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Thirteenth Edition

Ralph M. StairProfessor Emeritus, Florida State University

George W. ReynoldsInstructor, Strayer University

Principles of Information Systems

Australia • Brazil • Mexico • Singapore • United Kingdom • United States

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Principles of Information Systems,Thirteenth EditionRalph M. Stair & George W. Reynolds

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For Lila and Leslie—RMS

To my grandchildren: Michael, Jacob, Jared, Fievel,Aubrey, Elijah, Abrielle, Sofia, Elliot, Serena, and Kendall


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Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

Brief Contents

PART 1 Information Systems in Perspective 1

Chapter 1 An Introduction to Information Systems 2

Chapter 2 Information Systems in Organizations 44

PART 2 Information Technology Concepts 83

Chapter 3 Hardware and Mobile Devices 84

Chapter 4 Software and Mobile Applications 136

Chapter 5 Database Systems and Big Data 192

Chapter 6 Networks and Cloud Computing 238

PART 3 Business Information Systems 295

Chapter 7 Electronic and Mobile Commerce 296

Chapter 8 Enterprise Systems 344

Chapter 9 Business Intelligence and Analytics 382

Chapter 10 Knowledge Management and SpecializedInformation Systems 408

PART 4 Planning, Acquiring, and Building Systems 455

Chapter 11 Strategic Planning and Project Management 456

Chapter 12 System Acquisition and Development 502v

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PART 5 Information Systems in Business and Society 559

Chapter 13 Cybercrime and Information System Security 560

Chapter 14 Ethical, Legal, and Social Issues of InformationSystems 598

Glossary 636Subject Index 647Company Index 657


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Preface xv

PART 1 Information Systems in Perspective 1

1 An Introduction to Information Systems 2Part 1: Information Systems in Perspective 4An Introduction to Information Systems 4Information Systems in Organizations 9

Part 2: Information Technology Concepts 11Hardware and Mobile Devices 11Software and Mobile Applications 12Database Systems and Big Data 13Networks and Cloud Computing 15

Part 3: Business Information Systems 18Electronic and Mobile Commerce 20Enterprise Systems 21Business Intelligence and Analytics 25Knowledge Management and Specialized Information Systems 25

Part 4: Planning, Acquiring, and Building Systems 26Strategic Planning and Project Management 27System Acquisition and Development 28

Part 5: Information Systems in Business and Society 29Cybercrime and Information System Security 30Ethical, Legal, and Social Issues of Information Systems 31

CASE ONE: Connecting Patient Monitoring Devices to EHRs 41

CASE TWO: BMW: Automaker Competes on the Digital Front 41

2 Information Systems in Organizations 44Organizations and Information Systems 46Virtual Teams and Collaborative Work 50

Change in the Organization 51Innovation 52Reengineering and Continuous Improvement 53Outsourcing, Offshoring, and Downsizing 54

Organizational Culture and Change 56Lewin’s Change Model 57Lewin’s Force Field Analysis 57Leavitt’s Diamond 59User Satisfaction and Technology Acceptance 60Diffusion of Innovation Theory 61

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Careers in Information Systems 62Roles, Functions, and Careers in IS 66Typical IS Titles and Functions 67IS-Related Roles outside the IS Organization 70Certification 71Other IS Careers 72Working in Teams 72Finding a Job in IS 72

CASE ONE: Railroads Struggle to Implement Positive Train Control 79

CASE TWO: Nordstrom’s Innovation Efforts Recognize the Importanceof the Soft Side of Implementing Change 80

PART 2 Information Technology Concepts 83

3 Hardware and Mobile Devices 84Anatomy of a Computer 86Processor 87Memory 91Secondary Data Storage Devices 93Enterprise Storage Options 97Input and Output Devices 100Output Devices 107

Computer System Types 111Portable Computers 113Thin Clients, Desktops, and Workstations 114Servers, Mainframes, and Supercomputers 116

Server Farms, Data Centers, and Green Computing 119Server Farms 119Data Center 120Green Computing 122


CASE TWO: Vivobarefoot Upgrades Technology Infrastructure 131

4 Software and Mobile Applications 136An Overview of Software 138Software Sphere of Influence 139

Systems Software 141Operating Systems 141Utility Programs 155Middleware 158

Application Software 160Overview of Application Software 160Personal Application Software 163Workgroup Application Software 170Enterprise Application Software 171Application Software for Transaction Processing, Business Analytics,and Competitive Advantage 173Programming Languages 173


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Software Issues and Trends 176Software Bugs 176Copyrights and Licenses 177Freeware and Open-Source Software 177Software Upgrades 180Global Software Support 180

CASE ONE: Société de transport de Montréal (STM) Implements Innovative Mobile App 187

CASE TWO: FIMC Launches Mobile App to Provide Enhanced Roadside Assistance Services 188

5 Database Systems and Big Data 192Data Fundamentals 194Hierarchy of Data 195Data Entities, Attributes, and Keys 195The Database Approach 197

Data Modeling and Database Characteristics 199Data Modeling 199Relational Database Model 201Data Cleansing 204

Relational Database Management Systems (DBMSs) 206SQL Databases 206Database Activities 207Database Administration 212Popular Database Management Systems 213Using Databases with Other Software 214

Big Data 215Characteristics of Big Data 216Sources of Big Data 216Big Data Uses 217Challenges of Big Data 218Data Management 219

Technologies Used to Process Big Data 222Data Warehouses, Data Marts, and Data Lakes 222NoSQL Databases 224Hadoop 226In-Memory Databases 227

CASE ONE: WholeWorldBand: Digital Recording Studio 234

CASE TWO: Mercy’s Big Data Project Aims to Boost Operations 235

6 Networks and Cloud Computing 238Network Fundamentals 241Network Topology 241Network Types 242Client/Server Systems 244Channel Bandwidth 244Communications Media 245Communications Hardware 251Communications Software 251

The Internet and World Wide Web 253How the Internet Works 255


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Accessing the Internet 257How the Web Works 259Web Programming Languages 261Web Services 262Developing Web Content and Applications 262Internet and Web Applications 263Intranets and Extranets 274

The Internet of Things 276

Cloud Computing 279Public Cloud Computing 281Private Cloud Computing 283Hybrid Cloud Computing 283Autonomic Computing 283

CASE ONE: Cloud Helps Fight Cancer 291

CASE TWO: Globacom Invests in Its Mobile Network Infrastructure in Africa 292

PART 3 Business Information Systems 295

7 Electronic and Mobile Commerce 296An Introduction to Electronic Commerce 298Business-to-Business E-Commerce 298Business-to-Consumer E-Commerce 299Consumer-to-Consumer E-Commerce 302E-Government 303

Introduction to Mobile Commerce 304Mobile Commerce in Perspective 305M-Commerce Web Sites 305Advantages of Electronic and Mobile Commerce 305Multistage Model for E-Commerce 307E-Commerce Challenges 310

Electronic and Mobile Commerce Applications 313Wholesale e-Commerce 313Manufacturing 314Marketing 315Advertising 316Bartering 318Investment and Finance 319Banking 320Online Personalized Shopping 321

Strategies for Successful E-Commerce and M-Commerce 322Defining an Effective E-Commerce Model and Strategy 322Defining the Functions of a Web Site 322Establishing a Web Site 323Building Traffic to Your Web Site 324Maintaining and Improving Your Web Site 325

Technology Infrastructure Required to Support E-Commerce and M-Commerce 326Hardware 327Web Server Software 328E-Commerce Software 328


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Mobile Commerce Hardware and Software 328Electronic Payment Systems 329

CASE ONE: Facebook Moves into E-Commerce 339

CASE TWO: MobiKash: Bringing Financial Services to Rural Africa 339

8 Enterprise Systems 344Transaction Processing Systems 346Traditional Transaction Processing Methods and Objectives 347Transaction Processing Systems for Entrepreneurs and Small andMedium-Sized Enterprises 352Transaction Processing Activities 352

Enterprise Systems 356Enterprise Resource Planning 356Advantages of ERP 357Leading ERP Systems 359Supply Chain Management 361Customer Relationship Management 363Product Lifecycle Management 367Overcoming Challenges in Implementing Enterprise Systems 371Hosted Software Model for Enterprise Software 372

CASE ONE: Dunkin’ Donuts Prepares for Rapid Growth 379

CASE TWO: Kerry Group Is on Your Table 380

9 Business Intelligence and Analytics 382What Are Analytics and Business Intelligence? 384Benefits Achieved from BI and Analytics 385The Role of a Data Scientist 386Components Required for Effective BI and Analytics 387

Business Intelligence and Analytics Tools 388Spreadsheets 388Reporting and Querying Tools 389Data Visualization Tools 389Online Analytical Processing 391Drill-Down Analysis 392Linear Regression 393Data Mining 394Dashboards 395Self-Service Analytics 397

CASE ONE: Analytics Used to Predict Patients Likely to Be Readmitted 404

CASE TWO: Sunny Delight Improves Profitability with a Self-Service BI Solution 405

10 Knowledge Management and Specialized InformationSystems 408What Is Knowledge Management? 410Knowledge Management Applications and Associated Benefits 412Best Practices for Selling and Implementing a KM Project 413Technologies That Support KM 415


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Overview of Artificial Intelligence 421Artificial Intelligence in Perspective 422Nature of Intelligence 422Brain-Computer Interface 424Expert Systems 424Robotics 428Vision Systems 429Natural Language Processing 429Learning Systems 430Neural Networks 430Other Artificial Intelligence Applications 431

Multimedia and Virtual Reality 432Overview of Multimedia 433Overview of Virtual Reality 435Interface Devices 436Forms of Virtual Reality 437Virtual Reality Applications 437

Other Specialized Systems 439Assistive Technology Systems 439Game Theory 440Informatics 441

CASE ONE: The NASA Knowledge Map 449

CASE TWO: Doctor on Demand Enables Physicians to Make House Calls 450

PART 4 Planning, Acquiring, and Building Systems 455

11 Strategic Planning and Project Management 456Strategic Planning 458Analyze Situation 459Set Direction 461Define Strategies 464Deploy Plan 465Setting the Information System Organizational Strategy 467Identifying IS Projects and Initiatives 469Prioritizing IS Projects and Initiatives 469

Project Management 471Project Variables 472What Is Project Management? 475Project Management Knowledge Areas 475

CASE ONE: UConn’s University Information Technology Services (UITS)Develops a Five-Year Strategic Plan 497

CASE TWO: Webcor: Building Buy-In in the Brick-and-Mortar Business 498

12 System Acquisition and Development 502Buy versus Build 504

Waterfall System Development Process 506System Investigation 507System Analysis 514


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System Design 521Construction 526Integration and Testing 529Implementation 530System Operation and Maintenance 534

Agile Development 539

Buying Off-the-Shelf Software 542Package Evaluation Phase 543Finalize Contract 545Integration and Testing 546Implementation 546

CASE ONE: Etsy Uses DevOps for Rapid Deployment 555

CASE TWO: British Telecom Spreading Agile Development across the Globe 556

PART 5 Information Systems in Business and Society 559

13 Cybercrime and Information System Security 560The Threat Landscape 562Why Computer Incidents Are So Prevalent 562Types of Exploits 565Federal Laws for Prosecuting Computer Attacks 576

Implementing Secure, Private, Reliable Computing 577Risk Assessment 577Establishing a Security Policy 579Educating Employees and Contract Workers 579Prevention 580Detection 583Response 584Using a Managed Security Service Provider (MSSP) 586Computer Forensics 586

CASE ONE: Fairplay Turns to a Managed Security Service Provider 593

CASE TWO: Sony’s Response to North Korea’s Cyberattack 594

14 Ethical, Legal, and Social Issues of Information Systems 598Computer Waste and Mistakes 600Computer Waste 600Computer-Related Mistakes 601Preventing Computer-Related Waste and Mistakes 603

Privacy Issues 606Privacy and the Federal Government 606Privacy at Work 609Privacy and Email 610Privacy and Instant Messaging 611Privacy and Personal Sensing Devices 611Privacy and the Internet 612Privacy and Internet Libel Concerns 613Privacy and Fairness in Information Use 614Privacy and Filtering and Classifying Internet Content 614


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Corporate Privacy Policies 615Individual Efforts to Protect Privacy 617

Work Environment 618Health Concerns 619Avoiding Health and Environmental Problems 619

Ethical Issues in Information Systems 622What Is Ethics? 622Codes of Ethics 624

CASE ONE: FBI Orders Apple to Unlock iPhone 631

CASE TWO: Protecting Health Care Privacy 632

Glossary 636Subject Index 647Company Index 657


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As organizations and entrepreneurs continue to operate in an increasinglycompetitive and global marketplace, workers in all business areas includ-ing accounting, customer service, distribution, finance, human resources,information systems, logistics, marketing, manufacturing, research anddevelopment, and sales must be well prepared to make the significantcontributions required for success. Regardless of your future role, evenif you are an entrepreneur, you need to understand what informationsystems can and cannot do and be able to use them to help you achievepersonal and organizational goals. You will be expected to discoveropportunities to use information systems and to participate in the designand implementation of solutions to business problems employing informa-tion systems. To be successful, you must be able to view informationsystems from the perspective of business and organizational needs. Foryour solutions to be accepted, you must recognize and address theirimpact on coworkers, customers, suppliers, and other key business part-ners. For these reasons, a course in information systems is essential forstudents in today’s high-tech world.

Principles of Information Systems, Thirteenth Edition, continues the tradi-tion and approach of previous editions. Our primary objective is to providethe best information systems text and accompanying materials for the firstinformation systems course required for all business students. We want youto learn to use information systems to ensure your personal success in yourcurrent or future role and to improve the success of your organization.Through surveys, questionnaires, focus groups, and feedback that we havereceived from current and past adopters, as well as others who teach in thefield, we have been able to develop the highest-quality set of teaching materi-als available to help you achieve these goals.

Principles of Information Systems, Thirteenth Edition, stands proudlyat the beginning of the IS curriculum and remains unchallenged in itsposition as the only IS principles text offering basic IS concepts thatevery business student must learn to be successful. Instructors of the intro-ductory course faced a dilemma. On one hand, experience in businessorganizations allows students to grasp the complexities underlying impor-tant IS concepts. For this reason, many schools delayed presenting theseconcepts until students completed a large portion of their core businessrequirements. On the other hand, delaying the presentation of IS conceptsuntil students have matured within the business curriculum often forcesthe one or two required introductory IS courses to focus only on personalcomputing software tools and, at best, merely to introduce computerconcepts.

This text has been written specifically for the introductory course in the IScurriculum. Principles of Information Systems, Thirteenth Edition, addressesthe appropriate computer and IS concepts while also providing a strong man-agerial emphasis on meeting business and organizational needs.

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Approach of This Text

Principles of Information Systems, Thirteenth Edition, offers the traditionalcoverage of computer concepts, but places the material within the contextof meeting business and organizational needs. Placing information systemsconcepts within this context and taking a management perspective hasalways set this text apart from other computer texts, thus making it appeal-ing not only to MIS majors but also to students from other fields of study.The text is not overly technical, but rather deals with the role that informa-tion systems play in an organization and the key principles a manager ortechnology specialist needs to grasp to be successful. The principles of ISare brought together and presented in a way that is understandable, rele-vant, and interesting. In addition, the text offers an overview of the entire ISdiscipline, while giving students a solid foundation for further study in moreadvanced IS courses such as programming, systems analysis and design,project management, database management, data communications, Web sitedesign and development, information system security, big data and analytics,electronic and mobile commerce, and informatics. As such, it serves theneeds of both general business managers and those who aspire to becomeIS professionals.

The overall vision, framework, and pedagogy that made the previouseditions so popular have been retained in the Thirteenth Edition, offering anumber of benefits to students and instructors. While the fundamental visionof this market-leading text remains unchanged, the Thirteenth Edition moreclearly highlights established principles and draws on new ones that haveemerged as a result of business, organizational, technological, and societalchanges.

IS Principles First, Where They BelongExposing students to basic IS principles is an advantage even for thosestudents who take no IS courses beyond the introductory IS course. Sincemost functional areas of the business rely on information systems, anunderstanding of IS principles helps students in their other course work.In addition, introducing students to the principles of information systemshelps future business managers and entrepreneurs employ informationsystems successfully and avoid mishaps that often result in unfortunate conse-quences. Furthermore, presenting IS concepts at the introductory level createsinterest among students who may later choose information systems as theirfield of concentration.

Author TeamRalph Stair and George Reynolds have decades of academic and industrialexperience. Ralph Stair brings years of writing, teaching, and academicexperience to this text. He wrote numerous books and a large number ofarticles while at Florida State University. George Reynolds brings a wealthof information systems and business experience to the project, with morethan 30 years of experience working in government, institutional, andcommercial IS organizations. He has written numerous IS texts and hastaught the introductory IS course at the University of Cincinnati, MountSt. Joseph University, and Strayer University. The Stair and Reynoldsteam presents a solid conceptual foundation and practical IS experienceto students.


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Goals of This Text

Because Principles of Information Systems, Thirteenth Edition, is written forbusiness majors, we believe that it is important not only to present a realisticperspective on IS in business but also to provide students with the skills theycan use to be effective business leaders in their organizations. To that end,Principles of Information Systems, Thirteenth Edition, has three main goals:

1. To provide a set of core IS principles that prepare students to functionmore efficiently and effectively as workers, managers, decision makers,and organizational leaders

2. To provide insights into the challenging and changing role of the IS pro-fessional so that students can better appreciate the role of this keyindividual

3. To show the value of the IS discipline as an attractive field of specializa-tion so that students can evaluate this as a potential career path

IS PrinciplesPrinciples of Information Systems, Thirteenth Edition, although comprehen-sive, cannot cover every aspect of the rapidly changing IS discipline. Theauthors, having recognized this, provide students with an essential core ofguiding IS principles to use as they strive to use IS systems in their academicand work environment. Think of principles as basic truths or rules thatremain constant regardless of the situation. As such, they provide strong guid-ance for tough decision making. A set of IS principles is highlighted at thebeginning of each chapter. The use of these principles to solve real-worldproblems is driven home from the opening examples of cutting edge applica-tions to the dozens of real-world examples of organizations applying theseprinciples interspersed throughout each chapter to the interesting anddiverse end-of-chapter material. The ultimate goal of Principles of InformationSystems, Thirteenth Edition, is to develop effective, thinking, action-orientedstudents by instilling them with principles to help guide their decision makingand actions.

Survey of the IS DisciplinePrinciples of Information Systems, Thirteenth Edition, not only offers the tra-ditional coverage of computer concepts but also provides a broad frameworkto impart students with a solid grounding in the business uses of technology,the challenges of successful implementation, the necessity for gaining broadadoption of information systems, and the potential ethical and societal issuesthat may arise. In addition to serving general business students, this bookoffers an overview of the entire IS discipline and solidly prepares future ISprofessionals for advanced IS courses and careers in the rapidly changing ISdiscipline.

Changing Role of the IS ProfessionalAs business and the IS discipline have changed, so too has the role of the ISprofessional. Once considered a technical specialist, today the IS professionaloperates as an internal consultant to all functional areas of the organization,being knowledgeable about their needs and competent in bringing the powerof information systems to bear throughout the entire organization. The IS pro-fessional must view issues through a global perspective that encompasses theentire enterprise and the broader industry and business environment inwhich it operates.


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The scope of responsibilities of an IS professional today is not confined tojust his or her organization but encompasses the entire ecosystem of employ-ees, contractors, suppliers, customers, competitors, regulatory agencies, andother entities, no matter where they are located. This broad scope of responsi-bilities creates a new challenge: how to help an organization survive in ourhighly interconnected, highly competitive global environment. In acceptingthat challenge, the IS professional plays a pivotal role in shaping the businessitself and ensuring its success. To survive, businesses must strive for the high-est level of customer satisfaction and loyalty through innovative products andservices, competitive prices, and ever-improving product and service quality.The IS professional assumes a critical role in determining the organization’sapproach to both overall cost and quality performance and therefore plays animportant role in the ongoing growth of the organization. This new duality inthe role of the IS worker—a professional who exercises a specialist’s skillswith a generalist’s perspective—is reflected throughout Principles of Informa-tion Systems, Thirteenth Edition.

IS as a Field of StudyComputer science and business were ranked #1 and #4, respectively, in the2016 Princeton Review list of top 10 college majors based on research coveringjob prospects, alumni salaries, and popularity. A 2016 U.S. News & WorldReport study placed computer systems analyst, software developer, and Webdeveloper as three of the top 20 best jobs for 2016 based on hiring demand,median salary, employment rate, future job prospects, stress level, and work–life balance. The U.S. Bureau of Labor Statistics identified software developers,computer systems analysts, and computer support specialists as among the fast-est growing occupations for the period 2012 and 2022. Clearly, the long-termjob prospects for skilled and business-savvy information systems professionalsis good. Employment of such workers is expected to grow faster than the aver-age for all occupations through the year 2022. Upon graduation, IS graduates atmany schools are among the highest paid of all business graduates.

A career in IS can be exciting, challenging, and rewarding! Today, per-haps more than ever before, the IS professional must be able to align IS andorganizational goals and to ensure that IS investments are justified from abusiness perspective. The need to draw bright and interested students intothe IS discipline is part of our ongoing responsibility. Throughout this text,the many challenges and opportunities available to IS professionals arehighlighted and emphasized.

Changes in the Thirteenth Edition

A number of exciting changes have been made to the text based on user feed-back on how to align the text even more closely with changing IS needs andcapabilities of organizations. Here is a summary of those changes:

● Did You Know? Each chapter begins with two or three examples of cut-ting edge applications illustrating the concepts covered in the chapter.

● Critical Thinking Exercises. Each exercise features a scenario followedby two review and two critical thinking questions. Placed at the end ofeach major section of each chapter, these exercises test the student’sgrasp of the material just read. Students must analyze a real-life scenarioand synthesize the information provided to develop a recommendation ofwhat needs to be done. The exercises can also be used to stimulate classdiscussion or as additional “mini cases” that may be assigned as individualor team exercises.


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● Updated case studies. Two end-of-chapter case studies for each chapterprovide a wealth of practical information for students and instructors. Eachcase explores a chapter concept or problem that a real-world organizationhas faced. The cases can be assigned as individual or team homeworkexercises or serve as the basis for class discussion.

● Updated summary linked to objectives. Each chapter includes adetailed summary, with each section of the summary updated as neededand tied to an associated information system principle.

● Updated end-of-the chapter questions and exercises. More than half ofthe extensive end-of-chapter exercises (Self-Assessment Test, ReviewQuestions, Discussion Questions, Problem-Solving Exercises, Team Activi-ties, Web Exercises, and Career Exercises) are new.

● New chapters covering the latest IS developments. New chaptersinclude Database Systems and Big Data, Business Intelligence andAnalytics, Strategic Planning and Project Management, System Acquisitionand Development, and Cybercrime and Information System Security.These chapters cover important topics such as data governance, Hadoop,NoSQL databases, Cross-Industry Process for Data Mining, variousbusiness analytics techniques, self-service analytics, SWOT analysis, thenine project management knowledge areas, project steering team, agiledevelopment, DevOps, extreme programming, Pareto principle, advancedpersistent threat, cyberterrorism, next-generation firewall, risk assessment,and zero-day attack.

● Extensive changes and updates in each chapter. The remainingchapters in the text have all been extensively updated to provide the latestinformation available on a wide range of IS-related topics includinghundreds of new and current examples of organizations and individualsillustrating the principles presented in the text. In addition, a strong effortwas made to update the art work and figures with over 50 new figuresand images.

Online Solutions

MindTap™MindTap for Stair/Reynolds Principles of Information Systems, ThirteenthEdition, is a truly innovative reading experience with assignments that guidestudents to analyze, apply, and improve thinking! Relevant readings, multime-dia, and activities are designed to move students up the levels of learning, frombasic knowledge and comprehension to application, analysis, synthesis, andevaluation. Embedded within the eReader, ConceptClips focus on the challengeof understanding complicated IS terminology and concepts. Student-tested andapproved, the videos are quick, entertaining, and memorable visual and audi-tory representations of challenging topics. Also embedded within the MindTapeReader, animated figures and graphs provide a visual and at times interactiveand auditory enhancement to previously static text examples.

MindTap allows instructors to measure skills and outcomes with ease.Personalized teaching becomes yours through a Learning Path built with keystudent objectives and the ability to control what students see and when theysee it. Analytics and reports provide a snapshot of class progress, time incourse, engagement, and completion rates.

ConceptClipsConceptClip videos help students learn and comprehend intro-level informationsystems terminology by introducing new terms in a friendly and memorable


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way. Sixteen new concept clips have been created for a total of 44 conceptclips.

Adaptive Test PrepThis application allows students to take sample tests designed specifically tomimic the test bank question instructors use to build real exams. Over 750questions are included.

Student Resources

Accessible through, the student companion Web site containsthe following study tools (and more!) to enhance one’s learning experience:

PowerPoint SlidesDirect access is offered to the book’s PowerPoint presentations that cover thekey points of each chapter.

Classic CasesA frequent request from adopters is that they’d like a broader selection ofcases to choose from. To meet this need, a set of over 50 cases from the textare included here. These are the author’s choices of the “best cases” fromthese editions and span a broad range of profit, nonprofit, small, medium,and large organizations in a broad range of industries.

Instructor Resources

Instructor Companion SiteAs always, we are committed to providing the best teaching resourcepackages available in this market. All instructor materials can be found on thepassword-protected Web site at Here you will findthe following resources:

● Instructor’s Manual The comprehensive manual provides valuable chap-ter overviews; highlights key principles and critical concepts; offers sam-ple syllabi, learning objectives, and discussion topics; and featurespossible essay topics, further readings, cases, and solutions to all of theend-of-chapter questions and problems, as well as suggestions for con-ducting the team activities. Additional end-of-chapter questions are alsoincluded.

● Sample Syllabus A sample syllabus for both a quarter and semester-length course is provided with sample course outlines to make planningyour course that much easier.

● PowerPoint Presentations A set of impressive Microsoft PowerPointslides is available for each chapter. These slides are included to serve as ateaching aid for classroom presentation, to make available to students onthe network for chapter review, or to be printed for classroom distribu-tion. The goal of the presentations is to help students focus on the maintopics of each chapter, take better notes, and prepare for examinations.Instructors can add their own slides for additional topics they introduce tothe class.

● Figure Files Figure files allow instructors to create their own presentationsusing figures taken directly from the text.


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Test Bank and Cengage Learning Testing Poweredby CogneroCognero is a full-featured, online-assessment system that allows instructors tomanage test bank content, quickly create multiple test versions, deliver testsin several forms including from an LMS, and create test banks anywhere withInternet access!

To access Cognero, log into your Cengage Learning SSO account at Add this title to the bookshelf. Once the title is properlyadded to the bookshelf, a link to access Cognero will appear alongsidethe link to the instructor companion site. Technical questions, guides, andtutorials are hosted on Cengage Learning Technical Support Web site—


Creation of a text of this scope takes a strong team effort. We would like tothank all of our fellow teammates at Course Technology for their dedicationand hard work. We would like to thank Joe Sabatino, our Product Director,for his overall leadership and guidance on this effort. Special thanks toJonathan Gross Aand Michelle Cannistraci, our Content Developers,… whoshepherded the text through the production process and kept us on track.We are grateful for the excellent work by Michelle Ruelos Cannistraci in man-aging the creation of the many supplements to accompany the text. Ourappreciation also goes to Arul Joseph Raj, Joseph Malcolm, Brittani Morgan,Jennifer Ziegler, Aruna Sekar, Kathy Kucharek, and Mathangi Anantharaman.

We would also like to thank Kristen Maxwell of Evil Cyborg Productionsfor creating the ConceptClips videos that so humorously bring many keyterms found in the text to life.

We would especially like to thank Mary Pat Schaffer for her outstandingwork in editing the text and keeping track of the many revisions and changes.She also did an outstanding job in writing many of the end-of-chapter casesand creating initial drafts of four of the chapters.

Our Commitment

We are committed to listening to our adopters and readers in order to developcreative solutions to meet their needs. The field of IS continually evolves, andwe strongly encourage your participation in helping us provide the freshest,most relevant information possible.

We welcome your input and feedback. If you have any questions or com-ments regarding Principles of Information Systems, Thirteenth Edition, pleasecontact us through your local representative.


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PART 1 Information Systemsin Perspective

Chapter 1An Introduction to InformationSystems

Chapter 2Information Systems in Organizations

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1An Introduction toInformation Systems

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Know?Did You

• The number of smartphones sold worldwide in 2015exceeded 1.4 billion—over twice the combined sales ofdesktop, laptop, and tablet computers. The smartphoneis increasingly becoming the device of choice foraccessing the Internet and corporate databases.

• Although the success rate has improved over time withimproved methods, training, and tools, 94 percent ofvery large software projects fail or are challenged. Forexample, Federal officials badly managed the develop-ment of a Web site to sell health insurance under the

Affordable Care Act, costing taxpayers hundreds ofmillions of dollars in cost overruns.

• Financial losses from cybercrime and the cost of hard-ware, software, and various countermeasures imple-mented to fight cybercrime are estimated to be as highas $400 billion annually worldwide. A data breach atTarget exposed personal information about 110 millioncustomers, led the CEO to resign, and cost the com-pany an estimated $148 million.

Principles Learning Objectives

• The value of information is directly linked to how ithelps decision makers achieve the organization’sgoals.

• Information systems are composed of fundamen-tal components that must be carefully assembledand integrated to work well together.

• Managers have an essential role to play in thesuccessful implementation and use of informationsystems—that role changes depending on whichtype of IS system is being implemented.

• An organization’s infrastructure technology formsthe foundation upon which its systems and appli-cations are built.

• Organizations employ a variety of informationsystems to improve the way they conduct busi-ness and make fact-based decisions.

• Many challenges and potential benefits are asso-ciated with harnessing the rapid growth of datawithin organizations.

• Strategic planning and project management arekeys to ensuring that the organization is workingeffectively on the right projects.

• Information systems must be applied thoughtfullyand carefully so that society, organizations, andindividuals around the globe can reap their enor-mous benefits.

• Distinguish data from information and knowl-edge, and describe the characteristics ofquality data.

• Identify the fundamental components of aninformation system and describe theirfunction.

• Identify the three fundamental information systemtypes and explain what organizational comple-ments must be in place to ensure successfulimplementation and use of the system.

• Identify and briefly describe the role of eachcomponent of an organization’s technologyinfrastructure.

• Identify the basic types of business informationsystems, including who uses them, how they areused, and what kinds of benefits they deliver.

• Describe how organizations are using businessintelligence and business analytics to capitalizeon the vast amount of data becoming available.

• Discuss why it is critical for business objectivesand IS activities to be well aligned through systemplanning, development, and acquisition.

• Identify several major IT security threats as well assome of the legal, social, and ethical issuesassociated with information systems.

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Why Learn about Information Systems?We live in an information economy. Information itself has real value, and in order to stay competitive,organizations require a steady flow of information about their business partners, competitors,customers, employees, markets, and suppliers. Information systems are increasingly being used togather, store, digest, analyze, and make sense out of all this information. Indeed, information systemsare even embedded in and control many of the products we use on a daily basis. Using informationsystems, individuals communicate instantaneously with one another; consumers make purchases onlineusing mobile devices; project members dispersed globally and across multiple organizations collaborateeffectively; financial institutions manage billions of dollars in assets around the world; andmanufacturers partner with suppliers and customers to track inventory, order supplies, and distributegoods faster than ever before.

Information systems will continue to change businesses and the way we live. Indeed, manycorporate leaders are using technology to rework every aspect of their organization from product andservice creation through production, delivery, and customer service. To prepare to participate in andlead these innovations, you must be familiar with fundamental information concepts. Regardless of yourcollege major or chosen career, knowledge of information systems is indispensable in helping you landyour first job. The ability to recognize and capitalize on information system opportunities can make youan even more valuable member of your organization and will ultimately help advance your career.

As you read this chapter, consider the following:

• How are organizations using information systems to accomplish their objectives and meet ever-changingbusiness needs?

• What role might you have in identifying the need for, acquiring, or using such systems?

This chapter presents an overview of the material covered in the text. Thechapter is divided into five major sections corresponding to the five sectionsof the text. The chapters included in each section of the text are highlightedas a subsection and briefly summarized. The essential material will receivefuller treatment in subsequent chapters.

Part 1: Information Systems in Perspective

We begin by examining the topics covered in “Part 1: Information Systems inPerspective,” which includes an “An Introduction to Information Systems”and a discussion of “Information Systems in Organizations.”

An Introduction to Information SystemsInformation is a central concept of this book. The term is used in the title ofthe book, in this section, and in every chapter. To be an effective manager inany area of business, you need to understand that information is one of anorganization’s most valuable resources. Information is not the same thing asdata, and knowledge is different from both data and information. These con-cepts will now be explained.

Data, Information, and KnowledgeData consists of raw facts, such as an employee number, total hours workedin a week, an inventory part number, or the number of units produced on aproduction line. As shown in Table 1.1, several types of data can representthese facts. Information is a collection of data organized and processed sothat it has additional value beyond the value of the individual facts. For exam-ple, a sales manager may want individual sales data summarized so it showsthe total sales for the month. Providing information to customers can also

data: Raw facts such as an employeenumber or total hours worked in aweek.

information: A collection of dataorganized and processed so that it hasadditional value beyond the value of theindividual facts.

4 PART 1 • Information Systems in Perspective

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help companies increase revenues and profits. For example, social shoppingWeb site Kaboodle brings shoppers and sellers together electronically so theycan share information and make recommendations while shopping online.The free exchange of information stimulates sales and helps ensure shoppersfind better values.

Another way to appreciate the difference between data and information isto think of data as the individual items in a grocery list—crackers, bread,soup, cereal, coffee, dishwashing soap, and so on. The grocery list becomesmuch more valuable if the items in the list are arranged in order by the aislein which they are found in the store—bread and cereal in aisle 1, crackersand soup in aisle 2, and so on. Data and information work the same way.Rules and relationships can be set up to organize data so it becomes useful,valuable information.

The value of the information created depends on the relationships definedamong existing data. For instance, you could add specific identifiers to the itemsin the list to ensure that the shopper brings home the correct item—wholewheat bread and Kashi cereal in aisle 1, saltine crackers and chicken noodlesoup in aisle 2, and so on. By doing so, you create a more useful grocery list.

Turning data into information is a process, or a set of logically relatedtasks performed to achieve a defined outcome. The process of defining rela-tionships among data to create useful information requires knowledge,which is the awareness and understanding of a set of information and theways in which that information can be made useful to support a specific taskor reach a decision. In other words, information is essentially data mademore useful through the application of knowledge. For instance, there aremany brands and varieties of most items on a typical grocery list. To shopeffectively, the grocery shopper needs to have an understanding of the needsand desires of those being shopped for so that he knows to purchase one canof Campbell’s (not the store brand!) low-sodium chicken noodle soup for thefamily member who is diabetic along with two cans of Campbell’s regularchicken noodle soup for everyone else.

In some cases, people organize or process data mentally or manually.In other cases, they use a computer. This transformation process is shownin Figure 1.1.

The Value of InformationThe value of information is directly linked to how it helps decision makersachieve their organization’s goals. Valuable information can help people per-form tasks more efficiently and effectively. Many businesses assume thatreports are based on correct, quality information, but, unfortunately, that isnot always true. For example, Experian (a global information services firmthat provides credit services, marketing services, decision analytics, and con-sumer services) estimates that on average, 22 percent of an organization’s cus-tomer contact data is wrong.1 Companies can easily waste over $100 perinaccurate customer contact data record on things like direct-mail marketingsent to wrong addresses and the inability to properly track leads. For an

TABLE 1.1 Types of dataData Represented By

Alphanumeric data Numbers, letters, and other characters

Audio data Sounds, noises, or tones

Image data Graphic images and pictures

Video data Moving images or pictures

process: A set of logically relatedtasks performed to achieve a definedoutcome.

knowledge: The awareness andunderstanding of a set of informationand the ways that information can bemade useful to support a specific taskor reach a decision.

CHAPTER 1 • An Introduction to Information Systems 5

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organization with 100,000 customers and a 22 percent error rate, that projectsto a loss of $2.2 million.2

Characteristics of Quality InformationFundamental to the quality of a decision is the quality of the information usedto reach that decision. Any organization that stresses the use of advanced infor-mation systems and sophisticated data analysis before information quality isdoomed to make many wrong decisions. Table 1.2 lists the characteristics thatdetermine the quality of information. The importance of each of these charac-teristics varies depending on the situation and the kind of decision you are try-ing to make. For example, with market intelligence data, some inaccuracy andincompleteness is acceptable, but timeliness is essential. Market intelligencedata may alert you that a competitor is about to make a major price cut. Theexact details and timing of the price cut may not be as important as beingwarned far enough in advance to plan how to react. On the other hand, accu-racy and completeness are critical for data used in accounting for the manage-ment of company assets, such as cash, inventory, and equipment.

What Is an Information System?Another central concept of this book is that of an information system. People andorganizations use information systems every day. An information system (IS)is a set of interrelated components that collect, process, store, and disseminatedata and information; an information system provides a feedback mechanism tomonitor and control its operation to make sure it continues to meet its goals andobjectives. The feedback mechanism is critical to helping organizations achievetheir goals, such as increasing profits or improving customer service.

A computer-based information system (CBIS) is a single set of hard-ware, software, databases, networks, people, and procedures that are config-ured to collect, manipulate, store, and process data into information.Increasingly, companies are incorporating computer-based information systems

FIGURE 1.1Process of transforming datainto informationTransforming data into informationstarts by selecting data, then orga-nizing it, and finally manipulatingthe data.

Select data

Organize data

Data (2,1)

Data (3,1)

Data (n,1)

Data (2,2)

Data (3,2)

Manipulate data

Total 1 Total 2 Total 3

Data (2,3)

Data (3,3)

Data (n,2) Data (n,3)



Data (1,1) Data (1,2) Data (1,3)

information system (IS): A set ofinterrelated components that collect,process, store, and disseminate dataand information; an information systemprovides a feedback mechanism tomonitor and control its operation tomake sure it continues to meet its goalsand objectives.

computer-based informationsystem (CBIS): A single set ofhardware, software, databases, net-works, people, and procedures that areconfigured to collect, manipulate, store,and process data into information.

6 PART 1 • Information Systems in Perspective

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into their products and services. Investment companies offer their customers awide range of powerful investment tools, including access to extensive onlineresearch. Automobiles are available with advanced navigation systems that notonly guide you to your destination but also incorporate information regardingthe latest weather and traffic conditions to help you avoid congestion and traf-fic delays. Watches, digital cameras, mobile phones, music players, and otherdevices rely on CBIS to bring their users the latest and greatest features.

The components of a CBIS are illustrated in Figure 1.2. An organization’stechnology infrastructure includes all the hardware, software, databases,networks, people, and procedures that are configured to collect, manipulate,

TABLE 1.2 Characteristics of quality informationCharacteristic Definition

Accessible Information should be easily accessible by authorized users sothey can obtain it in the right format and at the right time tomeet their needs.

Accurate Accurate information is error free. In some cases, inaccurateinformation is generated because inaccurate data is fed into thetransformation process. This is commonly called garbage in,garbage out.

Complete Complete information contains all the important facts. Forexample, an investment report that does not include allimportant costs is not complete.

Economical Information should also be relatively economical to produce.Decision makers must always balance the value of informationwith the cost of producing it.

Flexible Flexible information can be used for a variety of purposes. Forexample, information on how much inventory is on hand for aparticular part can be used by a sales representative in closinga sale, by a production manager to determine whether moreinventory is needed, and by a financial executive to determinethe amount of money the company has invested in inventory.

Relevant Relevant information is important to the decision maker.Information showing that lumber prices might drop is proba-bly not relevant to a computer chip manufacturer.

Reliable Reliable information can be trusted by users. In many cases,the reliability of the information depends on the reliability ofthe data-collection method. In other instances, reliabilitydepends on the source of the information. A rumor from anunknown source that oil prices might go up may not bereliable.

Secure Information should be secure from access by unauthorizedusers.

Simple Information should be simple, not complex. Sophisticated anddetailed information might not be needed. In fact, too muchinformation can cause information overload, whereby a deci-sion maker has too much information and is unable to deter-mine what is really important.

Timely Timely information is delivered when it is needed. Knowinglast week’s weather conditions will not help when trying todecide what coat to wear today.

Verifiable Information should be verifiable. This means that you cancheck it to make sure it is correct, perhaps by checking manysources for the same information.

technology infrastructure: Allthe hardware, software, databases,networks, people, and procedures thatare configured to collect, manipulate,store, and process data intoinformation.

CHAPTER 1 • An Introduction to Information Systems 7

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store, and process data into information. The technology infrastructure is a setof shared IS resources that form the foundation of each computer-based infor-mation system.

People make the difference between success and failure in all organiza-tions. Jim Collins, in his book, Good to Great, said, “Those who build greatcompanies understand that the ultimate throttle on growth for any great com-pany is not markets, or technology, or competition, or products. It is onething above all others: the ability to get and keep enough of the rightpeople.”3 Thus, it comes as no surprise that people are the most importantelement in computer-based information systems.

Good systems can enable people to produce extraordinary results. Theycan also boost job satisfaction and worker productivity.4 Information systemspersonnel include all the people who manage, run, program, and maintainthe system, including the chief information officer (CIO), who leads the ISorganization. End users are people who work directly with information sys-tems to get results. They include financial executives, marketing representa-tives, and manufacturing line operators.

A procedure defines the steps to follow to achieve a specific end result,such as enter a customer order, pay a supplier invoice, or request a currentinventory report. Good procedures describe how to achieve the desired endresult, who does what and when, and what to do in the event somethinggoes wrong. When people are well trained and follow effective procedures,they can get work done faster, cut costs, make better use of resources, andmore easily adapt to change. When procedures are well documented, theycan greatly reduce training costs and shorten the learning curve.

Using a CBIS involves setting and following many procedures, includingthose for the operation, maintenance, and security of the system. For
























































FIGURE 1.2Components of a computer-based information systemHardware, software, networks, people, and procedures are part of a business’s technology infrastructure.

procedure: A set of steps that needto be followed to achieve a specific endresult, such as enter a customer order,pay a supplier invoice, or request acurrent inventory report.

8 PART 1 • Information Systems in Perspective

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example, some procedures describe how to gain access to the systemthrough the use of some log-on procedure and a password. Othersdescribe who can access facts in the database or what to do if a disaster,such as a fire, earthquake, or hurricane, renders the CBIS unusable. Goodprocedures can help companies take advantage of new opportunities andavoid lengthy business disruptions in the event of natural disasters. Poorlydeveloped and inadequately implemented procedures, however, can causepeople to waste their time on useless rules or result in inadequateresponses to disasters.

Information Systems in OrganizationsMost organizations have a number of different information systems. Whenconsidering the role of business managers in working with IS, it is useful todivide information systems into three types: personal IS, group IS, and enter-prise IS.

Personal IS includes information systems that improve the productivityof individual users in performing stand-alone tasks. Examples include per-sonal productivity software, such as word-processing, presentation, andspreadsheet software.

In today’s fast-moving, global work environment, success depends on ourability to communicate and collaborate with others, including colleagues, cli-ents, and customers. Group IS includes information systems that improvecommunications and support collaboration among members of a workgroup.Examples include Web conferencing software, wikis, and electronic corporatedirectories.

Enterprise IS includes information systems that organizations use todefine structured interactions among their own employees and/or withexternal customers, suppliers, government agencies, and other business part-ners. Successful implementation of these systems often requires the radicalredesign of fundamental work processes and the automation of new pro-cesses. Target processes may include purely internal activities within theorganization (such as payroll) or those that support activities with externalcustomers and suppliers (order processing and purchasing). Three examplesof enterprise IT are transaction processing, enterprise, and interorganiza-tional systems.

For each type of IS, certain key organizational complements must be inplace to ensure successful implementation and use of the system. These com-plements include:

● Well-trained workers. Employees must be well trained and understandthe need for the new system, what their role is in using or operating thesystem, and how to get the results they need from the system.

● System support. Trained and experienced users who can show othershow to gain value from the system and overcome start-up problems.

● Better teamwork. Employees must understand and be motivated to worktogether to achieve the anticipated benefits of the system.

● Redesigned processes. New systems often require radical redesign ofexisting work processes as well as the automation of new processes.

● New decision rights. Employees must understand and accept their newroles and responsibilities including who is responsible for making whatdecisions. Roles and responsibilities often change with introduction of anew system.

Managers have an essential role to play in the successful implementationand use of information systems. That role changes depending on which typeof IS system is being implemented, as shown in Table 1.3, which also high-lights other characteristics and provides examples of each type.

personal IS: An information systemthat improves the productivity of indi-vidual users in performing stand-alonetasks.

group IS: An information system thatimproves communications and supportcollaboration among members of aworkgroup.

enterprise IS: An information sys-tem that an organization uses to definestructured interactions among its ownemployees and/or with external custo-mers, suppliers, government agencies,and other business partners.

organizational complement: Akey component that must be in place toensure successful implementation anduse of an information system.

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CriticalThinking Exercise

Kroger’s QueVision System Improves Customer ServiceKroger has annual sales in excess of $100 billion and operates stores across theUnited States under various names, including Kroger’s, Ralph’s, and Harris Teeter.In surveys, Kroger’s customers have consistently rated waiting at the checkoutlane as the worst part of the grocery shopping experience. In response, Krogerdeveloped its QueVision computer-based information system, which relies onreal-time data feeds from point-of-sale systems as well as infrared sensors overstore doors and cash registers to count customers entering the store and standingat checkout lanes. The system also uses historical point-of-sale records to forecastthe number of shoppers that can be expected and, therefore, the number of cash-iers that will be needed. All this was done to achieve the goal of ensuring thatcustomers never have more than one person ahead of them in the checkout lane.The system provides feedback by displaying customer checkout time on a screenthat both employees and customers can see—delivering a visible measure of howwell the whole system is working. The system is now deployed at over 2,300stores in 31 states and has cut the average time a customer must wait to begincheckout from four minutes to 30 seconds.5

You are a new store manager at a Kroger store where the QueVision system hasbeen deployed for two years. Unfortunately, since you took charge of this store twoweeks ago, you have received numerous complaints about the system from store cash-iers and baggers. These employees are requesting that you either turn off the screenthat displays customer checkout time or add more cashiers and baggers to each shiftto reduce checkout times, which are currently averaging over six minutes.

Review Questions1. Would you classify the QueVision system as a personal, group, or enterprise

system?2. Four key organizational complements must be in place to ensure successful

implementation and use of a new system. Which two of these componentsseem to be missing at your store?

TABLE 1.3 Examples and characteristics of each type of information systemPersonal IS Group IS Enterprise IS

Examples Personal productivity soft-ware, decision-supportsystem

Email, instant messaging,project managementsoftware

Transaction processingsystems, enterprise sys-tems, interorganizationalsystems

Benefits Improved productivity Increased collaboration Increased standardizationand ability to monitor work

Organizational comple-ments (including well-trained workers, betterteamwork, redesignedprocesses, and newdecision rights)

● Does not bring com-plements with it

● Partial benefits can beachieved without allcomplements being inplace

● At least some comple-ments must be in placewhen IS “goes live”

● Allows users to imple-ment and modify com-plements over time

● Full complements mustbe in place when IS“goes live”

Manager’s role ● Ensure that employeesunderstand and con-nect to the change

● Encourage use● Challenge workers to

find new uses

● Demonstrate howtechnology can beused

● Set norms forparticipation

● Identify and put intoplace the full set oforganizational comple-ments prior to adoption

● Intervene forcefullyand continually toensure adoption

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Critical Thinking Questions1. Employees are requesting that you turn off the screen that displays customer

checkout time or add more cashiers and baggers to each shift to reduce waittimes. What action would you take to address the concerns of the cashiersand baggers?

a. Turn off the QueVision system now.b. Add more cashiers and baggers to each shift as soon as possible.c. Observe the checkout process and performance of cashiers and baggers

for a few days before taking action.d. Tell the cashiers and baggers their performance is unacceptable and to

“step it up.”

2. Provide a brief rationale for your recommended course of action.

Part 2: Information Technology Concepts

Next, we look at the topics covered in “Part 2: Information Technology Con-cepts,” including “Hardware and Mobile Devices,” “Software and MobileApplications,” “Database Systems and Big Data,” and “Networks and CloudComputing.” This discussion will help you understand basic concepts and pre-pare you for more in-depth coverage in the individual chapters.

Hardware and Mobile DevicesHardware consists of computer equipment used to perform input, proces-sing, storage, and output activities. The trend in the computer industry is toproduce smaller, faster, and more mobile hardware, such as smartphones, lap-tops, and tablet computers. In addition, hardware manufacturers and entre-preneurs are hard at work developing innovative new hardware devices, suchas the following:

● Advanced keyboards that turn individual keys on a keyboard intotrackpad-covered buttons where certain dual-purpose keys could bedepressed to multiple levels to complete different tasks; the spacebar, forexample, can serve its usual purpose. But add capacitive touch and itbecomes a cursor; press a little harder to generate a mouse click. (Capaci-tive touch relies on the electrical properties of the human body to detectwhen and where on a display the user touches. Because of this, capacitivedisplays can be controlled with very light touches of a finger.)

● Laptops and displays that connect wirelessly, thus eliminating the needfor expensive HDMI or DisplayPort display cables

● Computing devices with embedded 3D cameras, which will be able torecognize objects and even measure distances between things

● Keyboards that enable users to log in to Web sites via fingerprint authen-tication so they won’t have to remember dozens of passwords for differ-ent sites

● Very-high resolution display devices that will show content in incredibledetail and dramatically improve the viewing experience (think clarity andresolution way beyond 1080p HD)

● Computerized event data recorders (EDRs) that, like an airplane’s blackbox, record vehicle speed, possible engine problems, driver performance,and more

While desktop, laptop, and tablet computers continue to be used in a vari-ety of settings, smartphones have become the primary device used by peoplearound the world to communicate, go online, and access and share

hardware: Computer equipmentused to perform input, processing,storage, and output activities.

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information. In 2013, the number of smartphone users first exceeded thenumber of personal computer users, and the gap keeps growing, with thenumber of smartphones sold worldwide far exceeding the combined sale ofdesktops, laptops, and tablets as shown in Figure 1.3. This rapid growth hasbeen spurred by the improving affordability and capability of smartphones,the increasing speed and coverage of wireless networks, longer battery life,and the availability of hundreds of thousands of smartphone applications andgames. For many people in developing countries, a smartphone is their firstcomputer and their only Internet-connected device. For those in developedcountries, it is common for individuals who do have a computer to also havea smartphone. It is projected that roughly one-third of the world’s populationwill own a smartphone by 2018.6

Software and Mobile ApplicationsSoftware consists of the computer programs that govern the operation of aparticular computing device, be it desktop computer, laptop, tablet, smart-phone, or some other device. There are two types of software: system soft-ware and application software. System software—such as Google’s Androidor Apple’s iOS—oversees basic computer operations such as start-up, controlsaccess to system resources, and manages memory and files. Application soft-ware, such as Microsoft Office, allows you to accomplish specific tasks,including editing text documents, creating graphs, and playing games. Bothsystem software and application software are needed for all types of compu-ters, from small handheld devices to large supercomputers. In choosing appli-cation software, you must choose software that will work with the operatingsystem installed on your computing device.

As of June 2015, 1.6 million applications were available for devices thatrun under the Android operating system and roughly the same (1.5 million)available for download from Apple’s App Store.8,9 The number of apps foreach operating system is increasing by roughly 25,000 to 50,000 per month.

Business application software can be categorized by whether it isintended to be used by an individual, a small business, or a large multina-tional enterprise. For example, Quicken has long been a favorite accountingapplication for individuals who need money management and budgetingtools to help them watch their spending, increase their savings, and avoidlate fees with alerts on upcoming payment due dates. QuickBooks, anaccounting application popular with small businesses, enables users to create

FIGURE 1.3Millions of computing devicessold worldwide7The number of smartphones soldworldwide far exceeds the combinednumber of desktop, laptop, andtablet computers.

2013 2014 2015 2016 2017Year




s of
















software: The computer programsthat govern the operation of a particularcomputing device, be it desktop, laptop,tablet, smartphone, or some otherdevice.

12 PART 1 • Information Systems in Perspective

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invoices, track sales and expenses, process credit card payments, run payroll,and generate financial, tax, and sales reports. SAP ERP Financials is anaccounting application used by many large, multinational organizations tomanage the complexities of global accounting and reporting requirements.SAP’s software records all financial transactions in a comprehensive generalledger; supports sophisticated reporting requirements; provides managementaccounting tools for orders, projects, cost centers, and profit centers; enablesthe speedy and accurate closing of the firm’s books; and helps manage riskand compliance across accounting and finance.

An important trend in the design of business application software is theattempt to imitate the look, feel, and intuitive ease of use associated with con-sumer apps that can be downloaded from the Google Play Store and theApple App Store. Indeed, usability and user-interface design are key factorsin delivering apps that business users will actually use. In some organizations,employees can log on to enterprise app stores to acquire the latest companysoftware and software upgrades. This trend of consumer technology practicesinfluencing the way business software is designed and delivered is called theconsumerization of IT.

CDW is a leading provider of integrated information solutions to corpo-rate customers in small, medium, and large private and public organizationsin the United States and Canada. The firm has established its App MarketplaceWeb site ( where customers’ employees canidentify leading enterprise mobile app solutions. The Web site is easy to navi-gate with apps organized by industry and app functions. The apps there havealready been vetted by CDW to perform effectively and reliably. In addition,for those needing custom mobile apps, the Web site identifies mobile apppartners who have a proven track record of building, deploying, and updatingtop enterprise applications.

Database Systems and Big DataA database is an organized collection of facts and information, typically con-sisting of two or more related data files. An organization’s database can con-tain facts and information on customers, employees, inventory, sales, onlinepurchases, and much more. A database is essential to the operation of acomputer-based information system.

As anyone who works in marketing or sales knows, one of the biggestchallenges that any business faces is the ability to generate new leads in aneffort to locate customers. As businesses have looked for ways to meet thischallenge, numerous vendors have seized the opportunity by offering accessto databases of potential clients in various industries, as shown in Table 1.4.

TABLE 1.4 Sample of marketing databases used to generate sales leadsIndustry Database Vendor Number of Records (Thousands)

Auto dealers Oddity Software 110

Barber shops Usable Databases 53

Dry cleaning/laundry Oddity Software 42

Gas stations with convenience stores CHD 56

Healthcare providers and decisionmakers

SK & A 2,100

Music retail outlets Almighty Music Marketing 10

Nursing and retirement homes MCH 34

Pet shops and pet supply stores Oddity Software 15

consumerization of IT: The trendof consumer technology practicesinfluencing the way business softwareis designed and delivered.

database: An organized collection offacts and information, typically consist-ing of two or more related data files.

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A data warehouse is a database that stores large amounts of historicaldata in a form that readily supports analysis and management decision mak-ing. In a process called the extract-transform-load (ETL) process, raw datais extracted from various sources, transformed into a format that will supportthe analysis to be performed, and then loaded into the data warehouse. Datawarehouses frequently hold a huge amount of data; they often contain fiveyears or more of data. Many organizations employ data warehouses to holdthe data they need to make key business decisions:

● Walmart operates separate data warehouses for Walmart and Sam’s Club.Through these data warehouses, the company allows suppliers access toalmost any data they could possibly need to determine which of theirproducts are selling, how fast, and even whether they should redesigntheir packaging to fit more product on store shelves.10

● Harrah’s (part of the Caesar’s Entertainment casino empire) uses a datawarehouse to determine how much money particular gamblers are willingto lose in a day before they will decide not to come back the next day.11

● Continental Airlines uses a data warehouse to help it determine who itsmost valuable customers are and to find ways to keep them satisfied—forexample, by proactively making alternative travel arrangements for themif their flights get delayed.12

● Macy’s uses a terabyte-sized data warehouse to target improvements infour key areas of its e-commerce business: measuring the profitability andeffectiveness of banner advertising, analyzing customer interactions andpaths through its Web site, improving fulfillment capabilities, and corre-lating online sales with store sales to cross-sell and upsell customersacross its distribution channels.13

The digital universe (the collection of all data that exists) is doubling insize every two years as shown in Figure 1.4.14 Organizations are challengedby this rapid growth and at the same time scrambling to take advantage ofthe opportunities provided by this data. Big data is a term used to describedata collections that are so enormous (think petabytes or larger) and complex(from sensor data to social media data) that traditional data management soft-ware, hardware, and analysis processes are incapable of dealing with them.To gain a perspective on the quantity of data some organizations are strug-gling to manage, consider that the amount of data traveling over mobile net-works alone is expected to exceed 10 exabytes per month by 2016.15

Table 1.5 defines the units of measure for data.

FIGURE 1.4The size of the digital universe(zettabytes) doubles every twoyearsThe amount of digital data isexpected to double every two years.






2014 2016 2018 2020 2022

data warehouse: A database thatstores large amounts of historical datain a form that readily supports analysisand management decision making.

extract-transform-load (ETL):The process by which raw data isextracted from various sources, trans-formed into a format to support theanalysis to be performed, and loadedinto the data warehouse.

big data: A term used to describedata collections that are so enormous(think petabytes or larger) and complex(from sensor data to social media data)that traditional data management soft-ware, hardware, and analysis pro-cesses are incapable of dealingwith them.

14 PART 1 • Information Systems in Perspective

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To avoid being paralyzed by information overload, organizations andindeed society itself must find a way to deal with this oncoming tsunami ofdata. This challenge has several aspects, including how to choose which sub-set of data to keep, where and how to store the data, how to find the nuggetsof useful data that are relevant to the decision making at hand, and how toderive real value from the relevant data.

Ideally, the many challenges associated with big data will be conquered,and more data will lead to more accurate, insightful analyses and better deci-sion making, which in turn, will result in deliberate actions and improvedbusiness results. For that to happen, society will need to address the manyissues associated with big data, including concerns over invasions of privacyand the potential for overly intrusive monitoring of individuals by govern-ments and organizations.

Networks and Cloud ComputingNetworks connect computers and equipment in a room, building, campus,city, across the country, or around the world to enable electronic communica-tion. Wireless transmission networks enable the use of mobile devices, suchas smartphones and tablets. Telecommunication companies are now workingon fifth-generation wireless communications that will enable transmissionspeeds 10 times faster than currently available on wireless networks—withgreater coverage area and lower battery consumption—possibly as soon asthe year 2020. Such technology will be needed to support the increaseddemand for faster transfer of data and video.

The Internet is the world’s largest computer network, consisting of thou-sands of interconnected networks, all freely exchanging information. Peopleuse the Internet to research information, buy and sell products and services,email and instant message one another, participate in social networks (e.g.,Facebook and LinkedIn), make travel arrangements, complete banking trans-actions, make investments, download music and videos, read books, andwatch movies among other activities.

With public cloud computing, a service provider organization owns andmanages the hardware, software, networking, and storage devices, with clouduser organizations (called tenants) accessing slices of shared resources via theInternet. The service provider can deliver increasing amounts of computing,network, and storage capacity on demand and without requiring any capitalinvestment on the part of the cloud users. Thus, public cloud computing is agreat solution for organizations whose computing needs vary greatly

TABLE 1.5 Units of measure for dataUnit of Measure Size Equivalent To

Byte 1 byte One alphanumeric character

Kilobyte 1,000 bytes The text of a joke or very short story

Megabyte 1,000 kilobytes 800 pages of text

Gigabyte 1,000 megabytes 7 minutes of HD-TV

Terabyte 1,000 gigabytes The Hubble Space Telescope collected more than 45 terabytes of data in itsfirst 20 years of observations

Petabyte 1,000 terabytes 50 years’ worth of DVD-quality video

Exabyte 1,000 petabytes 44 billion 25 gigabytes Blu-ray discs

Zettabyte 1,000 exabytes The amount of text created by every man, woman, and child on earth tweet-ing continuously for 100 years

Yottabyte 1,000 zettabytes One thousand times the grains of sand on all of Earth’s beaches

network: A group or system of con-nected computers and equipment—in aroom, building, campus, city, across thecountry, or around the world—thatenables electronic communication.

Internet: The world’s largest com-puter network, consisting of thousandsof interconnected networks, all freelyexchanging information.

public cloud computing: A meansof providing computing serviceswherein a service provider organizationowns and manages the hardware,software, networking, and storagedevices, with cloud user organizations(called tenants) accessing slices ofshared resources via the Internet.

CHAPTER 1 • An Introduction to Information Systems 15

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depending on changes in demand. Amazon, Cisco Systems, IBM, Microsoft, Rack-space, Verizon Communications Inc., and VMWare are among the largest cloudcomputing service providers. These firms typically offer a monthly or annual sub-scription service model; they may also provide training, support, and data inte-gration services.16 Online content provider Netflix uses the Amazon WebServices (AWS) cloud computing service to provide global delivery of some 10billion hours of content per month. AWS enables Netflix users anywhere in theworld to stream TV shows and movies to computers and mobile devices.17

The World Wide Web (WWW), better known simply as “the Web,” is anetwork of links on the Internet to files containing text, graphics, video, andsound. Information about the documents and access to them are controlledand provided by tens of thousands of specialized computers called Web ser-vers. The Web is one of many services available over the Internet, and it pro-vides access to millions of files. New Internet technologies and increasedInternet communications and collaboration are collectively called Web 2.0.

The technology used to create the Internet is also being applied withinorganizations to create intranets, which enable communication, collaboration,search functions, and information sharing between the members of an organi-zation’s team using a Web browser. For example, the Swiss Medical Group,based in Buenos Aires, Argentina, is a network of professionals, clinics, andlaboratories that provide healthcare services and postgraduate medical educa-tion programs. It employs an intranet to provide its 9,000 employees withcommunication tools, company and industry news from various sources,announcements regarding new assignments for employees, tutorials, an onlinephone directory, videos, and document management services.18

An extranet is a network based on Web technologies that allows selectedoutsiders, such as business partners and customers, to access authorizedresources of a company’s intranet. Many people use extranets every day withoutrealizing it—to order products from their suppliers, track shipped goods, oraccess customer assistance from other companies. Federal Express (FedEx) wasone of the first large companies to empower customers to serve themselves attheir convenience through the use of a corporate extranet. A fundamental FedExbelief is that the information it provides customers about its services is moreimportant than the services themselves. Customers can access the FedEx extranetto obtain a full range of shipping, billing, and tracking services. See Figure 1.5.

FIGURE 1.5ExtranetsWhen you sign in to the FedEx site( to check the statusof a package, you are using anextranet. So

World Wide Web (WWW): A net-work of links on the Internet to filescontaining text, graphics, video, andsound.

intranet: A network that enablescommunication, collaboration, searchfunctions, and information sharingbetween the members of an organiza-tion’s team using a Web browser.

extranet: A network based on Webtechnologies that allows selected out-siders, such as business partners andcustomers, to access authorizedresources of a company’s intranet.

16 PART 1 • Information Systems in Perspective

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The Internet of Things (IoT) is a network of physical objects or“things” embedded with sensors, processors, software, and network connec-tivity capability to enable them to exchange data with the manufacturer ofthe device, device operators, and other connected devices. In theory, theIoT would enable us to connect almost any device with an on/off switch to anetwork—automobiles, appliances, components of an aircraft engine, heartmonitor implants, packing labels, ingestible pills, wearable devices, andeven highway sensors that can warn of traffic and hazardous road condi-tions. Each thing is uniquely identifiable and capable of interoperating withother “things” within the existing IoT infrastructure, often by connecting toa central hub. The IoT also includes cloud services, which enable the collec-tion and analysis of data so people can process the data and take appropri-ate action via mobile apps.

Until recently, the IoT has been most closely associated with machine-to-machine communications, such as that employed in the manufacturing,gas, oil, and power industries. For example, in oil and gas drilling operations,remote sensors can measure important parameters such as pressure, flowrates, temperatures, and fuel levels in on-site equipment. These variables aretransmitted to a computer that automatically adjusts the operation of theequipment to optimize hydrocarbon production, improve operational safety,and protect the environment.

The Internet of Everything (IoE) encompasses not only machine-to-machine but also people-to-people and people-to-machine connections. Itis estimated that the total number of devices supported by the IoE couldreach 50 billion by the end of 202019 See Figure 1.6. This rapid growth isbeing fueled by the increasing availability of network access, the creation ofmore inexpensive smart devices with sensors and network capabilities builtinto them, the rapid growth in smartphone penetration, and the creativity andinnovation of people who are able to see and capitalize on the almost unlim-ited opportunities.20

General Electric (GE) is making a major strategic investment in the Inter-net of Things by offering its Predix Cloud service for industrial data and ana-lytics. Predix will enable GE customers to connect sensors placed onindustrial machinery such as jet engines, wind turbines, and locomotives toremote computing centers “in the cloud,” where the data from the sensorscan be processed and analyzed to determine settings for optimal operatingefficiencies and to schedule preventative maintenance to avoid unexpectedfailures.21

FIGURE 1.6Growth of the Internet ofEverything (IoE)The Internet of Everything will con-nect tens of billions of devices.

1995 2000 2013 2020


“Fixed”computing(you go tothe device)

Mobility/BYOD(the device

goes with you)

Internet of things(age of devices)

Internet of everything(people, process,

data, things)





er o

f co



d d



Internet of Things (IoT): A net-work of physical objects or “things”embedded with sensors, processors,software, and network connectivitycapability to enable them to exchangedata with the manufacturer of thedevice, device operators, and otherconnected devices.

Internet of Everything: A networkthat encompasses not only machine-to-machine but also people-to-peopleand people-to-machine connections.

CHAPTER 1 • An Introduction to Information Systems 17

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CriticalThinking Exercise

NARCOMS Database to Aid MS VictimsMultiple sclerosis (MS) causes a disruption in the transmission of nerve signalsbetween the brain, spinal cord, and the rest of the body. Disrupted nerve signalscause the symptoms of MS, which can vary from one person to another, but ofteninclude difficulty walking, dizziness, fatigue, involuntary muscle spasms, pain,stiffness, tremors, vision problems, and weakness.

The North American Registry for Care and Research in Multiple Sclerosis(NARCOMS) is a database created to capture the real-life experiences of peopleliving with MS. The database contains information about each patient’s symptomsand their severity over time, medications taken, and courses of treatment. Physi-cians, scientists, and pharmaceutical companies can use this data to better under-stand MS by tracking patients’ disease course, comparing results of alternativecourses of treatment, measuring the effectiveness of medications, and identifyinguseful indicators of the severity of the disease.22

Anyone with a diagnosis of MS can participate in NARCOMS and contribute toits research studies. Participants are asked to fill out an initial enrollment ques-tionnaire and then complete surveys twice a year. Although roughly 400,000 peo-ple in the United States have been diagnosed with MS, fewer than 40,000 haveelected to participate. More participants are needed in order for the database tobe fully representative of people living with MS.23

Review Questions1. Identify the fundamental hardware components that are likely included in the

NARCOMS system.2. Assume that a record for each participant in the NARCOMS database contains

between 200 and 500 bytes of data. What is the maximum size of the databasein gigabytes for the total 100,000 target number of participants? Would NAR-COMS qualify as a big data project?

Critical Thinking QuestionsYou are a member of a highly successful advertising agency whose CEO suffersfrom MS. She has asked you to develop a proposal for the National Multiple Scle-rosis Society to increase the number of participants in NARCRMS to 100,000 peo-ple within 12 months. There will be no charge to the society for this work, butthe CEO has set a budget of $2 million. She has asked your full-time effort for thenext year to lead this effort to success.1. Identify three strong reasons why some MS victims might elect to participate

in NARCOMS while most do not.2. Outline a course of action that you think would successfully increase the num-

ber of NARCOMS participants by 60,000 over the next 12 months.

Part 3: Business Information Systems

Information systems are used in all functional areas of business organizations,as summarized here:

● Accounting and finance. Information systems are used to forecast reven-ues and expenses, determine the best sources and uses of funds, managecash and other financial resources, analyze investments, and performaudits to make sure that the organization is financially sound and that allfinancial reports and documents are accurate.

● Customer service. Information systems are used to capture data aboutcustomers and their interactions with the company to better understandtheir needs and issues and enable superior customer service.

18 PART 1 • Information Systems in Perspective

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● Human resources. Information systems help human resource staff screenjob applicants, administer performance tests to employees, monitoremployee productivity, and generate required government reports.

● Manufacturing. Information systems are used to process customerorders, develop production schedules, control inventory levels, and moni-tor product quality.

● Research and development. Information systems help R&D staff designproducts, gather input from customers that leads to new ideas andimprovements, and enable the sharing of information with a worldwidecommunity of researchers.

● Sales and marketing. Information systems help sales and marketing per-sonnel develop new goods and services (product analysis), determine thebest advertising and sales approaches (promotion analysis), and set opti-mal product prices to get the highest total revenues (price analysis).

Information systems are also used in nearly every industry, as the followingexamples show:

● Agriculture. Farmers attach a yield monitor and a global positioning unitto their combines to determine how much grain should be harvested ineach field. This data is entered in a system that produces a color-codedmap that predicts the expected yield. From this, farmers can determinewhere they should add soil additives or fertilizer, for example, to increasethe yield.

● Finance. Banks use information systems to help make sound decisionsregarding loans, invest wisely, and provide online services, such as billpayment and account transfers for account holders.

● Health care. Healthcare organizations use information systems to diagnoseillnesses, plan medical treatment, track patient records, and bill patientsSee Figure 1.7. Health insurance companies and health maintenance orga-nizations (HMOs) use Web technology to access patients’ insurance eligibil-ity information, pay medical claims, and analyze data to manage costs.

● Mining. Companies use global positioning systems to identify and evalu-ate promising areas for mineral exploration, model mine construction,and display geochemical and hydrological data. Mining companies also

FIGURE 1.7Information systems in healthcareHealthcare organizations use infor-mation systems to diagnose ill-nesses, plan medical treatment,track patient records, and billpatients. iSt



CHAPTER 1 • An Introduction to Information Systems 19

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use information systems to gather the necessary data when applying formining permits, to assess the environmental impacts of a proposed mine,and to design mine closure and reclamation plans.

● Professional services. Accounting, tax preparation, and investment firmsuse information systems to improve the speed and quality of the servicesthey provide to customers.

● Retail. Companies use information systems to help market products andservices, manage inventory levels, control the supply chain, and forecastdemand, as well as take orders directly from customers over the Web.

This part will discuss “Electronic and Mobile Commerce,” “EnterpriseSystems,” “Business Intelligence and Analytics,” and “Knowledge Managementand Specialized Information Systems.”

Electronic and Mobile CommerceE-commerce involves the exchange of money for goods and services over elec-tronic networks, and it encompasses many of an organization’s outward-facingprocesses—such as sales, marketing, order taking, delivery, procurement ofgoods and services, and customer service—that touch customers, suppliers,and other business partners (Figure 1.8).

E-commerce enables organizations and individuals to build new revenuestreams, to create and enhance relationships with customers and businesspartners, and to improve operating efficiencies (see Table 1.6). E-commerce iscritically important to many businesses.

Greyston Bakery is a $12 million company with 130 employees thatmakes brownies and cookies for wholesale and retail distribution. Sales to itslargest client Ben & Jerry’s generates more than half its revenues. The busi-ness was started in the mid-1980s as a means to provide employment for the

FIGURE 1.8The scope of e-commerceE-commerce covers a wide range ofbusiness activities.





Order takingDelivery




e-commerce: Involves the exchangeof money for goods and services overelectronic networks and encompassesmany of an organization’s outward-facing processes—such as sales, mar-keting, order taking, delivery, procure-ment of goods and services, andcustomer service—that touch custo-mers, suppliers, and other businesspartners.

20 PART 1 • Information Systems in Perspective

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poor and homeless in Yonkers, New York. To meet this goal, Greystonfollows an open-hiring policy, taking people directly off the street withoutbackground or reference checks. The highly successful bakery has expandedits operation to include sales from its Web site, further boosting its revenuesand enabling it to hire more workers.24

Mobile commerce (m-commerce) is the buying and selling of goodsand/or services using a mobile device, such as a tablet, smartphone, orother portable device. Mobile commerce can be used to support all forms ofe-commerce—business-to-business (B2B), business-to-consumer (B2C),consumer-to-consumer (C2C), and government-to-citizen (G2C).

Electronic business (e-business) goes beyond e-commerce by usinginformation systems and networks to perform business-related tasks and func-tions, such as:

● Gathering product demand forecasts directly from the distributors of yourproduct in order to aggregate them and develop a master productionschedule (rather than internally generating a forecast based on historicaldata, with no input from your distributors)

● Sharing product data (e.g., design specifications and bills of material)electronically with suppliers and contract manufacturers as your productsevolve through research and development, product design, prototyping,process design, and manufacturing

Enterprise SystemsComputers have been used to perform common business applications sincethe 1950s. These early systems were designed to reduce costs by automatingroutine, labor-intensive business transactions. A transaction is any business-related exchange such as a payment to an employee, a sale to a customer, ora payment to a supplier. A transaction processing system (TPS) is an orga-nized collection of people, procedures, software, databases, and devices usedto process and record business transactions.

One of the first business systems to be computerized was the payroll sys-tem. The primary inputs for a payroll TPS are the number of employee hoursworked during the week and the pay rate. The primary output consists ofpaychecks. Early payroll systems produced employee paychecks and relatedreports required by state and federal agencies, such as the Internal RevenueService (IRS). The cost of these early systems was more than offset by thereduction in the number of people required to complete payroll processing.Other high-volume, repetitive processes, such as order processing, customerbilling, and inventory control, were soon computerized as well.

TABLE 1.6 Benefits of e-commerceBenefit How Achieved

Build new revenue streams ● Reach a broader geographic dispersion ofconsumers

Create and enhance rela-tionships with customersand business partners

● Increase customer engagement● Improve loyalty of customers who initially

buy offline● Increase opportunity to build loyalty through

multiple channels

Improve operatingefficiencies

● Lower customer acquisition cost● Lower operating costs per sale● Reduce the expense of supporting and ser-

vicing existing customers

mobile commerce(m-commerce): The buying andselling of goods and/or services using amobile device, such as a tablet, smart-phone, or other portable device.

electronic business(e-business): The use of informationsystems and networks to performbusiness-related tasks and functionsbeyond those performed fore-commerce.

transaction: Any business-relatedexchange such as a payment to anemployee, a sale to a customer, or apayment to a supplier.

transaction processing system(TPS): An organized collection ofpeople, procedures, software, data-bases, and devices used to processand record business transactions.

CHAPTER 1 • An Introduction to Information Systems 21

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A management information system (MIS) is an organized collection ofpeople, procedures, software, databases, and devices that provides routineinformation to managers and decision makers. MISs were first developed inthe 1960s and were typically used to produce managerial reports. In manycases, these early reports were produced periodically—daily, weekly,monthly, or yearly. Because of their value to managers, MISs proliferatedthroughout the management ranks. Manufacturing, marketing, production,finance, and other functional areas of an organization were often supportedby their own TPS and MIS. An MIS typically provides standard reports gener-ated using data from a TPS. See Figure 1.9.

The TPS receives input from various sources, which it then edits and pro-cesses to create various outputs and to update a database of valid transac-tions. This database can be accessed by an MIS to create various reports,including periodic reports, exception reports, summary reports, drill-downreports, and on-demand reports.

Information systems that process business transactions (e.g., sales, ship-ments, payments) have evolved over the years and offer important solutionsfor organizations of all sizes. Traditional transaction processing systems (TPSs)and management information systems (MIS) are still being used today, butincreasingly, companies are turning to enterprise resource planning systems.

An isolated information system that is not easily capable of exchanginginformation with other information systems is called an information silo.The “silo mentality” is a way of thinking that occurs when groups of peopledo not share information, goals, tools, priorities, and processes with otherdepartments. Such thinking degrades operations, reduces employee produc-tivity, and can lead to the overall failure of a company or its products and ser-vices. Unfortunately, this sort of silo mentality was the basis for the design ofmany TPS and MIS systems.

In recent years, more organizations have begun implementing enterpriseresource planning (ERP) systems that support their routine businessprocesses, maintain records about those processes, and provide extensivereporting and data analysis capabilities. These systems employ a databaseof key operational and planning data that can be shared by all employeesacross all organizational units and, when appropriate, with customers andsuppliers—eliminating the problems of missing and inconsistent informationcaused by multiple transaction processing systems that support only one busi-ness function or one department in an organization. ERP systems haveexpanded in scope so that they now provide support for business analyticsand e-business. Although ERPs were initially thought to be cost effective onlyfor very large companies, these systems have since been implemented bymany small and midsized companies.

FIGURE 1.9TPS and MISThe TPS and MIS work together toprocess business transaction andcreate standard managementreports.





Reports, checkspurchase orders,etc.

management informationsystem: An organized collection ofpeople, procedures, software, data-bases, and devices that provides rou-tine information to managers anddecision makers.

information silo: An isolated infor-mation system not easily capable ofexchanging information with otherinformation systems.

enterprise resource planning(ERP) system: A system that sup-ports an organization’s routine busi-ness processes, maintains recordsabout those processes, and providesextensive reporting and data analysiscapabilities.

22 PART 1 • Information Systems in Perspective

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Every industry has its own unique business practices. In order to addressthese differences, ERP software vendors offer specially tailored software mod-ules designed to meet the needs of specific industries, such as consumer-packaged-goods manufacturing, higher education, utilities, banking, oil andgas, retail, and the public sector. Most ERP software packages are designedso that an organization does not have to implement the entire package atonce. Companies can pick and choose which software modules to installbased on their business needs. Many organizations choose to implementsome modules but delay implementing others until the necessary resourcesare available. Table 1.7 and Figure 1.10 illustrate and explain the primarycomponents of an ERP system, and Figure 1.11 offers a look at the user inter-face for SAP ERP, a popular ERP software.

The primary reasons for implementing an enterprise system include eas-ing adoption of improved work processes (best practices), increasing accessto timely data for decision making, and eliminating obsolete transaction pro-cessing systems and associated infrastructure. When implemented effectively,ERP systems can deliver the following benefits:

● Provide a global view of operational and planning data, enabling compa-nies to identify issues and opportunities and to address them proactively

● Lower the cost of doing business through the elimination of redundantprocesses and systems

● Ensure compliance with various financial and manufacturing standards● Automate core business operations—such as lead-to-cash, order-to-

fulfillment, and procure-to-pay processes—using industry best practices● Improve customer service by providing one source for billing and rela-

tionship tracking

TABLE 1.7 Primary components of an ERP system for amanufacturing organization

Module Business Functions Addressed

Supply chainmanagement

Manages all activities involved in sourcing and procuringraw materials, converting raw materials to finished product,warehousing, and delivering finished product to customers

Customer rela-tionshipmanagement

Automates and integrates the sales, marketing, and cus-tomer service functions to capture and store customer andprospect contact information, account data, and salesopportunities in one central location

Product lifecyclemanagement

Manages product information throughout the entire lifecycle of a product from ideation, design and manufacture,through service and remaining product disposal—acrossall departments, contractors, and suppliers

Maintenance,repair, andoperations

Automates and supports activities involved with the plan-ning and scheduling of maintenance and repairs for any sortof mechanical, plumbing, or electrical device, along with thetracking of inventory and ordering of necessary parts andsupplies

Accounting Tracks the flow of data related to all the cash flows thataffect an organization; manages functions related to settingup and maintaining the general ledger, accounts payable,accounts receivable, and payroll

Human resourcemanagement

Supports activities related to previous, current, and poten-tial employees of the organization; provides tools for work-force analysis and planning, hiring, training, job and taskassignment, performance evaluation, salary administration,managing employee benefits, retirement, and outplacement

CHAPTER 1 • An Introduction to Information Systems 23

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● Reduce time to market by sharing evolving product data across all con-tractors and suppliers involved in the concept design, detail design, andproduction of new products

FIGURE 1.10ERP componentsAn ERP system consists of manycomponents that provide sharedaccess to a database of businessinformation.

Supply chainmanagement





Maintenance, repair,and overhaul



Product lifecyclemanagement

FIGURE 1.11Enterprise resource planning(ERP) softwareSAP AG, a German software com-pany, is one of the leading suppliersof ERP software. The companyemploys more than 50,000 people inmore than 130 countries. So

24 PART 1 • Information Systems in Perspective

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Many ERP vendors are making their software products and services avail-able in the cloud. This approach can provide additional benefits, including:

● Safe access to data in the cloud from virtually anywhere, on any device● Reduced infrastructure, hardware, and IS management costs● Increased flexibility to scale infrastructure up or down as business needs

dictate● Opportunities to redirect IS resources away from managing infrastructure

to working on strategic projects● The ability to get up and running in days instead of months

Business Intelligence and AnalyticsThings, individuals, and organizations generate massive amounts of data as aby-product of their activities. In addition, many individuals and organizationsseek out third-party data providers, such as market research firms, govern-ment agencies, and social network operators, in an attempt to satisfy theirunquenchable thirst for more and more data. To be of any value, all this datamust be stored, analyzed, and reported.

Just as different music and movie stars have been popular over the years,different terms have been used to describe the technology and processesused to support management reporting and decision making. Over time, deci-sion support systems, executive information systems, online analytical proces-sing, business intelligence, and business analytics have gained in capabilitiesand expanded in scope to add new functionality but all have had the goal ofderiving the most value out of the data available.

Business intelligence (BI) includes a wide range of applications, prac-tices, and technologies for the extraction, transformation, integration, visuali-zation, analysis, interpretation, and presentation of data to support improveddecision making.

Business analytics can be simply defined as the extensive use of dataand quantitative analysis to support fact-based decision making within organi-zations. It can be used to gain a better understanding of current business per-formance, reveal new business patterns and relationships, explain why certainresults occurred, optimize current operations, and forecast future businessresults. Business analytics includes software components for accessing, trans-forming, storing, analyzing, modeling, and tracking information, as well ascomponents for communicating the results of all that analysis.

A number of components must be in place for an organization to get realvalue from its business analytics efforts. Most importantly, an organizationneeds creative data scientists—people who understand the business and thebusiness analytics technology, while also recognizing the limitations of theirdata, tools, and techniques. A data scientist puts all of this together to deliverreal improvements in decision making within an organization. To ensure thesuccess of a business analytics program, the management team within anorganization must have a strong commitment to data-driven decision making.Organizations that can put the necessary components in place can act quicklyto make superior decisions in uncertain and changing environments to gain astrong competitive advantage.

Knowledge Management and Specialized Information SystemsA knowledge management system (KMS) is an organized collection of peo-ple, procedures, software, databases, and devices that stores and retrievesknowledge, improves collaboration, locates knowledge sources, captures anduses knowledge, or in some other way enhances the knowledge managementprocess. Consulting firms often use a KMS to capture and provide the collec-tive knowledge of its consultants to one another. This makes each consultant

business intelligence (BI): Awide range of applications, practices,and technologies for the extraction,transformation, integration, visualiza-tion, analysis, interpretation, and pre-sentation of data to support improveddecision making.

business analytics: The extensiveuse of data and quantitative analysis tosupport fact-based decision makingwithin organizations.

data scientist: A person whounderstands the business and thebusiness analytics technology, whilealso recognizing the limitations of theirdata, tools, and techniques; a data sci-entist puts all of this together to deliverreal improvements in decision makingwith an organization.

knowledge management sys-tem (KMS): An organized collectionof people, procedures, software, data-bases, and devices that stores andretrieves knowledge, improves collab-oration, locates knowledge sources,captures and uses knowledge, or insome other way enhances the knowl-edge management process.

CHAPTER 1 • An Introduction to Information Systems 25

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CriticalThinking Exercise

much more valuable and avoids “re-inventing the wheel” to solve similar pro-blems for different clients.

The workforce at NASA is aging, and it is essential for the organization’sfuture success that critical knowledge not be lost as workers retire. Rather,their specialized knowledge must be captured and retained for future use.NASA employs knowledge management to document and integrate lessonslearned from decades of missions to effectively manage the risk involved infuture space exploration and human space flight.25

Specialized information systems include a wide range of artificial intelli-gence systems (robotics, vision systems, natural language processing andvoice recognition systems, learning systems, and expert systems) that can sim-ulate human intelligence processes. Multimedia systems, virtual reality sys-tems, assistive technology systems, and systems based on game theory areadditional types of specialized information systems.

Business Analytics for Gaming FirmPenn National Gaming, through its subsidiaries, owns and operates more than 25horseracing and casino gaming facilities throughout the United States and inCanada. It is the operator of the popular Hollywood Casinos around the countryplus the M Resort Spa Casino and Tropicana Las Vegas. In aggregate, its opera-tions include some 33,000 gaming machines, 800 table games, 4,500 hotel rooms,and 10 million square feet of property.26 Millions of patrons visit Penn NationalGaming facilities each year.

The firm is considering developing a large database to capture the data gener-ated at each property. This will be augmented with data about each patron—theirdemographics, purchases, gambling preferences and habits, and the services theyrequest as a guest. The data will be used by the firm’s management to makequick, well-informed decisions to maximize Penn National Gaming’s incomewhile packing more entertainment value into each patron’s visit. The data willalso be used to develop targeted direct mail campaigns, customize offers for spe-cific customer segments, and adapt programs for individual casinos.

Review Questions1. Collecting and analyzing all this data will draw Penn National Gaming in to

the realm of big data and business analytics. How would you define the termbusiness analytics?

2. Penn National Gaming will also need to recruit new kinds of human resourcesincluding data scientists. What do data scientists do?

Critical Thinking Questions1. Identify three data sources that might be tapped to obtain the desired data

about its patrons.2. What sort of data privacy issues might be associated with the establishment of

its patron database?

Part 4: Planning, Acquiring, and Building Systems

A project is a temporary endeavor undertaken to create a unique product, ser-vice, or result. A project attempts to achieve specific business objectives and issubject to certain constraints, such as total cost and completion date. Projectsare the way that much of an organization’s work gets done. For example, a con-sumer goods company executes a project to launch a new product, an opera-tions manager leads a project to outsource part of a firm’s operations to a

project: A temporary endeavorundertaken to create a unique product,service, or result.

26 PART 1 • Information Systems in Perspective

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contract manufacturer, a hospital executes a project to load an app onto physi-cians’ smartphones that enables them to access patient data anywhere. At anypoint in time, an organization may have dozens of ongoing projects, includingmultiple information system-related projects. However, since every organizationhas a limit to its available resources, it is essential that projects are directed atsupporting key business objectives and goals, as outlined in the firm’s strategicplan. This part will cover the topics of “Strategic Planning and Project Manage-ment” and “System Acquisition and Development.”

Strategic Planning and Project ManagementEver since the dawn of the computer age, various surveys of business and ITexecutives have stressed the need to use strategic planning to improve align-ment between the needs of the business and the activities of the informationsystems organization. In this context, alignment means that the IS organiza-tion and its resources are focused on efforts that support the key objectivesdefined in the strategic plan of the business. This implies that IS and businessmanagers have a shared vision of where the organization is headed and agreeon its key strategies. This shared vision will guide the IS organization in hir-ing the right people with the correct skills and competencies, choosing theright technologies and vendors to explore and develop, installing the rightsystems, and focusing on those projects that are needed to move the organiza-tion closer to its vision and meeting its mission.

In an organization where the IS and business managers have a sharedvision, the impact of the IS staff on the rest of the organization will beextremely positive, and the IS group will be viewed as a well-respected busi-ness partner. An IT organization not aligned with the key objectives of thebusiness will find it difficult to even gain management support for its pro-posed efforts. Much of its work will fail to hit the mark and it will not bewell received by the rest of the organization.

The Standish Group has been tracking the success rate of projects forover 20 years. Although the success rate has improved over time due toimproved methods, training, and tools, 94 percent of very large (multimilliondollar efforts) software projects still fail or are challenged (i.e., are late, overbudget, or lack required features) as shown in Figure 1.12.27

No matter what the industry and no matter whether the organization isa for-profit company or a nonprofit organization—large or small, multina-tional or local—good project management is a positive force that enablesan organization to get results from its efforts. At any point in time, an

FIGURE 1.12Resolution of very largesoftware projects 2003–2012Over 90 percent of large softwareprojects are challenged or fail.






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organization may have dozens or even hundreds of active projects aimedat accomplishing a wide range of results. Over the next few years, itis expected that many organizations will focus on projects that apply ana-lytics to large amounts of business data, take advantage of cloud comput-ing, and create more mobile applications for their customers andemployees.

System Acquisition and DevelopmentSystem acquisition is the process used to obtain the information systemresources needed to provide the services necessary to meet a specific set ofneeds. Those needs may be very broad and encompass many users, such asin the acquisition of a new enterprise resource planning system. Or they maybe very narrow in scope, affecting just a single user, such as in the acquisitionof personal computer software to enable an individual to prepare a federal taxreturn. There are two fundamental strategies for system acquisition: buy off-the-shelf software or build a custom application.

Buying existing software developed by a software manufacturer enablesan organization to test drive and evaluate it before making a major commit-ment to purchase it and install it. Once purchased, the existing software canbe installed with minimal disruption so that user needs can be quickly metand the organization can begin reaping the benefits from the information sys-tem. Buyers of the software do not actually own the software, nor can theyaccess it to make changes or improvements; they are simply licensed to usethe software on a computer. With no access to the underlying source code,user organizations must pay maintenance and support costs to the manufac-turer or to a third party authorized to fix bugs or add new functionality. Forsome organizations, these costs can become excessive. As a result, many orga-nizations are turning to open source software, which is software distributedfor free, with access permitted to the source code so that it can be studied,changed, and improved by software professionals at the various userorganizations—with no maintenance charges. Indeed, the amount and qualityof support for open source software is dependent on whether or not thereare people, resources, and interest among the user community to developupdates and fix bugs.

The activity of building information systems to meet users’ needs is calledsystem development. Systems development projects can range from small tovery large and are conducted in fields as diverse as nuclear science researchand video game development. If an organization elects to build a system, itcan use its own employees (perhaps augmented with contractors) to developthe system, or it can hire an outside company to manage and/or perform allof the system development work. The latter approach allows an organizationto focus on what it does best, by delegating software development to compa-nies that have world-class development capabilities. This can be importantsince the system development efforts for even relatively small projects canrequire months, with large projects requiring years of effort. Unfortunately, asalready pointed out, in spite of everyone’s best efforts, a significant number oflarge system development projects are likely to fail.

By choosing a software service provider, users can gain access to neededsoftware remotely, as a Web-based service via the cloud. Pricing is based ona monthly or per user fee and typically results in lower costs than a licensedapplication. Because the software is hosted remotely, users do not need topurchase and install additional hardware to provide increased capacity. Fur-thermore, the service provider handles necessary software maintenance andupgrades.

Table 1.8 summarizes the three basic alternatives for obtaining softwareto meet users’ needs.

system acquisition: The processused to obtain the information systemresources needed to provide the ser-vices necessary to meet a specific setof needs.

open source software: Softwarethat is distributed for free, with accesspermitted to the source code so that itcan be studied, changed, and improvedby software professionals at the varioususer organizations—with no mainte-nance charges.

system development: The activityof building information systems to meetusers’ needs.

28 PART 1 • Information Systems in Perspective

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CriticalThinking Exercise

Strategic Plan ReviewYou are a member of the finance organization of a midsized manufacturer, withtwo years of experience with the firm. Your manager serves as a liaison betweenthe finance group and the IS organization for budget review. The IS organizationhas just completed its annual strategic planning and budgeting process. Theirplans, which include a $25 million budget (a 6 percent increase over last year),were forwarded to your manager for review. Your manager shared the IS strategicplan and budget with you a week ago and scheduled a meeting today to get yourinput and perspective.

Review Questions1. What do you think are the hallmarks of a good strategic plan?2. Would you expect to see more funds allocated to system development or to

buying existing software and using software service providers? Why?

Critical Thinking Questions1. Your manager shocks you when she announces that she has recom-

mended you for promotion and that one of your new responsibilitieswould be to serve as the new finance liaison with the IS organization.She asks, “What do you feel needs to be done to help prepare you forthis new responsibility?”

2. Finally, she asks, “What steps would you take and what resources would youuse to review the current IS strategic plan and budget?”

Part 5: Information Systems in Business and Society

Information systems have been developed to meet the needs of all types oforganizations and people. The speed and widespread use of information sys-tems, however, opens users to a variety of threats from unethical people.Computer criminals and terrorists, for example, have used the Internet tosteal millions of dollars and promote terrorism and violence. Computer-related attacks can come from individuals, groups, companies, and even

TABLE 1.8 Alternatives for meeting users’ information system needsStrategy Pros Cons

Buy off-the-shelfsoftware

þ A software solution can be acquired anddeployed relatively quickly.þ An organization can “test drive” softwarebefore acquiring it.

� Unmodified, the software may not be a goodmatch to an organization’s needs.� Maintenance and support costs can becomeexcessive.

Build customapplication

þ Customized software is more likely to be agood match to an organization’s needs.þ A custom application provides the potentialto achieve competitive advantage.

� The cost to build a system can be quitehigh compared to the cost of purchasing ofoff-the-shelf software.� Customizing software can mean it will bemonths or even years before the softwaresolution is ready to deploy.

Choose a softwareservice provider

þ Users do not need to purchase and installadditional hardware or software.þ The service provider handles necessaryhardware and software maintenance andupgrades.

� Complex pricing arrangements and hiddencosts may reduce expected cost savings.� Performance issues may cause widevariations in performance over time.

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countries; however, some studies have shown that most of corporate securityattacks come from people inside the company.

This part will cover “Cybercrime and Information System Security” andthe “Ethical, Legal, and Social Issues of Information Systems.”

Cybercrime and Information System SecurityInformation systems provide a highly profitable venue for cybercriminals,who take advantage of the opportunity to reach millions of potential victims.Cybercriminals are motivated by the potential for monetary gain; they hackinto computer systems to steal, often by transferring money from one accountto another or by stealing and reselling credit card numbers, personal identi-ties, and financial account information. Financial losses related tocybercrime—including the cost of the hardware, software, and various coun-termeasures implemented to fight cybercrime—are estimated to be as high as$400 billion annually worldwide.28 Figure 1.13 shows some commonly occur-ring cybercrime incidents.

Cyberterrorism is an increasing concern for organizations and countriesaround the globe. Cyberterrorism is the intimidation of a government or acivilian population by using information technology to disable critical nationalinfrastructure (e.g., energy, transportation, financial, law enforcement, emer-gency response) to achieve political, religious, or ideological goals. Cyberter-rorists try on a daily basis to gain unauthorized access to a number ofimportant and sensitive sites, such as the computer systems of foreign intelli-gence agencies and government ministries as well as private companiesaround the world. In particular, companies in the oil and gas industry areseen as high-value targets. Some cyberterrorists are interested in taking con-trol over the flow of oil and natural gas in computer-controlled refineries andthe movement of oil through pipelines. This could result in devastatingconsequences—with oil and gas being cut off from freezing populations inthe dead of winter or skyrocketing prices at the gasoline pumps.

With organizations relying on information systems to accomplish theirmission and remain in operation, the security of information systems andtheir data is of utmost importance. Organizations must safeguard their sys-tems and confidential company data, including private customer andemployee information, against malicious acts of theft and disruption. How-ever, the need for computer security must be balanced against other business

FIGURE 1.13Commonly occurringcybercrime incidencesCybercrime is a serious issue fororganizations.


Loss of mobiledevice





t or







g t














cybercriminal: A computer hackerwho is motivated by the potential formonetary gain; cybercriminals hack intocomputer systems to steal, often bytransferring money from one account toanother or by stealing and resellingcredit card numbers, personal identi-ties, and financial account information.

cyberterrorism: The intimidation ofa government or a civilian population byusing information technology to disablecritical national infrastructure (e.g.,energy, transportation, financial, lawenforcement, emergency response) toachieve political, religious, or ideologi-cal goals.

30 PART 1 • Information Systems in Perspective

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needs. Business managers, IS professionals, and IS users all face a number ofcomplex trade-offs regarding IS security, such as the following:

● How much effort and money should be spent to safeguard against com-puter crime? (In other words, how safe is safe enough?)

● What should be done if recommended computer security safeguards makeconducting business more difficult for customers and employees, resultingin lost sales and increased costs?

● If a firm becomes a victim of a computer crime, should it pursue prosecu-tion of the criminals at all costs, maintain a low profile to avoid the nega-tive publicity, inform affected customers, or take some other action?

A strong security program begins by assessing threats to the organization’scomputers and network, identifying actions that address the most serious vul-nerabilities, and educating end users about the risks involved and the actionsthey must take to prevent a security incident. An organization’s IS securitygroup must lead the effort to prevent security breaches by implementing secu-rity policies and procedures, as well as effectively employing available hardwareand software tools. However, no security system is perfect, so systems and pro-cedures must be monitored to detect a possible intrusion. If an intrusion occurs,there must be a clear reaction plan that addresses notification, evidence protec-tion, activity log maintenance, containment, eradication, and recovery.

Ethical, Legal, and Social Issues of Information SystemsThe use of information systems raises a number of ethical, legal, and socialissues, including job losses caused by increasingly sophisticated, humanlikesystems, invasion of privacy through various data collection programs, free-dom of expression versus censorship, and the issues caused by unequalaccess to computer technology and the Internet.

Many organizations and professional associations have developed codesof ethics to help guide their members in making difficult decisions, includingthose connected to the use of information systems. Ethics is a set of beliefsabout right and wrong behavior. Ethical behavior conforms to generallyaccepted social norms—many of which are almost universally accepted. Inmany situations, the decision on what course of action to take is further com-plicated because it involves significant value conflicts among the various sta-keholders as to what is the fairest option to pursue. Such a decisionrepresents an ethical dilemma, and all parties involved can benefit when ethi-cal considerations are introduced into the decision-making process.

The use of information about people (employees, customers, businesspartners, etc.) requires balancing the needs of those who want to use theinformation against the rights and desires of the people whose informationmay be used. On the one hand, information about people is gathered, stored,analyzed, and reported because organizations can use it to make better deci-sions (see Figure 1.14). Some of these decisions can affect people’s livesprofoundly—whether or not to extend credit to a new customer, to hire onejob candidate versus another, or to offer a scholarship or not. In addition,increased competitiveness in the global marketplace has intensified the needto understand consumers’ purchasing habits and financial condition. Compa-nies use information they gather about people to target marketing efforts toconsumers who are most likely to buy their products and services. Organiza-tions also need basic information about existing customers in order to servethem better. It is hard to imagine an organization having a relationship withits customers without having data about them. Thus, many organizationsimplement customer relationship management (CRM) systems that collect andstore key data from every interaction they have with a customer.

On the other hand, many people object to the data collection policies of gov-ernment and other organizations because they believe such policies strip people

ethics: A set of beliefs about right andwrong behavior. Ethical behaviorconforms to generally accepted socialnorms—many of which are almostuniversally accepted.

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of the power to control their own personal information. In addition, many peo-ple are concerned not only about the potential abuse that control of such datamay bring but also about the potential for data breaches, resulting in disclosureof personal data. A combination of approaches—new laws, technical solutions,and privacy policies—is required to effectively balance the needs of all sides.

Internet censorship is the control or suppression of the publishing oraccessing of information on the Internet. Censorship can take many forms—such as limiting access to certain Web sites, allowing access to only some con-tent or modified content at certain Web sites, rejecting the use of certain keywords in search engine searches, tracking and monitoring the Internet activitiesof individuals, and harassing or even jailing individuals for their Internet use.For those fortunate enough to live in a nonauthoritarian country, it may be dif-ficult to even imagine that Internet censorship goes on. Yet many authoritarianregimes rely on a mix of sophisticated technology and old-fashioned intimida-tion to ensure that dissent and the flow of free information online is repressed.

The digital divide is a term used to describe the gulf between those whodo and those who don’t have access to modern information and communica-tions technology such as smartphones, personal computers, and the Internet.Roughly 40 percent of the world’s population or around 3 billion peoplehave an Internet connection, but the worldwide distribution of Internet usersvaries greatly from region to region.

Net neutrality is the principle that Internet service providers (ISPs) shouldbe required to treat all Internet traffic running over their wired and wirelessbroadband networks the same—without favoring content from some sourcesand/or blocking or slowing (also known as throttling) content from others. Thedebate over net neutrality raises questions about how best to keep the Internetopen and impartial, while still offering ISPs sufficient incentive to expand theirnetworks to serve more customers and to support new services.

The rapid growth of the Internet of Things is being fueled by the increas-ing availability of network access, the creation of more inexpensive smartdevices with sensors and network capabilities built into them, the rapid growth

FIGURE 1.14Much information is beinggathered about peoplePersonal privacy is difficult tosafeguard.














Internet censorship: Thecontrol or suppression of the publishingor accessing of information on theInternet.

digital divide: The gulf betweenthose who do and those who don’t haveaccess to modern information andcommunications technology such assmartphones, personal computers, andthe Internet.

net neutrality: The principle thatInternet service providers (ISPs) shouldbe required to treat all Internet trafficrunning over their wired and wirelessbroadband networks the same—without favoring content from somesources and/or blocking or slowing(also known as throttling) content fromothers.

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CriticalThinking Exercise

in smartphone penetration, and the creativity and innovation of people who areable to see and capitalize on the almost unlimited opportunities.29 Clearly thegrowth of the IoT will present major issues around Internet access.

Robo-Advice for MillennialsYour investment firm has been working hard to develop a robo-adviser servicethat uses computer algorithms to provide financial planning for its millennial cli-ents. There is widespread consensus across the investment community that millen-nials raised in an environment of video games and social networks are looking forjust this kind of investment robo-advice service.

You are a member of a field test unit for the robo-advice service. Your team of12 people has trained some 250 people (in the 25 to 35 target age range) in thebasics of investing and how to take best advantage of the robo-advice service. Thetrial results have been discouraging. Many of the trial clients ignored the robo-advicecompletely and simply turned into hyperactive traders, executing multiple trades perweek. Alarmingly, even those who followed the robo-advice did not fare well, losingan average of 5 percent on their investments even though the market (as measuredby the S&P 500) increased nearly 4 percent during the six-month trial period.

Review Questions1. What other fields besides investing might benefit from the use of a robo-

advice system?2. What sort of legal, ethical, and social issues are raised when creating a robo-

advice type of system? Do the builders of such a robo-advice system owe aspecial duty or responsibility to its users?

Critical Thinking QuestionsThe members of the field trial team are gathered to discuss their findings anddevelop conclusions in advance of a meeting next week with the firm’s senior man-agement team. Just 10 minutes into the meeting, it is clear that none of the fieldtrial team members feels confident that the new service is offering sound advice.However, some members of the trial team argue that the roll-out of the serviceshould commence as planned; they maintain that problems can be identified andfixed as more users come on board and the firm gains more experience workingwith investors and the robo-advice system. Their rationale is based at least in parton self-survival—to recommend against roll-out is probably a career-ending move,as the firm has already invested so much in the program, which it has alreadybegun promoting to customers. Others members of the team argue that the productis simply not ready for large-scale use. They argue that the current system shouldbe scrapped and the firm should forget about the idea of a robo-advice service.1. Are there other alternative strategies for the robo-advice service that make

sense? Which approach would you recommend and why?2. How might you present your approach to senior management in such a way

that it has a good chance of being accepted—and that the risk to your futureemployment is minimized?


Principle:The value of information is directly linked to how it helps decisionmakers achieve the organization’s goals.

Data consists of raw facts; information is a collection of data organized andprocessed so that it has additional value beyond the value of the individualfacts. The value of information created depends on the relationships defined

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among existing data. Turning data into information is a process performed toachieve a defined outcome. This process requires knowledge, which is the aware-ness and understanding of a set of information and the ways in which that infor-mation can be made useful to support a specific task or reach a decision.

Information has many different characteristics. It can be accessible, accu-rate, complete, economical to produce, flexible, relevant, reliable, secure, sim-ple to understand, timely, and verifiable. The importance of each of thesecharacteristics varies depending on the situation and the kind of decision youare trying to make. The value of information is directly linked to how it helpspeople achieve their organizations’ goals.

Principle:Information systems are composed of fundamental components that mustbe carefully assembled and integrated to work well together.

An information system (IS) is a set of interrelated components that collect,process, store, and disseminate data and information; an information systemprovides a feedback mechanism to monitor and control its operation to makesure it continues to meet its goals and objectives.

A computer-based information system (CBIS) is a single set of hardware,software, databases, networks, people, and procedures that are configured tocollect, manipulate, store, and process data into information.

An organization’s technology infrastructure includes all the hardware, soft-ware, databases, networks, people, and procedures that are configured to col-lect, manipulate, store, and process data into information.

Principle:Managers have an essential role to play in the successful implementationand use of information systems—that role changes depending on whichtype of IS system is being implemented.

When considering the role of business managers in working with IS, it isuseful to divide information systems into three types: personal IS, group IS, andenterprise IS.

For each type of IS, certain key organizational complements must be inplace to ensure successful implementation and use of the system. These com-plements include well-trained workers, better teamwork, redesigned processes,and new decision rights.

Principle:An organization’s infrastructure technology forms the foundation uponwhich its systems and applications are built.

Hardware consists of computer equipment used to perform input, proces-sing, storage, and output activities.

Smartphones have become the primary device used by people around theworld to communicate, go online, and access and share information.

Software consists of computer programs that govern the operation of aparticular computing device, be it desktop, laptop, tablet, smartphone, orsome other device.

The trend of consumer technology practices influencing the way businesssoftware is designed and delivered is called the consumerization of IT.

A database is an organized collection of facts and information, typicallyconsisting of two or more related files.

A data warehouse is a database that stores large amounts of historical datain a form that readily supports analysis and decision making. An extract-transform-load process is used to prepare the data for the data warehouse.

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Big data is a term used to describe collections of data that are so large andcomplex that traditional database management software, hardware, and analy-sis processes are incapable of dealing with them.

Networks connect computers and equipment in a room, building, campus, city,across the country, or around the world to enable electronic communications.

With public cloud computing, a service organization owns and managesthe hardware, software, networking, and storage devices, with cloud user orga-nizations (called tenants) accessing slices of shared resources via the Internet.

The Internet of Things (IoT) is a network of physical objects or thingsembedded with sensors, processors, software, and network connectivity capa-bility to enable them to exchange data with the manufacturer of the device,device operators, and other connected devices.

The Internet of Everything (IoE) encompasses not only machine-to-machine but also people-to-people and people-to machine connections. Itis estimated that the total number of devices connected to the Internet of Every-thing could exceed 50 billion by the end of 2020.

Principle:Organizations employ a variety of information systems to improve theway they conduct business and make fact-based decisions.

E-commerce involves the exchange of money for goods and services overelectronic networks, and it encompasses many of an organization’s outward-facing processes. Electronic business goes beyond e-commerce by using infor-mation systems and networks to perform business-related tasks and functions.

A transaction processing system (TPS) is an information system used toprocess and record business transactions.

A management information system (MIS) is an information system that pro-vides routine information to managers and decision makers.

Many organizations are replacing their transaction processing systems andmanagement information systems with enterprise resource planning (ERP) sys-tems that support their routine business processes, maintain records aboutthose processes, and provide extensive reporting and even data analysis capa-bilities. At the core of a modern enterprise resource planning system is thecapability to support e-business and business analytics.

Business analytics is the extensive use of data and quantitative analysis tosupport fact-based decision making within organizations.

Data scientists are people who understand the business and the businessanalytics technology, while also recognizing the limitations of their data, tools,and techniques. A data scientist puts all of this together to deliver real improve-ments in decision making. To ensure the success of a business analytics pro-gram, the management team within an organization must have a strongcommitment to data-driven decision making. Organizations that can put thenecessary components in place can act quickly to make superior decisions inuncertain and changing environments to gain a strong competitive advantage.

A knowledge management system is an information system that stores andretrieves knowledge, improves collaboration, locates knowledge sources, cap-tures and uses knowledge, or in some other way enhances the knowledge man-agement process.

Principle:Strategic planning and project management are keys to ensuring that theorganization is working effectively on the right projects.

Strategic planning is a means to improve alignment between the businessand the information systems organization so that the IS organization and itsresources are focused on efforts that support the key objectives that are

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important to the organization. This implies that IS and business managers havea shared vision of where the organization is headed and agree on its key strat-egies. This shared vision will guide the IS organization in hiring the right peo-ple with the correct skills and competencies, choosing the right technologiesand vendors to explore and develop, installing the right systems, and focusingon those projects that are needed to move the organization closer to its visionand meeting its mission.

System acquisition is the process used to obtain information system resourcesneeded to provide the services necessary to meet a specific set of needs.

The three basic alternatives for obtaining software to meet users’ needs are:buy off-the-shelf software, build a custom application, or choose a softwareservice provider.

Principle:Information systems must be applied thoughtfully and carefully so thatsociety, organizations, and individuals around the globe can reap theirenormous benefits.

Cybercriminals are motivated by the potential for monetary gain. The finan-cial losses from cybercrime—including the cost of the hardware, software, andvarious countermeasures implemented to fight cybercrime—are estimated to beas high as $400 billion annually worldwide. Cyberterrorism is also an increas-ing concern for organizations and countries around the globe.

A strong security program begins by assessing threats to the organization’scomputers and network, identifying actions that address the most serious vul-nerabilities, and educating end users about the risks involved and the actionsthey must take to prevent a security incident.

Information systems play a fundamental and ever-expanding role in soci-ety, business, and industry. But their use also raises a number of serious ethical,legal, and social issues, including job losses caused by increasingly sophisti-cated, humanlike systems; invasion of privacy through various data collectionprograms; freedom of expression versus censorship; and the issues caused byunequal access to computer technology and the Internet.

Many organizations and professional associations have developed codes ofethics to help guide their members in making difficult decisions.

Key Terms

big data

business analytics

business intelligence (BI)

computer-based information system (CBIS)

consumerization of IT




data scientist

data warehouse


digital divide


electronic business (e-business)

enterprise IS

enterprise resource planning (ERP) system


extract-transform-load (ETL)


group IS



information silo

information system (IS)


Internet censorship

Internet of Everything (IoE)

Internet of Things (IoT)



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knowledge management system (KMS)

management information system (MIS)

mobile commerce (m-commerce)

net neutrality


open source software

organizational complements

personal IS




public cloud computing


system acquisition

system development

technology infrastructure


transaction processing system (TPS)

World Wide Web (WWW)

Chapter 1: Self-Assessment Test

The value of information is directly linked to how ithelps decision makers achieve the organization’sgoals.

1. is a collection of raw facts orga-nized and processed so that it has additionalvalue beyond the value of the individual facts.a. Datab. Informationc. Knowledged. Expertise

2. Turning data into information is a ,or a set of logically related tasks performed toachieve a defined outcome.

3. Two quality characteristics that are critical fordata used in accounting for the management ofcompany assets, such as cash, inventory, andequipment are .a. flexibility and accuracyb. security and relevancyc. accuracy and completenessd. relevancy and economical

Information systems are composed of fundamentalcomponents that must be carefully assembled andintegrated to work well together.

4. Technology infrastructure includes all the hard-ware, software, , networks, people,and procedures that are configured to collect,manipulate, store, and process data intoinformation.

5. According to Jim Collins in his book Good toGreat, those who build great companies under-stand that the ultimate throttle on growth for anygreat company is not markets, or technology, orcompetition, or products; rather, it is one thingabove all others: .a. great customersb. great systemsc. great leadershipd. great people

Managers have an essential role to play in the suc-cessful implementation and use of informationsystems—the role changes depending on whichtype of IS system is being implemented.

6. When considering the role of business managersin working with IS, it is useful to divide informa-tion systems into these three types: .a. enterprise IS, group IS, and personal ISb. small and simple, medium and multifaceted,

and large and complexc. operational, tactical, and strategicd. management support, operational, and enter-

prise systems7. Which of the following is not a key organizational

complement that must be in place to ensure suc-cessful implementation and use of the system?a. well-trained workersb. better teamworkc. the latest technologyd. new decision rights

An organization’s technology infrastructure formsthe foundation upon which its systems and applica-tions are built.

8. are the primary device type usedby people around the world to communicate, goonline, and access and share information.a. Personal computersb. Laptopsc. Smartphonesd. Tablets

9. The trend of consumer technology practices influ-encing the way business software is designed anddelivered is called the .

10. is a computing environment inwhich a service provider organization owns andmanages the hardware, software, networking,and storage devices, with cloud user organiza-tions (called tenants) accessing slices of sharedresources via the Internet.

CHAPTER 1 • An Introduction to Information Systems 37

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Organizations employ a variety of information sys-tems to improve the way they conduct business andmake fact-based decisions.

11. involves the exchange of moneyfor goods and services over electronic networks,and it encompasses many of an organization’soutward-facing processes—such as sales, mar-keting, order taking, delivery, procurement ofgoods and services, and customer service—thattouch customers, suppliers, and other businesspartners.

12. A is an organized collection ofpeople, procedures, software, databases, anddevices that provides routine information tomanagers and decision makers.a. transaction processing system (TPS)b. management information system (MIS)c. enterprise resource planning (ERP) systemd. supply chain management system

13. Over time, decision support systems, executiveinformation systems, online analytical processing,business intelligence, and business analytics havegained in capabilities and expanded in scope toadd new functionality, but they have all had thegoal of .a. processing business transactions as rapidly

and accurately as possibleb. deriving the most value out of the data

availablec. providing routine information to managersd. enabling the sharing of information across

organizations units14. An organized collection of people, procedures,

software, databases, and devices thatstores and retrieves knowledge, improvescollaboration, locates knowledge sources,and captures and uses knowledge is calleda .

Strategic planning and project management arekeys to ensuring that the organization is workingeffectively on the right projects.

15. An IT organization not aligned with the keyobjectives of the business will .a. be recognized as a technology leader in its

industryb. find it difficult to even gain management

support for its proposed effortsc. be positioned to deliver a series of break-

through projectsd. be viewed as a partner with the business

16. The two fundamental strategies for systemacquisition are: .a. customize an existing package and acquire

open source softwareb. use a standard software package or customize

softwarec. build software in-house or contract for

softwared. buy off-the-shelf software or build a custom


Information systems must be applied thoughtfullyand carefully so that society, organizations, andindividuals around the globe can reap their enor-mous benefits.

17. Which of the following statements about com-puter security is not true?a. Cyberterrorism is an increasing concern for

organizations and countries around the globe.b. Information systems provide a new and

highly profitable venue for cybercriminals.c. The need for computer security must be bal-

anced against other business needs.d. Educating end users about the risks involved

and the actions they must take to prevent asecurity incident is a not key part of anysecurity program.

18. is a term used to describe the gulfbetween those who do and those who don’t haveaccess to modern information and communica-tions technology such as smartphones, personalcomputers, and the Internet.

Chapter 1: Self-Assessment Test Answers

1. b2. process3. c4. databases5. d6. a7. c8. c9. consumerization of IT

10. Cloud computing11. E-commerce12. b13. b14. knowledge management system15. b16. d17. d18. Digital divide

38 PART 1 • Information Systems in Perspective

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Review Questions

1. How is data different from information? How isinformation different from knowledge?

2. Identify and briefly define six characteristics thatdescribe the quality of data.

3. What is an information system? What is the role offeedback in a system?

4. Identify the six basic components of anycomputer-based information system.

5. What is meant by an organization’s technologyinfrastructure?

6. When considering the role of business managersin working with IS, it is useful to divide informa-tion systems into three types. Name and brieflydescribe those three types.

7. Identify and briefly describe the four key organi-zational complements that must be in place toensure successful implementation and use of aninformation system.

8. Define the term “software.” What are the twoprimary types of software? How are theydifferent?

9. What is meant by the phrase consumerization of IT?10. What is the extract-transform-load process?11. Define the term “big data.”

12. What is cloud computing?13. What is an extranet and how is one used?14. How is the Internet of Everything different from

the Internet of Things?15. How would you distinguish between e-commerce

and e-business?16. Briefly describe the differences among transac-

tion processing systems, management informa-tion systems, and enterprise resource planningsystems.

17. What is meant by the term “business analytics”?What other terms have been used for businessanalytics systems?

18. What is knowledge management? How might itbe used?

19. What are the components of a shared vision onwhich the business and IS organization mustagree?

20. Identify an advantage and a potential disadvan-tage of using open source software.

21. What is the difference between a cybercriminaland a cyberterrorist?

22. Identify three specific social issues associatedwith the use of information systems.

Discussion Questions

1. What do you hope to learn from this course thatwill make it worthwhile for you? Do you think abasic understanding of information systems isimportant to you? Why or why not?

2. Describe how you might use information systemsin a career area of interest to you.

3. How might completing this course help you insome of the courses you will take during youracademic career?

4. It has been estimated that the amount of digi-tal data is doubling every two years. Discusssome technological and social implications andissues associated with this rapid growth ofdata.

5. What are some of the social implications of theuse of smartphones by an increasing percentageof the world’s population?

6. Which of your school’s information systems is theworst or most difficult for you to deal with?Describe an ideal system that would replace thisone. What role might students play in definingand building this replacement system?

7. Discuss why it is critical for information systemsto be linked to the business objectives of anorganization.

8. For an industry of your choice, describe how a CBIScould be used to reduce costs or increase profits.

9. An organization has struggled for over threeyears in an attempt to implement and use anERP system. It has finally decided to scrapthis system, at great cost, and convert to anew ERP system from a different vendor.Identify and discuss actions managementshould take to ensure the success of the newsystem.

10. Identify specific benefits of the cloud computingmodel. Can you identify any potential risks asso-ciated with using this approach?

11. Describe three exciting new applications that arebecoming feasible as a result of the growth of theInternet of Everything.

12. Do research to identify a company that has gonebeyond e-commerce to use information systemsand networks to achieve an e-business environ-ment to perform business-related tasks and func-tions. Briefly describe the scope of the company’se-business functions.

13. Identify a specific company that could benefitfrom the use of big data and business analytics.What sort of data is required? How might thisdata be used in decision making?

14. What are the cornerstones to an organization’ssecurity program?

CHAPTER 1 • An Introduction to Information Systems 39

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Problem-Solving Exercises

1. Prepare a data disk and a backup disk (using USBflash drives) for the problem-solving exercisesand other computer-based assignments you willcomplete in this class. Create one folder for eachchapter in the textbook (you will need 14 folderstotal). As you complete the problem-solvingexercises and other work for each computer, saveyour assignments in the appropriate chapterfolder. Designate one disk as your working copyand the other as your backup.

2. Create a table that lists 10 or more possible careerareas—including estimated annual salaries andbrief job descriptions. Rate how much you think

you would like each potential career area on ascale from 1 (“don’t like”) to 10 (“like the most”).Sort the careers from high to low rating and printthe results. Sort the table according to annualsalaries, from high to low, and then print theresulting table. Sort the table from the most likedto least liked, and then print the results.

3. Use presentation software to create a set of threeslides that identifies the top three things youhope to learn from this course and why each isimportant to you. If requested, share your find-ings with the instructor and/or class.

Team Activities

1. Before you can do a team activity, you need ateam. As a class member, you might create yourown team, or your instructor might assign mem-bers to groups. After your group has beenformed, meet and introduce yourselves to eachother. Find out the first name and contact infor-mation for each member. Find out one interestingfact about each member of your team as well.Brainstorm a name for your team. Put the infor-mation on each team member into a database andprint enough copies for each team member andyour instructor.

2. With the other members of your group, use word-processing or group collaboration software towrite a summary of the members of your team,

the courses each team member has taken, asummary of employment, and the expectedgraduation date of each team member. Send thereport to your instructor via email.

3. With your team, use an Internet search engineor skim through several business periodicals(Bloomberg Businessweek, Computerworld,Forbes, InformationWeek, PC World, WallStreet Journal, Wired, etc.) to find recent arti-cles that describe potential social or ethicalissues related to the use of the Internet ofThings. Use word-processing software to writea one-page report summarizing your findings.Identify one or two issues that you think aremost significant.

Web Exercises

1. Throughout this book, you will see how theInternet provides a vast amount of informationto individuals and organizations, and you willexamine the important role the Web plays. Mostlarge universities and organizations have anaddress on the Internet (a Web site or homepage). The address of the Web site for thispublisher is You can gainaccess to the Internet through a browser, suchas Internet Explorer or Firefox. Using an Inter-net browser, go to the Web site for this pub-lisher. What did you find? Try to obtaininformation about this book. You might beasked to develop a report or send an email

message to your instructor about what youfound.

2. Do research on the Web to find information onInternet censorship. Identify those countries withthe strongest degree of Internet censorship, andstate specific reasons why those countries are sopoorly rated.

3. Go to the Web site for the U.S. Bureau of LaborStatistics, and find information about the occu-pations with the greatest projected job growth interms of the number of people who will beneeded. Use a graphics program to illustrate thegrowth of the 10 fastest growing occupations.Write a brief summary of your findings.

40 PART 1 • Information Systems in Perspective

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Career Exercises

1. In the Career Exercises section found at the endof every chapter, you will explore how materialin the chapter can help you excel in your collegemajor or chosen career. Identify 10 job charac-teristics that are important to you in selectingyour career (e.g., involves travel to foreign coun-tries, requires working in a project team). Place

these characteristics in rank order based on theirrelative importance to you.

2. Research two or three possible careers that inter-est you. Create a report describing the jobopportunities, job responsibilities, job character-istics, and possible starting salaries for eachcareer area.

Case Studies

Case One

Connecting Patient Monitoring Devices to EHRsAn electronic health record (EHR) is a computer-readablerecord of health-related information on an individual. Thecompiled data in an EHR can include information aboutpatient demographics, medical history, family history,immunization records, laboratory data, ongoing healthproblems, progress notes, medications, vital signs, andradiology reports. Ideally, EHRs incorporate data from allhealthcare facilities a patient uses, making the data easilyaccessible to healthcare professionals.

EHRs hold out the promise of improving health careand reducing costs, but for now, many hospitals arestruggling to automate the capture of raw data from thevarious patient monitoring devices—such as vital signmonitors, ventilators, and electrocardiogram machines—andpass the data directly into each patient’s EHR. This task ismade more difficult because different devices and/orvendors often use different standards for communicatingover the network. As a result, specialized software isrequired to receive the data and translate it into a formsuitable for updating the EHR. Until communicationsstandards are implemented across the healthcare industry,each new piece of monitoring equipment that outputs anonstandard signal requires a new interface with the EHR.So if a promising new vital sign monitoring device isdeveloped, some hospitals looking to use the device may berequired to create a new software middleware layer toconnect the new device to the EHR. Connecting monitoringdevices and EHRs is expected to become a major businessgrowth area over the next decade.

Many software vendors and device manufacturers aremoving quickly to capitalize on the opportunities involvedwith automating the many clinical-support activities thatinvolve monitoring devices. The Center for MedicalInteroperability has enlisted many of the nation’s largesthealthcare systems as part of its effort to strongly encouragedevice vendors to adopt communications standards that willease the problems with interoperability. The Food and DrugAdministration is working to encourage the development ofinteroperable devices by defining some 25 device standards.Solving the interoperability problem will require anagreement on standards through the cooperation of multiplestakeholders.

Critical Thinking Questions:1. What benefits can be achieved through the successful

implementation of EHRs? What additional benefits willbe gained by feeding data directly from patient moni-toring devices directly into EHRs?

2. Can you identify any legal, ethical or social concernswith the use EHRs? What additional concerns arisefrom connecting patient monitoring devices to the IoT?

3. What actions need to be taken by EHR software ven-dors, patient monitoring device vendors, governmentagencies, and hospital administrators to enable patientmonitoring devices to be safely and reliably connectedto EHRs?

SOURCES: Atherton, Jim, “Development of the Electronic HealthRecord,” AMA Journal of Ethics, March 2011,; Tahir, Dennis, “Getting the DataStream Flowing: Hospitals Want Monitoring Devices and EHRs toCommunicate,” Modern Healthcare, May 9, 2015,

Case Two

BMW: Automaker Competes on the Digital FrontOne of the biggest trends driving competition in the autoindustry in recent years is the race to offer new and better“connected-car” technologies—including those that enhancesafety, monitor maintenance requirements, provide Internetconnectivity, and offer seamless integration withsmartphones and wearable devices. A 2015 study of theworldwide auto industry projected that customer spendingon connected-car technologies will exceed €40 billion ($42billion) in 2016; that number is expected to more than tripleto €122 billion ($129 billion) by 2021. Tech-savvy consumersincreasingly expect their cars to serve as extensions of theirpersonal technology, and one company working hard toexceed those expectations is German automaker BayerischeMotoren Werke AG—or BMW, as it is more commonlyknown.

BMW was founded in 1916 as a manufacturer of aircraftengines, but the company soon branched out into otherareas. Today, the BMW Group manufactures motorcycles inaddition to its three premium car brands (BMW, MINI, andRolls-Royce), and it is now represented in over 140

CHAPTER 1 • An Introduction to Information Systems 41

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countries—including 30 production locations in 14 countries.With close to 2 million cars sold in 2014, BMW is one of theworld’s most-recognized luxury car brands, with a reputationfor consistently delivering high-quality cars built on afoundation of advanced mechanical engineering. To maintainits edge, BMW is now expanding its focus to find ways toimprove its cars through cutting-edge technologicalinnovations.

According to Dieter May, BMW’s digital business modelssenior vice president, “Our competitor is not Audi, JaguarLand Rover or Mercedes, but the space of consumerelectronics players.” As May sees it, one of the biggestquestions facing BMW—and other auto makers—in thecoming years is “How do we take the connected home,personal digital assistants, and advanced sensor technology,and connect all these trends?”

BMW has responded to this question by building anextensive array of new technologies into its latest models.Through BMW’s iDrive information and entertainmentsystem, drivers can access ConnectedDrive, a portal offeringa wide range of location-based services, including conciergeservices, real-time traffic information, and access to morethan 12.6 million searchable “points of interest,” rangingfrom gas stations to restaurants to tourist attractions. AnotherConnectedDrive feature, the Head-Up Display, projectsimportant driving information—such as current speed andwarnings from the car’s night vision system—on thewindshield, allowing the driver to keep his or her eyes on theroad. The Speed Limit Info feature uses a car-mountedcamera along with data from the navigation system to keepdrivers informed of current speed limits, including those ineffect due to road construction and weather conditions.ConnectedDrive, which can be controlled from the driver’ssmartphone, also offers mobile office features, such theability to dictate and send messages, and a ConnectedDriveStore, where users can purchase apps and services directlythrough the iDrive interface. And at the high end of BMW’smodel line, the 7 Series full-size sedan, BMW’s flagshipvehicle, is the first model to accept gesture-controlcommands for the iDrive display as well as a completelyautomated self-park feature that can be operated when thedriver is outside the vehicle.

BMW is also working to ensure that the car-buyingexperience is keeping up with customers’ expectations byencouraging its dealerships to create more digitalshowrooms, with flat screen displays and virtualdemonstrations to appeal to the many customers who areaccustomed to the online shopping experience. In addition,BMW is adding “product geniuses”—like those found inApple’s retail stores—to its showrooms. The specialists haveno responsibility to sell; their job is simply to spendwhatever time is necessary to explain and demonstrate eachcar’s various technological features to potential BMWcustomers.

To continue to develop the complex technologicalinnovations it needs to maintain its edge over competitors,

BMW has explored possible partnerships with technologycompanies such as Apple. Currently, however, the automaker is focused on building up its in-house expertise andspeeding up its internal software development cycles. In2014, BMW spent over €4.5 billion ($4.75 billion) on researchand development, and it spent, on average, more than €6,000($6,370) per car on connected-car technology. BMW ismaking it clear to potential customers and competitors alikethat is committed to competing and winning on the digitalfront.

Critical Thinking Questions:1. Other than selling more cars, what potential benefits

do connected-car technologies offer auto makers suchas BMW in terms of enhancing long-term customerrelationships?

2. What responsibilities does BMW have to itscustomers regarding the data it captures via thevarious connected car technologies that it builds intoits cars?

3. Of the primary components of an ERP system thatwere identified in this chapter, which modules arelikely to be of highest importance to BMW if it con-tinues to focus on in-house development of new tech-nological features and services rather than partneringwith an established personal technology company,such as Google or Apple? Would those tools need tochange if BMW establishes a long-term partnershipwith a technology company?

SOURCES: Muller, Joann, “5 Big Trends Driving The Auto Industry in2015,” Forbes, January 19, 2015,; Vierecki,Richard, Ahlemann, Dietmar, Koster, Alex, and Jursch, Sebastian,“Connected Car Study 2015: Racing Ahead with Autonomous Cars andDigital Innovation,” Strategy&, September 15, 2015,; “Annual Report 2014,” BMW Group,, accessed November 23, 2015; Murphy, Margi,“BMW Internalizes IT to Claw Back Customer Data,” ComputerworldUK,June 24, 2015,; Green, Chloe, “Rise of the Intelligent Car,”InformationAge, July 7, 2015,; “BMW ConnectedDrive,” BMW USA,, accessed November 28, 2015; “7 Series,” BMWUSA,, accessed November 28, 2015;Taylor, Edward and Love, Julia, “Tim Cook Visited BMW in Germany toLearn How to Build an Electric Car,” Business Insider, July 31, 2015,; “BMW Tosses Salesmen for ‘Geniuses,”The Wall Street Journal, February 19, 2014,

42 PART 1 • Information Systems in Perspective

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1. Haselkorn, Erin, “To Be a Marketing Master Mind, YouNeed Quality Data,” Experian Marketing Services, April15, 2014,

2. Shah, Jay, “Calculate the Cost of Bad Data Using ThisEasy Equation,” Informed Logix, April 2, 2015,

3. Collins, Jim, Good to Great: Why Some Companies Make theLeap and Others Don’t, New York: Harper Business, 2001.

4. Carroll, Ron, “People Are the Most Important SystemComponent,” Box Theory,, accessed June 10, 2015.

5. Laurianne McLaughlin, “Kroger Solves Top CustomerIssue: Long Lines,” InformationWeek, April 2, 2014,

6. “2 Billion Consumers Worldwide to Get Smart(phones)by 2015,” eMarketer, December 11, 2014,

7. “Global Smartphone Shipments Forecast from 2010 to2019 (in million units),” The Statistics Portal,, accessed June 11, 2015 and “Forecast for GlobalShipments of Tablets, Laptops and Desktop PCs from2010 to 2019 (in million units),” Statistica,, accessed June 10, 2015.

8. “Number of Android Applications,” App Brain Stats, June11, 2015,

9. “Number of Apps Available in Leading App Stores as ofMay 2015,” The Statistics Portal,, accessed June 12, 2015.

10. Harris, Derrick, “Why Apple, eBay, and Walmart HaveSome of the Biggest Data Warehouses You’ve EverSeen,” GIGAOM, March 27, 2013,

11. Ibid.12. Ibid.13. Vowler, Julia, “US Data Warehousing to Make the Most

of Web Data,”,, accessed January 19, 2014.

14. Williams, David, “EMC: World’s Data Doubling EveryTwo Years…,” IT Brief, April 15, 2014,

15. “Big Data: A New World of Opportunities,” NESSI,December 2012,

16. “Cloud Computing Options,” PC Today, June 2014.17. “AWS Case Study: Netflix,” Amazon Web Services,, accessed September26, 2015.

18. “Implementation of Intranets,” Innovaction ResearchGroup,, accessed June 16, 2015.

19. “Internet of Things: FTC Staff Report and a New Publi-cation for Businesses,” Federal Trade Commission, Jan-uary 2015,

20. Bradley, Joseph, Barbier, Joel, and Handler, Doug,“Embracing the Internet of Everything to Capture YourShare of $14.4 Trillion,” Cisco White Paper,

21. Kuehner-Hebert, Katie, “GE to Launch ‘Internet ofThings’ Service,” CFO, August 5, 2015,

22. “NARCOMS MS Research Effort Seeks Participants: MSRegistry Enables Researchers to Find Solutions for Peo-ple with MS,” National Multiple Sclerosis Society, March16, 2015,

23. Schwartz, C.E., Bode, R.K., and Vollmer, T, “The Symp-tom Inventory Disability-Specific Shorts Forms for MS:Reliability and Factorial Structure,” Archives of PhysicalMedicine and Rehabilitation. March 21, 2012,

24. Buchanan, Leigh, “The New York Bakery That HiresEveryone, No Questions Asked,” Inc., September 21,2015,

25. Luttrell, Anne, “NASA’s PMO: Building and Sustaining aLearning Organization,” Project Management Institute,, accessedJune 26, 2015.

26. “About|Penn National Gaming,”, accessed November 4, 2015.

27. “Big, Bang Boom,” Huffington Post,, accessed May 30,2015.

28. Durbin, Steve, “Cyber Crime: Battling a Growth Indus-try,” The Connected Business, September 5, 2014,

29. Morgan, Jacob, “A Simple Explanation of ‘The Internet ofThings’,” Forbes, May 13, 2014,

CHAPTER 1 • An Introduction to Information Systems 43

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2Information Systems inOrganizations

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Know?Did You

• Outsourcing can be an effective strategy, but it doesn’talways work. Boeing made a strategic decision to out-source development of the 787 Dreamliner aircraft with agoal of reducing costs and cutting development time bytwo years. However, complications led to a temporaryworldwide grounding of the aircraft a little more than ayear after its launch, denting the plane’s public reputation.

• Successful companies such as General Electric havedeveloped strategies for addressing the “soft side of

implementing change.” These strategies are designedto help employees embrace change and the new way ofworking and can mean the difference between successand failure of change efforts.

• Technology is one of the fastest-growing areas in theU.S. economy, and information systems professionalssuch as software developers, computer systems ana-lysts, computer support specialists, and data scientistsare in high demand.

Principles Learning Objectives

• Organizations are open systems that affect andare affected by their surrounding environment.

• Positive change is a key ingredient for anysuccessful organization.

• Information systems must be implemented insuch a manner that they are accepted and workwell within the context of an organization andsupport its fundamental business goals andstrategies.

• The information system worker functions at theintersection of business and technology anddesigns, builds, and implements solutionsthat allow organizations to effectively leverageinformation technology systems.

• Sketch a general model of an organization show-ing how information systems support and workwithin the automated portions of an organizationalprocess.

• Define the term value chain and identify severalexamples within a typical manufacturing or ser-vice organization.

• Define the term innovation and identify two types.

• Define reengineering and continuous improve-ment and explain how they are different.

• Discuss the pros and cons of outsourcing, off-shoring, and downsizing.

• Define the term “the soft side of implementingchange,” and explain why it is a critical factorin the successful adoption of any major change.

• Identify and briefly describe four change modelsthat can be used to increase the likelihood ofsuccessfully introducing a new informationsystem into an organization.

• Define the types of roles, functions, andcareers available in the field of informationsystems.

Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

Why Learn about Information Systemsin Organizations?After graduating, a management major might be hired by a transportation company and be assigned toan information system project designed to improve employee productivity. A marketing major might usea software application to analyze customer needs in different areas of the country for a national retailer.An accounting major might work for a consulting firm using an information system to audit a clientcompany’s financial records. A real estate major might work in a virtual team with clients, builders, anda legal team whose members are located around the world. A biochemist might conduct research for adrug company and use a computer model to evaluate the potential of a new cancer treatment. Anentrepreneur might use information systems to advertise and sell products and bill customers.

Although your job might be different from those in the above examples, throughout your career,you will almost certainly use information systems to help you and your organization become moreefficient, effective, productive, and competitive. However, the implementation of new informationsystems has a major impact on an organization, affecting people’s roles and responsibilities, theirday-to-day routines and processes for accomplishing work, who they interact with, what skills andknowledge they need, and how they are rewarded and compensated. The resulting changes can behighly disruptive and agonizing to work through, and as a result, the introduction of a new system oftenfaces considerable resistance. As a manager in an organization undergoing such change, you mustanticipate resistance and work actively to mitigate it. Failure to rise to this challenge can lead to thefailure of a promising information system project.

This chapter provides the information and tools you need to better understand people’s resistanceto change and management’s role in overcoming this resistance.

As you read this chapter, consider the following:

• Why is there a natural resistance to the implementation of new information systems?

• What must leaders do to prepare their organization for the changes that accompany the successfuladoption of a new information system?

Information systems (IS) continue to have a major impact on the role ofworkers and on how organizations as a whole function. While informationsystems were once used primarily to automate manual processes, todaythey are transforming the nature of work itself and, in many cases, thenature of the products and services offered. Organizational leaders have anessential role in preparing the organization to not just accept but toembrace the changes necessary for success. In this chapter and throughoutthe book, you will explore the benefits and issues associated with the useof information systems in today’s organizations around the globe.

Organizations and Information Systems

An organization is a group of people that is structured and managed to meetits mission or set of group goals. “Structured” means that there are definedrelationships between members of the organization and their various activi-ties, and that processes are defined that assign roles, responsibilities, andauthority to complete the various activities. In many cases, the processes areautomated using well-defined information systems. Organizations are consid-ered to be open systems, meaning that they affect and are affected by theirsurrounding environment. See Figure 2.1.

Providing value to a stakeholder—customer, supplier, partner, share-holder, or employee—is the primary goal of any organization. The valuechain, first described by Michael Porter in a classic 1985 Harvard BusinessReview article titled “How Information Gives You Competitive Advantage,”

organization: A group of people thatis structured and managed to meet itsmission or set of group goals.

46 PART 1 • Information Systems in Perspective

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reveals how organizations can add value to their products and services.The value chain is a series (chain) of activities that an organization performsto transform inputs into outputs in such a way that the value of the input isincreased. An organization may have many value chains, and different organi-zations in different industries will have different value chains. As an exampleof a simple value chain, the gift wrapping department of an upscale retailstore takes packages from customers, covers them with appropriate, decora-tive wrapping paper, and gives the package back to the customer, thusincreasing the customer’s (and the recipient’s) perceived value of the gift.

In a manufacturing organization, the supply chain is a key value chainwhose primary activities include inbound logistics, operations, outboundlogistics, marketing and sales, and service. See Figure 2.2. These primary

Environment- Customers- Suppliers- Technology

Inputs- Capital- Equipment- Facilities- Materials- Supplies- Labor- Knowledge

Transformation process- Alteration- Manufacture- Transportation- Storage



Goods andservices



Monitoring and control

Outputs- Goods- Services- Feedback

– Economy- Business partners- Industry

– Competition- Shareholder- Governments

FIGURE 2.1General model of an organizationInformation systems support and work within the automated portions of an organizational process.

FIGURE 2.2Supply chainThe primary and support activities ofthe manufacturing supply chain areconcerned with creating or deliver-ing a product or service.

SuppliersRaw materialTransportationStorage



Marketingand sales Services

Technology infrastructure, including information systems

Human resource management

Accounting and finance



Customer serviceAdvertisingPromotingSelling



value chain: A series (chain) ofactivities that an organization performsto transform inputs into outputs in sucha way that the value of the input isincreased.

supply chain: A key value chainwhose primary activities includeinbound logistics, operations, outboundlogistics, marketing and sales, andservice.

CHAPTER 2 • Information Systems in Organizations 47

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activities are directly concerned with the creation and/or delivery of the prod-uct or service. The supply chain also includes four main areas of supportactivities, including technology infrastructure, human resource management,accounting and finance, and procurement. (Technology infrastructure includesnot only research and development but also information systems hardware,software, databases, and networks.)

The concept of value chain is also meaningful to companies that don’tmanufacture products, including tax preparers, restaurants, book publishers,legal firms, and other service providers. By adding a significant amount ofvalue to their products and services, companies ensure their success.

Supply chain management (SCM) encompasses all the activitiesrequired to get the right product into the right consumer’s hands in theright quantity at the right time and at the right cost—from the identificationof suppliers and the acquisition of raw materials through manufacture andcustomer delivery. The organizations that compose the supply chain are“linked” together through both physical flows and information flows.Physical flows involve the transformation, movement, and storage of sup-plies and raw materials. Information flows allow participants in the supplychain to communicate their plans, coordinate their work, and manage theefficient flow of goods and material up and down the supply chain. SeeFigure 2.3.

Organizations are constantly fine-tuning and adjusting their supply chain.For example, many companies are increasing their use of free shipping to cus-tomers in hopes of increasing sales and profits. Amazon is experimenting withAmazonFresh, a Web site that offers fast, free delivery of groceries on ordersover $35 and other products in the Los Angeles and Seattle areas. Customerscan place an order by 10 am and have it by dinner; orders placed by 10 pmwill be delivered by breakfast time. The e-commerce giant is also experiment-ing with a new drive-up store concept that will allow consumers to order gro-cery items online and then schedule a pickup at a dedicated facility. Manyorganizations are also outsourcing much of their outbound distribution activi-ties, including the storage and shipping of finished products to customers

FIGURE 2.3Ford Motor Companyassembly lineFord Motor Company’s use of infor-mation systems is a critical supportactivity of its supply chain. Thecompany gives suppliers access toits inventory system so that the sup-pliers can monitor the database andautomatically send another shipmentof parts, such as engine parts orbumpers, eliminating the need forpurchase orders. This procedurespeeds delivery and assembly timeand lowers Ford’s inventory-carryingcosts. Na


supply chain management(SCM): The management of all theactivities required to get the right prod-uct into the right consumer’s hands inthe right quantity at the right time and atthe right cost—from the identification ofsuppliers and the acquisition of rawmaterials through manufacture andcustomer delivery.

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and the return of items from customers. Amazon, DHL, FedEx, Rakuten, Ship-wire, UPS, and other companies are highly skilled and efficient at performingthese functions.

What role do information systems play in supply chain management activ-ities and other organizational activities? A traditional view of information sys-tems holds that organizations use them to control and monitor processes andto ensure effectiveness and efficiency. In this view, information systems areexternal to the supply chain management process and serve to monitor orcontrol it.

A more contemporary view, however, holds that information systems areoften so intimately involved that they are part of the process itself. From thisperspective, the information system plays an integral role in the process,whether providing input, aiding product transformation, or producing output.Zara and Coles are two examples of organizations that have incorporatedinformation systems into the supply chain and made them integral parts ofthis process.

Zara is a Spanish clothing and accessories retailer with headquarters inArteixo, Spain, and 2,000 stores spread across 88 countries.1 Its founder,Amancio Ortega, had humble origins, but today is the third richest man inthe world. Consumer clothing trends are constantly changing, creating ahighly competitive environment in which companies compete not only onprice but also on their ability to deliver products that are new and stimulat-ing to their customers. To meet this challenge, Zara has developed anextremely responsive supply chain that enables it to go from design stageto sales floor in a maximum of three weeks rather than the six-month indus-try average. Zara can deliver new products twice a week to its storesaround the world. Mobile computers and point-of-sales systems are used tocapture and review data from stores on an hourly basis to spot new trendsas early as possible. This data includes sales and inventory data and anec-dotal information gleaned by sales assistants as they chat with customersand as the sales assistants gather unsold items that customers tried on, butleft in fitting rooms. All this data is sent to Zara’s headquarters where it iscarefully analyzed by design teams who decide what new designs will beprototyped and produced in small quantities to see what sells. In addition,inventory optimization models help the company determine the quantitiesand sizes of existing items that should be delivered to each store.Zara’s outstanding supply chain (which includes information systems as anintegral component) has led to improved customer satisfaction, decreasedrisks of overstocking the wrong items, reduced total costs, and increasedsales.2

Coles is the second largest supermarket chain in Australia. The companyemploys advanced analytics to improve consumer demand forecasts, and ituses sophisticated customer-loyalty analysis tools to deepen its understandingof customer buying patterns so it can plan effective marketing programs.Coles uses a supplier portal that supports effective working relationshipsbetween the chain and its more than 3,000 suppliers, providing better coordi-nation and communications, which, in turn, help the company reduce costsand achieve consistent delivery times along the supply chain. The portal alsoprovides suppliers with information they can use to assess their performanceand identify opportunities of improvement. Coles works closely with suppliersto take effective measures toward continuous improvement, including frankdiscussions about opportunities for improvement.3 All these actions havegone a long way toward reducing the number 1 complaint from Coles’customers—item stockouts. They have also paved the way for improvedinventory management and better supplier relationships.4

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Virtual Teams and Collaborative WorkA virtual team is a group of individuals whose members are distributed geo-graphically, but who collaborate and complete work through the use of infor-mation systems. The virtual team may be composed of individuals from asingle organization or from multiple organizations. The team can consist ofjust two people up to hundreds of team members. One benefit of virtualteams is that they enable organizations to enlist the best people in differentgeographical regions to solve important organizational problems. Anotherbenefit is that they provide the ability to staff a team with people who have arange of experience and knowledge that stems from a variety of professionalexperiences and cultural backgrounds.

Often, it is difficult for members of a large virtual organization to meet ata time that is convenient for everyone on the team due to the time zone dif-ferences in their various geographic locations. Thus, members of a virtualteam may seldom meet face to face. However, quick communicationexchanges among members can be key to project success. Thus, virtual teammembers may need to continually monitor their email, instant messages, andteam Web site and be prepared to participate in an audio or video teleconfer-ence on short notice. See Figure 2.4. Virtual team members must be preparedto do work anywhere, anytime. As a result, members of a virtual team mayfeel that their work day never ends.

Communications are greatly improved when participants can see oneanother and pick up facial expressions and body language. Thus, even withsophisticated information system tools, virtual teams still benefit from occa-sional face-to-face meetings. This is particularly true at the beginning of


FIGURE 2.4Group videoconferenceA virtual organizational structure allows collaborative work in which managers and employees can effectivelywork in groups, even those composed of members from around the world.

virtual team: A group of individualswhose members are distributed geo-graphically, but who collaborate andcomplete work through the use ofinformation systems.

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CriticalThinking Exercise

new projects when the team is just forming and defining goals, roles, andexpectations on how its members will work together. Virtual organizationmembers must also be sensitive to the different cultures and practices of thevarious team members to avoid misunderstandings that can destroy teamchemistry. It helps if virtual team members take the time to get to know oneanother by sharing experiences and personal background information.

International advertising, marketing, and public relations firm Ogilvy &Mather maintains offices in 161 cities all over the world and employs some15,000 workers. The firm promotes the brands of its multinational clients bycombining local market know-how with a worldwide network of resources tobuild powerful campaigns that address local market needs while also reinfor-cing global brand identity. The firm relies on multiple virtual teams across theorganization to implement this strategy.5

Reducing New Product Stockouts at ColesYou have been employed in the supply chain management organization of Coles forthe past two years. You are very excited when you are asked to join a team beingformed to address serious inventory management problems often associated withthe introduction of new products. Too often, customers who make a trip to Coles topurchase a highly advertised new product are disappointed to find the store is outof stock of that particular item. Such stockouts result in lost sales for both Coles andthe product supplier and the potential loss of customers as shoppers look elsewhereto find the new product. The resulting loss of customer goodwill can have a long-term effect on sales. Solving this problem will require a balancing act; the companyneeds to carry sufficient inventory of new products to meet customer demand whileavoiding excessive inventory levels that increase costs.

The team you have joined consists of nine people representing the finance,marketing, and supply chain management organizations at both Coles and two ofColes’ largest suppliers. The team is charged with looking at a wide range of solu-tions, including improved analytics and forecasting systems, customer-loyalty anal-ysis tools to provide insights into customer buying patterns, and improveddistribution methods to cut costs and delivery times.

Review Questions1. Identify some of the advantages of running a virtual team such as this. What

are some of the keys to success when working with a virtual team?2. What sort of complications might be expected when forming a multiorganiza-

tional virtual team?

Critical Thinking Questions1. The leader of the team has asked that each member share a brief personal

background paragraph that outlines the individual’s knowledge and experi-ence relevant to solving this problem. Create a paragraph for a team memberwho is a well-qualified, but relatively inexperienced representative of theColes supply chain management organization.

2. What actions would you recommend to minimize potential start-up issues forthis virtual team?

Change in the Organization

Your organization’s current products, services, and ways of accomplishingwork are doomed to obsolescence. Fail to change and your competition willtake away your customers and your profits. Positive change is a key

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ingredient for any successful organization. This section will discuss importanttopics related to change, including innovation, reengineering, continuousimprovement, outsourcing, offshoring, and downsizing.

InnovationInnovation is the application of new ideas to the products, processes, andactivities of a firm, leading to increased value. Innovation is the catalyst forthe growth and success of any organization. It can build and sustain profits,create new challenges for the competition, and provide added value for custo-mers. Innovation and change are absolutely required in today’s highly com-petitive global environment; without both, the organization is at risk of losingits competiveness and becoming obsolete. The following is a list of just a fewof today’s most innovative products:

● Tile is an innovative new product that helps solve a universal problemthat we all encounter—occasionally misplacing everyday items and wast-ing time trying to find them. Tile is a smartphone app combined withsmall devices (tiles) that consumers can stick on their keys, TV remotecontrols, purses, and wallets. A proximity sensor plays a musical soundthrough the smartphone app when you come within 100 feet of the tile,so you can walk around to see if the missing item is hiding nearby.

● Healthcare technology company iHealth has introduced several differentsensors that can measure and report on a wide array of biometric data,including steps taken, distance covered, and calories burned; sleep effi-ciency; blood pressure; glucose level; and blood oxygen saturation leveland pulse rate.

● Butterfleye offers a new, economical home security product that employsa megapixel camera smart enough to recognize you, members of yourfamily, and even your pets. If a stranger is caught inside your homewithin view of the camera, Butterfleye uses your home Wi-Fi system toalert you via an app.

● NeuroMetrix created Quell, an FDA-approved device that stimulates thebrain to block pain receptors for patients with chronic conditions. Thedevice is worn around the calf and calibrated to the user’s body to ensurethat it delivers the exact amount of relief needed. Quell performs func-tions similar to existing devices that today must be surgically implanted atmuch higher cost.

Various authors and researchers have identified different ways of classify-ing innovation. A simple classification developed by Clayton Christensen, aleading researcher in this field, is to think of two types of innovation—sustaining and disruptive.6

Sustaining innovation results in enhancements to existing products, ser-vices, and ways of operating. Such innovations are important because theyenable an organization to continually increase profits, lower costs, and gainmarket share. Procter and Gamble has invested hundreds of millions of dol-lars into making sustaining innovations to its leading laundry detergent, Tide,which was first introduced in 1946. The innovations include: the reformula-tion of Tide so it works as well in cold water as it does in hot water; the crea-tion of concentrated Tide, which reduces packaging and distribution costs;and the addition of scent, which makes clothes smell fresher. These innova-tions have allowed Tide to remain one of the leading detergents for severaldecades, with around $5 billion in worldwide annual sales.7 The brand cur-rently holds a 38 percent share of the North American laundry soap business.8

A disruptive innovation is one that initially provides a lower level of per-formance than the marketplace has grown to accept. Over time, however, thedisruptive innovation is improved to provide new performance characteristics,

innovation: The application of newideas to the products, processes, andactivities of a firm, leading to increasedvalue.

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becoming more attractive to users in a new market. As it continues to improveand begins to provide a higher level of performance, it eventually displacesthe former product or way of doing things. The cell phone is a good exampleof a disruptive innovation. The first commercial handheld cell phone wasinvented in 1973. It weighed 2.5 pounds, had a battery life of less than30 minutes, cost more than $3,000, and had extremely poor sound quality.9

Compare that with today’s ubiquitous cell phones that have one-tenth theweight, one-fifteenth the cost, and 25 times longer battery life; smartphonescan not only place calls but also serve as a camera, a video recorder, and ahandheld computer that can run applications and access the Internet.

Reengineering and Continuous ImprovementTo stay competitive, organizations must occasionally make fundamentalchanges in the way they do business. In other words, they must innovate andchange the activities, tasks, or processes they use to achieve their goals.Reengineering, also called process redesign and business process reengi-neering (BPR), involves the radical redesign of business processes, organiza-tional structures, information systems, and values of the organization toachieve a breakthrough in business results. See Figure 2.5. Successful reengi-neering can reduce delivery time, increase product and service quality,enhance customer satisfaction, and increase revenues and profitability.

General Electric employs a strategy it calls GE Advantage to reengineerbusiness processes to increase its speed to market, improve the quality of itsproducts and services, reduce costs, and achieve competitive advantage. Thisstrategy has been applied to its new product introduction process to reducethe time it takes to bring a new product to market (in some cases by morethan 50 percent), improve the quality of its designs, and lower developmentcosts.

In contrast to reengineering, the idea of continuous improvement (oftenreferred to by the Japanese word “Kaizen”) is a form of innovation that con-stantly seeks ways to improve business processes and add value to productsand services. This continual change will increase customer satisfaction andloyalty and ensure long-term profitability. Manufacturing companies makecontinual product changes and improvements. Service organizations regularly

FIGURE 2.5ReengineeringReengineering involves the radicalredesign of business processes,organizational structure, informationsystems, and the values of anorganization to achieve a break-through in business results.

Reengineering—Business processredesign

Changes toorganizationalstructure

Changes toorganizationalvalues

Changes toinformationsystems

reengineering (processredesign/business processreengineering, BPR): The radicalredesign of business processes,organizational structures, informationsystems, and values of the organizationto achieve a breakthrough in businessresults.

continuous improvement:Constantly seeking ways to improvebusiness processes and add valueto products and services.

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find ways to provide faster and more effective assistance to customers. Bydoing so, organizations increase customer loyalty, minimize the chance of cus-tomer dissatisfaction, and diminish the opportunity for competitive inroads.

Boeing has a long tradition and culture supportive of continuous improve-ment, which has yielded many positive results. For example, the time to assembleits popular long-range, wide-body, twin-engine 777 jet airliner has been reducedalmost in half through the implementation of many small improvements—from71 days in 1998 to just 37 days today.10 Table 2.1 compares the strategies of busi-ness process reengineering and continuous improvement.

Outsourcing, Offshoring, and DownsizingA significant portion of expenses for most organizations goes toward hiring,training, and compensating employees. Naturally, organizations try to controlcosts by determining the number of employees they need to maintain high-quality goods and services without being overstaffed. Strategies to containthese personnel costs include outsourcing, offshoring, and downsizing.

Outsourcing is a long-term business arrangement in which a companycontracts for services with an outside organization that has expertise in pro-viding a specific function. Organizations often outsource a process so theycan focus more closely on their core business—and target their limitedresources to meet strategic goals. Typically, the outsourcing firm has expertiseand other resources that enable it to perform the service better, faster, and/ormore cheaply. As a result, many companies now outsource jobs such as callcenter services, payroll activities, information system operations, computersupport services, and security services.

Offshore outsourcing (also called offshoring) is an outsourcing arrange-ment in which the organization providing the service is located in a countrydifferent from the firm obtaining the services. Offshoring of tasks that requiresignificant customer interaction has led to problems due to culture and lan-guage differences for some companies. As a result, many companies are ree-valuating their decision to offshore their call center and customer supportservices, as well as the outsourcing of other activities.

Deutsche Bank has extended an offshore outsourcing agreement withAccenture to provide its procurement and accounts payable services. The originalcontract was signed in 2004 and was set to expire in 2016. Through its agree-ment with Accenture, Deutsche Bank was looking to reduce operational costs,improve spending control, and simplify its sourcing and procurement services.

TABLE 2.1 Comparing business process reengineering withcontinuous improvement

Business Process Reengineering Continuous Improvement

Strong action taken to solve seriousproblem

Routine action taken to make minorimprovements

Top-down change driven by seniorexecutives

Bottom-up change driven by workers

Broad in scope; cuts acrossdepartments

Narrow in scope; focuses on tasks in agiven area

Goal is to achieve a majorbreakthrough

Goal is continuous, gradualimprovements

Often led by resources from outsidethe company

Usually led by workers close to thebusiness

Information systems are integral to thesolution

Information systems provide data toguide the improvement team

outsourcing: A long-term businessarrangement in which a companycontracts for services with an outsideorganization that has expertise inproviding a specific function.

offshore outsourcing(offshoring): An outsourcingarrangement where the organizationproviding the service is located in acountry different from the firm obtainingthe services.

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CriticalThinking Exercise

The arrangement has worked well, and the two organizations recently signed anew contract to extend the initial agreement through the end of 2021.11

Citizens Bank of Rhode Island signed a five-year agreement with IBM tooutsource its information systems services, with the goal of increasing effi-ciencies, lowering costs, and improving service. The bank’s information sys-tems employees are training replacements who work for IBM in India, wherethe average salary of IBM workers is about $17,000.12 It is estimated thatsome 250 to 350 current employees and existing contractors will lose theirjobs at Citizen Bank as a result of the offshore outsourcing move.13

Companies considering outsourcing need to take into account many factors.A growing number of organizations are finding that outsourcing does not neces-sarily lead to reduced costs. One of the primary reasons for cost increases ispoorly written contracts that allow the service provider to tack on unexpectedcharges. Other potential drawbacks of outsourcing include loss of control andflexibility, the potential for data breaches of information stored on the serviceprovider’s computer hardware, overlooked opportunities to strengthen core com-petencies of the firm’s own employees, and low employee morale. In addition,organizations often find that it takes years of ongoing effort and a large up-frontinvestment to develop a good working relationship with an outsourcing firm.Finding a reputable outsourcing partner can be especially difficult for a small ormidsized firm that lacks experience in identifying and vetting contractors.

Outsourcing part or all of a business process introduces significant risksthat the service provider will introduce quality problems into the supplychain. For example, Boeing made a strategic decision to partially outsourcedevelopment of the 787 Dreamliner aircraft, with a goal of reducing costs by$4 billion and cutting development time by two years. However, the develop-ment effort spiraled out of control—the project was ultimately billions of dol-lars over budget and three years behind schedule. And outsourcingcomplications led to severe quality challenges, including problems with theaircraft’s lithium ion batteries, which resulted in a worldwide temporarygrounding of the aircraft a little more than a year after its launch.14

Downsizing, a term frequently associated with outsourcing, involvesreducing the number of employees to cut costs. The euphemistic term “right-sizing” is sometimes also used. When downsizing, companies usually look todownsize across the entire company, rather than picking a specific businessprocess to downsize. Downsizing clearly reduces total payroll costs, althoughthe quality of products and services and employee morale can suffer. Shortlyafter Heinz merged with Kraft in March 2015, the food and beverage companyannounced that it would downsize its 46,000 employees in the United Statesand Canada by 2,500 people to save $1.5 billion in annual costs.15

Outsourcing Accounting FunctionsYou have been employed for two years in the accounting department of a midsizedmultinational consumer products company. Your performance has been outstand-ing, and it is clear that management feels you have great potential with the firm.However, you are quite surprised when your manager calls you into her office totell you that you have been chosen to lead an effort to identify an outsourcing part-ner for the payroll, accounts payable, and accounts receivable functions. Sheassures you that there will be an excellent assignment for you after the outsourcingis successfully completed and all is functioning well in one to two years.

Review Questions1. What benefits might your organization gain from outsourcing basic accounting

functions?2. Identify at least three major organizational challenges associated with transi-

tioning these functions to an outsourcing firm.

downsizing: Reducing the number ofemployees to cut costs.

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Critical Thinking Questions1. What concerns do you have about taking on responsibility for outsourcing

these business functions?2. What questions about this assignment would you like to have addressed?

Organizational Culture and Change

Culture is a set of major understandings and assumptions shared by a group,such as within an ethnic group or a country. Organizational culture consistsof the major understandings and assumptions for an organization. The under-standings, which can include common beliefs, values, and approaches to deci-sion making, are often not stated or documented as goals or formal policies.For example, salaried employees might be expected to check their email andinstant messages around the clock and be highly responsive to all suchmessages.

Mark Twain said, “It’s not the progress I mind, it’s the change I don’tlike.” Organizational change deals with how organizations successfully planfor, implement, and handle change. Change can be caused by internal factors,such as those initiated by employees at all levels, or by external factors, suchas those wrought by competitors, stockholders, federal and state laws, com-munity regulations, natural disasters, and general economic conditions.

Implementing change, such as a new information system introduces con-flict, confusion, and disruption. People must stop doing things the way theyare accustomed to and begin doing them differently. Successful implementa-tion of change only happens when people accept the need for change andbelieve that the change will improve their productivity and enable them tobetter meet their customers’ needs. The so-called soft side of implementingchange involves work designed to help employees embrace a new informa-tion system and way of working. This effort represents the biggest challengeto successful change implementation; yet, it is often overlooked or down-played, resulting in project failure. Indeed, both the Standish Group andGartner, two highly respected organizations that track project implementa-tions globally, believe that a significant contributor to project failures is over-looking the need to address employee adoption and resistance jointly.16

Another resource claims that 30 to 70 percent of large information systemsprojects fail, at least in part, due to a failure to prepare the business users forthe actual change to come.17

The California Department of Consumer Affairs is made up of more than40 entities (including multiple boards, bureaus, committees, and one com-mission) that regulate and license professional and vocational occupationsthat serve the people of California. Each year, the department processesover 350,000 applications for professional licensure along with some 1.2million license renewals. The BreEZe project was initiated in 2009 to stream-line the way the department does its business and interacts with its licenseapplicants and consumers.18 The resulting information system was intendedto eliminate many paper-based processes and speed up the entire licensingprocess. Unfortunately, the project team failed to adequately involve thebusiness users in the definition of the system requirements and insteadmade many erroneous decisions about how the system should work. Theinitial cost estimate for the system was $28 million; however, as of early2015, project costs exceeded $37 million and less than half the licensing andregulatory boards were using the system. It is estimated that it will cost atotal of $96 million to complete the project. Much of the delay and over-spending could have been avoided had the project team work better withthe business users to understand their needs.19

culture: A set of major understand-ings and assumptions shared by agroup, such as within an ethnic groupor a country.

organizational culture: The majorunderstandings and assumptions for abusiness, corporation, or otherorganization.

organizational change: How for-profit and nonprofit organizations planfor, implement, and handle change.

soft side of implementingchange: The work designed to helpemployees embrace a new informationsystem and way of working.

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The dynamics of how change is implemented can be viewed in terms of achange management model. A change management model describes thephases an individual or organization goes through in making a change andprovides principles for successful implementation of change. A number ofmodels for dealing with the soft side of implementing change will now beintroduced.

Lewin’s Change ModelKurt Lewin and Edgar Schein proposed a three-stage approach for changecalled Lewin’s change model. See Figure 2.6. The first stage, unfreezing, isceasing old habits and creating a climate that is receptive to change. Moving,the second stage, involves learning new work methods, behaviors, and sys-tems. The final stage, refreezing, involves reinforcing changes to make thenew process second nature, accepted, and part of the job.

Lewin’s Force Field AnalysisA frequently encountered stumbling block to the successful implementation ofchange, including the implementation of a new system, is negative user reac-tion. People affected by the change may fear that their positions may be elim-inated or their work altered in a way they do not like. Or they may see theintroduction of a new information system as a threat to their power and influ-ence. Such fears can lead to resentment, lack of cooperation, or outright resis-tance. Any of these reactions can doom a change project, no matter howcarefully the rest of the project is planned.

Lewin extended his change model theory to include force field analysis,which identifies both the driving (positive) and restraining (negative) forcesthat influence whether change can occur. The driving forces are beliefs,expectations, and cultural norms that tend to encourage a change and give itmomentum. Restraining forces are those that make it difficult to accept achange or to work to implement a change. For a change to occur, the strengthof the driving forces must exceed the strength of the restraining forces.20

FIGURE 2.6Lewin’s change modelChange involves three stages: unfreezing (preparing for change), moving (making the change), and refreezing (institutionalizing thechange).

MovingMaking the change


UnfreezingPreparing for change

Key Tasks

Monitor progress againstsuccess criteria

Establish processes, systemsto institutionalize change

Establish controls toensure change is occurring

Recognize and reward individuals forexhibiting new behavior

Provide feedback, motivation,additional training to individualsnot exhibiting new behavior

Key Tasks

Communicate what, why,when, who, how

Draw on others, and seekinput, ideas

Define objectives, successcriteria, resources, schedule,budget

Finalize work plans

Assign leaders andimplementation teams

Key Tasks

Motivate individualsinvolved or affected

Coach, train, lead, encou-rage, manage

Provide appropriateresources

Provide on-going feedback

change management model: Adescription of the phases an individualor organization goes through in makinga change and principles for successfulimplementation of change.

Lewin’s change model: A three-stage approach for implementingchange that involves unfreezing,moving, and refreezing.

force field analysis: An approachto identifying both the driving (positive)and restraining (negative) forces thatinfluence whether change can occur.

driving forces: The beliefs, expec-tations, and cultural norms that tendto encourage a change and give itmomentum.

restraining forces: Forces thatmake it difficult to accept a change orto work to implement a change.

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This can be done in one of two ways: first, by creating new driving forces ormaking existing driving forces stronger and, second, by eliminating or weak-ening existing restraining forces.20

Figure 2.7 is an example of a force-field analysis of a group of workersafter they first learn that a new information system is to be installed. Thefeelings shown on the left side are restraining forces against the change.The feelings shown on the right side are driving forces that supportthe change. The length of the arrow represents the relative strength ofthat feeling. In this example, fear of loss of job is the strongest restrainingforce.

Negative feelings must be reduced or eliminated in order for a new systemto gain acceptance. The fear of losing one’s job can be eliminated by making itclear that the individual will remain employed by the company. The fear ofmajor changes in one’s job can be reduced by allowing the individual toparticipate in developing one’s own new job description. If this is not possible,the person should be thoroughly informed of the new job requirements andprovided any necessary training. The positive impact of the change should bestressed.

It is not enough to reduce or neutralize negative feelings. Positive feel-ings must also be created to truly motivate the individual. Managers musttake the time to explain the many tangible and intangible benefits for theorganization as well as for the individual. For instance, in many informationsystem efforts, the new system may lead to job enrichment by enabling theindividual to take on more responsibility or to work in a new and moreinteresting way.

Figure 2.8 is an example of a force field analysis of workers after man-agers have effectively prepared them to accept the system. At this point, theworkers should recognize several things: (1) their role is essential to the suc-cess of the system, and they are making an important contribution to theorganization, (2) the development of new skills and knowledge will enhancetheir career growth, and (3) each individual has an important responsibilityto perform within the project to secure the potential benefits for both theindividual and the organization.

FIGURE 2.7Lewin’s force field analysisbefore addressing concernsMany strong restraining forces willmake it difficult to implement thischange.

Driving forcesRestraining forces

Fear of loss of jobSomehow this may bebest for the organization

Uncomfortable with changes in job

Require training

Distrust of project team

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Leavitt’s DiamondLeavitt’s diamond is another organizational change model that is extremelyhelpful in successfully implementing change. Leavitt’s diamond proposes thatevery organizational system is made up of four main components—people,tasks, structure, and technology—that all interact; any change in one of theseelements will necessitate a change in the other three elements. Thus, to success-fully implement a new information system, appropriate changes must be madeto the people, structure, and tasks affected by the new system. See Figure 2.9.

People are the key to the successful implementation of any change. Theymust be convinced to adopt a positive attitude about the change and be willingto exhibit new behaviors consistent with the change. This is likely to require a

FIGURE 2.8Lewin’s force field analysisafter addressing concernsRestraining forces have been weak-ened and driving forces strength-ened so there is a much likelihood ofsuccessfully implementing thischange.

Driving forcesRestraining forces

Fear of loss of job

Uncomfortable withchanges in job

Require training

Distrust ofproject team

Will improve my productivity andenable me to better serve ourcustomers

Provides opportunity to perform work in a new and interesting way

There are many benefitsfor the organization

FIGURE 2.9Leavitt’s diamondAny change in technology, people,task, or structure will necessitate achange in the other threecomponents.


– Attitudes

– Behavior

– Skills

– Reward system



– Hardware

– Software

– NetworkTasks

– Workflow

– Tools

– Standards

– Measures


– Roles

– Responsibilities

– Authority

Leavitt’s diamond: An organiza-tional change model that proposes thatevery organizational system is made upof four main components—people,tasks, structure, and technology—thatall interact; any change in one of theseelements will necessitate a change inthe other three elements.

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change in the reward system to recognize those who exhibit the desired newbehaviors. Thorough training in any required new skills is also needed.

The organization structure must be modified with appropriate changes inroles, responsibilities, and lines of authority. Along with these changes arerequired changes in communication patterns, relationships, and coordinationamong those affected by the change.

The tasks required to complete the work and the flow of work betweentasks also need to be changed. For each task, standards on how the work isto be performed and measures for the quality of completion need to be estab-lished. New tools may be required to perform the tasks.

As a result, the major challenges to successful implementation of an infor-mation system are often more behavioral issues than technical. Successfulintroduction of an information system into an organization requires a mix ofboth good organizational change skills and technical skills. Strong, effectiveleadership is required to overcome the behavioral resistance to change andachieve a smooth and successful system introduction.

Organizational learning is closely related to organizational change. Allorganizations adapt to new conditions or alter their practices over time—some better than others. Collectively, these adaptations and adjustmentsbased on experience and ideas are called organizational learning. Hourlyworkers, support staff, managers, and executives learn better ways of fulfillingtheir role and then incorporate them into their day-to-day activities. In somecases, the adjustments can require a radical redesign of business processes(reengineering). In other cases, adjustments can be more incremental (contin-uous improvement). Both adjustments reflect an organization’s strategy, thelong-term plan of action for achieving its goals.

User Satisfaction and Technology AcceptanceReengineering and continuous improvement efforts (including implementa-tion of new information systems) must be adopted and used to achieve thedefined business objectives by targeted users. The technology acceptancemodel (TAM) specifies the factors that can lead to better attitudes about theuse of a new information system, along with its higher acceptance and usage.See Figure 2.10. In this model, “perceived usefulness” is defined as the degreeto which individuals believe that use of the system will improve their perfor-mance. The “perceived ease of use” is the degree to which individuals believethat the system will be easy to learn and use. Both the perceived usefulnessand ease of use can be strongly influenced by the expressed opinions of

organizational learning: Theadaptations and adjustments madewithin an organization based onexperience and ideas over time.

technology acceptance model(TAM): A model that specifies thefactors that can lead to better attitudesabout an information system, along withhigher acceptance and usage of it.




usefulness (U)



using (A)


intention to

use (BI)


system use


ease of use (E)

FIGURE 2.10Technology acceptance modelPerceived usefulness (U) and perceived ease of use (E) strongly influence whether someone will use an informa-tion system. Management can improve that perception by demonstrating that others have used the system effec-tively and by providing user training and support.

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others who have used the system and the degree to which the organizationsupports use of the system (e.g., providing incentives and offering trainingand coaching from key users). Perceived usefulness and ease of use in turninfluence an individual’s attitude toward the system, which affect their behav-ioral intention to use the system.21

Avon Products is an international manufacturer and direct seller ofbeauty, household, and personal care products. Avon products are soldthrough six million independent and mostly part-time sales representativesworldwide who sell direct to family, friends, and personal contacts.22 In2013, Avon piloted a new sales system in Canada. The system was intendedto streamline the ordering process through the use of iPads, which wouldallow the sales rep to display products to customers and then check inven-tory and place orders online. It was estimated that the project would gener-ate some $40 million per year in cost savings and increased sales.Unfortunately, the system was poorly designed and did not meet the salesrep’s expectations in terms of ease of use. Sales reps were often unable tolog in to the system, and when they did get logged in, the system frequentlywould not accept orders, save orders correctly, or reserve inventory basedon the orders placed. The system was neither useful nor easy to use. As aresult, one Avon executive sales manager estimates that as many as 16,000Canadian sales reps quit in large part out of frustration with the new system.The pilot was such a disaster that Avon wrote off the project at a cost ofnearly $125 million.23

Diffusion of Innovation TheoryThe diffusion of innovation theory was developed by E.M. Rogers toexplain how a new idea or product gains acceptance and diffuses (or spreads)through a specific population or subset of an organization. A key point of thistheory is that adoption of any innovation does not happen all at once for allmembers of the targeted population; rather, it is a drawn-out process, withsome people quicker to adopt the innovation than others. See Figure 2.11.Rogers defined five categories of adopters, shown in Table 2.2, each with dif-ferent attitudes toward innovation. When promoting an innovation to a target


2.5% Early



Early majority


Late majority




FIGURE 2.11Innovation diffusionAdoption of any innovation does not happen all at once for all members of the targeted population; rather, itis a drawn-out process, with some people quicker to adopt the innovation than others.Source: Everett Rogers, Diffusion of Innovations.

diffusion of innovation theory: Atheory developed by E.M. Rogers toexplain how a new idea or productgains acceptance and diffuses (orspreads) through a specific populationor subset of an organization.

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CriticalThinking Exercise

population, it is important to understand the characteristics of the target pop-ulation that will help or hinder adoption of the innovation and then to applythe appropriate strategy. This theory can be useful in planning the roll-out ofa new information system.

Change Management for ERP System ProjectYou are a member of the human resources organization of a midsizedmanufacturing company that is implementing a new enterprise resource planningsystem that will have a major impact on the way some 50 members of the com-pany perform their jobs. In addition, many other employees will need to beretrained on how to obtain the management reports and perform the data analysisthey need for decision making.

Review Questions1. How could Lewin’s force field analysis be applied to this project?2. How might the diffusion of innovation theory be applied to this project?

Critical Thinking Questions1. You have been asked by the human resources department manager to assess

the project plans to prepare the business users for the major changes tocome. How might you proceed to make this assessment in a manner that willbuild rapport and trust with the project manager?

2. Imagine that your assessment shows that no plans have been developed toprepare the business users for the major changes to come other than trainingthem a few weeks before the system is to be implemented. What suggestionswould you make?

Careers in Information Systems

Today, most organizations cannot function or compete effectively withoutcomputer-based information systems. Indeed, organizations often attributetheir productivity improvement, superior customer service, or competitiveadvantage in the marketplace to their information systems. The informationsystem worker functions at the intersection of business and technology anddesigns and builds the solutions that allow organizations to effectively lever-age information technology.

TABLE 2.2 Five categories of innovation adoptersAdopter Category Characteristics Strategy to Use

Innovator Risk takers; always the first to try newproducts and ideas

Simply provide them with access to the newsystem and get out of their way

Early adopter Opinion leaders whom others listen to andfollow; aware of the need for change

Provide them assistance getting started

Early majority Listen to and follow the opinion leaders Provide them with evidence of the system’seffectiveness and success stories

Late majority Skeptical of change and new ideas Provide them data on how many others havetried this and have used it successfully

Laggards Very conservative and highly skeptical ofchange

Have their peers demonstrate how this changehas helped them and bring pressure to bearfrom other adopters

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Successful information system workers must enjoy working in a fast-paced, dynamic environment where the underlying technology changes allthe time. They must be comfortable with meeting deadlines and solving unex-pected challenges. They need good communication skills and often serve astranslators between business needs and technology-based solutions. Success-ful information systems workers must have solid analytical and decision-making skills and be able to translate ill-defined business problems andopportunities into effective technology-based solutions. They must developeffective team and leadership skills and be adept at implementing organiza-tional change. Last, but not least, they need to be prepared to engage in life-long learning in a rapidly changing field.

Specific technical skills that some experts believe are important for ISworkers to possess include the following, all of which are discussed in vari-ous chapters throughout this book:

● Capability to analyze large amounts of structured and unstructured data● Ability to design and build applications for mobile devices● Traditional programming and application development skills● Technical support expertise● Project management skills● Knowledge of networking and cloud computing● Ability to audit systems and implement necessary security measures● Web design and development skills● Knowledge of data center operations

Technology is one of the fastest-growing areas of the U.S. economy, andinformation systems professionals are in high demand. The U.S. Bureau ofLabor Statistics (BLS) forecasts an increase of 1.2 million new computing jobsin the time period 2012 to 2022, as shown in Table 2.3. This is an average of124,000 new jobs per year.

TABLE 2.3 BLS projections of computer-related jobs, 2012 to 2022

National Employment Matrix Title



Job Openings dueto Growth andReplacements2012 2022

Computer and math occupations (all numbers in thousands)

Computer and information researchscientists

26.7 30.8 4.1 8.3

Computer systems analysts 520.6 648.4 127.8 209.6

Information security analysts 75.1 102.5 27.4 39.2

Computer programmers 343.7 372.1 28.4 118.1

Software developers, applications 613.0 752.9 139.9 218.5

Software developers, system software 405.0 487.8 82.8 134.7

Web developers 141.4 169.9 28.5 50.7

Database administrators 118.7 136.6 17.9 40.3

Network and computer systemsadministrators

366.4 409.4 43.0 100.5

Computer network architects 143.4 164.3 20.9 43.5

Computer support specialists 722.3 845.3 123.0 236.5

Computer occupations, all other 205.8 213.6 7.8 40.2

Total 3,682.1 4,333.6 651.5 1,240.1

Yearly average 124.0

Source: “Employment by Detailed Occupation 2012–2022,” Bureau of Labor Statistics,, accessed August 13, 2015.

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While a career in information systems can be challenging, exciting, andrewarding, there are also some drawbacks to such a career. As reliance on technol-ogy increases, organizations have increasing expectations of their information sys-tem workers—so much so that many workers feel constant pressure to increaseproductivity, take on new tasks, and work more than 40 hours per week. A highdegree of stress can accompany the responsibility to fix major systems or networkproblems that are impacting a large number of users. One must often interact withend users or customers who are frustrated and not in the best of moods.

Figure 2.12 identifies the occupations that the BLS predicts will be thefastest-growing IS positions from 2012 to 2022 along with the median salaryfor those positions in 2015 (half the people employed in this position makemore than this amount; half make less).

Numerous schools have degree programs with titles such as businessinformation systems, computer engineering, computer science, and manage-ment information systems. Figure 2.13 shows an estimate of the annual num-ber of degrees awarded in computer science, computer engineering, andinformation (including information systems, information science, informationtechnology, and informatics) in the United States and Canada. It appears thatthere will be a shortfall of about 33,900 workers per year.

Opportunities in information systems are also available to people fromforeign countries. The U.S. L-1 and H-1B visa programs seek to allow skilledemployees from foreign lands into the United States. Opportunities in theseprograms, however, are limited and are usually in high demand. The L-1 visa











$00.0 50.0 100.0 150.0 200.0 250.0

Expected new job openings 2012–2022





n s




Informationsecurity analyst






FIGURE 2.12Occupational outlook for selected information systems positionsThis chart shows the IS positions that BLS predicts will be among the fastest growing in the near future, alongwith the median salary for those positions in 2015.

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program is often used for intracompany transfers for multinational companies.The H-1B program can be used for new employees. The United States distri-butes its annual 85,000 allotment of visas via a lottery system wherein smalltech companies submitting a single H-1B visa application must competeagainst large organizations that submit thousands of applications to increasetheir odds of winning the lottery.24

As part of the application process to obtain H-1B approval from the LaborDepartment, an employer is required to attest that the H-1B workers will notadversely affect the working conditions of workers similarly employed. However,in some cases, it appears that companies are hiring lower-paid H-1B workers toreplace existing employees. For instance, in 2015, about 400 information systemworkers at Southern California Edison were fired and their work was shifted to H-1B contractors from Tata and Infosys. Another 100 or so information system work-ers at Northeast Utilities in Connecticut also lost their jobs to H-1B contractors.25

Proponents of the H-1B program believe that it is invaluable to the U.S.economy and its competitiveness. Table 2.4 shows the top 15 users of H-1B

FIGURE 2.13Supply versus demand forIS workersThe total number of IS-related jobopenings is expected to averageabout 124,000 per year between2012 and 2022, while the number ofIS-related graduates is expected toaverage about 88,100 per year—fora shortfall of 35,900 workers.Source: “Computer Science Job Statistics”,Exploring Computer Science,,accessed August 19, 2015.








0Associate Bachelor Master PhD Total Openings





s o

f g






w j






TABLE 2.4 Top H-1B visa employers in 2013 to 2014Visas Granted

Rank Company Headquarters 2013 2014 Total

1 Tata India 6,258 7,149 13,407

2 Cognizant United States 5,186 5,228 10,414

3 Infosys India 6,298 4,022 10,320

4 Wipro India 2,644 3,246 5,890

5 Accenture Ireland 3,346 2,376 5,722

6 Tech Mahindra India 1,589 1,850 3,439

7 IBM United States 1,624 1,513 3,137

8 HCL India 1,766 927 2,693

9 Larsen & Toubro India 1,580 1,001 2,581

10 Syntel United States 1,041 1,149 2,190

11 IGATE Technologies United States 1,157 927 2,084

12 Microsoft United States 1,048 712 1,760

13 Amazon United States 881 811 1,692

14 Google United States 753 696 1,449

15 CapGemini France 500 699 1,199

Source: Thibodeau, Patrick and Machlis, Sharon, “Despite H-1B Lottery, Offshore Firms Dominate Visa Use,”Computerworld, July 30, 2015; Machlis, Sharon and Thibodeau, Patrick, “Offshore Firms Took 50% of H-1B Visasin 2013,” Computerworld, April 1, 2014.

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visas for computer-related workers in 2013 to 2014. Engineering, medicine,science, and law are other job categories in which large numbers of H-1Bvisas are granted.

Some of the best places to work as an IS professional are listed inTable 2.5. These organizations rate high for a variety of reasons, includingbenefits, career development opportunities, diversity, company facilities(including, in some cases, an employee gym or swimming pool), training pro-grams, and the nature of the work. For example, Sharp HealthCare, based inthe San Diego area, offers opportunities to work with cutting-edge technol-ogy, such as telemedicine, and many formal and informal training classes.Avanade ensures that employees are kept up-to-date by requiring 80 hours oftraining per year; the company also provides a $2,000 annual allowance toimprove its workers’ work–life balance. Serv1Tech offers employees up to$5,000 per year for tuition or certification, and it makes an annual $5,000 con-tribution to each employee’s 401(k) fund.26

Roles, Functions, and Careers in ISIS offers many exciting and rewarding careers. Professionals with careers ininformation systems can work in an IS department or outside a traditional ISdepartment as Web developers, computer programmers, systems analysts, com-puter operators, and in many other positions. Opportunities for IS professionalsalso exist in the public sector. In addition to technical skills, IS professionalsneed skills in written and verbal communication, an understanding of organiza-tions and the way they operate, and the ability to work with people and ingroups. At the end of every chapter in this book, you will find career exercisesthat will help you explore careers in IS and career areas that interest you.

Most medium to large organizations manage information system resourcesthrough an IS department. In smaller businesses, one or more people mightmanage information resources, with support from outsourced services. (Recallthat outsourcing is also popular with many organizations.) As shown inFigure 2.14, the typical IS organization is divided into three main functions:operations, development, and support.

TABLE 2.5 Best places to work as an IS professional

Rank Small (<1,000 Employees)Medium (1,001 to 4,999Employees) Large (> 5,000 Employees)

1 Noah Consulting Credit Acceptance Quicken Loans

2 Sev1Tech Lafayette General Health USAA

3 Commonwealth FinancialNetwork

Avanade Erickson Living

4 Secure-24 Autodesk Sharp HealthCare

5 Connectria Nicklaus Children’s Hospital Prudential Financial

6 Axxess Financial Industry RegulatoryAuthority


7 GlobalScape CHG Health Services Owens Corning

8 Bounce Exchange NuStar Energy DHL Express

9 Liquidnet Akamai University of Notre Dame

10 National Rural Electric CooperativeAssociation

Halifax Health Genentech

Source: “2015 100 Best Places to Work in IT,” Computerworld, July 2015.

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Typical IS Titles and FunctionsThe organizational chart shown in Figure 2.14 is a simplified model of an ISdepartment in a typical medium-sized or large organization. The followingsections provide a brief description of these roles. Smaller firms often com-bine the roles shown in Figure 2.14 into fewer formal positions.

Chief Information OfficerThe role of the chief information officer (CIO) is to employ an IS department’sequipment and personnel to help the organization attain its goals. CIOs alsounderstand the importance of finance, accounting, and return on investment.They can help companies avoid damaging ethical challenges by monitoringhow their firms are complying with a large number of laws and regulations.A good CIO is typically a visionary who provides leadership and direction tothe IS department to help an organization achieve its goals. CIOs need techni-cal, business, and personal skills.

Senior IS ManagersA large organization may have several people employed in senior IS manage-rial levels with job titles such as vice president of information systems, man-ager of information systems, and chief technology officer (CTO). A centralrole of all these people is to communicate with other areas of the organizationto determine changing business needs. Managers outside the IS organizationmay be part of an advisory or steering committee that helps the CIO andother IS managers make decisions about the use of information systems.Together, they can best decide what information systems will support

Chief informationofficer

Chief technologyofficer


Systems analyst


Help desksupport specialist


Web developer

Development Support

Data centermanager

System operator

Information systemssecurity analyst

LAN administrator

System developer

FIGURE 2.14Three primary functions of the information systems organizationEach of these functions—operations, development, and support—encompasses several differentIS roles.

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corporate goals. The CTO, for example, typically works under a CIO and spe-cializes in networks and related equipment and technology.

Operations RolesThe operations group is responsible for the day-to-day running of IS hard-ware to process the organization’s information systems workload. It must alsodo capacity planning to expand and upgrade equipment to meet changingbusiness needs. The operations group is constantly looking for ways toreduce the overall cost and increase the reliability of the organization’s com-puting. This group is also responsible for protecting the company’s IS systemsand data from unauthorized access. Professionals in the operations groupinclude those in the following positions:

● Data center manager. Data center managers are responsible for themaintenance and operation of the organization’s computing facilities thatmay house a variety of hardware devices—mainframe and or supercom-puters, large numbers of servers, storage devices, and networking equip-ment. Data center managers supervise other operations workers toaccomplish the day-to-day work needed to support business operations aswell as complete software and hardware upgrades. They also plan forcapacity changes and develop business contingency plans in the event ofa business disruption due to a fire, power outage, or natural disaster.

● System operator. System operators run and maintain IS equipment. Theyare responsible for efficiently starting, stopping, and correctly operatingmainframe systems, networks, tape drives, disk devices, printers, and soon. Other operations include scheduling, maintaining hardware, and pre-paring input and output.

● Information systems security analyst. IS security analysts are responsi-ble for maintaining the security and integrity of their organizations’ sys-tems and data. They analyze the security measures of the organizationand identify and implement changes to make improvement. Security ana-lysts are responsible for developing and delivering training on propersecurity measures. They also are responsible for creating action plans inthe event of a security breach.

● LAN administrator. Local area network (LAN) administrators set up andmanage network hardware, software, and security processes. They man-age the addition of new users, software, and devices to the network. Theyalso isolate and fix operations problems.

Development RolesThe development group is responsible for implementing the new informationsystems required to support the organization’s existing and future businessneeds. Importantly, they must also modify existing information systems as theneeds of the organization evolve and change. They are constantly on thewatch for new ways to use information systems to improve the competitive-ness of the firm. Professionals in the development group include those in thefollowing positions:

● Software developer. These individuals are involved in writing the soft-ware that customers and employees use. This includes testing and debug-ging the software as well as maintaining and upgrading software after it isreleased for operation. Software developers frequently collaborate withmanagement, clients, and others to build a software product from scratch,according to a customer’s specifications, or to modify existing software tomeet new business needs.

● Systems analyst. Systems analysts frequently consult with managementand users, and they convey system requirements to software developers

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and network architects. They also assist in choosing and configuringhardware and software, matching technology to users’ needs, monitoringand testing the system in operation, and troubleshooting problems afterimplementation.

● Programmer. Programmers convert a program design developed by asystems analyst or software developer into one of many computer lan-guages. To do this, they must write, debug, and test the program toensure that it will operate in a way that it will meet the users’ needs.

● Web developers. These professionals design and maintain Web sites,including site layout and function, to meet the client’s requirements. Thecreative side of the job includes creating a user-friendly design, ensuringeasy navigation, organizing content, and integrating graphics and audio(Figure 2.15). The more technical responsibilities include monitoring Website performance and capacity.

SupportThe support group provides customer service for the employees, customers,and business partners who rely on the firm’s information systems and serviceto accomplish their work. The support group responds to queries from theseconstituents and attempts to be proactive in eliminating problems before theyoccur. They often develop and provide training to users to enable them tobetter use information systems services and equipment. Professionals in thesupport group include those in the following positions:

● Database administrator. Database administrators (DBAs) design and setup databases to meet an organization’s needs. DBAs ensure that the data-bases operate efficiently, and they perform fine-tuning, upgrading, and


FIGURE 2.15Web developersWeb developers create and maintain company Web sites.

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testing modifications as needed. They are also responsible for implement-ing security measures to safeguard the company’s most sensitive data.

● System support specialist. These skilled specialists respond to telephonecalls, electronic mail, and other inquiries from computer users regardinghardware, software, networking, or other IS-related problems or needs.System support specialists diagnose the problem through dialogue withthe user, research solutions, and implement a plan to resolve the problemor refer the issue to specialized IS staff. Many organizations set up “drop-in” centers, where users can come to meet face-to-face with the help deskspecialists to get help.

IS-Related Roles outside the IS OrganizationIn addition to IS workers placed within the IS organization, some companieshave people who take on IS-related roles but reside outside the IS organization.For example, data scientists, can be found in the marketing, sales, and supplychain management departments of large organizations. Data scientists are respon-sible for understanding the business analytics technology as well as the business,and then putting all of that together to deliver improvements in decision making.

Based on a recent survey of 165 organizations representing over $45 bil-lion in information technology spending in Europe and the United States,only about 60 percent of all information technology outlays are controlled bythe information systems department. This means other business units areresponsible for 40 percent of the total information technology costs within anorganization.27 Shadow IT is a term used to describe the information systemsand solutions built and deployed by departments other than the informationsystems department. In many cases, the information systems department maynot even be aware of these efforts.

At one time, shadow IT was limited to employee or departmental pur-chases of nonstandard computing devices and off-the-shelf software fromoffice supply stores. However, the scope of shadow IT spending has greatlyexpanded, largely due to cloud computing and the availability of enterprisesoftware, file-sharing apps, and collaboration tools as a service. Cloud serviceproviders can deliver increasing amounts of computing, network, and storagecapacity on demand and without requiring any capital investment on the partof the cloud users. These cloud providers typically offer a monthly or annualsubscription service model; they may also provide training, support, and dataintegration services. All of this makes it easier for department managers toskirt formal procedures associated with the purchase of large capital expenseitems—including scrutiny by the information system department.

Shadow IT enables business managers to quickly create highly innovativesolutions to real business problems and to test out these solutions. Such sys-tems may serve as prototypes that evolve into future approved IT solutions.However, shadow IT solutions frequently employ nonapproved vendors, soft-ware, or hardware and may not meet the IS department standards for control,documentation, security, support, and reliability. This raises security risks andissues in regard to compliance with essential government and industry stan-dards, such as Basel III (international standards for the banking industry),FISMA (Federal Information Security Management Act of 2002), GAAP (Gener-ally Accepted Accounting Principles), HIPAA (Health Insurance Portability andAccountability Act), IFRS (International Financial Reporting Standards), andSarbanes-Oxley Act (accounting regulations for publicly traded companies).

Issues often arise when a shadow IT solution “breaks” and questions areraised about who is responsible for fixing it and supporting the end users.The IS department may not have developed it, or not even been aware of it,but business users expect their help in “fixing” it. Table 2.6 presents a sum-mary of the pros and cons associated with shadow IT.

shadow IT: The information systemsand solutions built and deployed bydepartments other than the informationsystems department. In many cases,the information systems departmentmay not even be aware of these efforts.

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The information systems department may become more comfortable withshadow IT if it sees the IS department’s role as maximizing the effective useof technology in the company rather than controlling the use of technology.Also shadow IT provides another source of funds to tackle high-priorityprojects.

CertificationOften, the people-filling IS roles have completed some form of certification.Certification is a process for testing skills and knowledge; successful com-pletion of a certification exam results in an endorsement by the certifyingauthority that an individual is capable of performing particular tasks orjobs. Certification frequently involves specific, vendor-provided, or vendor-endorsed coursework. Popular certification programs include Microsoft Cer-tified Systems Engineer (MCSE), Certified Information Systems SecurityProfessional (CISSP), Oracle Certified Professional, and Cisco CertifiedSecurity Professional (CCSP). Getting certified from a software, database, ornetwork company may open the door to new career possibilities or result inan increase in pay. According to a recent survey, 65 percent of employersuse IT certifications to differentiate between equally qualified candidates,while 72 percent of employers require some form of IT certification as arequirement for certain job roles. In some organizations, earning certaincertifications can result in a pay increase or eligibility for a new role. Thefollowing is a list of some of the more in demand certifications.28

● Citrix Certified Enterprise Engineer● Comp TIA Security+● GIAC Certified Windows System Administrator● Certified Computer Examiner● AWS Certified SysOps Administrator-Associate (Cloud)● EC-Council Certified Security Analyst● Mongo DB Certified DBA● Microsoft Certified Solution Developer: Applications Lifecycle

Management● Cisco Certified Design Associate

TABLE 2.6 Pros and cons of shadow IT effortsPros Cons

Enables the business to test quicksolutions to business needs withoutdelays brought on by involvement ofinformation systems.

The systems and processes developedmay lack necessary levels of securityrequired to meet compliancestandards.

Can create an innovative, synergisticpartnership between the informationsystems department and other businessunits.

Can create tension between the CIOwho has responsibility for technologywithin the organization and businessmanagers who want more of a role inthe information system decisions.

Provides the opportunity to evaluateand test many more information sys-tem initiatives.

Individual departments may buy ser-vices, software, and hardware that thecompany could get a better dealthrough central purchasing.

May be wasteful and duplicate workalready being done by the ISorganization.

Issues can arise over responsibility tofix “nonapproved” solutions.

certification: A process for testingskills and knowledge; successful com-pletion of a certification exam results ina statement by the certifying authoritythat confirms an individual is capable ofperforming particular tasks.

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Other IS CareersIn addition to working for an IS department in an organization, IS personnelcan work for large consulting firms, such as Accenture, IBM, and Hewlett-Packard. Some consulting jobs entail frequent travel because consultants areassigned to work on various projects, wherever the client is. Such jobs requireexcellent project management and people skills in addition to IS technicalskills. Related career opportunities include computer training, computer andcomputer-equipment sales, and computer equipment repair and maintenance.

Other IS career opportunities include being employed by technology com-panies, such as Oracle, IBM, HP, Microsoft, Google, and Dell. Such a careerenables an individual to work on the cutting edge of technology, which canbe challenging and exciting.

As some computer companies cut their services to customers, new compa-nies are being formed to fill the need. With names such as Speak with a Geekand Geek Squad, these companies are helping people and organizations withcomputer-related problems that computer vendors are no longer solving.

Some people decide to start their own IS businesses rather than continueto work for someone else. One such entrepreneur, Lavanya Purushothaman,started ATS Solutions, a UK-based company that offers software developmentservices and consulting to a wide range of industries and business areas.Small business owners like Purushothaman often prefer to be their own boss,with the freedom to think innovatively and take on new challenges.29 Otherpeople become IS entrepreneurs or freelancers, working from home writingprograms, working on IS projects with larger businesses, or developing newapplications for the iPhone or similar devices. Some Internet sites, such, post projects online and offer information and advicefor people working on their own. Many freelancers work for small- tomedium-sized enterprises in the U.S. market. People doing freelance or con-sulting work must be creative in pursuing new business, while also protectingthemselves financially. Freelancers and consultants must aggressively markettheir talents, and to ensure they are paid, should insist that some or all oftheir fees for a given project are put into an escrow account.

Working in TeamsMost IS careers involve working in project teams that can consist of many of thepositions and roles discussed earlier. Thus, it is always good for IS professionalsto have good communication skills and the ability to work with other people.Many colleges and universities have courses in information systems and relatedareas that require students to work in project teams. At the end of every chapterin this book are team activities that require teamwork to complete a project. Youmay be required to complete one or more of these team-oriented assignments.

Finding a Job in ISTraditional approaches to finding a job in the information systems areainclude attending on-campus visits from recruiters and getting referrals fromprofessors, friends, and family members. People who have quit jobs or beenlaid off often use informal networks of colleagues or business acquaintancesfrom their previous jobs to help find new jobs.

Many colleges and universities have excellent programs to help studentsdevelop résumés and conduct job interviews. Developing an online résumécan be critical to finding a good job. Many companies only accept résumésonline and screen job candidates using software to search for key words andskills. Consequently, mentioning the right key words and skills in yourresume can mean the difference between getting and not getting a job inter-view. Some corporate recruiters, however, are starting to actively search for

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CriticalThinking Exercise

employees rather than sifting through thousands of online résumés or postingjobs on their Web sites. Instead, these corporate recruiters do their own Internetsearches and check with professional job sites such as,,, and to name just afew. Other companies hire college students to help them market products andservices to other students. In addition to being paid, students can get invaluablecareer experience. In some cases, it can help them get jobs after graduation.

Students who use the Internet to access other nontraditional sources to findIS jobs have more opportunities to land a job. Many Web sites, such as Mon-ster, Career Builders, Indeed, Simply Hired, Snagged a Job, TheLadders, Linke-dIn, and ComputerJobs, post job opportunities for information system careersas well as more traditional careers. Most large companies list job opportunitieson their corporate Web sites. These sites allow prospective job hunters tobrowse job opportunities and get information on job location, salary, and bene-fits. In addition, some sites allow job hunters to post their résumés. Many peo-ple use social networking sites such as Facebook to help get job leads.Corporate recruiters also use the Internet and social network sites to gatherinformation on current job candidates or to locate new job candidates.

Many professional organizations and online user groups can be helpful infinding a job, staying current once employed, and seeking new career oppor-tunities. These groups include the Association for Computer Machinery (, the Association of Information Technology Professionals(AITP:, Apple User Groups (, andLinux user groups based in various countries around the world.

Many companies use Twitter to advertise job openings in industries suchas advertising and public relations, consulting, consumer products, and educa-tion, among others. Many organizations in the information systems industry,including Google (@googlejobs), Intel (@jobsatIntel), Microsoft (@Microsoft_-Jobs), and Yahoo (@EngRecruiter), also use Twitter to advertise job openings.

Students should review and edit what is posted about them on socialmedia sites, as employers often search the Internet to get information aboutpotential employees before they make hiring decisions. Over 90 percent ofrespondents to a recent survey either use or plan to use some form of socialmedia—such as Facebook, LinkedIn, or Twitter—in their recruiting.30

Product Supply Turns to Shadow ITYou are a section manager in the product supply department of a midsizedmanufacturing firm. The department manager has called a meeting of all sectionmanagers to outline his plan to contract with a cloud service provider to providesales forecasting and inventory management software and services. The goal is toreduce the number of out-of-stock occurrences while maintaining a minimum levelof finished product inventory. The cloud service provider requires detailed order,shipment, and promotion data for the past three years in addition to ongoing currentdata. Members of the product supply department will be able to access the softwareto develop sales forecasts and make better manufacturing and inventory decisions.

Review Questions1. What are the arguments for and against shadow IT?2. What are the possible motivations for your manager to recommend the use of

shadow IT?

Critical Thinking Questions1. What potential issues could arise from this proposed project?2. The department manager has just completed his discussion and is asking for

comments and questions. What would you say?

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Principle:Organizations are open systems that affect and are affected by theirsurrounding environment.

An organization is a group of people that is structured and managed tomeet its mission or set of group goals. Organizations affect and are affectedby their environment.

The value chain is a series of activities that an organization performs to trans-form inputs into outputs in such a way that the value of the input is increased.

The supply chain is a key value chain whose primary activities includeinbound logistics, operations, outbound logistics, marketing and sales, andservice. Supply chain management encompasses all the activities required toget the right product into the right consumer’s hands in the right quantity atthe right time and at the right cost.

Information systems have transformed the nature of work and the shapeof organizations themselves. They are often so intimately involved in theactivities of the value chain that they are a part of the process itself.

A virtual team is a group of individuals whose members are distributedgeographically, but who collaborate and complete work through the use ofinformation systems.

Principle:Positive change is a key ingredient for any successful organization.

Innovation is the application of new ideas to the products, processes, andactivities of a firm, leading to increased value. Innovation is the catalyst forthe growth and success of any organization. Innovation may be classified assustaining or disruptive.

Business process reengineering is a form of innovation that involves theradical redesign of business processes, organizational structures, informationsystems, and values of the organization to achieve a breakthrough in results.Continuous improvement is a form of innovation that continually improvesbusiness processes to add value to products and services.

Outsourcing is a long-term business arrangement in which a company con-tracts for services with an outside organization that has expertise in providing aspecific function. Offshore outsourcing is an outsourcing arrangement in whichthe organization providing the service is located in a country different from thefirm obtaining the services. Downsizing involves reducing the number of employ-ees to cut costs. All these staffing alternatives are an attempt to reduce costs orimprove services. Each approach has its own associated ethical issues and risks.

Principle:Information systems must be implemented in such a manner that theyare accepted and work well within the context of an organization andsupport its fundamental business goals and strategies.

Organizational culture consists of the major understandings and assump-tions for a business, a corporation, or an organization. According to the con-cept of organizational learning, organizations adapt to new conditions or alterpractices over time.

Organizational change deals with how organizations successfully plan for,implement, and handle change. The ability to introduce change effectively iscritical to the success of any information system project.

Several change models can be used to increase the likelihood of success-fully introducing a new information system into an organization.

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Lewin’s three-stage organization change model divides the change imple-mentation process into three stages: unfreezing, moving, and refreezing. Themodel also identifies key tasks that need to be performed during each stage.

Lewin’s force field analysis is an approach to identifying the driving (pos-itive) and restraining (negative) forces that influence whether change canoccur.

Leavitt’s diamond proposes that every organizational system is made up offour main components—people, tasks, structure, and technology—that all inter-act. To successfully implement a new information system, appropriate changesmust be made to the people, structure, and tasks affected by the new system.

The user satisfaction and technology acceptance model specifies the factorsthat can lead to better attitudes about the use of a new information system,along with higher acceptance and use of it.

The diffusion of innovation theory explains how a new idea or productgains acceptance and diffuses through a specific population or subset of anorganization. A key point of this theory is that adoption of any innovationdoes not happen all at once for all people; rather, it is a drawn-out process,with some people quicker to adopt the innovation than others. The theorygroups adopters into five categories and recommends a different adoptionstrategy for each category.

Principle:The information system worker functions at the intersection of busi-ness and technology and designs, builds, and implements solutionsthat allow organizations to effectively leverage information technologysystems.

Successful information system workers need to have a variety of personalcharacteristics and skills, including the ability to work well under pressure, goodcommunication skills, solid analytical and decision-making skills, effective teamand leadership skills, and adeptness at implementing organizational change.

Technology is one of the fastest-growing areas of the U.S. economy, whichhas a strong demand for information system workers.

Opportunities in information systems are available to people from foreigncountries under the H-1B and L-1 visa programs.

The IS organization has three primary functions: operations, development,and support.

Typical operations roles include data center manager, system operator,information system security analyst, and LAN administrator.

Typical development roles include software developer, systems analyst,programmer, and Web developer.

Typical support roles include database administrator and system supportspecialist.

Only about 60 percent of all information technology outlays are controlledby the information systems department. Shadow IT is a term used to describethe information systems and solutions built and deployed by departments otherthan the information systems department. In many cases, the information sys-tems department may not even be aware of these efforts.

Certification is a process for testing skills and knowledge; successful com-pletion of a certification exam results in an endorsement by the certifyingauthority that an individual is capable of performing particular tasks or jobs.Certification frequently involves specific, vendor-provided, or vendor-endorsedcoursework.

Besides working for an IS department in an organization, IS personnel canwork for a large consulting firm or a hardware or software manufacturer.Developing or selling products for a hardware or software vendor is anotherIS career opportunity.

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Key Terms

business process reengineering (BPR)


change management model

continuous improvement


diffusion of innovation theory


driving forces

force field analysis


Leavitt’s diamond

Lewin’s change model

offshore outsourcing



organizational change

organizational culture

organizational learning


process redesign


restraining forces

shadow IT

soft side of implementing change

supply chain

supply chain management (SCM)

technology acceptance model (TAM)

value chain

virtual team

Chapter 2: Self-Assessment Test

Organizations are open systems that affect and areaffected by their surrounding environment.

1. Organizations are considered to besystems, meaning that can affect and are affectedby their surrounding environment.

2. The is a series of activities that anorganization performs to transform inputs intooutputs in such a way that the value of the inputis increased.a. supply chainb. inbound logisticsc. value chaind. manufacturing

3. encompasses all the activitiesrequired to get the right product into the rightcustomer’s hands in the right quantity at the righttime and at the right cost.

4. Which of the following is not a true statementregarding the use of virtual teams?a. Virtual teams enable the organization to enlist

the best people in different geographical regionsto solve important organizational problems.

b. The use of virtual teams provides the ability tostaff a team with people who have a widerange of experience and knowledge thatstems from a variety of professional experi-ences and cultural backgrounds.

c. It is usually easy and convenient for all mem-bers of a virtual team to meet at the same timeand physical location.

d. Members of a virtual team may feel that theirwork day never ends.

Positive change is a key ingredient for any suc-cessful organization.

5. Continuous enhancement of an existing productis an example of innovation.

6. A long-term business arrangement in which acompany contracts for services with an outsideorganization located in another country to providea specific business function is called .a. business process reengineeringb. outsourcingc. downsizingd. offshore outsourcing

7. of large information system projectsfail, at least in part, due to a failure to preparebusiness users for the actual change to come.a. Less than 15 percentb. Over 80 percentc. About 48 percentd. Between 30 and 70 percent

Information systems must be implemented insuch a manner that they are accepted and workwell within the context of an organization andsupport its fundamental business goals andstrategies.

8. The three stages of Lewin’s change model include(1) ceasing old habits and creating a climate thatis receptive to change; (2) learning new workmethods, behaviors, and systems; and(3) .a. reinforcing changes to make the new process

second nature, accepted, and part of the job

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b. fine-tuning existing work processes and sys-tems so they become more streamlined andefficient

c. replacing existing users that refuse to acceptthe change

d. rewarding those responsible for the change9. The change model is helpful in

identifying and addressing negative feelings thatmake it difficult for users to accept the move to anew information system.a. Leavitt’s diamondb. Lewin’s force field analysisc. Diffusion of innovation theoryd. Lewin’s change model

The information system worker functions at theintersection of business and technology anddesigns, builds, and implements solutions that allow

organizations to effectively leverage information tech-nology systems.

10. The Bureau of Labor Statistics forecasts anincrease of new computing jobs inthe time period 2012 to 2022.a. .12 millionb. .5 millionc. 1.0 milliond. 1.2 million

11. The typical information systems organization istypically divided into three functions, includingsupport, development, and .

12. is a process for testing skills andknowledge; successful completion of a certifica-tion exam results in an endorsement by the cer-tifying authority that an individual is capable ofperforming particular tasks or jobs.

Chapter 2: Self-Assessment Test Answers

1. open2. c3. Supply chain management4. c5. sustaining6. d

7. d8. d9. b10. d11. operations12. Certification

Review Questions

1. What is the difference between a value chain anda supply chain?

2. What activities are encompassed by supply chainmanagement?

3. What are some of the characteristics of a virtualteam?

4. Identify and briefly describe the differencesbetween the two types of innovation discussed inthe chapter.

5. Briefly define the term “business processreengineering.”

6. What is meant by continuous improvement?

7. What is outsourcing? How is it different fromoffshoring?

8. What is meant by the term “the soft side ofimplementing change”?

9. What do the terms “organizational culture” and“organizational learning” mean?

10. Sketch and briefly describe Leavitt’s diamond.11. List and describe three popular job-finding Web

sites.12. Describe the role of a CIO within an organization.13. What is meant by the term “shadow IT”?

Discussion Questions

1. Discuss a value chain of which you are apart. What is the purpose of the value chain?What is your role? How do you interactwith other members of the value chain? Howis the effectiveness of the value chainmeasured?

2. Discuss a virtual team of which you are a mem-ber. What is the role of the team? How were themembers of the team chosen, and what uniqueskills and experiences does each member bring tothe team? How does the team communicate andshare information?

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3. What things might managers in an organizationdo that could unintentionally discourage innova-tion by their employees? How can innovation beencouraged?

4. Identify and briefly discuss the similarities anddifferences between outsourcing and downsizing.How might an enlightened management teamdeal with the negative impacts of either down-sizing or outsourcing?

5. Identify several aspects of the culture shared bymembers of a group to which you belong. Arethere any aspects of this culture that you thinkare negative and detract from what the group istrying to accomplish?

6. Your manager has asked for your input on ideas forhow to improve the likelihood of successful adop-tion of a major new information system that will beused by members of the company’s financedepartment. What suggestions would you offer?

7. You have been asked to assess the success of arecently implemented system that has beendeployed across the entire supply chain of a largeorganization. How might you go about trying tomeasure the technology diffusion of this system?How else might you assess the success of thissystem?

8. Describe the advantages and disadvantages ofusing the Internet to search for a job.

9. Assume you are a member of a committeeresponsible for replacing your organization’sretiring CIO. What characteristics would youwant in a new CIO? How would you go aboutidentifying qualified candidates?

10. Identify several personal characteristics needed tobe successful in an information system career.Which of these characteristics do you think youpossess?

Problem-Solving Exercises

1. Figure 2.15 presents the occupational outlook(median salary and number of job openings) forselected information systems positions. Obtaindata from the U.S. Bureau of Labor Statistics anduse a spreadsheet program to create a similarfigure for five occupations of your choice.

2. Use graphics software to develop a force fieldanalysis of the restraining forces and driving

forces that would impact your decision to changemajors or to seek a new job.

3. Do research to learn more about GE’s ChangeAcceleration Management process. Prepare aslide presentation that summarizes the key stepsin the process and outlines the advantages of thisprocess.

Team Activities

1. With your team, interview a manager in a suc-cessful organization about that organization’sculture. Try to identify both positive and negativeaspects of that culture. Discuss whether themanager employs any organizational changemodel when introducing a major change.

2. Develop a set of interview questions and outlinea process that you and your team might follow to

assess the degree of user satisfaction and tech-nology acceptance of a major new system.

3. Do research to learn about the use of focusgroups to gain insight into how people view anew product or idea. With your team, design a setof focus group questions that could be used toassess a work groups feelings about a new infor-mation system to be implemented.

Web Exercises

1. Do research online to identify the number of newH-1B visas granted this year by job category—administrative specializations, education, engi-neering, information systems, law, medicine andhealth, math and physical science, and other.

2. Identify the three top-ranked places to work as anIS professional. What makes these places so

attractive? Are these features and benefits ofimportance to you?

3. Do research on the Web to learn about howrecruiters use social network data to helpscreen job applicants. Does what you learnraise any concerns about how you could beviewed?

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Career Exercises

1. Do research on an entrepreneur that you admire.Write a brief description of how the individualwas able to start a business. What challenges hadto be overcome? Did the individual encounterfailure before becoming a success?

2. For you, what would be the most positive aspectsof a career in information systems? What wouldbe the least positive aspects of such a career?

3. Use presentation software (e.g., MicrosoftPowerPoint) to prepare a brief slide presentationthat describes your idea job in terms of role,responsibilities, interaction with others, degree ofdecision-making authority, and other characteris-tics important to you.

Case Studies

Case One

Railroads Struggle to Implement PositiveTrain ControlPositive train control (PTC) is a complex system designedto prevent the human errors that cause roughly 40 percentof train accidents, including train-to-train collisions,derailments caused by excess speed, train movementthrough track switches left in the wrong position, andunauthorized incursion into work zones. PTC uses wirelesscommunications to relay visual and audible data to traincrew members regarding when the train needs to be slowedor stopped. This guidance is based on several factors,including the train’s location and speed, as determinedby GPS, track geometry, the status and position ofapproaching switches, and speed limits at approachingcurves, crossings, and other speed-restriction areas. PTCcommunicates with the train’s onboard computer, whichaudibly warns the engineer and displays the train’s safe-braking distance, based on conditions at that time. Shouldthe engineer fail to respond appropriately, the onboardcomputer will activate the brakes and safely slow or stopthe train.

The National Transportation Safety Board (NTSB) hasinvestigated 145 “PTC-preventable” railroad accidents thatoccurred since 1969. The NTSB estimates that some 300deaths and over 6,700 injuries could have been preventedhad PTC systems been in place. Congress mandated inthe Rail Safety Improvement Act of 2008 that railroadsimplement PTC systems on rail lines that (1) carry morethan 5 million tons annually, (2) carry poisonous or toxicmaterials, or (3) carry commuter rail passenger service.The act specified a deadline of December 31, 2015, forimplementation of PTC.

Metrolink is a commuter rail system serving southernCalifornia and the greater Los Angeles area. A 2008 Metrolinkaccident that killed 25 and injured 100 is often cited asthe event that drove Congress to pass the Rail SafetyImprovement Act. In that accident, a Metrolink commutertrain collided head-on with a Union Pacific train becausethe Metrolink engineer, who had been texting, failed to stopfor a red signal.

An executive of the Association of AmericanRailroads estimates that PTC has been installed on

8,200 miles out of the 60,000 miles where PTC technologyis mandated. He also believes that, for a number ofreasons, the railroads cannot complete the installation ofPTC until the end of 2018 and that it will take anadditional two years to test that all the systemcomponents work together correctly.

The Federal Railroad Administration (FRA) estimates thecost of the PTC system to be $52,000 per mile of track—for atotal of more than $3 billion for the 60,000 miles of track tobe covered. Meanwhile, the railroads estimate the totalcost will be more than $9 billion and claim they have spent$5.2 billion on this effort already.

One complicating factor relates to the fact that PTCsystems require access to a wireless frequency in order tooperate. The Federal Communications Commission regulatesthe use of radio frequencies and grants exclusive access orlicenses to certain frequencies. This ensures that operatorsdon’t interfere with one another by broadcasting signals overthe same frequency. Demand for access to frequencies in thewireless broadband spectrum has soared due to the rapidgrowth in use of cell phones, smartphones, and mobilecomputing devices. The railroads must acquire a license tooperate their wireless PTC system at a certain frequency, butanother company may already own the rights to thatfrequency band in a certain area. In some cases, railroadshave struggled for years to buy the rights to airwaves tooperate their PTC equipment.

Tracks on which multiple carriers operate presenta higher risk of collisions. The continued smooth,uninterrupted operations of each PTC system as the traincrosses tracks operated by different rail carriers is criticaleven when that carrier’s PTC system is built on hardware,software, and track switches from an entirely different setof vendors.

Critical Thinking Questions1. Develop a force field analysis that approximates the

strength of the driving and restraining forces for PTC.2. The high cost of implementing changes to infrastruc-

ture always raises questions about priorities. Shouldinvestments in infrastructure be made to addresshigh-impact, low-probability events (such as human-error-caused accidents) or should investments be

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focused on low-impact, high-probability events (suchas the need for ongoing cleaning and maintenance oftrain stations and installing air conditioning)? Make anargument in favor of accelerating deployment of PTCgiving three strong reasons supporting this decision.Now take the other side and present a strong argumentagainst PTC deployment and offering an alternativesolution.

3. Do research to determine the current status of PTCdeployment. Summarize your findings in a coupleof paragraphs.

SOURCES: “An Introduction to Positive Train Control,”, accessed October 3, 2015;“Report to Congress on the Status of Positive Train Control Implemen-tation,” U.S. Department of Transportation Federal Railroad Adminis-tration, August 7, 2015,; Shear,Michael D. and Mouawad, Jad, “Amtrak Says Shortfalls and RulesDelayed Its Safety System,” New York Times, May 14, 2015,; “Investigating the PhiladelphiaAmtrak Train Derailment,” New York Times, May 12, 2015,; “About Us,”, accessed October 3, 2015.

Case Two

Nordstrom’s Innovation Efforts Recognize theImportance of the Soft Side of ImplementingChangeBased in Seattle, Washington, Nordstrom Inc. is an upscaledepartment store chain that operates more than 300 storesacross the United States and Canada. The company got itsstart in 1901 as a small shoe store in downtown Seattle, and ithas since grown into a well-regarded fashion specialty chainwith net sales of more than $13.1 billion in 2014. Nordstromhas built a loyal customer following through its qualityproducts and its almost legendary customer service. Thecompany prides itself on its culture, which supports andempowers employees, and for the last decade, the companyhas consistently been named one of Fortune magazine’s “100Best Companies to Work For.”

In keeping with its commitment to quality, Nordstromhas invested heavily in innovation throughout itsorganization—by embracing omnichannel retailing strategiesthat allow customers to make purchases in the store, online,and via mobile devices, and through its approach todeveloping and supporting the variety of informationsystems that fuel the company’s growth.

For instance, Nordstrom looked for innovative solutionsto help it revamp its approach to developing mobile appsafter a detailed analysis of internal processes determined thatits typical development cycle for updating customer mobileapps was 22 to 28 weeks—far too long to keep the companycompetitive in the rapidly changing mobile marketplace. Theproject was successful (cutting development cycles down to30 days or less) because the company took the time tothoroughly map all of the processes—and then shared thatdetail with employees and other stakeholders. Through thatprocess it became clear to everyone involved how much

change was needed in order for the company to staycompetitive on the digital front. In addition, having everystep mapped out showed each individual team how it neededto change.

According to Courtney Kissler, Nordstrom’s vicepresident of e-commerce and store technologies, the processanalysis work that Nordstrom performed at the start of theproject provided the data that helped build momentum forchange within the organization. Kissler’s advice to otherteams looking to make such a transformation is, “Make theconversation as much about data as possible and not aboutemotion. A lot of the skeptics come around once they see [thedata].”

In another effort to strengthen its innovation practices,the retailer recently made changes to its “Innovation Lab,”which it established in 2010 to focus on jumpstartingtechnology projects. Over time, the company came to realizethat those efforts needed to be better integrated into thebusiness groups in order to spur collaboration between thetechnology innovators and other Nordstrom employees—andencourage acceptance of new initiatives. Therefore, thecompany moved most of its technologists out of its centrallab and into the different business groups so they could workmore closely with end users, especially those who workdirectly with customers. This approach “works better becausewe have a broader intake of new ideas from both businessand technology teams,” according to Nordstrom CIO DanLittle.

These changes in the way Nordstrom is innovating andproviding the information systems that support its corebusiness mean that Nordstrom employees—both on thetechnical and the business side—need to learn new ways ofworking with technology and the development process.However, the changes also mean that new innovations have ahigher chance of adoption and acceptance because end usersare more connected to the innovation process.

Keeping an organization as large as Nordstromcompetitive and innovative requires all employees toembrace change. And for Nordstrom, its focus on the softside of implementing change is paying off. Nordstrom hasbeen able to build on its organizational culture to encourageinnovation and acceptance of change. As Sam Hogenson, vicepresident of technology at Nordstrom, puts it, “If you don’tpay attention to culture, everything is really hard to do. But ifyou do, everything else works.”

Critical Thinking Questions1. How might Nordstrom’s decision to move many of its

technology innovators out of its central Innovation Laband into the business groups allow the retailer to betterfocus on the soft side of implementing change?

2. What resistance from the business units might haveinhibited the movement of technology innovators intobusiness groups? What strategies or actions couldmanagement have taken to reduce this resistance?

3. Nordstrom’s Vice President of E-Commerce and StoreTechnologies, Courtney Kissler, is a strong proponentof innovating through continuous improvement. Howdo you think Nordstrom’s organizational culture and

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its focus on the soft side of implementing change couldenhance its continuous improvement initiatives?

SOURCES: “Nordstrom Company History,” Nordstrom, Inc.,, accessed December6, 2015; “The World’s Biggest Public Companies: #864 Nordstrom,”Forbes, May 2015,; “100 BestCompanies to Work For: 2015,” Fortune,, accessed December 7, 2015; Murphy, Chris, “Nordstrom VP: TakeEmotion Out of Agile Transformation,” InformationWeek, May 4, 2015,; “DOES14 -Courtney Kissler – Nordstrom – Transforming to a Culture of ContinuousImprovement,” DevOps Enterprise Summit 2014, October 29, 2014,; Nash, Kim S., “Nordstrom’sInnovation Revamp Leads to E-commerce Texting App,” Wall StreetJournal (CIO Journal blog), May 28, 2015,; Reed, J. Paul, “DevOps in Practice: Nordstrom,” O’Reilly,


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11. Jain, Rahul, “Deutsche Bank Extends Accenture BPOProcurement Contract,” The Outsource Blog, July 3,2015,

12. Thibodeau, Patrick, “In a Symbolic Shift, IBM’s IndiaWorkforce Likely Exceeds U.S.,” Computerworld,November 29, 2012,–ibm-s-india-workforce-likely-exceeds-u-s-.html.

13. Thibodeau, Patrick, “As It Sets IT Layoffs, Citizens BankShifts Work to India by Web,” Computerworld, August13, 2015,

14. Denning, Steve, “What Went Wrong at Boeing?,” Forbes,January 21, 2013,

15. “Kraft Heinz Announces Job Cuts in U.S. and Canada,”Reuters, August 12, 2015,

16. Hornstein, Henry, “The Need to Integrate Project Man-agement and Organizational Change,” Ivey BusinessJournal, March/April 2012,

17. Zhu, Pearl, “Five ‘Super Pitfalls’ Why Large IT ProjectsFail, Future CIO, May 2014,

18. “California Department of Consumer Affairs’ BreEZeSystem,” California State Auditor,, accessed August 11, 2015.

19. Ortiz, Jon, “$96 Million California IT Project Late,Flawed, Busting Budget,” State Worker, February 12,2015,

20. Kaminski, June, “Theory Applied to Informatics—Lewin’sChange Theory,” Canadian Journal of Nursing, Winter2011,

21. Davis, F. D., “Perceived Usefulness, Perceived Ease ofUse, and User Acceptance of Information Technology,”MIS Quarterly, Volume 13, Issue 3, pp. 319–339.

22. “Investor Relations,” Avon,, accessedAugust 12, 2015.

23. “Avon Products,” Why Projects Fail Blog, January 21,2014,

24. Thibodeau, Patrick and Machlis, Sharon, “Despite H-1BLottery, Offshore Firms Dominate Visa Use,” Computer-world, July 30, 2015,

25. Thibodeau, Patrick, “Southern California Edison ITWorkers ‘Beyond Furious’ over H-1B Replacements,”Computerworld, February 14, 2015,

26. “2015 100 Best Places to Work in IT,” Computerworld,July 2015.

27. Groenfeldt, Tom, “40 Percent of IT Spending Is outsideCIO Control,” Forbes, December 2, 2013, www.forbes

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28. Hein, Rich, “IT Certification Hot List 2015: 10 ThatDeliver Higher Pay,” CIO, March 3, 2015,

29. “Starting an Information Technology Business,” FemaleEntrepreneur Association, August 28, 2014,

30. Smith, Darrell, “Job Front: Social Media Expected to PlayBigger Role in Hiring,” Sacramento Bee, February 4,2013,

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PART 2 InformationTechnologyConcepts

Chapter 3Hardware and Mobile Devices

Chapter 4Software and Mobile Applications

Chapter 5Database Systems and Big Data

Chapter 6Networks and Cloud Computing


83Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203


3 Hardware and Mobile Devices

Stephen Coburn/

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Know?Did You

• The Large Hadron Collider (LHC)—built to gain abetter understanding of what our universe is made ofand how it began—captures about 3 gigabytes of dataper second. One gigabyte can store seven minutesof HD-TV. The mission of the LHC Computing Grid is tostore and analyze all this data using 132,922 physicalprocessors, 300 petabytes of online disk storage, and230 petabytes of magnetic tape storage. For perspec-tive, one gigabyte can store seven minutes of HD-TVwhile one petabyte is equivalent to 13.3 years of HD-TV.

• Current technology allows chip manufacturers to createchips with features that measure as small as

14 nanometers (nm) across. For perspective, a mole-cule of water is around 0.5 nm across. Not only arechips getting smaller, but they are getting faster andrequire less energy. These improved chips will be inyour computing devices, smartphones, and wearablecomputers making them more powerful and useful.

• Biomedical engineers are exploring a process calledbioprinting, which uses 3D printers to create living tissuecapable of naturally integrating into the body. This willeventually enable the construction of fully functionalhuman organs.

Principles Learning Objectives

• The computer hardware industry is rapidlychanging and highly competitive, creating anenvironment ripe for technologicalbreakthroughs.

• Computer hardware must be carefully selected tomeet the evolving needs of the organization andits supporting information systems.

• The computer hardware industry and users areimplementing green computing designs andproducts.

• Identify and briefly describe the functions of theprimary components of a computer.

• Give an example of recent innovations incomputer processor chips, memory devices,and input/output devices.

• Identify the characteristics of various classes ofsingle-user and multiuser computer systems, anddiscuss the usage of each class of system.

• Identify some of the challenges and trade-offs thatmust be considered in implementing a data center.

• Define the term “green computing” and identify theprimary goals of this program.

Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

Why Learn about Hardware and Mobile Devices?Organizations invest in computer hardware to improve worker productivity, increase revenue, reduce costs,provide better customer service, speed up time to market, and facilitate collaboration among employees.Organizations that don’t make wise hardware investments are often stuck with outdated equipment that isunreliable and that cannot take advantage of the latest software advances. Such obsolete hardware canserve as an anchor to progress and can place an organization at a competitive disadvantage. Managers, nomatter what their career field and educational background, are expected to help define the business needsthat hardware must support. In addition, managers must be able to ask relevant questions and evaluateoptions when considering hardware investments for their areas of the business. This need is especiallytrue in small organizations, which might not employ information system specialists. Managers inmarketing, sales, and human resources often help IS specialists assess opportunities to apply computerhardware and evaluate the options and features specified for the hardware. Managers in finance andaccounting must keep an eye on the bottom line—guarding against overspending—yet be willing toinvest in computer hardware when and where business conditions warrant it.

As you read this chapter, consider the following:

• What major competitive advantages can organizations gain from the effective use of computerhardware and mobile devices?

• What impact do the increasing capabilities and decreasing costs of hardware over time have onhow organizations are using information system hardware?

This chapter focuses on the hardware components of a computer-based infor-mation system (CBIS). Recall that hardware refers to the physical componentsof a computer that perform the input, processing, output, and storage activi-ties of the computer. When making hardware-purchasing decisions, the over-riding consideration of a business should be how hardware can support theobjectives of the information system (IS) and the goals of the organization.

Anatomy of a Computer

Computer system hardware components include devices that perform input, pro-cessing, data storage, and output, as shown in Figure 3.1. These include the proces-sor, memory, and input/output devices, all of which are discussed in this section.

FIGURE 3.1Basic anatomy of a computerComputer hardware componentsinclude the processor (CPU),memory, address and data bus,and input/output devices.



Address bus

Data bus


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ProcessorThe central processing unit (CPU) or simply processor is the part of a com-puter that sequences and executes instructions. Memory provides the proces-sor with a working storage area to hold program instructions and data. Itrapidly provides data and instructions to the processor. Input/output devicesprovide data and instructions to the computer and receive results from it. Dataand instructions are routed to and from the various components over the bus,a set of electronic circuits.

The components of the computer work together to complete the instruc-tions (e.g., add, multiply, divide, subtract, compare) of a computer programto accomplish the goals of the user (e.g., send/receive email, develop a profitforecast, pay an invoice). Completing an instruction involves two phases(instruction and execution), which are broken down into the following foursteps (see Figure 3.2):

● Instruction phase:

● Fetch instruction. The computer reads the next program instructionto be executed—along with any necessary data—into the processor.

● Decode instruction. The instruction is decoded and passed to theappropriate processor execution unit.

● Execution phase:

● Execute instruction. The computer executes the instruction by mak-ing an arithmetic computation, logical comparison, bit shift, or vectoroperation.

● Store results. The results are stored in temporary storage locationscalled registers or in memory.

Each processor produces a series of electronic pulses at a predetermined rate,called the clock speed, which governs the speed at which these steps are com-pleted. Clock speed is measured in gigahertz (GHz), which is a unit of fre-quency that is equal to one billion cycles per second. Many of today’s personalcomputers operate in the 1 to 4 GHz range. The higher the clock speed, theshorter the interval between pulses and the faster instructions can be completed.

Unfortunately, the faster the clock speed of the processor, the more heatthe processor generates. This heat must be dissipated to avoid corrupting the

FIGURE 3.2Execution of an instruction(1) In the instruction phase, aprogram’s instructions and anynecessary data are read into theprocessor. (2) The instruction is thendecoded by the control unit of theCPU so that the central processorcan understand what to do. (3) In theexecution phase, the arithmetic andlogic unit (ALU) component of theCPU does what it is instructed to do,making either an arithmeticcomputation or a logicalcomparison. (4) The results arethen stored in the registers or inmemory. The instruction andexecution phases together makeup one machine cycle.

Processing device


Control unit ALU


(2) Decode (3) Execute

(1) Fetch (4) StoreI-Time E-Time

central processing unit (CPU):The part of a computer that sequencesand executes instructions.

memory: A component of the com-puter that provides the processor with aworking storage area to hold programinstructions and data.

input/output device: A computercomponent that provides data andinstructions to the computer andreceives results from it.

bus: A set of electronic circuits used toroute data and instructions to and fromthe various components of a computer.

clock speed: A series of electronicpulses produced at a predeterminedrate that affects machine cycle time.

gigahertz (GHz): A unit of frequencythat is equal to one billion cycles persecond; a measure of clock speed.

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data and instructions the computer is trying to process. Thus, processors thatrun at higher temperatures need bigger heat sinks (a device or substance forabsorbing excessive heat), fans, and other components to eliminate the excessheat. This increases the size and weight of the computing device.

Processor FamiliesThis section will introduce the concept of instruction set architecture and pro-cessor family and briefly discuss three of the most commonly used processorfamilies.

The instruction set architecture (ISA) of a computer defines the basicset of commands (opcodes) that the processor can execute. Examples ofopcodes include:

● ADD—Add two numbers together.● COMPARE—Compare numbers.● IN—Input information from a device (e.g., keyboard).● JUMP—Jump to designated memory address.● JUMP IF—Conditional statement that jumps to a designated memory

address.● LOAD—Load information from memory to the processor.● OUT—Output information to device (e.g., monitor).● STORE—Store information to memory.

A processor family is a set of processors from the same manufacturerthat have similar features and capabilities. However within each processorfamily, multiple processors are developed to meet the many diverse comput-ing needs of consumers. While the general ISA and feature set within a givenfamily are identical, certain model specific variations occur. Different proces-sors can use almost the same instruction set while still having very differentinternal design. For example, both the Intel Pentium and AMD Athlon proces-sors use nearly the same instruction set.

x86 family. Intel, AMD, and VIA Technologies are the largest manufac-turers of x86 processors. Servers based on the x86 processor dominate datacenters, and it is the world’s predominant personal computer CPU processor.

Intel Atom. This is the brand name for a line of ultra-low-voltage CPUsfrom Intel that is designed to generate less heat than the x86 chip. As a result,it requires less power and fewer additional components to dissipate theexcees heat. As a result, the Intel Atom is used mostly in lightweight portablecomputers and mobile Internet devices.

ARM. These processors are used in computers that run Android, iOS, andother operating systems found in mobile devices such as laptops and smart-phones. ARM is a designer of computer processors; it licenses its designs tochip manufacturers to build. ARM created a design for a family of processorsbased on Reduced Instruction Set Processing (RISC). RISC processors executea small set of simplified instructions more quickly than complex instructionset computers based on the x86 processor. Because RISC processors requireless power and generate less heat than standard x86 processors, ARM proces-sors do not require big heat sinks and fans to remove excess heat. This resultsin smaller, lighter, more energy-efficient computing devices with longer bat-tery life—ideal for use in smartphones and tablets.

The toughest challenge in designing a processor for a smartphone ortablet is balancing performance and power consumption. Many processordesigns rely on a multiple-core configuration ARM calls big.LITTLE thatincludes high clock speed along with powerful cores, and slower, moreenergy-efficient cores. The powerful cores are used when high performanceis required, such as for gaming computers. The more energy-efficient coresare used for less taxing tasks, such as Web browsing and email. Thisapproach provides sufficient computing power to get the job done, but

instruction set architecture(ISA): A basic set of commands(opcodes) that the processor canexecute.

processor family: A set of proces-sors from the same manufacturer thathave similar features and capabilities.

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reduces heating problems and, consequentially, the drain on the battery torun a cooling fan. Mobile devices from Samsung and Qualcomm employ thebig.LITTLE design.

MultiprocessingMultiprocessing involves the simultaneous execution of two or more instruc-tions at the same time. One form of multiprocessing uses coprocessors.A coprocessor speeds processing by executing specific types of instructionswhile the CPU works on another processing activity. Coprocessors can beinternal or external to the CPU and can have different clock speeds than theCPU. Each type of coprocessor performs a specific function. For example, amath coprocessor chip speeds mathematical calculations, while a graphicscoprocessor chip decreases the time it takes to manipulate graphics.

A multicore processor has two or more independent processing units,called cores, which are capable of sequencing and executing instructions.The multiple cores can run multiple instructions at the same time, therebyincreasing the amount of processing that can be completed in a givenamount of time.

Parallel ComputingParallel computing is the simultaneous execution of the same task on multi-ple processors to obtain results more quickly. Systems with thousands ofsuch processors are known as massively parallel processing systems, a formof multiprocessing that speeds processing by linking hundreds or even thou-sands of processors to operate at the same time, or in parallel, with each pro-cessor having its own bus, memory, disks, copy of the operating system, andapplications. The processors might communicate with one another to coordi-nate when executing a computer program, or they might run independentlyof one another under the direction of another processor that distributes thework to the various processors and collects their results.

The most frequent uses for parallel computing include modeling, simulation,and analyzing large amounts of data. For example, parallel computing is used inmedicine to develop new imaging systems that complete ultrasound scans in lesstime and with greater accuracy, enabling doctors to provide better, more timelydiagnoses to patients. Instead of building physical models of new products,engineers can create virtual models and use parallel computing to test how theproducts work and then change design elements and materials as needed.

The Lawrence Livermore National Laboratory in California is home to theSequoia supercomputer, an impressive example of a massively parallel pro-cessing system. Sequoia is consistently ranked as one of the fastest computersin the world, with over 1.5 million processing cores that allow it to processover 17 quadrillion computations per second.1 Although utilized primarily fornuclear weapons simulation, Sequoia was recently used by a group ofresearchers to model mantle convection (the process within the Earth’s inte-rior that is responsible for the movement of the Earth’s tectonic plates andthe earthquakes, volcanoes, and tsunamis that sometimes accompany thosemovements). The model could only be simulated on such a powerful com-puter and is a step toward developing a better understanding and predictionof natural disasters.2

Grid computing is the use of a collection of computers, often owned bymultiple individuals or organizations, that work in a coordinated manner tosolve a common problem. Grid computing is a low-cost approach to parallelcomputing. The grid can include dozens, hundreds, or even thousands ofcomputers that run collectively to solve extremely large processing problems.Key to the success of grid computing is a central server that acts as the gridleader and traffic monitor. This controlling server divides the computing taskinto subtasks and assigns the work to computers on the grid that have (at

multiprocessing: Thesimultaneous execution of two ormore instructions at the same time.

coprocessor: The part of thecomputer that speeds processing byexecuting specific types of instructionswhile the CPU works on anotherprocessing activity.

multicore processor: Amicroprocessor that has two ormore independent processing units,called cores, which are capableof sequencing and executinginstructions.

parallel computing: Thesimultaneous execution of thesame task on multiple processorsto obtain results faster.

massively parallel processingsystem: A system that speedsprocessing by linking hundreds orthousands of processors to operate atthe same time, or in parallel, with eachprocessor having its own bus, memory,disks, copy of the operating system,and applications.

grid computing: The use of a col-lection of computers, often owned bymultiple individuals or organizations,that work in a coordinated manner tosolve a common problem.

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least temporarily) surplus processing power. The central server also monitorsthe processing, and if a member of the grid fails to complete a subtask, theserver restarts or reassigns the task. When all the subtasks are completed, thecontrolling server combines the results and advances to the next task untilthe whole job is completed.

The Large Hadron Collider (LHC) was built to study the behavior of fun-damental particles to gain a better understanding of what our universe ismade of and how it began. The LHC hurls protons and other particles at eachother at nearly the speed of light and then records what happens when theysmash together. LHC detectors record particle collisions with 100 millionread-out channels taking 14 million pictures per second. This translates toabout 3 gigabytes of data per second or about 25 petabytes (25 million giga-bytes) of data per year. The Worldwide LHC Computing Grid (WLCG) projectis a global collaboration of more than 170 computing centers in 42 countries,linking up national and international grid infrastructures. Its mission is tostore and analyze all this data on the LHC Computing Grid, which consists of132,922 physical CPUs, 300 petabytes of online disk storage, and 230 peta-bytes of magnetic tape storage.3

Manufacturing ProcessorsAn integrated circuit (IC)—or chip—is a set of electronic circuits on onesmall piece of semiconductor material, normally silicon. ICs can be madeextremely small with up to several billion electronic components packedinto an area the size of a fingernail. Processors and memory chips are exam-ples of integrated circuits. A semiconductor fabrication plant (also called afab or foundry) is a factory where integrated circuits are manufactured.Extreme ultraviolet lithography (EUVL) is a highly complex process used inmanufacturing computer chips with feature sizes that are extremely small—measured in nanometers (nm) or billionths of a meter. EUVL involves direct-ing a laser beam at xeon gas to heat it up and eject electrons to etch the tinycomponents of the chip. The entire process must occur in a vacuum. Cur-rent technology allows chip manufacturers to create chips with features thatmeasure as small as 14 nm across. For perspective, a molecule of water isabout 0.5 nm across. Table 3.1 lists some of the Intel processors and theircharacteristics.

Intel, Samsung, and STMicroelectronics design and manufacture theirchips in their own fab plants. Some organizations operate a semiconductorfab for the purpose of fabricating the designs of other companies. Such orga-nizations are known as foundry companies. Qualcomm, Nvidia, and AMD areexamples of fabless manufacturers; they outsource their manufacturing tofoundry companies who fabricate the design.

TABLE 3.1 Some members of the Intel family of processors

Chip Family Product NameMaxClock

Speed (GHz)Numberof Cores


x86 Xeon E7-2850 2.0 10 32

x86 Core i7 Extreme Edition980x

3.3 6 32

x86 Core i5 6600 3.9 4 14

x86 Pentium 4 G4400T 2.9 2 14

Atom x7 Z8700 2.4 4 14

Atom x5 Z8500 2.2 4 14

integrated circuit (IC): A set ofelectronic circuits on one small pieceof semiconductor material, normallysilicon.

semiconductor fabricationplant: A factory where integratedcircuits are manufactured; alsocalled a fab or a foundry.

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Fabs are extremely expensive to set up and require many expensivedevices to function. Intel is investing $6 billion to upgrade its fab plant inKiryat Gat,Israel, and will hire 1,000 workers in addition to the 2,500 whoalready work there. It is believed that the plant will shift to making chipsemploying new 10-nanometer technology, which experts expect to arrivein 2016.4,5

MemoryMain memory provides the CPU with a working storage area for programinstructions and data. The chief function of memory is to rapidly provide dataand instructions to the CPU. In order for their systems to run efficiently, orga-nizations must invest in a sufficient amount of main memory. Organizationsalso need large amounts of secondary storage to hold the huge quantities ofdata that cannot fit within the limits of main memory.

Like the CPU, memory devices contain thousands of circuits imprinted onsilicon chips. Each circuit is either conducting electrical current (on) or notconducting current (off). Data is stored in memory as a combination of on oroff circuit states. Usually, 8 bits are used to represent a character, such as theletter A. Eight bits together form a byte (B). In most cases, storage capacity ismeasured in bytes, with 1 byte equivalent to one character of data. The con-tents of the Library of Congress, with over 126 million items and 530 miles ofbookshelves, would require about 20 petabytes of digital storage. It is esti-mated that all the words ever spoken by humans represented in text formwould equal about 5 exabytes of information.6 Table 3.2 lists units for mea-suring computer storage.

Types of MemoryComputer memory can take several forms. Instructions or data can be tempo-rarily stored in and read from random access memory (RAM). As currentlydesigned, RAM chips are volatile storage devices, meaning they lose their con-tents if the current is turned off or disrupted, which can be caused by a powersurge, a brownout, or electrical noise generated by lightning or nearbymachines. RAM chips are mounted directly on the computer’s main circuitboard or in other chips mounted on peripheral cards that plug into the maincircuit board. These RAM chips consist of millions of switches that are sensi-tive to changes in electric current.

RAM comes in many varieties: Static random access memory (SRAM) isbyte-addressable storage used for high-speed registers and caches; dynamicrandom access memory (DRAM) is byte-addressable storage used for themain memory in a computer; and double data rate synchronous dynamic

TABLE 3.2 Computer storage unitsName Abbreviation Number of Bytes

Byte B 1

Kilobyte KB 1,000

Megabyte MB 1,0002

Gigabyte GB 1,0003

Terabyte TB 1,0004

Petabyte PB 1,0005

Exabyte EB 1,0006

Zettabyte ZB 1,0007

Yottabyte YB 1,0008

main memory: The component of acomputer that provides the CPU witha working storage area for programinstructions and data.

byte (B): Eight bits that togetherrepresent a single character of data.

random access memory (RAM):A form of memory in which instructionsor data can be temporarily stored.

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random access memory (DDR SDRAM) is an improved form of DRAM thateffectively doubles the rate at which data can be moved in and out of mainmemory. DDR has been superseded by second-, third-, and fourth-generationDDR called DDR2, DDR3, and DDR4, respectively. DDR3 requires 1.5 volts ofelectrical power to operate, while DDR4 needs just 1.2 volts. DDR4 also sup-ports a deep power-down mode, which allows the host device to go intostandby without needing to refresh its memory—reducing standby power con-sumption by up to 50 percent. Thus, DDR4 reduces the energy required to runportable devices and servers. This means longer battery life for portable com-puter users and lower electric bills for organizations that operate serversfarms.7

Although microprocessor speed has roughly doubled every 24 monthsover the past several decades, memory performance has not kept pace. Ineffect, memory has become the principal bottleneck to system performance.Cache memory is a type of high-speed memory that a processor can accessmore rapidly than main memory to help ease this bottleneck. See Figure 3.3.Frequently used data is stored in easily accessible cache memory instead ofslower memory, such as RAM. Because cache memory holds less data, theCPU can access the desired data and instructions more quickly than whenselecting from the larger set in primary storage. Thus, the CPU can executeinstructions faster, improving the overall performance of the computer sys-tem. Cache memory is available in three forms. The level 1 (L1) cache is onthe CPU chip. The level 2 (L2) cache memory can be accessed by the CPUover a high-speed dedicated interface. The latest processors go a step further,placing the L2 cache directly on the CPU chip itself and providing high-speedsupport for a tertiary level 3 (L3) external cache. See Figure 3.4.

FIGURE 3.3Cache memoryProcessors can access this type ofhigh-speed memory faster than mainmemory. Located on or near the CPUchip, cache memory works with mainmemory. A cache controller deter-mines how often the data is used,transfers frequently used data tocache memory, and then deletes thedata when it goes out of use.



Memory(main store)


Typically4 MB


Typically256 KBor moreHit

FIGURE 3.4Relative speed of varioustypes of storageThe closer memory is to the CPU, thefaster the CPU can access it.




Cache memoryLevel 1Level 2Level 3

cache memory: A type of high-speed memory that a processor canaccess more rapidly than mainmemory.

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Read-only memory (ROM), another type of memory, is nonvolatile,meaning that its contents are not lost if the power is turned off or interrupted.ROM provides permanent storage for data and instructions that do notchange, such as programs and data from the computer manufacturer, includ-ing the instructions that tell the computer how to start up when power isturned on. ROM memory also comes in a couple varieties. Programmableread-only memory (PROM) is used to hold data and instructions that cannever be changed. Electrically erasable programmable read-only memory(EEPROM) is user-modifiable read-only memory that can be erased and repro-grammed repeatedly through the application of higher-than-normal electricalvoltage. EEPROM requires data to be written or erased 1 byte at a time.

Secondary Data Storage DevicesStoring data safely and effectively is critical to an organization’s success.Driven by many factors—such as needing to retain more data longer to meetgovernment regulatory concerns, storing new forms of digital data such asaudio and video, and keeping systems running under the onslaught ofincreasing volumes of email—the world’s information is more than doublingevery two years. Nearly 6 zettabytes (6 × 1021 bytes) of information was cre-ated and stored in 2013 alone.8 It is mainly unstructured digital content suchas video, audio, and image objects that is fueling this growth. IBM, which isinvesting heavily in technologies (such as Watson, its cognitive computer sys-tem) that can help organizations manage all that unstructured data, estimatesthat more than 80 percent of the 2.5 billion gigabytes of data created everyday comes in the form of unstructured data.9

For most organizations, the best overall data storage solution is likely acombination of different secondary storage options that can store largeamounts of data, instructions, and information more permanently than allowedwith main memory. Compared with memory, secondary storage offers theadvantages of nonvolatility, greater capacity, and greater economy. On a cost-per-megabyte basis, secondary storage is considerably less expensive than pri-mary memory. See Table 3.3. The selection of secondary storage media anddevices requires understanding their primary characteristics: access method,capacity, and portability.

As with other computer system components, the access methods, storagecapacities, and portability required of secondary storage media are deter-mined by the business requirements that must be met. An objective of a creditcard company might be to rapidly retrieve stored customer data to approveconsumer purchases. In this case, a fast access method is critical. In othercases, such as equipping the Coca-Cola field salesforce with smartphones,

TABLE 3.3 Cost comparison for various forms of storage

Data Storage Type

Cost per GB

2009 2011 2013 2015

8 GB flash drive $2.50 $2.48 $1.25 $.69

25 GB rewritable Blu-ray disc $.44 $.11 $.30 $.30

72 GB DAT 72 data cartridge $.21 $.24 $.26 $.21

50 4.7 GB DVD+R disks $.09 $.31 $.07 $.08

500 GB portable hard drive $.23 $.15 $.12 $.12

1 TB desktop external hard drive $.12 $.09 $.10 $.10

Source: Office Depot,, December 2009, October 2011, October 2013, and October 2015.

read-only memory (ROM): A non-volatile form of memory.

secondary storage: A device thatstores large amounts of data, instruc-tions, and information more perma-nently than allowed with main memory.

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portability and ruggedness might be major considerations in selecting andusing secondary storage media and devices.

In addition to cost, capacity, portability, and ruggedness, organizationsmust address security issues so that only authorized people are allowed accessto sensitive data and critical programs. Because the data and programs kepton secondary storage devices are so critical to most organizations, all of theseissues merit careful consideration.

Secondary data storage is not directly accessible by the CPU. Instead,computers usually use input/output channels to access secondary storage andthen transfer the desired data to intermediate areas in primary storage. Themost common forms of secondary storage devices are magnetic, optical, andsolid state.

Magnetic Secondary Storage DevicesMagnetic storage uses tape or disk devices covered with a thin magneticcoating that enables data to be stored as magnetic particles. Magnetic tapeis a type of secondary storage medium, which is frequently used for storingbackups of critical organizational data in the event of a disaster. Examplesof tape storage devices include cassettes and cartridges measuring a fewmillimeters in diameter, requiring very little storage space. Magnetic tapehas been used as storage media since the time of the earliest computers,such as the 1951 Univac computer.10 Continuing advancements have keptmagnetic tape as a viable storage medium. For example, IBM and FUJIFILMCorporation of Japan recently achieved a recording density of 123 billionbits per square inch on low-cost magnetic tape. While still in development,this innovation represents the equivalent of a 220-terabyte tape cartridge(enough to hold the text of approximately 220 million books) that could fitinto the palm of your hand.11

The High-End Computing Capability (HECC) Project at NASA offers scien-tists and engineers access to supercomputing systems services that are backedup by a 132-petabyte tape storage system.12 Many such supercomputers,including those deployed at the National Center for Atmospheric Research,use robotic tape backup systems. See Figure 3.5.

A hard disk drive (HDD) is a direct access storage device used to storeand retrieve data from rapidly rotating disks coated with magnetic material.

FIGURE 3.5Robotic tape backup systemThe National Center for AtmosphericResearch uses a robotic tapebackup system to back up a fleet ofsupercomputers that solve theworld’s most computationally inten-sive climate-modeling problems.

magnetic tape: A type of sequentialsecondary storage medium, now usedprimarily for storing backups of criticalorganizational data in the event of adisaster.

hard disk drive (HDD): A directaccess storage device used to storeand retrieve data from rapidly rotatingdisks coated with magnetic material.





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A hard disk represents bits of data with small magnetized areas and uses aread/write head to go directly to the desired piece of data. Because directaccess allows fast data retrieval, this type of storage is used by organizationsthat need to respond quickly to customer requests, such as airlines and creditcard firms. For example, information on the credit history of a customer orthe seat availability on a particular flight would likely be stored on a direct-access hard disk drive so that a customer-service representative or managercould obtain that data in seconds. Hard disk drives vary widely in capacityand portability.

Putting an organization’s data online involves a serious business risk—the loss of critical data can put a corporation out of business. The concernis that the most critical mechanical components inside a HDD storagedevice—the disk drives, the fans, and read/write heads—can fail. Thus,organizations now require that their data storage devices be fault tolerant,that is, they can continue with little or no loss of performance if one ormore key components fail. In response, disk manufacturers are continuallydeveloping new technologies that will improve the performance and reliabil-ity of their hard disk drives. For example, Western Digital’s HGST subsidiaryrecently released the world’s first 10-terabyte helium-filled hard drive—theUltrastar He10 HDD. By using helium, HGST is able to decrease frictionwithin its HDDs, allowing them to spin more reliably and consume lesspower than conventional designs. And according to HGST, the UltrastarHe10 has a mean-time-between-failure rating of 2.5 million hours, giving itthe highest reliability rating of any HDD on the market.13,14

A redundant array of independent/inexpensive disks (RAID) is amethod of storing data that generates extra bits of data from existing data,allowing the system to create a “reconstruction map” so that if a hard drivefails, it can rebuild lost data. With this approach, data can be split and storedon different physical disk drives, using a technique called striping that evenlydistributes the data. RAID technology has been applied to storage systems toimprove system performance and reliability.

RAID can be implemented in several ways. RAID 1 subsystems duplicatedata on the hard drives. This process, called “disk mirroring,” provides anexact copy that protects users fully in the event of data loss. However, tokeep complete duplicates of current backups, organizations need to doublethe amount of their storage capacity. Other RAID methods are less expensivebecause they duplicate only part of the data, allowing storage managers tominimize the amount of extra disk space they must purchase to protect data.

The National Foreign Language Center (NFLC) at the University of Mary-land is a research institute dedicated to improving the nation’s ability to under-stand and communicate with people around the world. The staff at the NFLCare involved in a variety of projects that develop and disseminate languageinformation to policy makers across the United States. These projects generatelarge amounts of data that the institute had been storing on a Windows-basedDell server. However, with data accumulating at a rate of 150 to 200 gigabytesper month, the NFLC needed to implement a new storage solution. The NFLCopted for a RAID storage solution, which gave the institute enough storagespace to offload thousands of large audio and video files, freeing up space onits Dell server. The RAID storage option offered the NFLC the ability to dramat-ically increase its capacity at a relatively low price per terabyte of storage.15,16

Virtual tape is a storage technology suitable for less frequently neededdata. With virtual tape systems, data appears to be stored entirely on tape car-tridges, although some parts might actually be located on faster hard disks.The software associated with a virtual tape system is sometimes called a vir-tual tape server. Virtual tape can be used with a sophisticated storage-management system that moves data to slower but less costly forms of storagemedia as people use the data less often. Virtual tape technology can decrease

redundant array of indepen-dent/inexpensive disks (RAID):A method of storing data that generatesextra bits of data from existing data,allowing the system to create a“reconstruction map” so that if a harddrive fails, the system can rebuildlost data.

virtual tape: A storage device forless frequently needed data. Withvirtual tape systems, data appears tobe stored entirely on tape cartridges,although some parts of it might actuallybe located on faster hard disks.

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data access time, lower the total cost of ownership, and reduce the amount offloor space consumed by tape operations.

Optical Secondary Storage DevicesAn optical storage device uses special lasers to read and write data. Thelasers record data by physically burning pits in the disc. Data is directlyaccessed from the disc by an optical disc device, which operates much like acompact disc player. This optical disc device uses a low-power laser thatmeasures the difference in reflected light caused by a pit (or lack thereof) onthe disc.

A common optical storage device is the compact disc read-only memory(CD-ROM), with a storage capacity of 740 megabytes of data. After data isrecorded on a CD-ROM, it cannot be modified—the disc is “read-only.” A CDburner, the informal name for a CD recorder, is a device that can record datato a compact disc. CD-recordable (CD-R) and CD-rewritable (CD-RW) are thetwo most common types of drives that can write CDs, either once (in the caseof CD-R) or repeatedly (in the case of CD-RW). CD-rewritable (CD-RW) tech-nology allows PC users to back up data on CDs.

A digital video disc (DVD) looks like a CD, but it can store about 135minutes of digital video or several gigabytes of data. At a data transfer rate of1.352 megabytes per second, the access speed of a DVD drive is also fasterthan that of the typical CD-ROM drive. Software, video games, and moviesare often stored and distributed on DVDs. See Figure 3.6.

DVDs have replaced recordable and rewritable CD discs (CD-R andCD-RW) as the preferred physical media for sharing movies and photos.Whereas a CD can hold about 740 megabytes of data, a single-sided DVD canhold 4.7 gigabytes, with double-sided DVDs having a capacity of 9.4 giga-bytes. Several types of recorders and discs are currently in use. Recordingscan be made on record-once discs (DVD-R and DVD+R) or on rewritable discs(DVD-RW, DVD+RW, and DVD-RAM). Not all types of rewritable DVDs arecompatible with other types.

The Blu-ray high-definition video disc format based on blue laser technol-ogy stores at least three times as much data as a DVD. The primary use forthis technology is in home entertainment equipment to store high-definitionvideo, although this format can also store computer data. A dual-layer Blu-raydisc can store 50 gigabytes of data.17

DVD and Blu-ray discs are commonly used to store data; however, thediscs can become unreliable over time as they are exposed to light, humidity,and chemical changes inside the disc itself. As a result, the data stored onsuch discs can become unreadable over time. Thus, disc manufacturers arefocused on developing longer-lasting DVD and Blu-ray technology.

Scientists are experimenting with an even more advanced storage technolo-gies, including the use of DNA molecules to store vast amounts of data for longperiods of time. DNA molecules consist of four chemicals connected end-to-end, similar to the sequences of ones and zeroes that computers use to rep-resent data. One gram of DNA is capable of holding 455 exabytes (one exabyteis equivalent to a billion gigabytes).18 In addition, data could be stored in DNA

FIGURE 3.6Digital video discs and playerDVDs look like CDs but have agreater storage capacity and cantransfer data at a faster rate. Pl


optical storage device: A form ofdata storage that uses lasers to readand write data.

compact disc read-onlymemory (CD-ROM): A commonform of optical disc on which datacannot be modified once it has beenrecorded.

digital video disc (DVD): A form ofoptical disc storage that looks like aCD but that can store more data andaccess it more quickly.

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for thousands of years. By comparison, today’s most powerful desktop harddrives hold around 6 terabytes of data and might last 50 years.19 At this time,the cost of synthesizing DNA to store data and the cost of decoding the datastored in DNA are prohibitively expensive, unless the data needs to be archivedfor at least 600 years. It will likely be a decade or more before the technologyevolves to the point where DNA data storage is practical.20

Solid State Secondary Storage DevicesA solid state storage device (SSD) stores data in memory chips rather thanon hard disk drives or optical media. These memory chips require less powerand provide much faster data access than magnetic data storage devices. Inaddition, SSDs have no moving parts, so they are less fragile than hard diskdrives. All these factors make the SSD a preferred choice over hard disk drivesfor portable computers.

A universal serial bus (USB) flash drive is one example of a commonlyused SSD. USB flash drives are external to the computer and are removableand rewritable. Most weigh less than an ounce and can provide a wide rangeof storage capacity. Samsung has developed a 15.36-terabyte solid state stor-age device based on 48-layer 3D chip technology.21 This technology allowsfor vertical stacking of flash cells, thus requiring less space to store data. Italso improves performance and requires less power.

Enterprise Storage OptionsBusinesses need to store the large amounts of data created throughout anorganization. Such large-scale secondary storage is called enterprise storageand comes in four forms: attached storage, network-attached storage (NAS),storage area networks (SANs), and cloud computing storage.

Attached StorageAttached storage methods include all the options just discussed—tape, harddisk drives (including RAID devices), virtual tape systems, optical devices,and solid state secondary storage devices—which are connected directly to asingle computer. Attached storage methods, though simple and cost effectivefor single users and small groups, do not allow systems to share storage, andthey make it difficult to back up data.

Because of the limitations of attached storage, firms are turning tonetwork-attached storage (NAS) and storage area networks (SANs). Thesealternatives enable an organization to share data storage resources among amuch larger number of computers and users, resulting in improved storageefficiency and greater cost effectiveness. In addition, they simplify databackup and reduce the risk of downtime. Nearly one-third of system down-time is a direct result of data storage failures, so eliminating storage problemsas a cause of downtime is a major advantage.

Network-Attached StorageNetwork-attached storage (NAS) is a hard disk drive storage device that isset up with its own network address and provides file-based storage servicesto other devices on the network. NAS includes software to manage storageaccess and file management, relieving the users’ computers of those tasks.The result is that both application software and files can be served fasterbecause they are not competing for the same processor resources. Computerusers can share and access the same information, even if they are using differ-ent types of computers. Common applications for NAS include consolidatedstorage, Internet and e-commerce applications, and digital media.

CD-adapco is the world’s largest independent provider of computationalfluid dynamics (CFD) software and services. The company’s products are

Solid state storage device(SSD): A storage device that storesdata in memory chips rather than onhard disk drives or optical media.

network-attached storage(NAS): A hard disk drive storagedevice that is set up with its ownnetwork address and providesfile-based storage services to otherdevices on the network.

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used for complex engineering simulations by over 3,000 different organiza-tions around the world. CD-adapco has deployed more than one petabyte ofPanasas ActiveStor storage, an advanced NAS solution designed for technicalcomputing environments. ActiveStor is a scalable, hybrid NAS platform thatutilizes high-capacity hard drives and solid state drives in the samesystem.22,23

Storage Area NetworksA storage area network (SAN) is a high-speed, special-purpose network thatintegrates different types of data storage devices (e.g., hard disk drives, mag-netic tape, solid state secondary storage devices) into a single storage systemand connects that to computing resources across an entire organization. SeeFigure 3.7. SANs can provide important capabilities such as disk mirroring,data backup and restore, data archiving, data migration from one storagedevice to another, and the sharing of data among computing devices con-nected to the network.

Using a SAN, an organization can centralize the people, policies, proce-dures, and practices for managing storage, and a data storage manager canapply the data consistently across an enterprise. This centralization eliminatesinconsistent treatment of data by different system administrators and users,providing efficient and cost-effective data storage practices.

When the city of Riverside, California, created its “Riverside 2.0” strate-gic plan, it set goals related to cybersecurity, disaster preparedness, and gov-ernment transparency. To meet those goals, the city needed to upgrade itsdata centers to a more flexible and scalable platform. As part of the project,the city migrated 500 terabytes of data to a new storage infrastructure thatoffered enterprise SAN performance—with almost double the previous stor-age capacity—to support its extensive array of e-government services aswell as mission-critical applications, such as those related to public safetyand utilities.24

A fundamental difference between NAS and SAN is that NAS uses file input/output, which defines data as complete containers of information, while SANdeals with block input/output, which is based on subsets of data smaller than afile. SAN manufacturers include EMC, Hitachi Data Systems Corporation,NetApp, Xiotech, and IBM.

As organizations set up large-scale SAN systems, they use more computersand network connections than in a NAS environment, and consequently, the

FIGURE 3.7Storage area networkA SAN provides high-speed con-nections among data storagedevices and computers over anetwork.

Computer 1

Computer 2

Computer 3

Storage device 1

Storage device 2

Storage device 3



storage area network (SAN): Ahigh-speed, special-purpose networkthat integrates different types of datastorage devices (e.g., hard disk drives,magnetic tape, solid state secondarystorage devices) into a single storagesystem and connects that to computingresources across an entireorganization.

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network can become difficult to manage. In response, software tools designedto automate storage using previously defined policies are finding a place inthe enterprise. Known as policy-based storage management, the softwareproducts from industry leaders such as Veritas Software Corporation, LegatoSystems, EMC, and IBM automatically allocate storage space to users, balancethe loads on servers and disks, and reroute network traffic when systems godown—all based on policies set up by system administrators.

The trend in secondary storage is toward higher capacity, increased porta-bility, and automated storage management. Organizations should select a typeof storage based on their needs and resources. In general, storing largeamounts of data and information and providing users with quick access makean organization more efficient.

Storage as a ServiceStorage as a service is a data storage model in which a data storage serviceprovider rents space to people and organizations. Users access their renteddata storage via the Internet. Such a service enables the users to store andback up their data without requiring a major investment to create and main-tain their own data storage infrastructure. Businesses can also choose pay-per-use services, where they rent space on massive storage devices housedeither at a service provider (such as Hewlett-Packard or IBM) or on the custo-mer’s premises, paying only for the amount of storage they use. Thisapproach makes sense for many organizations, especially those with wildlyfluctuating storage needs, such as those involved in the testing of new drugsor in developing software.

Increasingly, individuals and organizations expect to be able to accessdata, documents, databases, presentations, and spreadsheets from anywhere,with any sort of Internet-enabled device, such as a smartphone, tablet, or lap-top. In response to this need, numerous cloud-based storage services haveemerged, including Amazon’s Elastic Compute Cloud, Apple iCloud, Dropbox,Google Drive, Microsoft SkyDrive, and Mozy. These services provide datastorage at a rate of $2 or less per gigabyte a year.

Amazon’s Simple Storage Service (Amazon S3) allows subscribers toupload, store, and download data. Amazon S3 stores subscriber data asobjects within resources it calls “buckets.” Subscribers can store as manyobjects as they want within a bucket and can write to, read, and delete objectsin their bucket. Subscribers can choose to label their data private or make itpublicly accessible. Subscribers can also elect to encrypt data prior to storage,and they can control who can create, delete, and retrieve objects in theirbuckets. Subscriber data is stored on redundant servers across multiple datacenters to provide data redundancy and protect against accidental loss of dataor natural disasters.

Social media start-up, Pinterest, operates a photo-sharing Web site whereusers create personalized boards with visual bookmarks—called pins—thatlink back to the sites they came from. Individuals and businesses use Pinterestto discover and save creative ideas—or to be discovered by the site’s morethan 100 million active users. The company describes itself as a visual book-marking tool, but, perhaps more important, it also considers itself to be theworld’s first and biggest discovery engine. And with more than 50 billionpins created since it launched in 2010, Pinterest is a data-driven company.25

The site’s infrastructure growth is fueled by its user growth, and from thebeginning, Pinterest has used Amazon Web Services, including the AmazonS3 data storage service, where it now stores over 8 billion objects and morethan 10 petabytes of data. Pinterest logs approximately 14 terabytes of dataeach day, and the Amazon S3 service offers the company the scale and flexi-bility it requires to operate a large and rapidly growing consumer Internetservice.26–28

policy-based storagemanagement: The automation ofstorage using previously definedpolicies.

storage as a service: A data stor-age model where a data storage ser-vice provider rents space to individualsand organizations.

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Input and Output DevicesInput and output devices are the gateways to the computer system—you usethem to provide data and instructions to the computer and receive resultsfrom it. Input and output devices are part of a computer’s user interface,which includes other hardware devices and software that allow you to interactwith a computer system.

As with other computer system components, an organization should keepits business goals in mind when selecting input and output devices. For exam-ple, many restaurant chains use handheld input devices or computerizedterminals that let food servers enter orders and transfer them to the kitchenefficiently and accurately. These systems have also cut costs by helping restau-rants track inventory and market to customers.

In general, businesses want input devices that let them accurately andrapidly enter data into a computer system, and they want output devices thatlet them produce timely results. Some organizations have very specific needsfor input and output, requiring devices that perform specific functions. Themore specialized the application, the more specialized the associated systeminput and output devices.

Getting data into a computer—input—often requires transferring human-readable data, such as a sales order, into a computer system. “Human-readabledata” means data that people can read and understand. The temperature regis-tered on a thermometer is an example of human-readable data. An example ofmachine-readable data is the universal bar code on many grocery and retailitems that indicates the stock-keeping identification number for that item. Tothe human eye, the universal bar code is unintelligible and looks like a seriesof vertical bars of varying thicknesses. Some data, such as magnetic ink onbank checks, can be read by people and machines. Usually, people begin theinput process by organizing human-readable data and transforming it intomachine-readable data. Every keystroke on a keyboard, for example, turns aletter symbol of a human language into a digital code that the machine canmanipulate.

Data Entry and InputGetting data into the computer system is a two-stage process. First, thehuman-readable data is converted into a machine-readable form throughdata entry. The second stage involves transferring the machine-readable datainto the system. This is data input.

Today, many companies use online data entry and input: They communi-cate and transfer data to computer devices directly connected to the computersystem. Online data entry and input place data into the computer system in amatter of seconds. Organizations in many industries require the instantaneousupdating offered by this approach. For example, when ticket agents for a con-cert venue enter a request for tickets, they can use online data entry and inputto record the request as soon as it is made. Ticket agents at other terminalscan then access this data to make a seating check before they process anotherrequest.

Source Data AutomationRegardless of how data gets into the computer, it should be captured and edi-ted at its source. Source data automation involves capturing and editing datawhere it is originally created and in a form that can be directly entered into acomputer, thus ensuring accuracy and timeliness. For example, using sourcedata automation, salespeople enter sales orders into the computer at the timeand place they take the orders. Any errors can be detected and correctedimmediately. If an item is temporarily out of stock, the salesperson can dis-cuss options with the customer. Prior to source data automation, orders were

data entry: Converting human-readable data into a machine-readableform.

data input: Transferring machine-readable data into the system.

source data automation: Captur-ing and editing data where it is initiallycreated and in a form that can bedirectly entered into a computer, thusensuring accuracy and timeliness.

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written on paper and entered into the computer later (usually by a clerk, notby the person who took the order). Often the handwritten information wasn’tlegible or, worse yet, order forms were lost. If problems occurred during dataentry, the clerk had to contact the salesperson or the customer to “recap-ture” the data needed for order entry, leading to further delays and customerdissatisfaction.

Data entry and input devices come in many forms. They range from special-purpose devices that capture specific types of data to more general-purposeinput devices. Some of the special-purpose data entry and input devices are dis-cussed later in this chapter. First, we focus on devices used to enter and inputgeneral types of data, including text, audio, images, and video for personalcomputers.

Common Personal Computer Input DevicesA keyboard and a computer mouse are common devices used for entry andinput of data, such as characters, text, and basic commands. Some compa-nies manufacture keyboards that are more comfortable, more easilyadjusted, and faster to use than standard keyboards. These ergonomic key-boards, such as the split keyboard, are designed to help users avoid wristand hand injuries caused by hours of typing. Other keyboards includetouch pads, which let you enter sketches on the touch pad while still usingkeys to enter text. See Figure 3.8. A mouse is used to point to and clicksymbols, icons, menus, and commands on the screen. The computer takes anumber of actions in response, such as entering data into the computer sys-tem. Wireless mice and keyboards help keep a physical desktop free fromclutter.

Speech-Recognition TechnologyUsing speech-recognition technology, a computer can interpret humanspeech as an alternative means of providing data or instructions. The mostbasic systems are designed to support a limited conversation on a fixed topic.For example, your insurance provider may employ a speech-recognition sys-tem to support calls to its billing department. The scope of the conversationis very limited, and the caller is guided to make one of a few possible andvery distinct responses. For example, a typical prompt is “Do you wish toinquire about your monthly bill or make a payment?” More advanced systemscan recognize continuous speech and convert it to text such as in closed-caption live TV broadcasts, sometimes with amusing results when key wordsare not properly converted to text.

Nurses at the Hudson Valley Heart Center in Poughkeepsie, New York, nowuse speech-recognition technology to record all of their patient history and prog-ress notes, physical exam results, and discharge summaries. The software, whichmakes use of natural language-processing technology, automatically updates the

FIGURE 3.8Drawing pad and integratedkeyboardA drawing pad and integratedkeyboard can replace a traditionalkeyboard and mouse for input.

speech-recognitiontechnology : Input devices thatrecognize human speech.

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hospital’s electronic health record (EHR) system when a nurse adds new informa-tion for a patient. The hospital expects the new system to cut down on theamount of time nurses spend on documentation (currently estimated at 19 per-cent of their day, nationally).29

Motion-Sensing Input DevicesThe major video game makers Microsoft, Nintendo, and Sony all have gamecontrollers based on motion-sensing input devices. Kinect is a motion-sensinginput device that enables the user to control the Microsoft Xbox as well ascomputers running the Windows operating system. The sensor is a horizontalbar positioned above or below the video display. It includes a Webcam-styledevice that interprets the user’s hand gestures as instructions to quickly swipethrough home screens and apps. The Wii Remote is the primary controller forNintendo’s Wii console. It can sense motion in all three dimensions and hasan optical sensor that enables it to determine where the Wii Remote is point-ing. This allows the user to interact with and manipulate items on the videoscreen via gestures and pointing. PlayStation Move is the motion-sensinggame controller from Sony Computer Entertainment. It employs a handheldmotion controller wand with sensors that detect its motion and a Webcam totrack its position. These manufacturers hope that their motion-sensing inputdevices will broaden their user base beyond the typical gamer and increasetheir market share. However, such input devices may also prove useful in theoperation of business information systems.

Scanning DevicesScanning devices capture image and character data. A page scanner is like acopy machine. You either insert a page into the scanner or place it face downon the glass plate of the scanner and then scan it. With a handheld scanner,you manually move or roll the scanning device over the image you want toscan. Both page and handheld scanners can convert monochrome or colorpictures, forms, text, and other images into machine-readable digits. Consider-ing that U.S. enterprises generate an estimated 1 billion pieces of paper daily,many companies are looking to scanning devices to help them manage theirdocuments and reduce the high cost of using and processing paper.

The NeatReceipt filing system is a compact, portable scanner and associ-ated software that enable the user to scan business cards and convert theminto digital contacts. NeatReceipt can also scan receipts to convert them intorecords of vendors and amounts that can be used for tax preparation.30

Optical Data ReadersIndividuals and organizations can also use a special scanning device called anoptical data reader to scan documents. The two categories of optical datareaders are optical mark recognition (OMR) and optical character recognition(OCR). OMR readers are used for tasks such as grading tests and scanningforms. With this technology, pencils are used to fill in bubbles or checkboxes on OMR paper, which is also called a “mark sense form.” OMR systemsare used in standardized tests, including the SAT and GMAT tests, and torecord votes in elections.

In contrast, most OCR readers use reflected light to recognize and scanvarious machine-generated characters. With special software, OCR readerscan also convert handwritten or typed documents into digital data. After datais entered, it can be shared, modified, and distributed over computer net-works to hundreds or thousands of people. Previously, the use of OCR tech-nology required a special scanner device that creates an image of thecharacters to be converted. Expensive OCR software was then required toconvert that image into text. However, it is now possible to complete this pro-cess using the camera in an Android smartphone or tablet. Once the image is

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stored on the camera or tablet, you use the Google Drive app for Android tocopy the image to Google Drive, where Google’s software and servers will dothe OCR conversion at no cost.

Magnetic Ink Character Recognition (MICR) DevicesIn the 1950s, the banking industry was becoming swamped with paperchecks, loan applications, bank statements, and so on. The result was thedevelopment of magnetic ink character recognition (MICR), a system forreading banking data quickly. With MICR, data is placed on the bottom of acheck or other form using a special magnetic ink. Using a special characterset, data printed with this ink is readable by both people and computers.See Figure 3.9.

Magnetic Stripe CardsA magnetic stripe card stores a limited amount of data by modifying themagnetism of tiny iron-based particles contained in a band on the card. Themagnetic stripe is read by physically swiping the card at a terminal. For thisreason, such cards are called contact cards. Magnetic stripes are commonlyused in credit cards, transportation tickets, and driver’s licenses.

Magnetic stripe technology is still in wide use in the U.S. credit cardindustry. The data encoded on the magnetic stripe on the back of the cardis read by swiping the card past a magnetic reading head. To protect theconsumer, businesses in the United States have invested in extensive com-puter networks for verifying and processing this data. Software at the point-of-sale (POS) terminal automatically dials a stored telephone number to callan acquirer, an organization that collects credit-authentication requests frommerchants and provides the merchants with a payment guarantee. When theacquirer company receives the credit-card authentication request, it checksthe transaction for validity by reading the card number, expiration date, andcredit card limit recorded on the magnetic stripe. If everything checks out,the authorization is granted. Should it later be discovered that the creditcard was stolen or bogus, the merchant and the bank that partnered withthe merchant are liable for the loss. The merchant loses the value of anygoods or services sold plus the transaction fee associated with processingthe sale. If the bank that issued the card does not have a charge-back rightthen, the bank bears the loss and the merchant is covered for the cost of thegoods and services.

Unfortunately, the magnetic stripe is not a secure place for sensitive con-sumer information. The magnetic stripes on traditional credit and debit cardsstore contain unchanging data. Whoever accesses that data gains the sensitivecard and cardholder information necessary to make purchases. The data onthe stripe can be lifted from an existing card and copied onto a new card andused to make fraudulent purchases. Almost half of the world’s credit cardfraud now happens in the United States—even though only a quarter of allcredit card transactions happen here.31

An employee of an Apple store in Queens, New York, was arrested andcharged with using fraudulent credit cards to buy almost $1 million worth of

FIGURE 3.9MICR deviceMagnetic ink character recognitiontechnology codes data on the bot-tom of a check or other form usingspecial magnetic ink, which is read-able by people and computers.

magnetic stripe card: A type ofcard that stores a limited amount ofdata by modifying the magnetism of tinyiron-based particles contained in aband on the card.


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Apple gift cards. The man sold each $2,000 Apple gift card to a third party for$200. When he was arrested, the alleged fraudster was in possession of morethan 50 American Express and Visa gift, debit, and prepaid credit cards withre-encoded magnetic stripes.32

Chip CardsCredit cards with only magnetic stripes are finally being phased out in theUnited States. After October 1, 2015, a liability shift occurred—merchantswho accept payments made via a chip card’s magnetic stripe can continue todo so, however, they must accept responsibility for any fraudulent purchases.This provides a strong incentive for merchants to move to new payment term-inals that accept the chip card.

Credit cards with chips employ the EMV (Europay, Mastercard, Visa)global standard for enabling chip cards to work at point-of-sale systems andautomated teller machines. Unlike with magnetic stripe cards, every time anEMV card is used for payment, the card chip creates a unique transactioncode that can never be used again. If a hacker somehow steals the chip infor-mation from one specific point of sale, typical card duplication will not workbecause the stolen transaction number created in that instance is not usableagain and the card would just get denied.

Smart CardsMost European countries use smart card technology. Smart cards are embed-ded with computer chips containing key consumer and account data. Smartcard users must either enter their PIN (chip-and-PIN) or sign (chip-and-sign)for each transaction to be approved. The smart cards require different term-inals from those used for magnetic stripe cards. All the information neededfor authorization is contained in the chip or is captured at the point-of-sale.With smart cards, merchants do not need to send data over networks toobtain authorization.33

Contactless Payment CardsContactless payment cards contain an embedded chip and antenna thatenables the consumer to simply hold the card close to a terminal to transferthe data necessary to make a payment. Typically, no signature or PIN entryis required for purchases less than $25, making transactions speedier thanpayments made by conventional credit or debit card or even cash. Contact-less payment cards are ideal in situations where the consumer must make afast payment, such as when boarding a form of mass transportation; how-ever, some observers are concerned that it is relatively easy to scan detailsfrom contactless cards. During 2014, in the United Kingdom, where thisform of payment is very popular, some 58 million contactless cards wereused to make 15.8 billion transactions totaling £802 billion ($1.23 trillion),for an average transaction of £50.75 ($78.16).34 American Express Expres-sPay, ExonMobile SpeedPass, MasterCard PayPass, and Visa PayWave arecontactless payment cards used in the United States.

Point-of-Sale DevicesPoint-of-sale (POS) devices are devices used to capture data. They are fre-quently used in retail operations to enter sales information into computersystems. The POS device computes the total charges, including tax. In med-ical settings, POS devices are often used for remote monitoring in hospitals,clinics, laboratories, doctors’ offices, and patients’ homes. With network-enabled POS equipment, medical professionals can instantly get an updateon the patient’s condition from anywhere at any time via a network or theInternet. POS devices use various types of input and output devices, suchas keyboards, bar-code readers, scanning devices, printers, and screens.

smart card: A credit cardembedded with a computer chip thatcontains key consumer and accountdata; smart card users must eitherenter their PIN (chip-and-PIN) or sign(chip-and-sign) for each transaction tobe approved.

contactless payment card: Acard with an embedded chip that onlyneeds to be held close to a terminal totransfer its data; no PIN number needsto be entered.

point-of-sale (POS) device:A device used to enter data into acomputer system.

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Much of the money that businesses spend on computer technology involvesPOS devices.

Many restaurants, bars, and retail shops are switching from traditionalcash registers and costly credit card terminals to simpler devices that pluginto smartphones and tablets. For example, a device called the Square Standincludes a built-in card reader that connects to an iPad and a hub device thatconnects to accessories, including a cash drawer, receipt printer, and scanner.With this device, a small retailer can have a cash register that keeps track ofinventory and provides instant sales analysis for the cost of an iPad and $450for the Square Stand, printer, and cash drawer, plus a per-transaction fee of2.75 percent. PayPal and Groupon also offer similar devices.35

Automated Teller Machine (ATM) DevicesThe automated teller machine (ATM), another type of special-purpose input/output device, is a terminal that bank customers use to perform transactionswith their bank accounts. Other types of companies also use various ATMdevices, sometimes called kiosks, to support their business processes. Somecan dispense tickets, such as for airlines, concerts, and soccer games. Somecolleges use them to produce transcripts.

Bar-Code ScannersA bar-code scanner employs a laser scanner to read a bar-coded label andpass the data to a computer. The bar-code reader may be stationary or hand-held to support a wide variety of uses. This form of input is used widely instore checkouts and warehouse inventory control. Bar codes are also used inhospitals, where a nurse scans a patient’s wristband and then a bar code onthe medication about to be administered to prevent medication errors.

Several companies have created applications that convert a cell phonecamera into a bar-code reader. You can scan a bar code from a print ad, pack-aging, or label to launch Web sites and buy items with a few clicks.

Radio Frequency Identification (RFID) DevicesRadio frequency identification (RFID) is a technology that employs amicrochip with an antenna to broadcast its unique identifier and location toreceivers. The purpose of an RFID system is to transmit data by a mobiledevice, called a tag (see Figure 3.10), which is read by an RFID reader andprocessed according to the needs of a computer program. One popular appli-cation of RFID is to place microchips on retail items and install in-store read-ers that track the inventory on the shelves to determine when shelves shouldbe restocked. The RFID tag chip includes a special form of EPROM memorythat holds data about the item to which the tag is attached. A radio frequency

FIGURE 3.10RFID tagAn RFID tag is small compared withcurrent bar-code labels used toidentify items.

radio frequency identification(RFID): A technology that employs amicrochip with an antenna to broadcastits unique identifier and location toreceivers.

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signal can update this memory as the status of the item changes. The datatransmitted by the tag might provide identification, location information, ordetails about the product tagged, such as date of manufacture, retail price,color, or date of purchase.

Target Corporation is slowly rolling out RFID technology in its stores,starting with key vendors in high-priority categories, such as women’s andkids’ apparel and home décor. The retailer will use RFID smart labelsattached to price tags in an effort that is expected to help the companyimprove inventory accuracy throughout its supply chain and better fulfillorders placed on its Web site for store pickup.36,37 In a separate, small-scaleRFID-enabled trial, Target utilized RFID-tag lanyards in its pop-up holidaystore in New York City during the 2015 holiday shopping season. Visitors tothe temporary store were given lanyards outfitted with RFID tags, whichthey could scan next to any product they wished to purchase. Shoppersthen checked out using a digital shopping cart and received their product atthe front of the shop. Although this trial was extremely limited (involvingjust 16 different products), it allowed Target to begin testing the concept ofcartless shopping, which the retailer sees as a way to generate new salesand compete with online shopping sites.38

Pen Input DevicesBy touching the screen with a pen input device, you can activate a commandor cause the computer to perform a task, enter handwritten notes, and drawobjects and figures. Pen input requires special software and hardware. Hand-writing recognition software, for example, converts onscreen handwritinginto text. Many tablet computers can transform handwriting into typed textand store the “digital ink” just the way a person writes it. People can use apen to write and send email, add comments to documents, mark up presenta-tions, and even hand draw charts in a document. The data can then bemoved, highlighted, searched, and converted into text. If perfected, this inter-face is likely to become widely used. Pen input is especially attractive to peo-ple who are uncomfortable using a keyboard. The success of pen inputdepends on how accurately and at what cost handwriting can be read andtranslated into digital form.

Touch ScreensAdvances in screen technology allow display screens to function as input aswell as output devices. By touching certain parts of a touch-sensitive screen,you can start a program or trigger other types of action. Touch screens canremove the need for a keyboard, which conserves space and increases porta-bility. Touch screens are frequently used at gas stations to allow customers toselect grades of gas and request a receipt; on photocopy machines for select-ing options; at fast-food restaurants for entering customer choices; at informa-tion centers for finding facts about local eating and drinking establishments;and at amusement parks to provide directions to patrons. They also are usedin kiosks at airports and department stores. Touch screens are also beingused for gathering votes in elections.

As touch screens get smaller, the user’s fingers begin to block the infor-mation on the display. Nanotouch technology is being explored as a meansof overcoming this problem. With this technology, users control the touchscreen from its backside so that fingers do not block the display. As theuser’s finger moves on the back of the display, a tiny graphical finger is pro-jected onto the touch screen. Such displays are useful for mobile audioplayers that are about the size of a coin.

Application developers are busy trying to find ways to take advantage ofApple’s 3D Touch feature, which the company introduced in the fall of 2015with its iPhone 6s smartphone. 3D Touch uses a pressure-sensitive touch

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screen that measures how forcefully you press down on the screen. The newfeature adds “peek” and “pop” gestures to the tap, swipe, and pinch gestureswith which most smartphone users are familiar. 3D Touch is designed tobring a new dimension of functionality to the iPhone, allowing users to bothsee and feel what a press can do.39 OpenTable, an online restaurant-reservation and review service, has included 3D Touch features in the latestversion of its iPhone apps. Users can 3D Touch the app’s icon to quicklyview favorited restaurants and upcoming reservations. Within the app, userscan “peek” at a restaurant’s details by pressing lightly on the name of the res-taurant in a list of search results. Swiping up offers the ability to instantly seeavailable reservation times, and pressing harder on a restaurant name “pops”a user to the restaurant’s full profile.40

Output DevicesComputer systems provide output to decision makers at all levels of an orga-nization so they can solve a business problem or capitalize on a competitiveopportunity. In addition, output from one computer system can provide inputinto another computer system. The desired form of this output might bevisual, audio, or even digital. Whatever the output’s content or form, outputdevices are designed to provide the right information to the right person inthe right format at the right time.

Display ScreensThe display screen is a device used to show the output from the computer.Today a variety of flat-panel display screens are far lighter and thinner thanthe traditional cathode-ray tubes (CRTs) associated with early computers.Table 3.4 compares types of flat-panel display screens.

With today’s wide selection of display screens, price and overall qualitycan vary tremendously. The quality of a screen image is largely determinedby the number of horizontal and vertical pixels used to create it. The imagesshown on your display device are composed of a million or more pixels. Res-olution is the total number of pixels contained in the display; the more pixels,the clearer and sharper the image. A common resolution is 2,040 horizontalpixels × 1,536 vertical pixels. The size of the display monitor also affects thequality of the viewing. The same pixel resolution on a small screen is sharper

TABLE 3.4 Various types of flat-panel displaysType Description Noteworthy Feature

Liquid crystal display (LCD) Uses several layers of charged liquid crys-tals placed between clear plates that are litfrom behind by a fluorescent light to createlight and images

The viewing angle tends to be worse thanthat of plasma displays

Light-emitting diode (LED) An LCD display that uses light-emittingdiodes (LEDs) as backlight on the screenrather than a fluorescent lamp

Provides better contrast and lowerenergy consumption than LCDs

Organic light-emittingdiode (OLED)

Functions by exciting organic compoundswith electric current to produce bright,sharp images

Does not employ a backlight, whichenables improved contrast and lowerpower consumption than LCD and LEDLCD displays

Plasma Uses electricity to excite gas atoms to lightup appropriate phosphors on the screen toemit light and color

Performs well in dark conditions but notas well in well-lit rooms

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than on a larger screen, where the same number of pixels is spread out over alarger area.

The computer graphics card takes binary data from the CPU and trans-lates it into an image you see on your display device. It is the computer gra-phics card that controls the quality of the image and determines how manydisplay devices can be attached to the computer. The computer graphics cardholds the graphics processing unit (GPU), a powerful processing chip thatrenders images on the display screen. After the computer graphics card takesbinary data from the CPU, the GPU decides what to do with each pixel onthe screen to create the image. As the GPU creates images, it uses RAM onthe graphics card (called video RAM or VRAM) to store data about each pixel,including its color and location on the screen. One measure of a video card’sperformance is how many complete images the card can display per second,which is called the frame rate. The human eye can process roughly 25 framesper second; however, many video games require a frame rate of at least 60frames per second to provide a good user experience.41

Because many users leave their computers on for hours at a time, powerusage is an important factor when deciding which type of display to pur-chase. Although power usage varies from model to model, OLED displays arethe most energy efficient, with LCD monitors generally consuming between35 and 50 percent less power than plasma screens.

Aspect ratio and screen size describe the size of the display screen. Aspectratio is the ratio of the width of the display to its height. The aspect ratio ofwidth to height of 4:3 or 5:4 is good for people who use their computer toview or create Web pages or documents. Widescreen displays typically havean aspect ratio of 16:10 or 16:9 to allow improved viewing of movies andvideo games.

Companies are competing on the innovation frontier to create thinner,lighter, flexible, and more durable display devices for computers, cell phones,and other mobile devices. LG Display, a leading manufacturer of LCD andOLED displays, recently unveiled prototypes for a 55-inch double-sided OLEDdisplay that is just 5.3 mm thick, as well as a flexible 1-mm thick “wallpaper”OLED display that can be attached to the wall using a magnetic mat. The com-pany also has working prototypes for a transparent display and one that canbe rolled up like a newspaper. According to LG, its innovative OLED displaysare flexible enough to curve around corners and are almost impossible tobreak.42,43 Many of these displays are still in development as LG worksthrough the complex manufacturing processes involved. In the meantime, thecompany is investing over $8 billion to build a new display panel manufactur-ing facility that is expected to be up and running in 2018.44

Printers and PlottersOne of the most useful and common forms of output is called hard copy,which is simply paper output from a printer. The two main types of printersare laser printers and inkjet printers, and they are available with differentspeeds, features, and capabilities. Some can be set up to accommodate paperforms, such as blank check forms and invoice forms. Newer printers allowbusinesses to create full-color, customized, and individualized printed outputusing standard paper and data input. Ticket-receipt printers, such as thoseused in restaurants, ATMs, and point-of-sale systems are in wide-scale use.

The speed of a printer is typically measured by the number of pagesprinted per minute (ppm). Similar to a display screen, the quality, or resolu-tion, of a printer’s output depends on the number of dots printed per inch(dpi). A 600-dpi printer prints more clearly than a 300-dpi printer. A recurringcost of using a printer is the inkjet or laser cartridge that must be replacedperiodically—every few thousand pages for laser printers and every 500 to900 pages for inkjet printers.

computer graphics card: Acomponent of a computer that takesbinary data from the CPU andtranslates it into an image you seeon your display device.

graphics processing unit (GPU):A powerful processing chip that rendersimages on the screen display.

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Inkjet printers that can print 10 to 40 ppm for black-and-white output and5 to 20 ppm for color output are available for less than $175. With an initialcost much less than color laser printers, inkjet printers can print vivid huesand can produce high-quality banners, graphics, greeting cards, letters, text,and photo prints.

Laser printers are generally faster than inkjet printers and can handle aheavier print load volume. A monochrome laser printer can print 25 to 45ppm and cost anywhere from $200 to $700. Color laser printers can printcolor pages at a rate of 10 to 35 ppm and are available in a wide range ofprices—from $350 to more than $3,500 for a high-quality color laser printer.

A number of manufacturers offer multiple-function printers that cancopy, print (in color or black and white), fax, and scan. Such multifunctionaldevices are often used when people need to do a relatively low volume ofcopying, printing, faxing, and scanning. Typical prices for multifunctionprinters range from $100 to $400, depending on features and capabilities.Because these devices take the place of more than one piece of equipment,they are less expensive to acquire and maintain than a stand-alone fax plus astand-alone printer, copier, and so on. Also, eliminating equipment that wasonce located on a countertop or desktop clears a workspace for other work-related activities. As a result, such devices are popular in homes and smalloffice settings.

Mobile print solutions enable users to wirelessly send documents, emailmessages and attachments, presentations, and even boarding passes from anysmartphone, tablet, or laptop to any mobile-enabled printer in the world. Forexample, PrinterOn Enterprise enables any print requests from any mobile orfixed device to be routed to any of over 10,000 printers worldwide that areconfigured with the PrinterOn Enterprise service. Mobile users who use theservice only need to access a directory of PrinterOn printers and locationsand then send an email with the attachment to be printed to the email addressof the printer. American Airlines Admiral Club, Delta Sky Club, EmbassySuites, and DoubleTree by Hilton have installed PrinterOn printers at many oftheir locations.45

Plotters are a type of hard-copy output device used for general designwork. Businesses typically use plotters to generate paper or acetate blue-prints, schematics, and drawings of buildings or new products. Standard plotwidths are 24 inches and 36 inches, and the length can be whatever meets theneed—from a few inches to many feet.

3D Printers3D printers have created a major breakthrough in how many items will be“manufactured.” See Figure 3.11. 3D printing technology takes a three-dimensional model of an object stored on a computer and sends it to a 3Dprinter to create the object using strands of a plastic filament or syntheticpowder. The filament comes in spools of various colors and is fed through aheated extruder that moves in several directions to place super thin layers ontop of each other. The stacks are then bonded together, often using ultravioletlight, to create a 3D object. 3D printers come with a wide range of capabilitiesin terms of how fast they can build objects and how large of an object theycan build. 3D printers for home use typically run $1,000 and up, while com-mercial 3D printers can cost tens of thousands of dollars.46

3D printing is commonly used by aerospace firms, auto manufacturers,and other design-intensive companies. It is especially valuable during the con-ceptual stage of engineering design when the exact dimensions and materialstrength of the prototype are not critical. Some architectural design firms areusing 3D printers to create full color models of their projects to show clients.Cincinnati Children’s Hospital uses 3D printing to create models of patients’hearts so that physicians can plan their surgery.47

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The automotive, electronics, and toy industries are early adopters of using3D printing to improve upon traditional manufacturing processes. Ford MotorCompany used 3D printing to design the new engine cover of its next-generation Mustang. Following traditional methods, an engineer would firstcreate a computer model and then wait for about four months for a prototypeto be produced, at a cost of $500,000. Using 3D printing, Ford can print theprototype in just four days at a cost of only $3,000.48 A drag racing enthusiastcreated a remote control dragster capable of going 202 mph using 3Dprinting.49

3D printing can cut costs and reduce the waste and carbon footprint asso-ciated with traditional manufacturing. With 3D printing, production andassembly can be local, with no need to ship products thousands of miles totheir destination. Only the raw materials needed to create the object—be itcarbon fiber, metal powder, plastic filament, or some other substance—areused. Product parts can be replaced using parts manufactured with 3D print-ing so the entire product doesn’t have to be disposed of and replaced eachtime it malfunctions.50

Biomedical engineers are exploring a process called bioprinting, whichuses 3D printers to build human parts and organs from actual human cells.For example, bioprinting is being used to create custom breast implants andgrafts for cancer patients using the recipient’s own fat and skin cells.51 Regen-erative medicine pioneer Organovo is able to build blood vessels and cardiactissue via a 3D printer that dispenses cells instead of ink. The firm plans tobegin selling 3D printed liver tissue.52

Digital Audio PlayersA digital audio player is a device that can store, organize, and play digitalmusic files. MP3 (MPEG-1 Audio Layer-3) is a popular format for compressinga sound sequence into a very small file while preserving the original level ofsound quality when it is played. By compressing the sound file, it requiresless time to download the file and less storage space on a hard drive.

You can use many different music devices smaller than a deck of cards todownload music from the Internet and other sources. These devices have nomoving parts and can store hours of music. Apple first moved into the digitalmusic market with its iPod MP3 player in 2001. In 2003, it launched its iTunesMusic Store, where users can find music online, preview it, and download it

FIGURE 3.113D printer3D print technology is making itpossible to print objects rangingfrom everyday objects to houses.

bioprinting: The use of 3D printers tobuild human parts and organs fromactual human cells.

digital audio player: A device thatcan store, organize, and play digitalmusic files.

MP3: A standard format for compres-sing a sound sequence into a small file.



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CriticalThinking Exercise

in a way that is safe, legal, and affordable. Other MP3 manufacturers includeDell, Sony, Samsung, Iomega, Creative, and Motorola, whose Rokr productwas the first iTunes-compatible phone. Today, you can use your smartphoneto view YouTube videos, buy music online, check email, and more.

E-Book ReadersThe digital media equivalent of a conventional printed book is called ane-book (short for electronic book). The Project Gutenberg Online Book Cata-log offers over 50,000 free e-books and a total of over 100,000 e-books avail-able. E-books can be downloaded from many sites, including the ProjectGutenberg site (, onto personal computers or dedicatedhardware devices known as e-book readers. The devices cost anywhere fromaround $60 to $350, and users typically pay between $10 and $20 to down-load electronic versions of the best-selling books. E-book readers usuallyhave the capacity to store thousands of books. The most current Amazon.comKindle, Kobo Aura, Barnes & Noble Nook e-readers have e-paper displays thatlook like printed pages. A typical e-reader weighs less than three-quarters of apound, is around one-half inch thick, and comes with a display screen rang-ing from 5 to 8 inches in size. Thus, these readers are more compact thanmost paperbacks and can be easily held in one hand. More recent versions ofe-book readers display content in 16 million colors and high resolution. Onmany e-readers, the size of the text can be magnified for readers with poorvision.

Choosing Your Next ComputerYou are looking for the latest and greatest portable computer to replace your five-year old laptop. You will use this computer for both work and personal comput-ing tasks—everything from creating documents, spreadsheets, and presentationsto surfing the Web and editing videos of your friends and family. You want acomputer that is powerful, lightweight, and comes with a long battery life.

Review Questions1. Should you purchase a computer with an x86 processor, an Intel Atom

processor, or an ARM processor? What are the pros and cons of each type ofprocessor? Will you want a multicore processor? Why or why not?

2. What sort of main memory and cache memory should you seek?

Critical Thinking Questions1. What sort of secondary storage devices would most economically meet your

needs?2. Which input and output devices would be most useful to you?

Computer System Types

In general, computers can be classified as either special purpose or generalpurpose. Special-purpose computers are used for limited applications, forexample, by military, government, and scientific research groups such asthe CIA and NASA. Other applications include specialized processors foundin appliances, cars, and other products. For example, automobile repairshops connect special-purpose computers to your car’s engine to identifyspecific performance problems. As another example, IBM is developing anew generation of computer chips to develop so-called cognitive computersthat are designed to mimic the way the human brain works. Rather than

e-book: The digital media equivalentof a conventional printed book.

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being programmed as today’s computers are, cognitive computers, such asIBM’s Watson computer, are able to learn through experiences and out-comes and mimic human learning patterns.

General-purpose computers are used for a variety of applications,including the business applications discussed in this text. General-purposecomputer systems can be divided into two major groups: systems used byone user at a time and systems used by multiple concurrent users. Table 3.5shows the general ranges of capabilities for various types of computersystems.

TABLE 3.5 Types of computer systemsSingle-user computer systems can be divided into two groups: portable computers and nonportable computers.

Single-User Computers

Portable Computers

Factor Smartphone Laptop Notebook/Ultrabook Tablet

Cost $150–$1,000 $300–$3,000 $300–$800 $75–$1,500

Weight (pounds) <0.5 <6 <3 <2

Screen size(inches)

2–5.5 <20 <12 <13

Typical use Combines a cellphone with a hand-held computer; runapps and text mes-saging services;access network andthe Internetwirelessly

Run workerproductivitysoftware, access theInternet, playgames, listen tomusic, and watchvideos

Smaller version of alaptop, with sufficientprocessing power torun nearly every busi-ness application

Capture data at thepoint of contact,read email, accessthe Internet, reade-books, viewphotos, playgames, listen tomusic, and watchvideos

Nonportable Computers

Factor Thin Client Desktop Nettop Workstation

Cost $200–$500 $500–$3,000 $150–$350 $1,500–$9,500

Weight (pounds) <3 20–30 <5 <20–35

Typical use Enter data andaccess applicationsvia the Internet; canbe portable or non-portable

Run worker pro-ductivity software,access the Internet,play games, listen tomusic, and watchvideos

Small, limited capacitydesktop computer;performs basic taskssuch as Internet surf-ing, accessing Web-based applications,document processing,and audio/video play-back[

Powerful desktopcapable of per-forming engineer-ing, computeraided design, andsoftware develop-ment functions

Multiple-user computer systems include servers, mainframes, and supercomputers.

Multiple-User Computers

Factor Server Mainframe Supercomputer

Cost >$500 >$75,000 >$250,000

Weight (pounds) >25 >100 >100

Typical use Execute networkand Internetapplications

Execute computing tasks forlarge organizations and providemassive data storage

Run scientific applications; per-form intensive number crunching

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Portable ComputersMany computer manufacturers offer a variety of portable computers, thosethat are small enough to carry easily. Portable computers include wearablecomputers, smartphones, laptops, notebooks, ultrabooks, and tablets.

Wearable ComputersA wearable computer is an electronic device capable of storing and proces-sing data that is incorporated into a person’s clothing or personal accesso-ries. Companies like Apple, FitBit, Google, Huawei, LG, Pebble, Samsung,Sony, TomTom, Xiaomi, and others offer health-tracking wrist bands orsmart watches that can capture a wide range of data, including distance cov-ered, elevation climbed, pace, calories burned, continuous heart rate, andquality of sleep. Most can also display call and text notifications and enableone to control songs from a mobile playlist. These products cost anywherefrom $75 to $750.

Around one-half to two-thirds of U.S. employers with 15 or more workershave implemented some sort of employee wellness program. One-half of fit-ness band sales in the United States are to organizations that pass thesedevices along to its employees, often at no charge. Iron Mountain, the recordsand data management firm, awards employees points for completing varioushealth- and wellness-related “challenges” that can later be converted intocash. One challenge requires employees to connect a wearable device to acomputer portal and walk one million steps in a year.53

Chinese researchers have developed an e-skin that is just a few atomsthick so it can press close to the skin. The e-skin contains all the sensorsneeded to track and broadcast the wearer’s blood pressure, pulse, and othervital measurements. The developers are hoping the material can be used toprovide instant health assessment and real-time patient diagnoses.54

The Mi.Mu is a high-tech glove designed to ease the creation of musicusing computers and other technology through gestures, enabling musiciansto avoid cumbersome dials and computer screens. When wearing the gloves,an upward movement of the hand raises the pitch, extending an index fingeradds some reverb, and snapping your palm shut silences everything.55 Googleis partnering with Levi Strauss & Co to make conductive yarn that can bewoven into garments to enable touch and gesture interactivity that wouldallow wearers to do things like press their sleeve to turn a light on or activatetheir smartphone to make a call.56

SmartphonesWhile features and capabilities vary from model to model and manufacturer tomanufacturer, with most smartphones you can place calls, download and runapps (e.g., games, a contact list manager, and personal and business financemanagers), send and receive text messages and email, view documents andfiles, take and send photos and videos, get driving directions via GPS, browseWeb sites, and create a playlist of digital tunes. Smartphones employ a combi-nation chipset called a “system on a chip,” which includes processor cores,RAM and ROM memory, interface controllers and voltage regulators, asshown in Figure 3.12. With system on a chip, all the critical components ofthe smartphone are located in a relatively small area, making the device fasterand more energy efficient and reducing assembly costs.

Mobile ComputersA laptop is a personal computer designed for use by mobile users, beingsmall and light enough to sit comfortably on a user’s lap. Laptops use a vari-ety of flat-panel technologies to produce lightweight and thin display screenswith good resolution. In terms of computing power, laptops can match most

portable computer: A computersmall enough to carry easily.

wearable computer: An electronicdevice capable of storing and proces-sing data that is incorporated into aperson’s clothing or personalaccessories.

laptop: A personal computerdesigned for use by mobile users,being small and light enough to sitcomfortably on a user’s lap.

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desktop computers as they come with powerful CPUs as well as large-capacityprimary memory and disk storage. This type of computer is highly popularamong students and mobile workers who carry their laptops on trips and tomeetings and classes. Most personal computer users now prefer a laptopover a desktop because of its portability, lower energy usage, and smallerspace requirements.

Numerous portable computers are smaller than the typical laptop andhave various names, including notebook and the even smaller ultrabook. Thenewest notebook computers come with a natural user interface, includingboth voice-control integration and touch screens; high-quality display screens;always-on, always-connected capabilities; all-day battery life; and processingpower sufficient to run most business applications and games.

Tablet are portable, lightweight computers that can come with or withouta keyboard and allow you to roam the office, home, or factory floor, carryingthe device like a clipboard. You can enter text with a writing stylus directly onthe screen, thanks to built-in handwriting-recognition software. Other inputmethods include an onscreen keyboard and speech recognition. Tablets thatsupport input only via a writing stylus are called slate computers. The convert-ible tablet PC comes with a swivel screen and can be used as a traditional note-book or as a pen-based tablet PC. Most new tablets come with a front-facingcamera for videoconferencing and a second camera for snapshot photos andvideo. Tablets are especially popular with students and gamers. They are alsofrequently used in the healthcare, retail, insurance, and manufacturing indus-tries because of their versatility.

The Apple iPad is a tablet capable of running the same software that runson the Apple iPhone and iPod touch devices, giving it a library of well over amillion applications. It also runs software developed specifically for the iPad.The device supports Internet access over both wireless and cellular networks,and it includes an onscreen keypad, although a physical keyboard can also beattached. Apple offers a variety of iPad models, ranging from the iPad mini,which weighs 0.73 pounds and has a 7.9-inch screen, up to the iPad Pro, whichweighs 1.5 pounds and has a 12.9-inch screen.

A number of computer companies offer tablets to compete with Apple’siPad, including the Amazon Fire, the Inspiron and Venue by Dell, the Nexusand Pixel from Google, the Tab 2 and Yoga from Lenovo, the Surface Profrom Microsoft, the Shield from Nvidia, the Tablet S and Xperia from Sony,the Encore and Excite by Toshiba, the Galaxy Tab and Galaxy Note from Sam-sung (see Figure 3.13), and the low-cost (less than $75) Aakash and Ubislatefrom the India-based company Quad.

Thin Clients, Desktops, and WorkstationsNonportable single-user computers include thin client computers, desktopcomputers, nettop, and workstations.

FIGURE 3.12Anatomy of a smartphoneSmartphones employ a combinationchipset called a “system on a chip,”which includes processor cores,RAM and ROM memory, interfacecontrollers, and voltage regulators. Keyboard Display Microphone Speaker GPS Camera

System on a chipMemory Modem

User Input/Output

tablet: A portable, lightweight com-puter with no keyboard that allows youto roam the office, home, or factory floorcarrying the device like a clipboard.

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A thin client is a low-cost, centrally managed computer with no internalor external attached drives for data storage. These computers have limitedcapabilities and perform only essential applications, so they remain “thin” interms of the client applications they include. As stripped-down computers,they do not have the storage capacity or computing power of typical desktopcomputers, nor do they need it for the role they play. With no hard disk, theynever pick up viruses or suffer a hard disk crash. Unlike personal computers,thin clients download data and software from a network when needed, mak-ing support, distribution, and updating of software applications much easierand less expensive. Thin clients work well in a cloud-computing environmentto enable users to access the computing and data resources available withinthe cloud. The Chromebook, which runs the Chrome OS operating system, isa highly portable device, is widely used in many schools, and is an exampleof a thin client.

As patient records within the healthcare industry have gone increasinglydigital, many healthcare providers have struggled to find new ways to ensurethat their staff have ready access to a patient’s pertinent records. ChaptersHealth System, which provides post-acute, palliative, and hospice care forpatients across west-central Florida, decided to upgrade to thin client technologyin the form of Samsung Chromebooks for its staff of 140 caregivers, who fre-quently make rounds to hospitals, nursing homes, assisted living facilities, andprivate home. For Chapters Health, the Chromebooks offer affordable, light-weight, and secure access to clinical data—along with a nine-hour battery life.57

FIGURE 3.13TabletThe Samsung Galaxy Note 10.1Android tablet has a large touchscreen and a quad-core processor.

thin client: A low-cost, centrallymanaged computer with no internalor external attached drives for datastorage.


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Desktop computers are single-user computer systems that are highly ver-satile. Named for their size, desktop computers can provide sufficient comput-ing power, memory, and storage for most business computing tasks.

The Apple iMac is a family of Macintosh desktop computers first intro-duced in 1998 in which all the components (including the CPU and the diskdrives) fit behind the display screen. Intel’s Core i7 High-end Desktop Proces-sor family of computers has eight cores, 20 megabytes of cache memory, andsupports DDR4 memory. The CPU operates at a base clock frequency of3.0GHz making it a popular choice for gamers.

A nettop computer is a very small, inexpensive desktop computer typi-cally used for Internet access, email, accessing Web-based applications, docu-ment processing, and audio/video playback. A key feature of nettopcomputers is that they require perhaps one-tenth the amount of power tooperate as a typical desktop computer.

Workstations are more powerful than personal computers but still smallenough to fit on a desktop. They are used to support engineering and techni-cal users who perform heavy mathematical computing, computer-assisteddesign (CAD), video editing, and other applications requiring a high-end pro-cessor. Such users need very powerful CPUs, large amounts of main memory,and extremely high-resolution graphic displays. Workstations are typicallymore expensive than the average desktop computer. Some computer manu-facturers are now providing laptop versions of their powerful desktop work-stations. The Mac Pro is a series of workstation and server computers basedon the high performance Intel Xeon processor.

Larson & Darby Group is an architectural, engineering, interiors, andtechnology design firm that uses powerful HP Z workstations to run AutodeskAutoCAD and related software. Larson & Darby needs high-performance com-puting to meet the challenging demands of creating 3D models and then ren-dering those models to put design options in front of clients. If the computerhardware runs slowly, then designers must wait for drawings to regeneratewhen changes are made and this eats into design time. Reliability is also criti-cal. Rendering can take hours on many projects and a hardware failure canmean losing a full day’s worth of work.58

Servers, Mainframes, and SupercomputersServers, mainframes, and supercomputers are designed to support work-groups from a small department of two or three workers to large organiza-tions with tens of thousands of employees and millions of customers.

A server is a computer employed by many users to perform a specifictask, such as running network or Internet applications. While almost anycomputer can run server operating system and server applications, a servercomputer usually has special features that make it more suitable for operat-ing in a multiuser environment. These features include greater memory andstorage capacities, faster and more efficient communications abilities, andreliable backup capabilities. A Web server is one specifically designed tohandle Internet traffic and communications. An enterprise server stores andprovides access to programs that meet the needs of an entire organization.A file server stores and coordinates program and data files. Server systemsconsist of multiuser computers, including supercomputers, mainframes, andother servers.

Servers offer great scalability, the ability to increase the processing capa-bility of a computer system so that it can handle more users, more data, ormore transactions in a given period. Scalability is achieved by adding more,or more powerful, processors. Scaling up adds more powerful processors,and scaling out adds many processors to increase the total data-processingcapacity. Most new servers include onboard diagnostic capabilities that enable

desktop computer: A nonportablecomputer that fits on a desktop andprovides sufficient computing power,memory, and storage for most businesscomputing tasks.

nettop: A very small, inexpensivedesktop computer typically used forInternet access, email, accessingWeb-based applications, documentprocessing, and audio/video playback.

workstations: A more powerfulpersonal computer used for mathemat-ical computing, computer-assisteddesign, and other high-end processingbut still small enough to fit on adesktop.

server: A computer employed bymany users to perform a specific task,such as running network or Internetapplications.

scalability: The ability to increasethe processing capability of a computersystem so that it can handle moreusers, more data, or more transactionsin a given period.

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the server to alert the IS operations group to potential problems, a capabilitythat used to be only available for high-end, mainframe computers.

A mainframe computer is a large, powerful computer shared by dozens oreven hundreds of concurrent users connected to the machine over a network.Mainframe computers have been the workhorses of corporate computing formore than 50 years. They can support thousands of users simultaneously and canhandle all of the core functions of a corporation. Mainframe computers provide thedata-processing power and data-storage capacity that enables banks and broker-age firms to deliver new mobile services, credit card companies to detect identitytheft, and government agencies to better serve citizens. Examples of companiesusing mainframe technology include ADP, which processes payroll for millions ofemployees at over 610,000 client companies; Mastercard, which manages 2 billionaccounts and tracks $4.1 trillion of spending in 150 different currencies in 210countries around the world; and UPS, which tracks the route of 18 millionpackages and documents each day in 200 countries and territories.59–61

IBM spent $1 billion and five years designing its new z13 mainframe sys-tem, which is capable of processing 2.5 billion transactions per day. Pricingfor the z13 depends on configuration, but versions of the previous model ranas high as $1 million.62

Radixx International operates the computerized reservation systems for 40small and midsize airlines with 90,000 directly connected travel agents. Thereservation systems were running on a collection of 400 servers; however,Radixx recently switched to running on IBM mainframes, reducing its totalcost of ownership by about 50 percent.63

Supercomputers are the most powerful computers with the fastest proces-sing speed and highest performance. They are special-purpose machinesdesigned for applications that require extensive and rapid computational capa-bilities. Originally, supercomputers were used primarily by government agen-cies to perform the high-speed number crunching needed in weatherforecasting, earthquake simulations, climate modeling, nuclear research, studyof the origin of matter and the universe, and weapons development and testing.They are now used more broadly for commercial purposes in the life sciencesand the manufacture of drugs and new materials. For example, Procter & Gam-ble uses supercomputers in the research and development of many of its leadingcommercial brands, such as Tide and Pampers, to help develop detergent withmore soapsuds and improve the quality of its diapers. And supercomputers arealso used to help establish the safety ratings for vehicles sold in the UnitedStates. The ratings are based on sophisticated computer simulations, duringwhich supercomputers crunch equations involving many different variables.These computer-generated simulations are combined with data taken fromactual crash tests and analyzed to determine safety ratings that many consumersuse as one factor in determining which car to buy.

Most new supercomputers are based on an architecture that employs gra-phics processing unit (GPU) chips in addition to traditional central processingunit (CPU) chips to perform high-speed processing. The speed of supercom-puters is measured in floating point operations per second (FLOPS). Table 3.6lists supercomputer processing speeds.

TABLE 3.6 Supercomputer processing speedsSpeed Meaning

GigaFLOPS 1 � 109 FLOPSTeraFLOPS 1 � 1012 FLOPSPetaFLOPS 1 � 1015 FLOPSExaFLOPS 1 � 1018 FLOPS

mainframe computer: A large,powerful computer often shared byhundreds of concurrent users con-nected to the machine over a network.

supercomputers: The most power-ful computer systems with the fastestprocessing speeds.

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CriticalThinking Exercise

The fastest supercomputer in the world as of November 2015 is theTianhe-2 built by the National University of Defense Technology located inHunan Province, China. It was built at an estimated cost of about $3 billionand is expected to be used for simulations, analysis, and government securityapplications.64

Table 3.7 lists the five most powerful supercomputers in use as of July2015.

Upgrading an Organization’s ComputersYour organization earns $50 million in annual sales, has 500 employees, andplans to acquire 250 new portable computers this year along with another250 next year. The goal is to issue every employee a company-owned com-puter, which they can use at work and at home. The computers will be loadedwith antivirus software and productivity software to meet each employee’s busi-ness needs. Your organization has decided it will purchase the computersfrom the same manufacturer to obtain a quantity purchase discount. To theextent possible, the goal is to have the same hardware and software for every-one to simplify the troubleshooting and support of the computers. The chieffinancial officer has asked you to lead a project team to define users’ computerhardware needs and recommend the most cost-effective solution for meetingthose needs.

Review Questions1. Which classes of portable computers could meet the needs of your organization?2. What are the pros and cons of each class of portable computer?

Critical Thinking Questions1. Who else (role, department) and how many people would you select to

be a member of the team? How would your team go about defining users’needs?

2. Do you think that only one manufacturer and model of portable computer willmeet everyone’s needs, or should you define multiple portable computersbased on the needs of various classes of end user?

TABLE 3.7 Five most powerful operational supercomputers (July 2015)

Rank Name Manufacturer Research Center LocationNumber ofCores


1 Tianhe-2 NUDT National University of DefenseTechnology (NUDT)

China 3.1 million 33.9

2 Titan Cray Oak Ridge NationalLaboratory


0.56 million 17.6

3 Sequoia IBM Lawrence Livermore NationalLaboratory


1.5 million 17.2

4 K Fujitsu Riken Advanced Institute forComputational Science

Japan 0.75 million 10.5

5 Mira IBM Argonne National Laboratory UnitedStates

0.8 million 8.6

Source: Lendino, Jamie, “China’s Tianhe-2 Still the Fastest Supercomputer in the World, but the US Is Catching Up,” Extreme Tech, July 13, 2015,

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Server Farms, Data Centers, and Green Computing

This section will cover three topics that provide a good overview of what thecomputer industry and various organizations are doing to meet their comput-ing needs in a more efficient and environmentally friendly manner.

Server FarmsOften, an organization will house a large number of servers in the same room,where access to the machines can be controlled and authorized support per-sonnel can more easily manage and maintain the servers. Such a facility iscalled a server farm. Apple, Google, Microsoft, the U.S. government, andmany other organizations have built billion-dollar server farms in small ruralcommunities where both land and electricity are cheap.

Server manufacturers are competing heavily to reduce the powerrequired to operate their servers and are making “performance per watt” akey part of their product differentiation strategy. Low power usage is acritical factor for organizations that run server farms made up of hundredsor even thousands of servers. Typical servers draw up to 220 watts,although new servers based on Intel’s Atom microprocessor draw 8 orfewer watts. The annual power savings from such low-energy usage serverscan amount to tens of thousands of dollars for operators of a large serverfarm. Server farm operators are also looking for low-cost, clean, renewableenergy sources. For example, Apple runs a server farm in Maiden, NorthCarolina, on 167 million kilowatt hours of power generated from a 100-acresolar energy facility. This is enough power to operate 17,600 homes for ayear.65

A virtual server is an approach to improving hardware utilization by log-ically dividing the resources of a single physical server to create multiple logi-cal servers, each acting as its own dedicated machine, as shown inFigure 3.14. The server on which one or more virtual machines is running iscalled the host server. Each virtual server is called a guest server or a virtualmachine, and it includes its own operating system to manage the user inter-face and control how the virtual machine uses the host server’s hardware.The use of virtual servers is growing rapidly, with at least 70 percent of x86server workloads virtualized.66 In a typical data center deployment of severalhundred servers, companies using virtualization can build 12 virtual machinesfor every actual server, with a resulting savings in capital and operatingexpenses (including energy costs) of millions of dollars per year. The hypervi-sor is a virtual server program that controls the host processor and resources,

FIGURE 3.14Virtual serverVirtualization is an approach toimproving hardware utilization bylogically dividing the resources of asingle physical server to createmultiple logical servers.








Without virtualization -Three physical servers

each running at lowlevel of utilization

With virtualization -Single physical server

running at highlevel of utilization

Single physical serverserving as host for 3

virtual servers

server farm: A facility that housesa large number of servers in the sameroom, where access to the machinescan be controlled and authorized sup-port personnel can more easily manageand maintain the servers.

virtual server: A method of logicallydividing the resources of a singlephysical server to create multiple logi-cal servers, each acting as its owndedicated machine.

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allocates the necessary resources to each virtual system, and ensures that theydo not disrupt each other.

Cognizant, an IT, consulting, and business process outsourcing companybased in New Jersey, is making use of virtual servers in some of its 100 devel-opment and delivery centers worldwide. At one point, the company hadalmost 7,000 physical servers, which became unstainable in terms of cost andmanagement time. To address this problem, Cognizant utilized virtual servertechnology to reduce its number of physical servers by 90 percent. It nowruns 8,000 virtual servers, representing 85 percent of its server capacity.67

Software developers and hardware managers can package applicationsand software components into containers that give whatever is inside a well-defined, compact envelope that can be used to more easily manage it, includ-ing moving it across various hosts. While virtual machines divide the hostserver into multiple operating systems, all containers use the operating systemof their host server. This means containers require less memory to run and arefaster to deploy than virtual machines.

Bank of America, Goldman Sachs, and the International Securities Exchangeare just some of the organizations within the banking and financial servicesindustries that have been exploring the possibility of using container software(such as CoreOS and Docker), partly in response to demands from their owndevelopers who are looking for more efficient ways to deploy their applications.Like other organizations, banks and other financial institutions like the simplicitythat containers offer; however, some institutions are still only using containersfor in-house applications and for development due to security and regulatorycompliance concerns. Recently, Goldman Sachs became one of the first financialinstitutions to launch some applications into production using containers in thepublic cloud.68,69

A blade server houses many computer motherboards that include one ormore processors, computer memory, computer storage, and computer net-work connections. These all share a common power supply and air-coolingsource within a single chassis. By placing many blades into a single chassis,and then mounting multiple chassis in a single rack, the blade server is morepowerful but less expensive than traditional systems based on mainframes orserver farms of individual computers. In addition, the blade server approachrequires much less physical space than traditional server farms.

Data CenterA data center is a climate-and-access-controlled building or a set of buildingsthat houses the computer hardware that delivers an organization’s data andinformation services.

The rapid growth in the demand for additional computing capacity iscausing an explosion in the growth of new and existing data centers. Rack-space is a major cloud-computing service provider that manages over112,000 servers supporting its more than 300,000 cloud and hosting custo-mers.70 Apple, Facebook, AT&T, Rackspace, and IT services company Wiproare among firms that have spent hundreds of millions in a single year onnew data centers. Google spends on the order of $4 billion a year on build-ing data centers in an attempt to keep up with the burgeoning demand ofits existing and new customers.71 Apple is spending $2 billion to build onedata center in Mesa, Arizona, to serve as a command center for its globalnetworks.72

The need for additional data storage capacity is another factor driving thegrowth in data centers. According to one study, somewhere between one-third and one-half of all data centers will run out of space in the next severalyears. Of those organizations needing more database capacity, about 40 per-cent indicated that they would build new data centers, about 30 percent said

container: A way for softwaredevelopers and hardware managersto package applications and softwarecomponents into a well-defined,compact envelope that can be usedto more easily manage it, includingmoving it across various hosts.

blade server: A server thathouses many individual computermotherboards that include one ormore processors, computer memory,computer storage, and computernetwork connections.

data center: A climate-and-access-controlled building or aset of buildings that houses thecomputer hardware that delivers anorganization’s data and informationservices.

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they would lease additional space, and the rest indicated that they wouldinvestigate other options, including the use of cloud computing.

A further driving force behind the increased spending on new data cen-ters is that some organizations are consolidating their data centers from manylocations down to just a few locations. The goal of consolidation is to lowerongoing operating costs—less spending on utilities, property taxes, and labor.General Motors consolidated 23 data center locations into just two, reducingboth its operating costs and energy usage.73 The General Accounting Officereports that the federal government saved $2 billion between 2011 and 2014from its data center consolidation efforts.74

Traditional data centers consist of warehouse-size buildings filled withrow upon row of server racks and powerful air conditioning systems designedto remove dust and humidity from the air and offset the heat generated by theprocessors. Such data centers can use as much energy as a small city and runup a power bill of millions of dollars per year. Indeed, energy costs canamount to 25 percent of the total cost of operating a data center, with hard-ware expenses and labor costs the other 75 percent.

Businesses and technology vendors are working to develop data centersthat run more efficiently and require less energy for processing and cooling.For example, Red Cloud, an Australian Web site hosting company, implemen-ted a range of modular data center solutions from Cannon Technologies toincrease its number of data centers by 11, thus adding 1 million square feetof available space. The module pods can be assembled in just a few daysusing only basic hand tools.75 Google, Dell, Hewlett-Packard, Microsoft, andothers have adopted similar modular data center approach. See Figure 3.15.

About half the energy usage of a traditional data center goes to operate itscomputers. The other half goes to cooling the computers, removing dust andhumidity from the air, and lighting the facility, along with other systems thatsustain the data center. Such a data center has a power usage effectiveness(PUE) of 2.0. (PUE ¼ total power consumed/power required to run the com-puters). The ideal goal is a PUE of 1.0, which would indicate that all thepower goes to running the computers. Google has been able to build datacenters that operate with a PUE of 1.14.76

In a further attempt to lower ongoing operating costs, many organizationsare locating their data centers in areas with milder climates and lower energyrates and land costs. For organizations in the United States, this translates to

FIGURE 3.15Modular data centerMicrosoft employs a state-of-the-artmodular data center.Source:



62 62 50



1 3 4








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rural locations in the south and the northwest. Apple’s $1 billion data center,Google’s $600 million data center, and Facebook’s $450 million data centerare all located in rural North Carolina.77

The ability to absorb the impact of a disaster (e.g., hurricane, earthquake,terrorism attack, or war) and quickly restore services is a critical concernwhen it comes to the planning for new data centers. As a result, data centersof large information systems service organizations are often distributedamong multiple locations in different areas of the country or even differentcountries to ensure continuous operations in the event of a disaster. If onedata center in such an arrangement is affected by a disaster, its work loadcould be redirected to one or more of the distributed data centers notaffected. IBM offers an extreme example of distributed data centers. Since2009, IBM has opened nine data centers in Brazil, Mexico, Costa Rica, Chile,Colombia, Peru, and Uruguay to ensure around-the-clock services to its LatinAmerican customers. Globally, IBM has more than 400 widely distributeddata centers to meet the needs of its customers.78 In addition to the distribu-tion strategy, most data centers have implemented some form of backup gen-erator or uninterruptible power supply in the event that the local powerprovider fails.

Green ComputingElectronic devices such as computer hardware and smartphones contain hun-dreds or even thousands of components. The components, in turn, are com-posed of many different materials, including some that are known to bepotentially harmful to humans and the environment, such as beryllium, cad-mium, lead, mercury, brominated flame retardants (BFRs), selenium, andpolyvinyl chloride.79 Electronics manufacturing employees and suppliers at allsteps along the supply chain and manufacturing process are at risk ofunhealthy exposure to these raw materials. Users of these products can alsobe exposed to these materials when using poorly designed or improperlymanufactured devices. Care must also be taken when recycling or destroyingthese devices to avoid contaminating the environment.

Green computing is concerned with the efficient and environmentallyresponsible design, manufacture, operation, and disposal of IS-related pro-ducts, including all types of computing devices (from smartphones to super-computers), printers, printer materials such as cartridges and toner, andstorage devices. Many business organizations recognize that going green is intheir best interests in terms of public relations, safety of employees, and thecommunity at large. They also recognize that green computing presents anopportunity to substantially reduce total costs over the life cycle of their ISequipment. Green computing has three goals: reduce the use of hazardousmaterial, allow companies to lower their power-related costs, and enable thesafe disposal or recycling of computers and computer-related equipment.

It is estimated that 51.9 million computers, 35.8 million monitors, and33.6 million hard copy devices (printers, faxes, etc.)—representing a total of1.3 million tons of waste—were disposed of in the United States in 2010alone.80 Because it is impossible for manufacturers to ensure safe recycling ordisposal, the best practice would be for them to eliminate the use of toxicsubstances, particularly since recycling of used computers, monitors, and prin-ters has raised concerns about toxicity and carcinogenicity of some of thesubstances. However, until manufacturers stop using these toxic substances,safe disposal and reclamation operations must be carried out carefully toavoid exposure in recycling operations and leaching of materials, such asheavy metals, from landfills and incinerator ashes. In many cases, recyclingcompanies export large quantities of used electronics to companies in unde-veloped countries. Unfortunately, many of these countries do not have strong

green computing: A programconcerned with the efficient andenvironmentally responsible design,manufacture, operation, and disposalof IS-related products.

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CriticalThinking Exercise

environmental laws, and they sometimes fail to recognize the potential dan-gers of dealing with hazardous materials. In their defense, these countriespoint out that the United States and other first-world countries were allowedto develop robust economies and rise up out of poverty without the restric-tions of strict environmental policies.

Electronic Product Environmental Assessment Tool (EPEAT) is a sys-tem that enables purchasers of electronic products to evaluate, compare,and select products based on a set of environmental criteria. EPEAT wasfirst implemented in 2006 with Computer and Displays (IEEE 1680.1 stan-dard) and has now expanded to Imaging Equipment, under the IEEE 1680.2standard from January 2013. Products are ranked in EPEAT according tothree tiers of environmental performance: bronze, silver, and gold. SeeTable 3.8.81 Individual purchasers as well as corporate purchasers of compu-ters, printers, scanners, and multifunction devices can use the EPEAT Website ( to screen manufacturers and models based on environ-mental attributes.82

Some electronics manufacturers have developed programs to assist theircustomers in disposing of old equipment. For example, Dell offers a freeworldwide recycling program for consumers. It also provides no-charge recy-cling of any brand of used computer or printer with the purchase of a newDell computer or printer. This equipment is recycled in an environmentallyresponsible manner, using Dell’s stringent and global recycling guidelines.83

HP, which offers a similar program, has recovered 2.8 billion pounds of pro-ducts since 1987.84

Computer manufacturers such as Apple, Dell, and Hewlett-Packard havelong competed on the basis of price and performance. As the differenceamong the manufacturers in these two arenas narrows, support for greencomputing is emerging as a new business strategy for these companies to dis-tinguish themselves from the competition. Apple claims to have the “greenestlineup of notebooks” and is making progress at removing toxic chemicalsfrom its manufacturing process. Dell is focused on becoming “the greenesttechnology company on Earth.” Hewlett-Packard often highlights its long tra-dition of environmentalism and is improving its packaging to reduce the useof materials. It is also urging computer users around the world to shut downtheir computers at the end of the day to save energy and reduce carbonemissions.

Moving to Green ComputingYour organization is a leader in the development of renewable energy sourcesbased on enhanced geothermal systems and is viewed as a champion in the fightto reduce carbon emissions. The organization employs over 25,000 people world-wide and operates three global data centers, one each in the United States, Eur-ope, and Southeast Asia. The CEO has asked all her C level executives for inputon a proposed strategy to become a leader in green computing.

TABLE 3.8 EPEAT product tiers for computers

TierNumber of Required CriteriaThat Must Be Met

Number of Optional CriteriaThat Must Be Met

Bronze All 23 None

Silver All 23 At least 50%

Gold All 23 At least 75%

Electronic ProductEnvironmental AssessmentTool (EPEAT): A system thatenables purchasers to evaluate,compare, and select electronicproducts based on a set ofenvironmental criteria.

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Review Questions1. In what ways is a move toward green computing consistent with your organi-

zation’s mission of developing renewable energy sources?2. One green computing proposal is to consolidate the three data centers into

one. Discuss the pros and cons of this approach.

Critical Thinking Questions1. Identify two additional tactics the organization might take to accelerate its

move toward green computing?2. Identify the pros and cons or any issues associated with your proposed tactics.


Principle:The computer hardware industry is rapidly changing and highly compet-itive, creating an environment ripe for technological breakthroughs.

Computer hardware should be selected to meet specific user and businessrequirements. These requirements can evolve and change over time.

The central processing unit, memory, input/output devices, and the buscooperate to execute program instructions following a fetch, decode, execute,and store process.

Computer system processing speed is affected by clock speed, which ismeasured in gigahertz (GHz). As the clock speed of the CPU increases,more heat is generated, which can corrupt the data and instructions thecomputer is trying to process. Bigger heat sinks, fans, and other compo-nents are required to eliminate the excess heat. Chip designers and manu-facturers are exploring various means to avoid heat problems in their newdesigns.

The Intel x86, Intel Atom, and ARM processors are each based on a differ-ent instruction set and are designed with different goals in mind.

A multicore processor is one that combines two or more independent pro-cessors into a single computer so that the independent processors can sharethe workload.

Parallel computing is the simultaneous execution of the same task on multi-ple processors to obtain results more quickly. Massively parallel processinginvolves linking many processors to work together to solve complex problems.

Grid computing is the use of a collection of computers, often owned bymultiple individuals or organizations, that work in a coordinated manner tosolve a common problem.

An integrated circuit—such as a processor or memory chip—is a setof electronic circuits on one small chip of semiconductor material. A fab orfoundry is a factory where integrated circuits are manufactured. Fabless man-ufacturers outsource their manufacturing to foundry companies who fabricatethe design.

Main memory provides the CPU with working storage for programinstructions and data. The chief function of memory is to rapidly provide dataand instructions to the CPU. Memory storage capacity is measured in bytes.

Random access memory or RAM is volatile; loss of power to the computererases its contents. RAM comes in many different varieties, including dynamicRAM or DRAM (dynamic random access memory) and DDR SDRAM (doubledata rate synchronous dynamic random access memory). DDR has beensuperseded by DDR2, DDR3, and DDR4.

Cache memory is a type of high-speed memory that CPUs can accessmore rapidly than RAM.

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Read-only memory (ROM) is nonvolatile and contains permanent pro-gram instructions for execution by the CPU. Other nonvolatile memorytypes include programmable read-only memory (PROM), erasable program-mable read-only memory (EPROM), electrically erasable PROM (EEPROM),and flash memory.

Computer systems can store larger amounts of data and instructions in sec-ondary storage, which is less volatile and has greater capacity than memory.The primary characteristics of secondary storage media and devices includeaccess method, capacity, portability, and cost. Common forms of secondarystorage include magnetic storage devices such as tape, hard disk drives, andvirtual tape; optical storage devices such as CD-ROMs and digital video discs(DVDs); and solid state storage devices (SSDs) such as flash drives.

Redundant array of independent/inexpensive disks (RAID) is a method ofstoring data that generates extra bits of data from existing data, allowing thesystem to more easily recover data in the event of a hardware failure.

Network-attached storage (NAS) and storage area networks (SAN) are alter-native forms of data storage that enable an organization to share data storageresources among a much larger number of computers and users for improvedstorage efficiency and greater cost effectiveness.

Storage as a service is a data storage model in which a data storage serviceprovider rents space to people and organizations.

Input and output devices allow users to provide data and instructions tothe computer for processing and allow subsequent storage and output. Thesedevices are part of a user interface through which human beings interact withcomputer systems.

Data is placed in a computer system in a two-stage process: Data entryconverts human-readable data into machine-readable form; data input thentransfers machine-readable data into the system. Common input devicesinclude a keyboard, a mouse, speech-recognition technology, motion-sensinginput devices, scanning devices, optical data readers, magnetic ink characterrecognition (MICR) devices, magnetic stripe cards, chip cards, smart cards, con-tactless payment cards, point-of-sale (POS) devices, automated teller machines(ATMs), bar-code scanners, radio frequency identification (RFID) devices, peninput devices, and touch-sensitive screens.

There are numerous flat-panel display screens, including liquid crystal dis-play (LCD), light-emitting diode (LED), organic light-emitting diode (OLED),and plasma devices. Display screen quality is determined by the computergraphics card, aspect ratio, size, color, and resolution. Other output devicesinclude printers, plotters, digital audio players, and e-book readers.

3D printing has created a major breakthrough in how many items will bemanufactured. Biomedical engineers are exploring a process called bioprinting,which uses 3D printers to build human parts and organs from actual human cells.

Principle:Computer hardware must be carefully selected to meet the evolving needsof the organization and its supporting information systems.

Computer systems are generally divided into two categories: single userand multiple users.

Single-user systems include portable computers, such as wearable compu-ters, smartphones, laptops, notebooks, and tablets.

Nonportable single-user systems include thin client, desktop, nettop, andworkstation computers. Some thin clients (e.g., the Chromebook) are designedto be highly portable.

Multiuser systems include servers, blade servers, mainframes, andsupercomputers.

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Scalability is the ability to increase the processing capability of a computersystem so that it can handle more users, more data, or more transactions in agiven period.

A mainframe computer is a large, powerful computer shared by dozens oreven hundreds of concurrent users connected to the machine over a network.

Supercomputers are the most powerful computers with the fastest proces-sing speed and highest performance.

Principle:The computer hardware industry and users are implementing green com-puting designs and products.

A server farm houses a large number of servers in the same room, whereaccess to the machines can be controlled and authorized support personnel canmore easily manage and maintain the servers.

A virtual server is an approach to improving hardware utilization by logi-cally dividing the resources of a single physical server to create multiple logicalservers, each acting as its own dedicated machine.

A data center is a climate-and-access-controlled building or a set of build-ings that houses the computer hardware that delivers an organization’s dataand information services. The rapid growth in data centers is stimulated bythe increased demand for additional computing and data storage capacity andby the trend toward consolidating from many data centers down to a few.

Organizations and technology vendors are trying a number of strategies tolower the ongoing cost of data center operations.

The ability to absorb the impact of a disaster and quickly restore services isa critical concern when it comes to planning for new data centers.

Green computing is concerned with the efficient and environmentallyresponsible design, manufacture, operation, and disposal of IT-relatedproducts.

Many business organizations recognize that going green can reduce costsand is in their best interests in terms of public relations, safety of employees,and the community at large.

Three specific goals of green computing are to reduce the use of hazardousmaterial, lower power-related costs, and enable the safe disposal and/or recy-cling of IT products.

The Electronic Product Environmental Assessment Tool can be used bypurchasers of electronic products to evaluate, compare, and select productsbased on a set of environmental criteria.

Key Terms


blade server


byte (B)

cache memory

central processing unit (CPU)

clock speed

compact disc read-only memory (CD-ROM)

computer graphics card

contactless payment card



data center

data entry

data input

desktop computer

digital audio player

digital video disc (DVD)


Electronic Product Environmental Assessment Tool(EPEAT)

gigahertz (GHz)

graphics processing unit (GPU)

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green computing

grid computing

hard disk drive (HDD)

instruction set architecture (ISA)

input/output device

integrated circuit (IC)


magnetic stripe card

magnetic tape

main memory

mainframe computer

massively parallel processing system



multicore processor



network-attached storage (NAS)

optical storage device

parallel computing

point-of-sale (POS) device

policy-based storage management

portable computer

processor family

radio frequency identification (RFID)

random access memory (RAM)

read-only memory (ROM)

redundant array of independent/inexpensivedisks (RAID)


secondary storage

semiconductor fabrication plant


server farm

smart card

solid state storage device (SSD)

source data automation

speech-recognition technology

storage area network (SAN)

storage as a service



thin client

virtual server

virtual tape

wearable computer


Chapter 3: Self-Assessment Test

The computer hardware industry is rapidly chang-ing and highly competitive, creating an environ-ment ripe for technological breakthroughs.

1. The is the part of the computer thatsequences and executes instructions.a. CPUb. memoryc. busd. input/output devices

2. Clock speed is measured in GHz or .a. millions of instructions per secondb. millions of cycles per secondc. billions of cycles per secondd. millions of floating point instructions per

second3. A key advantage of ARM processors over the tra-

ditional x86 complex instruction set processors isthat .a. ARM processors do not generate as much heatb. ARM processors are more powerfulc. ARM processors are largerd. ARM processors have a faster clock speed

4. The use of a collection of computers, oftenowned by multiple individuals or organizations,to work in a coordinated manner to solve acommon problem is called .a. parallel computingb. massively parallel processingc. multicore processingd. grid computing

5. is a highly complex process used inmanufacturing computer chips with feature sizesthat are extremely small.

6. L1 is the fastest type of cache memory built into acomputer, faster even than DDR4 SDRAM mem-ory. True or False?

7. The optical storage device capable of storing themost data is the .a. DVDb. Blu-ray discc. CD-ROMd. double-sided DVD

8. A high-speed, special-purpose network that inte-grates different types of data storage devices intoa single storage system and connects them to

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computing resources across an entire organiza-tion is called a(n) .a. network-attached storageb. storage area networkc. storage as a serviced. enterprise data storage solution

9. involves capturing and editing datawhere it is originally created and in a form thatcan be directly entered into a computer to ensureaccuracy and timeliness.

10. After October 1, 2015, merchants who acceptpayments made via a chip card’s magnetic stripecan continue to do so; however, they must acceptresponsibility for any fraudulent purchases. Trueor False?

11. is a process that uses 3D printers tobuild human body parts and organs from actualhuman cells.

Computer hardware must be carefully selected tomeet the evolving needs of the organization andits supporting information systems.

12. A combination chipset called aincludes processor cores, RAM and ROM mem-ory, interface controllers, and voltage regulators.

13. A is a low-cost, centrally managedcomputer with no internal or external attacheddrives for data storage.a. tabletb. thin client

c. nettop computerd. workstation

14. Servers offer great , the ability toincrease the processing capability of a computersystem so it can handle more users, more data, ormore transactions in a given period.

The computer industry and users are implementinggreen computer designs and products.

15. is an approach to improving hard-ware utilization by logically dividing theresources of a single physical server to createmultiple logical servers each with its own dedi-cated machine.a. Server farmb. Multiprocessingc. Virtual serverd. Hypervisor

16. Which of the following is not a goal of greencomputing?a. Enable the safe disposal or recycling of com-

puters and computer-related equipment.b. Allow companies to lower their power-related

costs.c. Reduce the use of hazardous material.d. Reduce the cutting down of trees and other

foliage.17. Green computing is about saving the environ-

ment; there are no real business benefits associ-ated with this program. True or False?

Chapter 3: Self-Assessment Test Answers

1. a2. c3. a4. d5. Extreme ultraviolet lithography or EUVL6. True7. b8. b9. Source data automation

10. True11. Bioprinting12. system on a chip13. b14. scalability15. c16. d17. False

Review Questions

1. Identify four fundamental components of everycomputer.

2. What is the purpose of the computerbus?

3. How does clock speed govern the execution ofinstructions by a computer?

4. What is the x86 instruction set?

5. What is a multicore processor?6. What is the difference between a foundry

company and a fabless manufacturer?7. How does the role of main memory differ from

the role of secondary storage?8. Which is the largest amount of memory—a

gigabyte, petabyte, or terabyte?

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9. Identify and briefly discuss the fundamentalcharacteristic that distinguishes RAM from ROMmemory.

10. What is cache memory and how is it used?11. What is a solid state storage device?12. What is RFID technology? Identify three practical

uses for this technology.13. When speaking of computers, what is meant by


14. How is a blade server different from a regularserver?

15. Identify and briefly describe the various classes ofsingle-user, portable computers.

16. Identify three reasons for increased spending ondata centers.

17. Define the term “green computing,” and state itsprimary goals.

18. What is the EPEAT? How is it used?

Discussion Questions

1. Discuss the role a business manager should takein helping determine the computer hardware tobe used by the organization.

2. Identify the similarities and differences betweenmassively parallel processing systems and gridcomputing.

3. Briefly describe the concept of multiprocessing.How does parallel processing differ frommultiprocessing?

4. Discuss some of the technical and nontechnicalissues that might come up in trying to establish alarge grid computing project such as the LargeHadron Collider.

5. What is 3D printing? Discuss what you think thefuture is for 3D printing.

6. What is a multicore processor? What advantagesdoes it offer users over a single-core processor?Are there any potential disadvantages?

7. Outline how the Electronic Product EnvironmentAssessment Tool (EPEAT) can be used for ratingcomputers.

8. Identify and briefly discuss the advantages anddisadvantages of solid state secondary storage

devices compared with magnetic secondary stor-age devices.

9. Briefly discuss the advantages and disadvantagesof attached storage, network-attached storage,and storage area networks in meeting enterprisedata storage challenges.

10. If cost were not an issue, describe thecharacteristics of your ideal computer. Whatwould you use it for? Would you choose atablet, laptop, desktop, or workstationcomputer? Why?

11. Briefly explain the differences between the mag-netic stripe card, chip card, and the smart card.Which do you believe is safest for the consumer?Why?

12. Fully discuss why some organizations areconsolidating many data centers into a few.Are there any potential drawbacks to thisstrategy?

13. Discuss potential issues that can arise if an orga-nization is not careful in selecting a reputableservice organization to recycle or dispose of itsIS equipment.

Problem-Solving Exercises

1. Do research to find the total worldwide sales forhard disk drives and solid state storage devicesover a five-year or more period. Try to get figuresfor the number of units sold as well as total stor-age capacity in some unit, such as gigabytes. Usegraphing software to develop a chart showingthese sales figures. Write a few paragraphs statingyour conclusions about the future of the harddisk drive market versus solid state storage.

2. Develop a spreadsheet that compares the fea-tures, initial purchase price, and a two-year esti-mate of operating costs (paper, cartridges, andtoner) for three different color laser printers.Assume that you will print 50 color pages and100 black-and-white pages each month. Now dothe same comparison for three inkjet printers.Write a brief memo on which of the six printers

you would choose and why. Develop a secondspreadsheet for the same printers, but this timeassume that you will print 250 color pages and500 black-and-white pages per month. Nowwhich of the printers would you buy and why?

3. Use word-processing software to document whatyour needs are as a computer user and your jus-tification for selecting either a desktop or someform of a portable computer. Find a Web site thatallows you to order and customize a computerand select those options that will best meet yourneeds in a cost-effective manner. Assume that youhave a budget of $850. Enter the computer spe-cifications you selected along with the associatedcosts from the Web site into an Excel spread-sheet. Insert that spreadsheet into the documentdefining your needs.

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Team Activities

1. Have you and your team do research on the Web toidentify three large grid computing projects ofinterest to the team. Visit the home page for each ofthese projects to learn more about the goals of theproject, results to date, and what is required if youwish to volunteer to help this project. Choose one ofthe projects, and volunteer to have your computeradded to the grid. Write a brief paper summarizingwhy your team chose this particular grid computingproject, what was required for your computer tojoin the grid, and how being a member of the gridaffected your use of your computer.

2. With one or two of your classmates, visit threedifferent retail stores or Web sites in search ofyour ideal smart watch. Document the costs, fea-tures, advantages, and disadvantages of three

different watches using a spreadsheet program.Analyze your data, and write a recommendationon which one you would buy. Be sure to clearlyexplain your decision.

3. With the members of your team, visit a data cen-ter or server farm, perhaps at your university or anearby computer services firm. (Be sure to obtainpermission from the appropriate companyresources prior to your visit). As you tour thefacility, draw a simple diagram showing thelocations of various pieces of hardware equip-ment. Label each piece of equipment. Documentwhat has been done in terms of access control,power backup, surge protection, and HVAC.Discuss use of virtualization and containers atthe site.

Web Exercises

1. Do research on the Web to find a description ofMoore’s Law. What are the implications of this law?Are there any practical limitations to Moore’s Law?

2. Do research on the Web to learn more aboutbioprinting—both current and potential futureapplications.

3. Do research on the Web to learn more aboutApple’s decision to withdraw from the EPEATprogram and why it later reversed that decision.Write a one-page report summarizing yourfindings.

Career Exercises

1. A friend of yours texted you that he is consider-ing changing his major to computer engineering.He wants to meet with you and get your input onthis move. Do some research to find out just whatis a computer engineer and what do they do.What are the career prospects, and what sort ofeducation and experience is required to become acomputer engineer?

2. How might supercomputers be employed in yourcurrent or future career field?

3. Examine the possibility of a career in computerhardware sales. Which area of sales do youbelieve holds the brightest prospects for youngcollege graduates—servers, mainframe compu-ters, supercomputers, or high-volume storagedevices? Why? What would be some of theadvantages and disadvantages of a career incomputer hardware sales?

Case Studies

Case One

ARMThe Acorn Computer Group developed the world’s firstcommercial Reduced Instruction Set Computer (RISC)processor in the 1980s. The simpler commands employed inRISC computers enables the computer to operate faster, useless power, and take up less space—major advances over theearly complex instruction set computer systems (CISC),which tried to pack as many actions into each command aspossible.ARM was founded in 1990 as a spin-off of Acorn

Computer and Apple after the two companies begancollaborating on the ARM processor for the Newtoncomputer system—Apple’s ill-fated attempt at a handheldcomputer.

The ARM business model involves the design and licenseof intellectual property rather than the manufacture and salesof actual semiconductor chips. ARM licenses the rights tobuild chips based on its design to the world’s leadingsemiconductor and systems companies. These companies payARM a license fee for the original design along with a royaltyon every chip or wafer produced. ARM has signed over 1,100

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licenses with more than 300 companies. Some companieselect to license the ARM instruction set to design their ownprocessors. See Table 3.9.

Over 60 billion ARM chips have been shipped since thecompany was founded. Chips based on ARM designs are foundin 99 percent of the world’s smartphones and tablets. Inaddition, processors based on designs licensed from ARMare used in all sorts of computing devices, includingmicrocontrollers in embedded systems such as antilockbraking systems (ABS) systems for autos, smartTVs, andsmartwatches. The number of ARM-designed chips sold isestimated to be 25 times that of Intel-designed chips.

Personal computer vendors upgrade their productsevery 12 to 18 months. The smartphone industry isdemanding an upgrade every six months to a year. ARMis constantly striving to keep pace with these demands.The Cortex-A57 is a processor design by ARM that wasannounced in October 2012 and appeared in handsets twoyears later. The Cortex-A72, its successor, was announced inFebruary 2015 and began to appear in mobile devices bythe end of 2015.The Cortex A72 processor represents a50 times increase in processing power compared withsmartphone chips used just five years ago. Development ofthe Cortex A-72 continues the trend of smartphones gettingmore and more powerful and becoming our primarycomputing device, replacing the personal computer formany uses.

Meanwhile, Intel is now shipping chips code-namedSofia for inexpensive smartphones. These chips were madein conjunction with the Chinese company Rockchip, whichhas experience in turning around processor designs in amatter of months. Intel will soon begin to ship a high-endAtom chip called Broxton, which has a modular design thatallows Intel to modify the chip and deliver updates at a fasterpace. Broxton supports Intel’s strategy of delivering productsthat can be easily customized—similar to the chip designsof ARM.

China assembles most of the world’s smartphones andcomputers, but currently must import most of the technologythat underlies them. Chinese authorities hope to gain a

bigger role in the microchip industry and have madeownership of semiconductor intellectual property a priority.The issue of protecting intellectual property rights is a majorconcern for ARM and its customers entering or doingbusiness and China.

Critical Thinking Questions1. What are some of the challenges and opportunities

facing the processor chip industry in general and ARMin particular?

2. Some chip industry observers and financial analystsbelieve that because of its licensing business model,ARM missed an opportunity to capture billions of dol-lars in sales of microprocessor chips it could havemanufacturered. Compare sales, profits, and stockprices over a three-year period for ARM to two of itscustomers who do have fab plants and manufacturetheir own chips such as Samsung Electronics and Intelor AMD, a competitor. Do you believe that the ARMlicensing rather than manufacturing business modelhas hurt the firm? Why or why not?

3. Do research to learn more about how China came to bethe lead assembler of the world’s smartphones andcomputers. What are some of the pros and cons ofoutsoucring this work to China?

SOURCES: “Company Profile,”,accessed July 15, 2015; Vance, Ashlee, “ARM Designs One of the World’sMost-Used Products. So Where’s the Money?,” Bloomberg Business,February 4, 2014,; Hackman, Mark, “ARM Launches Cortex A-72 Platform,Powering Flagship Smartphones in 2016,” PC World, February 3, 2015,; Hamblen, Matt,“The Rise of China’s Smartphone Makers,” Computerworld, December30, 2014, and “Intel Plans to Increase CPU Performancewith New Atom Chips,” Alvareztg Technology Group,, accessed July 16, 2015,

Case Two

Vivobarefoot Upgrades Technology InfrastructureVivobarefoot is an innovative shoe company that recentlyundertook a major review of its technology infrastructureto determine what changes needed to be made to supportand accelerate the company’s already rapid growth.Vivobarefoot’s success is connected to the growingpopularity of barefoot or “miminalist” running. In fact, thecompany lays claim to the first minimalist shoe, originallyproduced in 2004, offering an ultrathin, puncture-resistantsole that provides “maximum sensory feedback andmaximum protection.”

The specialist shoe company is headquartered in theUnited Kingdom, but also has a team based in China, whereall of its manufacturing takes place. Vivobarefoot sells itshoes online, through a variety of partnerships around theworld, and in its store in Covent Garden, a popular shoppingdistrict in London. According to founder Galahad Clark, thecompany went from selling 30,000 pairs of shoes per month

TABLE 3.9 Partial list of ARM licenseesCompanies ThatLicense the ARM ChipDesign to IncorporateIt into Their OwnSystem on a Chip

Companies ThatLicense The ARMInstruction Set toDesign Their OwnProcessor

ApliedMicro Apple

Broadcom Broadcom

HiSilico Intel

Rockchip Marvell TechnologyGroup

Samsung Microsoft

STMMicroelectronics Nvdia


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to over 300,000 per month—over the course of just fiveyears.

As with many companies that experience rapid growth,over the years, Vivobarefoot had acquired a hodgepodge ofhardware and software that was no longer meeting its needs.According to Damian Peat, global operations director for thecompany, “We were working with some pretty archaicsystems. We had three servers in our basement all runningWindows Server 2003 and backed up to tape, and I wouldworry a lot about the chance of something not working.”Vivobarefoot employees were also using multiple versionsof Microsoft Office, and staff in China were forced to usepersonal Gmail accounts because they could not reliablyaccess the company’s Microsoft Exchange email server inLondon.

Managing the variety of hardware and software systemswas becoming time consuming and costly. And, likethousands of other companies, Vivobarefoot was also facedwith the reality that it would soon be forced to migrate awayfrom Windows Server 2003, as Microsoft was ending itssupport of the outdated server operating system. Accordingto Peat, “Upcoming end of support for Windows Server2003 gave us concerns around security patching andmounting management costs, and we already had significantrisk around data security. …My priority became to geteverything onto one safe, reliable platform as soon aspossible.”

After a review of available technologies, Vivobarefootchose to replace Windows Server 2003 with Windows Server2012 R2 and Hyper-V hypervisor software, giving thecompany both physical and virtual server capabilities,including the capacity the company needs to host file serversand business-critical applications, such as accountingsoftware and stock management systems. The company alsomigrated to Office 365 in both its London and China offices.Office 365 had particular appeal for the company because, asa global cloud service, it is easily accessible in China, wherestaff are now more easily able to communicate—usingVivobarefoot email addresses rather than Gmail accounts.Vivobarefoot staff are also making use of Microsoft’sOneDrive for Business, where they can store, share, and syncfiles. According to Peat, with these cloud-based upgrades, thecompany “can ensure everyone can see the same documentsand access them whenever they need, which is reallybeneficial.” As part of a phased process, the company is alsomoving many employees to Windows 8.1 laptops and SurfacePro tablets.

As part of its efforts to streamline its IT infrastructureat all levels, Vivobarefoot has also moved away from tapebackups to a remote hosted backup service, and theupgraded server technology means that many other systemmanagement tasks have been simplified, as well. Datasecurity has been improved, and IT staff have gained theability to manage the company’s servers remotely. WhileVivobarefoot still has work to do to migrate all of itstechnology to the same platform, the company’s efforts havegone a long way toward providing the company with anupdated and more rational arrangement of hardware,software, and cloud computing.

Critical Thinking Questions1. What are some of the competitive advantages Vivo-

barefoot gained through its infrastructure update?2. One ongoing concern for Vivobarefoot is the quality

and speed of the Internet service available to its officein central London. Given that, do you think it madesense for the company to move more of its IT servicesto the cloud? Go online and do some research aboutMicrosoft’s Office 365 product. What options does itoffer for working offline if Internet service is notavailable? Does that change your opinion about Vivo-barefoot’s shift to the cloud?

3. Estimates for the number of computers still runningWindows Server 2003 range from hundreds of thou-sands to several million—even though Microsoft hasstopped supporting the product. What are the risks forcompanies that continue to use software or hardwaretechnology after a vendor ends support for it?

SOURCES: “Frequently Asked Questions,” Vivobarefoot,,accessed December 11, 2015; Ho, Geoff, “Shoe Manufacturer Vivobare-foot to Step It Up to Fund Expansion Plans,” Express, May 3, 2015,; Worth, Dan, “Windows Server2003 Migration Helps Shoe Seller Vivobarefoot Put One Foot in theCloud,”, April 17, 2015,; “Pioneering Footwear Brand Unites Teams for Secure,Remote Working,” Microsoft,, accessed December11, 2015; Curtis, Joe, “How Vivobarefoot Escaped Windows Server 2003in IT Upgrade,” IT Pro, July 8, 2015,


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44. Seppala, Timothy J., “LG’s Spending Billions to MakeMore OLED Things,” Engadget, November 26, 2015,

45. “PrinterOn”, PrinterOn,, accessedAugust 19, 2013.

46. Saker, Anne, “Printing a 3D Heart to Save a Heart,”, February 22, 2015,

47. Ibid.48. “3D Printing in the Automotive Industry,” FunTech, Jan-

uary 7, 2015,

49. Sher, Davide, “World’s Fastest RC Car 3D Printed onUltimaker 2 Extended,” October 12, 2015,

50. Gilpin, Lyndsey, “10 Industries 3D Printing Will Disruptor Decimate,” Republic, February 25, 2014,

51. Benvin, Rich, “Biotech Startup Uses 3D Bioprinting toCreate Custom Breast Implants and Grafts,” BioprintingWorld, July 27, 2015,

52. Benvin, Rich, “3D Organ Bioprinting—Who Wants toLive Forever?,” Bioprinting World, March 24, 2015,

53. Hamblen, Matt, “Wearables and Company Wellness Pro-grams Go Hand-in-Hand,” Computerworld, June 18,2015,

54. Fogarty, Kevin, “Card-Sized Diagnostics, e-Skin AreFuture of Wearable Medicine,” Computerworld, May 13,2015,

55. Broder, Kevin, MD, “Glove from Imogen Heap WillChange the Way You Make Music,” Wearable Devices,June 24, 2014,

56. Arthur, Rachel, “Google and Levi’s Want to Put Compu-ters in Your Clothing,” Forbes, June 16, 2015,

57. “Chromebooks in Healthcare: Good for Patients and forBottom Lines,” Samsung, December 7, 2015,

58. “Case Study: Larson & Darby Group,” HP,, accessed November 2, 2015.

59. “About ADP,” ADP,,accessed October 18, 2015.

60. “About Mastercard,” Mastercard,, accessed October 18, 2015.

61. “About UPS,” UPS,, accessed October 18, 2015.

62. Dignan, Larry, “IBM Rolls Out Z13, Repositions Main-frame for Mobile Transactions,” ZD Net, January 13,2015,

63. Green, Timothy, “Here’s Why IBM Is Still BuildingMainframes,” The Motley Fool, accessed October 18,2015,

64. Chen, Stephen, “World’s Fastest Computer, Tianhe-2,Might Get Very Little Use,” South China Morning Post,June 20, 2013,

65. “A Rare Look inside Apple’s Maiden, North Carolina DataCenter [Video],” iClarified, posted April 25, 2014,

66. “Guide to Virtualization Hypervisors,” Network Comput-ing, February 9, 2015,

67. “VMWare Case Study: Cognizant,” VMWare, October 27,2015,

68. Crosman, Penny, “Why Tech-Savvy Banks Are Gung Hoabout ‘Container’ Software,” American Banker, Decem-ber 3, 2015,

69. Ovide, Shira, “Software Firms Scramble to Jump intoContainers,” Wall Street Journal, November 4, 2015,

70. Morgan, Timothy Prickett, “Inside the Rackspace Open-Power Megaserver,” The Platform, March 23, 2015,

71. Arthur, Charles, “Technology Firms to Spend $150bn onBuilding New Data Centres,” Guardian, August 23,2013,

72. Colt, Sam, “Apple is Building a $2 Billion Data Center inArizona,” Business Insider, February 2, 2015,

73. “GM’s Latest Michigan Data Center Gets LEED Gold,”Data Center Dynamics, September 13, 2013,

134 PART 2 • Information Technology Concepts

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74. Boyd, Aaron, “Data Center Consolidation BiggestMoney Saver among IT Reforms,” Federal Times, Sep-tember 15, 2015,

75. “Modular Data Center Expansion Planned for RedCloud,” Wired Real Estate Group,,accessed October 18, 2015.

76. Babcock, Charles, “5 Data Center Trends for 2013,”InformationWeek, January 2, 2013,

77. Thibodeau, P., “Rural N.C. Becomes Popular IT Loca-tion,” Computerworld, June 20, 2011, p. 2.

78. “IBM Opens New Cloud Data Center in Peru to MeetDemand for Big Data Analytics,” IBM, August 22, 2013,

79. Wells, Brad, “What Truly Makes a Computer ‘Green’?”OnEarth (blog), September 8, 2008,

80. “Electronics Waste Management in the United Statesthrough 2009,” U.S. EPA, May 2011, EPA

81. “EPEAT Environmental Criteria,” EPEAT,, accessed August 19, 2013.

82. “Electronic Environmental Assessment Tool,” EPEAT,, accessed Octo-ber 18, 2015.

83. “Asset Resale and Recycling,” Dell,, accessed October 18,2015.

84. “Product Return and Recycling,”, accessed October 18, 2015.

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4Software and MobileApplications


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Know?Did You

• Know how you’re constantly updating and upgradingprograms on your computer and devices? You canthank IBM for that. They birthed the software industry in1969 when they decided to charge customers sepa-rately for software and services. Although businesscomputers had been in use since the mid-1950s, hard-ware manufacturers had bundled software with theirhardware without charging for it.

• If you move to the Microsoft Windows 10 operatingsystem, you will no longer have to upgrade to a new

operating system every few years. Instead, Microsoftwill be providing continual, incremental updates andimprovements, rolled out automatically, perhaps asoften as monthly for individual consumers. Windows 10is here to stay!

• As of July 2015, Apple’s App Store had over 1.5 millionapps available for iOS device users, and Android userscould choose from over 1.6 million mobile apps onGoogle’s Play Store.

Principles Learning Objectives

• Software is valuable in helping individuals, work-groups, and entire enterprises achieve theirgoals.

• Identify and briefly describe the functions of twobasic kinds of software.

• Define the term “sphere of influence,” anddescribe how it can be used to classify software.

• The operating system is called the “soul of thecomputer” because it controls how you enter datainto your computer, perform meaningful work, anddisplay results.

• Define the basic functions performed by theoperating system.

• Identify current operating systems that are used forpersonal, workgroup, and enterprise computing.

• Discuss the role of the operating system inembedded systems.

• Organizations typically use off-the-shelf applica-tion software to meet common business needsand proprietary application software to meetunique business needs and provide a competitiveadvantage.

• Discuss how application software cansupport personal, workgroup, and enterprisebusiness objectives.

• Identify three basic approaches to developingapplication software and discuss the prosand cons of each.

• Identify programming languages commonly inuse today.

• The software industry continues to undergoconstant change; computer users need to beaware of recent trends and issues in the softwareindustry to be effective in their business andpersonal life.

• Identify several key software issues and trendsthat have an impact on organizations andindividuals.

Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

Why Learn about Software and Mobile Applications?Software is indispensable for any computer system and the people using it. In this chapter, you willlearn about system software—which includes operating systems, utilities, and middleware—andapplication software. The operating system is sometimes called the “soul of the computer,” andwithout it, you would be unable to enter data into your computer, perform meaningful work, ordisplay results. You use application software to help you accomplish tasks that enable you toaccomplish tasks efficiently and effectively. Sales representatives use software on their smartphonesand tablet computers to enter sales orders and help their customers get what they want. Stock andbond traders use software to make split-second decisions involving millions of dollars. Scientists usesoftware to analyze the threat of climate change. Regardless of your job, you will likely use softwareto help you advance in your career and earn higher wages. You can also use software to help youprepare your personal income taxes, keep a budget, and stay in contact with friends and familyonline. Software can truly advance your career and enrich your life. We begin with an overview ofsoftware.

As you read this chapter, consider the following:

• How is application software tied to or limited by advances in hardware and operating systems?

• How can organizations ensure that their employees use appropriate software to support their worktasks and meet the goals of the enterprise?

An Overview of Software

Software consists of computer programs that control the workings of computerhardware. Software can be divided into two types: systems software andapplication software. System software includes operating systems, utilities,and middleware that coordinate the activities and functions of the hardwareand other programs throughout the computer system. Application softwareconsists of programs that help users solve particular computing problems.Examples include a spreadsheet program or a program that captures and dis-plays data that enables monitoring of a manufacturing process.

The effective use of software can have a profound impact on individualsand organizations. It can make the difference between profits and losses andbetween financial health and bankruptcy. As Figure 4.1 shows, companiesrecognize this impact; globally, spending on software now exceeds other IT

FIGURE 4.1Software expenditures exceedspending on hardwareSince the 1950s, businesses havesubstantially increased their expen-ditures on software compared withhardware.











system software: Software thatincludes operating systems, utilities,and middleware that coordinate theactivities and functions of the hardwareand other programs throughout thecomputer system.

application software: Programsthat help users solve particular com-puting problems.

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expenditures, including spending on computer hardware. This is far differentfrom when computers first were available; software was given away and cus-tomers paid only for the hardware.1 Indeed, the software industry was bornin 1969 when IBM decided to unbundle—and charge customers separatelyfor—its software and services. Although business computers had been in usesince the mid-1950s, hardware manufacturers had previously bundled soft-ware with their hardware without charging separately for it.

Software Sphere of InfluenceEvery organization relies on the contributions of individuals and groupsacross the enterprise to achieve its business objectives. One useful way ofclassifying the many potential uses of information systems is to identify thescope of the problems and opportunities that the software addresses. Thisscope is called the sphere of influence. For most companies, the spheres ofinfluence are personal, workgroup, and enterprise. Table 4.1 shows howvarious kinds of software support these three spheres.

Information systems that operate within the personal sphere of influenceserve the needs of individual users. These information systems help usersimprove their personal effectiveness, increasing the amount and quality ofwork they can do. Such software is often called personal productivity soft-ware. For example, VIP Organizer is personal productivity software designedto help users develop to do lists, categorize tasks, keep notes and records in asingle database, report on performance, and set deadlines and priorities.2

When two or more people work together to achieve a common goal, theyform a workgroup. Workgroups include large, formal, permanent organiza-tional entities, such as sections or departments, as well as temporary groupsformed to complete a specific project. An information system in the work-group sphere of influence helps workgroup members attain their commongoals. Microsoft Outlook is an example of an application in the workgroupsphere of influence; see Figure 4.2. IBM Notes, another application in theworkgroup sphere of influence, provides collaboration features such as teamcalendars, email, to-do lists, contact management, discussion forums, file shar-ing, microblogging, instant messaging, blogs, and user directories.3 JGC Cor-poration is an engineering construction company with operations in morethan 70 different countries. Many of its projects cost over $15 billion, last for10 years or more, and involve hundreds of partner companies. JGC employsLotus Notes to coordinate the work of project teams and relay informationabout project status, changes in work plans, and other critical information.4

Information systems that operate within the enterprise sphere of influ-ence support an organization in its interactions with its environment, includ-ing customers, suppliers, shareholders, competitors, special-interest groups,the financial community, and government agencies. The enterprise sphere ofinfluence for a company might include business partners such as suppliersthat provide raw materials, retail companies that store and sell a company’s

TABLE 4.1 Software supporting individuals, workgroups, and enterprisesSoftware Type Personal Workgroup Enterprise

Systems software Smartphone, tablet, personalcomputer, and workstationoperating systems

Network operating systems Server and mainframeoperating systems


Word-processing, spreadsheet,database, and graphicsprograms

Email, group-scheduling,shared-work, and collabo-ration applications

General-ledger, order-entry, payroll, and human-resources applications

sphere of influence: The scope ofthe problems and opportunities that thesoftware addresses.

personal sphere of influence:The sphere of influence that serves theneeds of an individual user.

personal productivity software:Software that enables users toimprove their personal effectiveness,increasing the amount of work andquality of work they can do.

workgroup: Two or more people whowork together to achieve a common goal.

workgroup sphere of influence:The sphere of influence that helpsworkgroup members attain theircommon goals.

enterprise sphere of influence:The sphere of influence that serves theneeds of an organization in its interac-tions with its environment.

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CriticalThinking Exercise

products, and shipping companies that transport raw materials to the plantand finished goods to retail outlets. Many organizations use SAP enterpriseresource planning software to capture customer orders, manage inventory,plan and ship customer orders, bill customers, and manage accounts payableand accounts receivable.

Establishing a Corporate App StoreYou are a new hire in the finance organization of a large retail firm. You areamazed to see the number of different software applications (apps) employed byyour coworkers, who use them for everything from maintaining personal calen-dars to calculating the rate of return on projects to forecasting sales and financialdata. It seems that everyone has a favorite app for doing each of these tasks. Forexample, in the few weeks you have been here, you identified over half a dozendifferent apps that are being used to calculate the rate of return on projects andinvestments. Your coworkers download these apps from the Internet or buildthem using spreadsheet software. You previously worked as an intern at anotherlarge retailer that had established a corporate app store, which employeesaccessed to download corporate-approved apps that had been vetted and recom-mended for use for specific tasks. You wonder if such an approach should beimplemented at your current employer.

Review Questions1. Give an example of two tasks that an employee in the finance organization of

this retail firm might perform that would have an impact restricted to theirown personal sphere of influence.

2. Identify two tasks that an employee might perform that would have an impacton the workgroup and two that would have an impact on the enterprisesphere of influence.

Critical Thinking Questions1. What risks are associated with letting employees use their favorite app to per-

form various tasks? Are these risks associated with tasks in the personal,workgroup, or enterprise sphere of influence?

FIGURE 4.2Microsoft OutlookOutlook is an application that work-groups can use to schedule meet-ings and coordinate activities. Mi





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2. Can you identify some advantages and disadvantages of establishing a corpo-rate app store?

We will now discuss systems software including operating systems, utili-ties, and middleware.

Systems Software

The primary role of system software is to control the operations of computerhardware. System software also supports the problem-solving capabilities ofapplication programs. System software can be divided into three types: oper-ating systems, utility programs, and middleware.

Operating SystemsAn operating system (OS) is a set of programs that controls a computer’shardware and acts as an interface with application software; see Figure 4.3.An operating system can control one or more computers, or it can allow mul-tiple users to interact with one computer. The various combinations of OSs,computers, and users include the following:

● Single computer with a single user. This system is commonly used inpersonal computers, tablets, and smartphones that support one user at atime. Examples of OSs for this setup include Microsoft Windows, Mac OSX, and Google Android.

● Single computer with multiple simultaneous users. This type of systemis used in larger server or mainframe computers that support hundreds orthousands of people, all using the computer at the same time. Examples ofOSs that support this kind of system include UNIX, z/OS, and HP-UX.

● Multiple computers with multiple users. This type of system is used incomputer networks, including home networks with several computersattached as well as large computer networks with hundreds of computersattached, supporting many users, who may be located around the world.Network server OSs include Red Hat Enterprise Linux Server, WindowsServer, and Mac OS X Server.

● Special-purpose computers. This type of system is typical of a numberof computers with specialized functions, such as those that control

FIGURE 4.3Role of operating systemsThe role of the operating system is toact as an interface between appli-cation software and hardware.

User interface

Application program interface

Operating system kernel and utilities

Hardware drivers


operating system (OS): A set ofcomputer programs that controls thecomputer hardware and acts as aninterface to application software.

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sophisticated military aircraft, digital cameras, or home appliances. Exam-ples of OSs designed for these purposes include Windows Embedded,Symbian, and some distributions of Linux.

The OS, which plays a central role in the functioning of a computer sys-tem, is usually stored on a hard drive in general-purpose computers and insolid state memory on mobile computers such as tablets and smartphones.After you start, or boot up, a computer system, the kernel of the OS is loadedinto primary storage and remains there for as long as the computer is pow-ered on. The kernel, as its name suggests, is the heart of the OS and controlsits most critical processes. The kernel ties all of the OS components togetherand regulates other programs.

Other portions of the OS are transferred to memory as the system needsthem. OS developers are continually working to shorten the time required toboot devices after they are shut down and to wake devices from sleep mode.

You can also boot a computer from a CD, a DVD, or even a USB flashdrive. A storage device that contains some or all of the OS is often called arescue disk because you can use it to start the computer if you have problemswith the primary hard disk.

Functions Performed by the Operating SystemThe programs that make up the OS perform a variety of activities, includingthe following:

● Control common computer hardware functions● Provide a user interface and manage input/output management● Provide a degree of hardware independence● Manage system memory● Manage processing tasks● Provide networking capability● Control access to system resources● Manage files

Common Hardware Functions The OS enables applications to perform a varietyof hardware-related tasks, such as the following:

● Get input from the keyboard or another input device● Retrieve data from disks● Store data on disks● Display information on a monitor or printer

Each of these tasks requires a detailed set of instructions. The OS convertsa basic request into instructions that the hardware can process. In effect, theOS acts as an intermediary between the application and the hardware. TheOS uses special software (called hardware drivers) provided by device manu-facturers to communicate with and control a device. Hardware drivers are typ-ically downloaded from the device manufacturer’s Web site or read from aninstallation DVD and installed when the hardware is first connected to thecomputer system.

User Interface and Input/Output Management One of the most important func-tions of any OS is providing a user interface, which allows people to accessand interact with the computer system. The first user interfaces for mainframeand personal computer systems were command based. A command-baseduser interface requires you to give text commands to the computer to per-form basic activities. For example, the command ERASE 00TAXRTN wouldcause the computer to erase a file named 00TAXRTN. RENAME and COPY areother examples of commands used to rename files and copy files from onelocation to another. Today’s systems engineers and administrators often use a

kernel: The heart of the operatingsystem that controls the most criticalprocesses of the OS.

user interface: The element of theoperating system that allows people toaccess and interact with the computersystem.

command-based userinterface: A user interface thatrequires you to give text commands tothe computer to perform basicactivities.

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command-based user interface to control the low-level functioning of com-puter systems. Most modern OSs (including those with graphical user inter-faces, such as Windows) provide a way to interact with the system through acommand line. See Figure 4.4.

A graphical user interface (GUI) displays pictures (called icons) andmenus that people use to send commands to the computer system. GUIs aremore intuitive to use than command-based interfaces because they try toanticipate the user’s needs and they provide easy-to-recognize options. Micro-soft Windows is one popular operating system with a GUI. As the name sug-gests, Windows is based on the use of a window, or a portion of the displayscreen dedicated to a specific application. The screen can display several win-dows at once.

Although GUIs have traditionally been accessed using a keyboard andmouse, more recent technologies allow people to use touch screens and spokencommands. Today’s mobile devices and some PCs, for example, use a touch userinterface—also called a natural user interface (NUI) or multitouch interface.

Speech recognition is also available with some operating systems. Microsoftand other operating system manufacturers have developed voice-commandcomputer control software. Microsoft employs a special programming languagecalled Speech Application Program Interface (SAPI) to associate your voicecommands with specific actions performed by the computer. Apple’s OpenEarsmakes it simple for you to add speech recognition and text to speech to youriPhone, iPad, or iPod. Siri, the personal assistant that acts as an app on theApple iOS operating system, uses a natural language user interface to answerquestions. Adacel is a company that develops advanced simulation and controlsystems for aviation and defense. It is working on a voice-activated control sys-tem to operate the display system on aircrafts.

Some operating systems provide sight interfaces that enable a computerto perform different commands or operations depending on where a personis looking on the screen. Some companies are also experimenting with sen-sors attached to the human brain (brain interfaces) that can detect brainwaves and control a computer as a result. Sight and brain interfaces can bevery helpful to disabled individuals.

FIGURE 4.4Command-based andgraphical user interfacesA Windows file system viewed with aGUI (a) and from the commandprompt (b).


(b) Microsoftproductscreenshotsused





graphical user interface (GUI):An interface that displays pictures(icons) and menus that people use tosend commands to the computersystem.

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Operating system developers must be extremely careful in makingchanges to their user interface. The Windows 8 touch interface representeda major change from its traditional mouse-driven point-and-click user inter-face. Initial user reaction was lukewarm at best, with many users complain-ing about the loss of the Start button to display a pop-up menu ofprograms, folders, and icons. For Windows 10 (there is no Windows 9),Microsoft responded to consumers’ feedback by bringing back the tradi-tional Start screen. Microsoft also tried to appease users accustomed to thetile-based interface of Windows 8 by adding a few tiles to the right side ofthe Start menu.

Hardware Independence An application programming interface (API) is aset of programming instructions and standards that enable one softwareprogram to access and use the services of another software program. An APIprovides a software-to-software interface, not a user interface. The API alsoprovides software developers tools that allow them to build application soft-ware without needing to understand the inner workings of the OS and hard-ware. Software applications are designed to run on a particular OS by usingthe operating system’s application program interface.

APIs also provide a degree of hardware independence so that the under-lying hardware can change without necessarily requiring a rewrite of the soft-ware applications. Hardware independence refers to the ability of a softwareprogram to run on any platform, without concern for the specific underlyinghardware. When new hardware technologies are introduced, the operatingsystem, not the application software, is required to adjust to enable use ofthose changes.

A software manufacturing company or service provider will oftenrelease its API to the public so that other software developers can designproducts that employ its service. For example, released itsAPI to other Web site developers so they could use it to access Amazon’sproduct information; thus, allowing third-party Web sites to post directlinks to Amazon products with updated prices and a “buy now” option.5

Memory Management The OS also controls how memory is accessed, maxi-mizing the use of available memory and storage to provide optimum effi-ciency. The memory-management feature of many OSs allows the computerto execute program instructions effectively and to speed processing. One wayto increase the performance of an old computer is to upgrade to a newer OSand increase the amount of memory.

Most OSs support virtual memory, which allocates space on the harddisk to supplement the immediate, functional memory capacity of RAM. Vir-tual memory works by swapping programs or parts of programs betweenmemory and one or more disk devices—a concept called paging. This proce-dure reduces CPU idle time and increases the number of jobs that can run ina given time span.

Processing Tasks Operating systems use the following five basic approachesto task management to increase the amount of processing that can be accom-plished in a given amount of time:

● Multiuser. Allows two or more users to run programs at the same timeon the same computer. Some operating systems permit hundreds oreven thousands of concurrent users. The ability of the computer to han-dle an increasing number of concurrent users smoothly is calledscalability.

● Multiprocessing. Supports running a program on more than one CPU.● Multitasking. Allows more than one program to run concurrently.

application programming inter-face (API): A set of programminginstructions and standards that enablesone software program to access anduse the services of another softwareprogram.

hardware independence: Theability of a software program to run onany platform, without concern for thespecific underlying hardware.

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● Multithreading. Allows different threads of a single program to runconcurrently. A thread is a set of instructions within an application thatis independent of other threads. For example, in a spreadsheet program,the thread to open the workbook is separate from the thread to sum acolumn of figures.

● Real time. Responds to input instantly. To do this, the operating systemtask scheduler can stop any task at any point in its execution if it deter-mines that another higher priority task needs to run immediately. Real-time operating systems are used to control the operation of jet engines,the deployment of air bags, and the operation of antilock brakingsystems—among other uses.

Not all operating systems employ all these approaches to task manage-ment. For example, the general-purpose operating systems with which we aremost familiar (e.g., Windows, Mac OS, and Linux) cannot support real-timeprocessing.

Networking Capability Most operating systems include networking capabilitiesso that computers can join together in a network to send and receive dataand share computing resources. Operating systems for larger server compu-ters are designed specifically for computer networking environments.

Access to System Resources and Security Because computers often handle sensi-tive data that can be accessed over networks, the OS needs to provide a highlevel of security against unauthorized access to the users’ data and programs.Typically, the OS establishes a logon procedure that requires users to enter anidentification code, such as a user name, and a password. Operating systemsmay also control what system resources a user may access. When a user success-fully logs on to the system, the OS permits access to only the portions of the sys-tem for which the user has been authorized access. The OS records who is usingthe system and for how long, and it reports any attempted breaches of security.

File Management The OS manages files to ensure that files in secondary stor-age are available when needed and that they are protected from access byunauthorized users. Many computers support multiple users who store fileson centrally located disks or tape drives. The OS keeps track of where eachfile is stored and who is cleared to access them.

Current Operating SystemsToday’s operating systems incorporate sophisticated features and impressivegraphic effects. Table 4.2 classifies a few current operating systems by sphereof influence.

TABLE 4.2 Operating systems by sphere of influencePersonal Workgroup Enterprise

Microsoft Windows Microsoft Windows Server Microsoft WindowsServer

Mac OS X, iOS Mac OS X Server

Linux Linux Linux

Google Android, ChromeOS


HP webOS IBM i and z/OS IBM i and z/OS


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From time to time, software manufacturers drop support for older operatingsystems—meaning that although computers and software running under theseoperating system will continue to run, the operating system manufacturer will nolonger provide security fixes and updates. Without such patches, the users’ com-puters are more susceptible to being infected by viruses and other malware. Forexample, Google announced that in 2016 it would be ending its support for itsChrome browser on Windows XP and Vista as well as on Mac OS X 10.6, 10.7,and 10.8. Google chose to drop support for these operating systems becausethey are no longer actively supported by Microsoft and Apple, respectively.6

Discontinuance of support is a strong reason to upgrade to new software.However, many organizations take the approach that “if it ain’t broke, don’tfix it.” In their view, other projects take priority over updating software thatis still functioning. However, this approach can lead to interruptions in keysystems. For example, on November 7, 2015, planes were grounded for sev-eral hours at Paris’ busy Orly airport when a computer that links air trafficcontrol systems with France’s main weather bureau stopped working. Thecomputer was running on Windows 3.1, a 23-year-old operating systemdropped from support by Microsoft over a decade ago.7

Personal Computing Operating SystemsThis section summarizes information about several operating systems that arefound on personal computers, portable computers, and mobile devices.

Microsoft PC Operating Systems In 1980, executives from IBM approachedMicrosoft’s Bill Gates regarding the creation of an operating system for IBM’sfirst personal computer. That operating system, which was ultimately calledMicrosoft Disk Operating System (MS-DOS), was based on Microsoft’s pur-chase of the Quick and Dirty Operating System (QDOS) written by Tim Pater-son of Seattle Computer Products. Microsoft bought the rights to QDOS for$50,000. QDOS, in turn, was based on Gary Kildall’s Control Program forMicrocomputers (CP/M). As part of its agreement with Microsoft, IBM allowedMicrosoft to retain the rights to MS-DOS and to market MS-DOS separatelyfrom the IBM personal computer. The rest is history, with Gates and Microsoftearning a fortune from the licensing of MS-DOS and its descendants.8 MS-DOS, which had a command-based interface that was difficult to learn anduse, eventually gave way to the more user-friendly Windows operating sys-tem, which opened the PC market to everyday users. See Figure 4.5.

FIGURE 4.5Microsoft Windows 10Windows 10 brings back the familiarStart menu, replaces the Explorerbrowser with the Edge browser, andprovides the Cortana personalassistant. omihay/

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With its launch of Windows 10, Microsoft announced that it is movingaway from its usual practice of releasing major new versions of its Windowsoperating system every few years (see Table 4.3 for an overview of thecurrent and previous versions of Windows). Instead, the company will be

TABLE 4.3 Summary of Microsoft Windows operating systemsYear Version Highlights

1985 Windows 1.0 Ran as a graphical, 16-bit multitasking shell on top of an existing MS-DOS installation,providing an environment that could run graphical programs designed for Windowsas well as existing MS-DOS software

1987 Windows 2.0 Introduced more sophisticated keyboard shortcuts as well as the ability to minimizeand maximize Windows

1988 Windows 2.03 Allowed application Windows to overlap each other

1990 Windows 3.0 Introduced a multitasking capability with a protected/enhanced mode, which allowedWindows applications to use more memory; first widely successful version of Windows

1992 Windows 3.1 Introduced improved system stability and expanded support for multimedia, TrueTypefonts, and workgroup networking

1995 Windows 95 Introduced numerous important features and functions, such as the taskbar, the Startbutton, and a new approach to user navigation; moved from a 16-bit architecture to a32-bit architecture

1998 Windows 98 Introduced many features, such as the Quick Launch toolbar, the Active Desktop,single-click launching, Back and Forward navigation buttons, favorites, and theaddress bar in Windows Explorer, and image thumbnails; heavily criticized operatingsystem, with major compatibility issues

1999 Windows 98 SecondEdition

Included fixes for many Windows 98 problems and replaced Internet Explorer 4.0with Internet Explorer 5.0; improved audio, modem, and USB support

2000 Windows 2000 An operating system for use on both client and server computers; marketed as themost secure Windows version ever, but it became the target of a number of high-profile virus attacks, such as Code Red and Nimda

2000 Windows ME Rated Microsoft’s worst OS by many industry observers; exhibited stability and com-patibility issues; included Internet Explorer 5.5, Windows Media Player 7, and Win-dows Movie Maker software, which provided basic video editing functions that weredesigned to be easy for consumers to use

2001 Windows XP Offered a major advance from the MS-DOS–based versions of Windows in terms of secu-rity, stability, and efficiency; introduced a significantly redesigned graphical user interface

2007 Windows Vista Focused primarily on improving security; offered an updated graphical user interfaceand visual style dubbed “Aero” and a new search component called Windows Search;provided redesigned networking, audio, print, and display subsystems, as well as newmultimedia capabilities, including Windows DVD Maker

2009 Windows 7 Provided an incremental upgrade to the operating system; intended to address Win-dows Vista’s performance issues, while maintaining hardware and software compati-bility; provided support for touch displays and 64-bit processors

2012 Windows 8 Introduced major changes to the operating system’s platform and user interface toimprove user experience on tablets; included a touch-optimized Windows shell, a Startscreen that displays programs and dynamically updated content on a grid of tiles, theability to sync apps and settings between devices, and the Windows Store for down-loading and purchasing new software

2013 Windows 8.1 Included an improved Start screen, additional bundled apps, tighter OneDrive inte-gration, Internet Explorer 11, a Bing-powered unified search system, and restorationof a visible Start button on the taskbar

2015 Windows 10 Brought back the familiar Start menu and desktop; introduced the Edge browser andthe Cortana assistant, which responds to natural language and can perform a variety oforganizational tasks for the end user, including setting reminders, scheduling calendarevents, calculating math problems, and converting measurements and money

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providing ongoing, incremental upgrades and improvements, rolled out auto-matically, perhaps as often as monthly for individual consumers. Organiza-tions, whose information systems professionals desire minimal change inorder to ensure reliable operations of corporate applications, may elect to optout of such frequent updates. Microsoft hopes that the automatic, rapidupdate cycle will force users to stay current and discontinue use of olderoperating systems. One benefit of this approach is that it will allow Microsoftto gradually shift some of its resources away from updating and maintainingearlier versions of Windows. Ideally, those resources will instead be refocusedon efforts to improve Windows 10. Microsoft also plans to make Windows 10a common platform with a single app store for any machine—smartphone,laptop, desktop, xBox game station, etc. (with variations to allow for differingscreen sizes and uses).9

Apple Computer Operating Systems In July 2001, Mac OS X was released as anentirely new operating system for the Mac. Based on the UNIX operatingsystem, Mac OS X included a new user interface with luminous and semitrans-parent elements, such as buttons, scroll bars, and windows along with fluidanimation to enhance the user’s experience.

Since its first release, Apple has upgraded OS X multiple times, as shownin Table 4.4. The first eight versions of the OS were named after big cats, thelatest are named after places in California. OS X 10.11 El Capitan is Apple’slatest operating system. See Figure 4.6. It offers enhanced security features aswell as the ability to launch the iBooks app, and books you’ve already down-loaded to your iPad, iPhone, or iPod Touch will appear in your library. Direc-tions, bookmarks, and recent searches are automatically passed on to all youriOS devices, and you can now use natural language when using the Spotlightsearch feature (e.g., “spreadsheet I worked on yesterday”). The new SplitView feature automatically positions two app windows side by side in fullscreen so you can work with both apps at the same time. Power-savingtechnology enables you to browse longer, and upgraded graphics-renderingtechnology has improved overall system performance compared to previousversions.10

Because Mac OS X runs on Intel processors, Mac users can set up theircomputers to run both Windows and Mac OS X and select the platform theywant to work with when they boot their computers. Such an arrangement iscalled dual booting. While Macs can dual boot into Windows, the opposite is

TABLE 4.4 Summary of recent Mac operating systemsOS X Version Name Date Released

10.0 Cheetah 2001

10.1 Puma 2001

10.2 Jaguar 2002

10.3 Panther 2003

10.4 Tiger 2005

10.5 Leopard 2007

10.6 Snow Leopard 2009

10.7 Lion 2011

10.8 Mountain Lion 2012

10.9 Mavericks 2013

10.10 Yosemite 2014

10.11 El Capitan 2015

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not true. OS X cannot be run on any machine other than an Apple device.However, Windows PCs can dual boot with Linux and other OSs.

Linux Linux is an OS developed in 1991 by Linus Torvalds as a student inFinland. The OS is distributed under the GNU General Public License, and itssource code is freely available to everyone. It is, therefore, called an open-source operating system.

Individuals and organizations can use the open-source Linux code tocreate their own distribution (flavor) of Linux. A distribution consists ofthe Linux kernel (the core of the operating system)—which controls thehardware, manages files, separates processes, and performs other basicfunctions—along with other software. This other software defines the termi-nal interface and available commands, produces the graphical user interface,and provides other useful utility programs. A Linux distributor takes all thecode for these programs and combines it into a single operating system thatcan be installed on a computer. The distributor may also add finishingtouches that determine how the desktop looks like, what color schemes andcharacter sets are displayed, and what browser and other optional softwareare included with the operating system. Typically, the distribution is “opti-mized” to perform in a particular environment, such as for a desktop com-puter, server, or TV cable box controller.

More than 100 distributions of Linux have been created.11 Many distribu-tions are available as free downloads. Three of the most widely used distribu-tions come from software companies Red Hat, SUSE, and Canonical. Althoughthe Linux kernel is free software, both Red Hat and SUSE produce retail ver-sions of the operating system that earn them revenues through distributionand service of the software. openSUSE is the distribution sponsored by SUSE.See Figure 4.7.

Red Hat, an open-source software developer based in Raleigh, NorthCarolina, offers a range of Linux-based solutions. Its Red Hat EnterpriseLinux distribution, first released in 2000, is an enterprise-grade operatingsystem that can be deployed on desktops as well as servers.12 Cerner Corpo-ration is a Kansas-based provider of healthcare IT solutions whose softwaresolutions are in use in over 18,000 healthcare facilities around the world.13

When Cerner was looking to standardize the hosting environment for itsflagship Cerner Millennium application suite, it chose to implement the RedHat Enterprise Linux operating system. Millennium applications providehealthcare providers real-time access to a variety of data, including patient

FIGURE 4.6Mac OS X El CapitanEl Capitan incorporates many fea-tures of Apple’s mobile devices intoits desktop operating system.Source: Apple, Inc. ©


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information, diagnoses, lab results, and medication lists. When deciding onan operating system for its hosting environment for high-priority applica-tions, an important consideration for Cerner was the fact that over 70 per-cent of its Millennium customers opt to host their applications usingCerner’s hosting services. It was a priority for Cerner and its customers thatthe company implement a dependable and scalable solution. With its imple-mentation of Red Hat’s Linux distribution, Cerner found that it gained per-formance improvements and a lower total cost of ownership in addition to amore stable and scalable system.14

Google: Android and Chrome Over the years, Google has extended its reachbeyond its popular search engine (Google) to offer application software (Goo-gle Docs), email services (Gmail), a mobile operating system (Android), Webbrowser (Chrome), and, more recently, a PC operating system—Chrome OS.The various releases of the Android operating system have been given tastynames such as Gingerbread, Jelly Bean, and Ice Cream Sandwich. Androidhas surpassed 1 billion users across all devices—with 80 percent of mobilephones worldwide operating on Android.15

Chrome OS is a Linux-based operating system for notebooks and desktopPCs primarily used to access Web-based information and services such asemail, Web browsing, social networks, and Google online applications. TheOS is designed to run on inexpensive low-power computers. Chrome OS forpersonal computers is designed to start fast and provide quick access to appli-cations through the Internet. An open-source version of Chrome OS, namedChromium OS, was made available at the end of 2009. Because it is open-source software, developers can customize the source code to run on differentplatforms, incorporating unique features.

Workgroup Operating SystemsTo keep pace with user demands, business technology must be able to sup-port an environment in which network usage, data storage requirements, anddata-processing speeds are increasing at a dramatic rate. Powerful and sophis-ticated operating systems are needed to run the servers that meet thesebusiness needs for workgroups.

Windows Server Microsoft designed Windows Server to perform a host oftasks that are vital for Web sites and corporate Web applications. For exam-ple, Microsoft Windows Server can be used to coordinate and manage large

FIGURE 4.7openSUSE operating systemopenSUSE is a distribution of Linuxavailable as a free download. Co



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data centers. Windows Server delivers benefits such as a powerful Web servermanagement system, virtualization tools that allow various operating systemsto run on a single server, advanced security features, and robust administra-tive support. Windows Server 2016 provides further enhancements forcontainerization—with individual containers having their own WindowsServer kernel that is not shared with the host machine. This ensures thatusers can run jobs without worrying that workloads running on one containerwill reach outside their bounds and interfere with either the host machine orother applications running on it. Windows Home Server allows individuals toconnect multiple PCs, storage devices, printers, and other devices into ahome network. Windows Home Servers provides a convenient way for homeusers to store and manage photos, video, music, and other digital content. Italso provides backup and data recovery functions.

UNIX UNIX is a powerful OS originally developed by AT&T for minicomputers—the predecessors of servers, which were larger than PCs and smaller than main-frames. UNIX can be used on many computer system types and platforms, includ-ing workstations, servers, and mainframe computers. UNIX also makes it easy tomove programs and data among computers or to connect mainframes and work-stations to share resources. There are many variants of UNIX, including HP-UXfrom Hewlett-Packard, AIX from IBM, and Solaris from Oracle. The UNIX platform(a computer capable of running the UNIX operating system plus the operatingsystem itself) is considered a high-cost platform compared to Linux and WindowsServer.

The Solaris operating system is a UNIX-based operating system originallydeveloped by Sun Microsystems. Oracle, known primarily as a database man-agement software firm, acquired Sun in 2010. Sun products included serverhardware, the Solaris operating system, and the Java programming language.Oracle now offers so-called general-purpose engineered systems that includea combination of Oracle and Sun software running on powerful Sun servers,dubbed SPARC.16 Office Depot is one of the largest retail office supply com-panies in the world, with some 1,400 stores in the United States, Europe, andthe Middle East. The company upgraded the information system infrastructureused to run its ERP application to SPARC servers and the Solaris operatingsystem to gain a 20 percent increase in performance.17

Red Hat Linux Red Hat Software offers Red Hat Enterprise Linux Server, anoperating system that is very efficient at serving Web pages and can managea cluster of several servers. Distributions such as Red Hat have proven Linuxto be a very stable and efficient OS. Red Hat Enterprise Virtualization (RHEV)software provides virtualization capabilities for servers and desktop compu-ters to enable the hardware to run more than one operating system. SeeFigure 4.8.

Casio is a multinational electronics manufacturing company headquar-tered in Japan. Its products include calculators, mobile phones, cameras,musical instruments, and watches. Casio migrated to RHEV, and its virtualservers now use only 60 percent of the resources used by physical servers.The firm has also been able to ensure that in the event of a server failure,other servers will have the capacity to pick up the load without a seriouseffect on the entire system.18

Mac OS X Server The Mac OS X Server is the first modern server OS fromApple Computer, and it is based on the UNIX OS. Designed for OS X andiOS, OS X Server makes it easy to collaborate, develop software, host Websites and wikis, configure Mac and iOS devices, and remotely access a net-work. Smartphone users running iOS can now open, edit, and save docu-ments on OS X Server.

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Enterprise Operating SystemsMainframe computers, often referred to as “Big Iron,” provide the computingand storage capacity required for massive data-processing environments, andthey provide systems that can support many users while delivering high per-formance and excellent system availability, strong security, and scalability. Awide range of application software has been developed to run in the main-frame environment, making it possible to purchase software to address almostany business problem. Examples of mainframe OSs include z/OS from IBM,HP-UX from Hewlett-Packard, and Linux. The z/OS is IBM’s first 64-bit enter-prise OS and is capable of handling very heavy workloads, including servingthousands of concurrent users and running an organization’s critical applica-tions. (The z stands for zero downtime.)

Mobile Operating SystemsSmartphones now employ full-fledged personal computer operating systemssuch as the Google Android, Apple iOS, and Microsoft Windows Phone thatdetermine the functionality of your phone and the applications that you canrun. These operating systems have software development kits that allow devel-opers to design thousands of apps providing a myriad of mobile services.

Table 4.5 lists the top four mobile operating systems for smartphonesand tablets based on worldwide market share as of the second quarter (2Q)of 2015. Table 4.6 lists the top tablet operating systems based on sales in1Q 2015.

FIGURE 4.8Red Hat LinuxRed Hat Enterprise Virtualization(RHEV) software provides virtualiza-tion capabilities for servers anddesktop computers.Source:

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Embedded Operating SystemsAn embedded system is a computer system (including some sort of processor)that is implanted in and dedicated to the control of another device. Embeddedsystems control many devices in common use today, including TV cable boxes,smartphones, digital watches, digital cameras, MP3 players, calculators, micro-wave ovens, washing machines, and traffic lights. The typical car contains manyembedded systems, including those that control antilock brakes, air bag deploy-ment, fuel injection, active suspension devices, transmission control, and cruisecontrol. A global positioning system (GPS) device uses an embedded system tohelp people find their way around town or more remote areas. See Figure 4.9.

TABLE 4.5 Comparison of smartphone operating systems

Smartphone OperatingSystem

Worldwide Market Shareof Sales during 2Q 2015

Estimated Total Numberof Applications

Estimated Rate ofIncrease in Number ofNew Applications

Google Android 82.8% 1,824,500 (Nov 2015) 980/day

Apple iPhone OS (iOS) 13.9% 1,500,000 (July 2015) 667/day

Microsoft Windows Mobile(to be replaced byWindows 10 Mobile)

2.6% 300,000 (June 2014) 550/day

Blackberry OS 0.3% Not available Not available

Sources: “Smartphone OS Market Share, 2015 Q2,” International Data Corporation, August 2015,; Costello,Sam, “How Many Apps Are in the App Store?,” About Tech, September 15, 2015,; Whitney.Lance, “Windows Phone Store Hits More than 300,000 Apps,” CNET, August 8, 2015,

TABLE 4.6 Worldwide market share of tablet computer operating systemsTable Computer Operating System Worldwide Market Share

Android 67%

iOS 28%

Windows 5%

Source: Shah, Agam, “Windows Forecast to Gradually Grab Tablet Market Share From iOS and Android,”PCWorld, March 12, 2015,

FIGURE 4.9GPS devices use embeddedoperating systemsA GPS device uses an embeddedsystem to acquire information fromsatellites, display your current loca-tion on a map, and direct you to yourdestination. iSt



embedded system: A computersystem (including some sort of proces-sor) that is implanted in and dedicatedto the control of another device.

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Some embedded systems include specialized operating systems. For exam-ple, Palm, an early smartphone manufacturer, developed its well-regardedPalm webOS operating system to run its Pre and Pixi smartphones. AlthoughwebOS was considered innovative, Palm’s smartphones were a market failure,and in 2010, HP bought the company along with webOS, hoping to use it todevelop its mobile platform. HP’s efforts were also unsuccessful, and in early2013, LG bought all the assets associated with webOS from HP. LG now usesthe specialized software in its smart TVs to enable users to watch streamingmovies and television shows and YouTube videos, connect to social networks,play games, get news, and download apps.19

Some of the more popular OSs for embedded systems are described inthe following section.

Windows Embedded Windows Embedded is a family of Microsoft operatingsystems included with or embedded into small computer devices. For exam-ple, Windows Embedded Compact includes several versions that providecomputing power for TV set-top boxes, automated industrial machines,media players, medical devices, digital cameras, PDAs, GPS receivers, ATMs,gaming devices, and business devices such as cash registers. Microsoft Win-dows Embedded Automotive helps manufacturers provide drivers witheverything they need to stay in touch with others, be entertained, and beinformed. Drivers can also monitor vehicle performance, screen for mainte-nance issues, and allow remote tracking of the car’s location. Speech recog-nition, touch interface, and hands-free technologies enable drivers to stayfocused on the road and in control of their surroundings. The Ford Sync sys-tem uses an in-dashboard display, an industrial-strength operating systemowned by BlackBerry called QNX, and wireless networking technologies tolink automotive systems with smartphones and portable media players. SeeFigure 4.10.

Syndicat Mixte Autolib’ is an electric car-sharing program implementedby the city of Paris and surrounding municipalities. The goals of the pro-gram are to relieve traffic congestion, reduce noise and air pollution, andprovide people with flexible transit options. Various components of the Win-dows Embedded operating system provide connectivity between the in-carsystem, rental kiosks, charging stations, and a central control system. Syndi-cat Mixte Autolib’ has reduced carbon dioxide emissions by 1.5 metric tonsannually and replaced 25,000 privately owned gas vehicles. Autolib’ subscri-bers enjoy additional benefits including GPS navigation and free parking.20

FIGURE 4.10Ford Sync 3 user interfaceThe Ford Sync 3 system allowsdrivers to wirelessly connectsmartphones and media devicesto automotive systems.Source: McCracken, Henry, “Why FordDumping Microsoft’s Automotive SoftwareWas Inevitable—And Probably LongOverdue,” Fast Company,

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Proprietary Linux-Based Systems Because embedded systems are usuallydesigned for a specific purpose in a specific device, they are usually proprie-tary or custom-created and owned by the manufacturer. Sony’s Wii, for exam-ple, uses a custom-designed OS based on the Linux kernel. Linux is a popularchoice for embedded systems because it is free and highly configurable. It hasbeen used in many embedded systems, including e-book readers, ATMs,smartphones, networking devices, and media players.

Utility ProgramsUtility programs perform a variety of tasks typically related to system main-tenance or problem correction. For example, there are utility programsdesigned to merge and sort sets of data, keep track of computer jobs beingrun, compress data files before they are stored or transmitted over a network(thus saving space and time), and perform other important tasks.

Just as your car engine runs best if it has regular tune-ups, computers alsoneed regular maintenance to ensure optimal performance. Over time, yourcomputer’s performance can start to diminish as system errors occur, filesclutter your hard drive, and security vulnerabilities materialize. SysinternalsSuite is a collection of Windows utilities that can be downloaded for freefrom the Microsoft Technet Web site. These utilities can be used to boost theperformance of a slow PC, repair errors in the registry and on a hard drive,remove unnecessary files, improve system security and privacy, and optimizesluggish system processes as shown in Figure 4.11.21

Although many PC utility programs come installed on computers, you canalso purchase utility programs separately. The following sections examinesome common types of utilities.

Hardware UtilitiesHardware utilities can be used to check the status of all parts of the PC,including hard disks, memory, modems, speakers, and printers. Disk utilitiescheck the hard disk’s boot sector, file allocation tables, and directories andanalyze them to ensure that the hard disk is not damaged. Disk utilities can

FIGURE 4.11Sysinternals SuiteSysinternals Suite is a collection ofutilities for troubleshooting andmaintaining a Windows system.

utility program: A program thathelps to perform maintenance or cor-rect problems with a computer system.






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also optimize the placement of files on a crowded disk. Hardware manufac-turers often provide utilities that can be used for their specific devices.Other companies such as Symantec, which produces Norton Utilities, offerhardware utilities that can be used to repair, maintain, and optimize a rangeof system types.

Security UtilitiesComputer viruses and malware from the Internet and other sources can be anuisance and worse—sometimes completely disabling a computer. Antivirusand anti-malware utilities can be used to constantly monitor and protect acomputer. If a virus or other malware is found, it can often be removed. Fire-wall software is another important security utility for protecting a computersystem. Firewall software filters incoming and outgoing packets, making surethat neither hackers nor their tools are attacking the system. Symantec, McA-fee, and Microsoft are the most popular providers of security software.

File-Compression UtilitiesFile-compression programs can reduce the amount of disk space required tostore a file or reduce the time it takes to transfer a file over the Internet. BothWindows and Mac operating systems let you compress or decompress files andfolders. A Zip file has a .zip extension, and its contents can be easily unzippedto the original size. MP3 (Motion Pictures Experts Group-Layer 3) is a popularfile-compression format used to store, transfer, and play music and audio files,such as podcasts—audio programs that can be downloaded from the Internet.

Spam-Filtering UtilitiesReceiving unwanted email (spam) can be a frustrating waste of time. Email soft-ware and services include spam-filtering utilities to assist users with theseannoyances. Email filters identify spam by learning what the user considersspam and routing it to a junk mail folder. In addition, many security utilities—such as Symantec’s Norton Security and Kaspersky’s Internet Security—includespam-filtering utilities. Businesses often invest in additional software to ensurebetter protection for enterprise-level email systems where spam containingviruses is a serious threat. A variety of companies, including Cisco, BarracudaNetworks, and Google, offer spam-filtering software that can intercept danger-ous spam as it enters the corporate email system.

Being able to block spam efficiently and accurately is a priority for organi-zations such as the Long Island Rail Road Company (LIRR), a commuter railsystem serving over 300,000 passengers weekly in southeastern New York.22

The LIRR uses enterprise-level messaging security software from GWAVA toprotect more than 2,000 email accounts. Using GWAVA’s software, which isintegrated into the LIRR’s overall communication infrastructure, the railroad’sIT team is able to block more than 34,000 spam emails each month.23

Network and Internet UtilitiesA broad range of network- and systems-management utility software is avail-able to monitor hardware and network performance and trigger an alertwhen a server is crashing or a network problem occurs. IBM’s Tivoli NetcoolNetwork Management, Hewlett-Packard’s Automated Network ManagementSuite, and Paessler’s PRTG Network Monitor can be used to solve computer-network problems and help save money. As shown in Figure 4.12, PRTG Net-work Monitor creates a sensor for each network device and then monitors thedevice to make sure it is connected and working properly. If a device encoun-ters a problem, the network manager is alerted via email or text message.

The University of Kentucky community includes more than 26,000 studentsand almost 11,000 employees on its campus in Lexington.24 The university’scomputing infrastructure is made up of multiple local area networks (LANs)

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that connect to the school’s wide area network (WAN). One of those LANsincludes over 1,000 desktop computers, 50 switches, 6 servers, and 2 routers.The university’s network administrators use AdRem’s NetCrunch network moni-toring software to ensure uninterrupted service on the network, which serves17 different on-campus labs. NetCrunch allows the school’s IT personnel tomonitor the network and track connectivity problems with minimum humanattention, by providing early warnings regarding failures in device, server, anddesktop performance. In particular, the utility has helped the network team cutdown on connectivity problems related to port settings at switches and routers,thus improving network performance for the students and faculty who rely onit for a variety of learning, teaching, and research activities.25

Server and Mainframe UtilitiesSome utilities enhance the performance of servers and mainframe computers.Blue Cross and Blue Shield of Kansas provides medical, dental, and life insur-ance coverage to 800,000 customers. As part of its service, it offers onlineaccess to health information stored in an IBM DB2 database running on anIBM z/OS mainframe. The company employs IBM mainframe utility programsto manage this operation effectively. The IBM z/OS Data Facility System Man-aged Storage utility applies the appropriate retention policies to data storedon direct access storage devices, and the IBM Tivoli Workload Scheduler isused to preform automated job scheduling to ensure critical jobs are com-pleted on time.26

The main enabling technology for cloud computing is software that allowsthe creation of virtual servers, which separate a physical computing device intoone or more “virtual” servers, each of which can be easily used and managed toperform computing tasks (see Figure 4.13). A server administrator uses softwareto divide one physical server into perhaps as many as a dozen virtualmachines—with each virtual machine capable of processing a set of data forusers from a given organization. In a typical cloud computing data center

FIGURE 4.12PRTG Network MonitorPRTG Network Monitor and othernetwork utility software can help youto keep track of network compo-nents, traffic flows, and networkperformance.Source: ©



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deployment of several hundred servers, companies using virtual servers can savemillions of dollars in capital and operating expenses (including energy costs) peryear by dramatically reducing the number of actual physical servers in use.

Other UtilitiesUtility programs are available for almost every conceivable task or function.Managing the vast array of operating systems for smartphones and mobiledevices, for example, has been difficult for many companies. Many organiza-tions unwisely allow employees to connect to corporate databases usingsmartphones and mobile devices with little or no guidance. Utility programscalled mobile device management (MDM) software can help a company man-age security, enforce corporate strategies, and control downloads and contentstreaming from corporate databases into smartphones and mobile devices.Columbia Sportswear Company uses VMWare’s AirWatch MDM package todeliver mobile applications and manage hundreds of mobile devices in itsretail stores and distribution centers. AirWatch allows the retailer’s IT staff tomanage the mobile devices from a central location, ensuring secure and con-sistent deployment of mobile devices and applications, including those usedfor tracking sales and monitoring staff scheduling.27

In addition, a number of companies, such as CNET, offer utilities that canbe downloaded for most popular operating systems. CNET offers hundreds ofutilities for Windows operating systems, including defraggers (fixes the prob-lem of fragmentation, which occurs when data is broken up into discontinu-ous pieces that waste space on your hard drive), system cleaners (cleanstracks on your hard drive, deletes temporary files, and cleans your registry),uninstallers (safely removes unwanted software), and replacements for Note-pad and Task Manager.

MiddlewareMiddleware is software that provides messaging services that allow differentapplications to communicate and exchange data. This systematic tyingtogether of disparate applications, often through the use of middleware, isknown as enterprise application integration (EAI). It is implemented toaddress situations in which a company acquires different types of informa-tion systems—often through mergers, acquisitions, or expansion—that need

FIGURE 4.13VirtualizationVirtual servers that separate a phys-ical computing device into one ormore “virtual” servers, each of whichcan be easily used and managed toperform computing tasks.


VMWare Virtualization Layer

Actual hardware






Without virtualization

With virtualization


Operating system

Hardware—CPU,memory, etc.

middleware: Software that allowsvarious systems to communicate andexchange data.

enterprise application integra-tion (EAI): The systematic tyingtogether of disparate applications sothat they can communicate.



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CriticalThinking Exercise

to share data and interact. Middleware can also serve as an interface betweenthe Internet and private corporate systems. For example, it can be used totransfer a request for information from a corporate customer on the companyWeb site to a traditional database on a mainframe computer and to return theresults of that information request to the customer on the Internet.

The use of middleware to connect disparate systems has evolved into anapproach for developing software and systems called SOA. Service-orientedarchitecture (SOA) is a software design approach based on the use ofdiscrete pieces of software (modules) to provide specific functions (such asdisplaying a customer’s bill statement) as services to other applications. Eachmodule is built in such a way that ensures that the service it provides canexchange information with any other service without human interaction andwithout the need to make changes to the underlying program itself. In thismanner, multiple modules can be combined to provide the complete function-ality of a large, complex software application. Systems developed with SOAare highly flexible, as they allow for the addition of new modules that providenew services required to meet the needs of the business as they evolve andchange over time.

SOA itself has evolved over time. One potential downside to SOA is thatit can lead to expensive and challenging implementations of individual ser-vices that are too complex. In response, some organizations have shiftedtheir SOA approach—starting with microservices at the department level,rather than at the enterprise level, and building from there. Microservicesare designed to quickly solve tactical problems by doing one thing verywell, and they offer organizations the opportunity to implement SOA usingsimplified components.28

Netflix, which describes itself as the world’s leading Internet televisionnetwork, has 70 million members in 60 countries watching more than 100million hours of streaming TV shows and movies each day.29 Recently, thecompany shifted its development approach to a microservices architectureapproach, with many small engineering teams responsible for the develop-ment of hundreds of microservices that work together to stream content tocustomers. Each microservice represents a single-product feature that canbe updated independently. This architecture, along with Netflix’s continu-ous delivery approach to development, means that microservices can beupgraded and debugged on their own schedules, improving performanceand reliability for the company’s millions of customers.30,31

Migration to New Operating SystemThe information systems support organization of your firm is keen to migrate allemployees from whatever operating system they have now (mostly Windows 8)to Microsoft Windows 10. Making such a change can be a big deal for employeesand can require them to get comfortable with a new user interface and ways ofaccomplishing their work.

Review Questions1. What are some of the advantages of such a move?2. What are some potential issues that could arise from this change?

Critical Thinking Questions1. What are some of the negative forces that will cause employees to resist this

change?2. What are some creative things the IS team could do to overcome these resis-

tance forces?

service-oriented architecture(SOA): A software design approachbased on the use of discrete pieces ofsoftware (modules) to provide specificfunctions as services to otherapplications.

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Application Software

The primary function of application software is to apply the power of a com-puter system to enable people, workgroups, and entire enterprises to solveproblems and perform specific tasks. Millions of software applications havebeen created to perform a variety of functions on a wide range of operatingsystems and device types. The following are some of the dozens of categoriesof applications:

Business Genealogy Personal information manager

Communications Language Photography

Computer-aided design Legal Science

Desktop publishing Library Simulation

Educational Multimedia Video

Entertainment Music Video games

In almost any category of software, you will find many options fromwhich to choose. For example, Microsoft Edge, Mozilla Firefox, GoogleChrome, Apple Safari, and Opera are all Web browsers that enable users tosurf the Web. The availability of many software options enables users to selectthe software that best meets the needs of the individual, workgroup, or enter-prise. For example, Procter & Gamble Company (P&G), a large, multinationalorganization, chose the SAP Enterprise Resource Planning software with itsvast array of options, features, and functionality to meet its complex globalaccounting needs. However, a small, neighborhood bakery might decide thatIntuit’s QuickBooks, an accounting software package designed for small busi-nesses, meets its simple accounting needs.

In most cases, application software resides on the computer’s hard diskbefore it is brought into the computer’s memory and then run. Applicationsoftware can also be stored on CDs, DVDs, and USB flash drives. Anincreasing amount of application software is available on the Web. Some-times referred to as a rich Internet application (RIA), a Web-deliveredapplication combines hardware resources of the Web server and the PC todeliver valuable software services through a browser interface. Before aperson, a group, or an enterprise decides on the best approach for acquir-ing application software, they should carefully analyze computing goals,needs, and budget.

Overview of Application SoftwareProprietary software and off-the-shelf software are two important types ofapplication software. Proprietary software is one-of-a-kind softwaredesigned for a specific application and owned by the company, organization,or person that uses it. Proprietary software can give a company a competitiveadvantage by providing services or solving problems in a unique manner—better than methods used by a competitor. Off-the-shelf software is pro-duced by software vendors to address needs that are common across busi-nesses, organizations, or individuals. For example, uses thesame off-the-shelf payroll software as many businesses, but on its Web site,the company uses custom-designed proprietary software, which allows visi-tors to more easily find items to purchase. The relative advantages and disad-vantages of proprietary software and off-the-shelf software are summarized inTable 4.7.

rich Internet application (RIA):A Web-delivered application combineshardware resources of the Web serverand the PC to deliver valuable softwareservices through a Web browserinterface.

proprietary software: One-of-a-kind software designed for a spe-cific application and owned by thecompany, organization, or person thatuses it.

off-the-shelf software: Softwareproduced by software vendors toaddress needs that are common acrossbusinesses, organizations, orindividuals.

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Many companies use off-the-shelf software to support business processes.Key questions for selecting off-the-shelf software include the following:

● Will the software run on the OS and hardware you have selected?● Does the software meet the essential business requirements that have

been defined?● Is the software manufacturer financially solvent and reliable?● Does the total cost of purchasing, installing, and maintaining the software

compare favorably to the expected business benefits?

Founded in 1955, H&R Block is the world’s largest tax services provider, with80,000 employees in 12,000 offices across the United States. In 2014, more than24 million tax returns were prepared by H&R Block tax professionals and by cli-ents using the company’s digital tax solutions.32 H&R Block places a priority onproviding accurate and easily accessible information about the company—aswell as tax preparation information and tips—through its online newsroom.When the tax preparer was building the newsroom for its corporate Web site, itopted to use an off-the-shelf software package called PressPage. By using aproven, off-the-shelf option, H&R Block was able to quickly deploy an onlinenewsroom that included all of the features it needed, while taking advantage ofPressPage’s best practice expertise. The result was a user-friendly newsroom thatcomplements the company’s “brand journalism” approach to public relations.33

As mentioned in Chapter 1, workers in many organizations operate in acloud-computing environment in which software, data storage, and other ser-vices are provided by the Internet (“the cloud”); the services are run on anotherorganization’s computer hardware, and both software and data are easilyaccessed. Examples of public cloud service providers, which make their servicesavailable to the general public, include Amazon Elastic Compute Cloud (EC2),IBM’s Blue Cloud, Sun Cloud, Google Cloud Platform, Rackspace’s Managed

TABLE 4.7 Comparison of proprietary and off-the-shelf softwareProprietary Software Off-the-Shelf Software

Advantages Disadvantages Advantages Disadvantages

You can get exactly whatyou need in terms of fea-tures, reports, and so on.

It can take a long time anda significant amount ofresources to developrequired features.

The initial cost is lowerbecause the software firmcan spread the develop-ment costs across manycustomers.

An organization mighthave to pay for featuresthat it does not requireand never uses.

Being involved in thedevelopment offers morecontrol over the results.

In-house system develop-ment staff may be hard-pressed to provide therequired level of ongoingsupport and maintenancebecause of pressure tomove on to other newprojects.

The software is likely tomeet the basic businessneeds. Users have theopportunity to more fullyanalyze existing featuresand the performance of thepackage beforepurchasing.

The software might lackimportant features, thusrequiring future modifica-tion or customization,which can be very expen-sive,and because users willeventually be required toadopt future releases of thesoftware, the customiza-tion work might need to berepeated.

You can more easily mod-ify the software and addfeatures that you mightneed to counteract an ini-tiative by competitors or tomeet new supplier or cus-tomer demands.

The features and perfor-mance of the deliveredsoftware may fail to meetevolving business and enduser needs.

The software is likely to beof high quality becausemany customer firms havetested the software andhelped identify its bugs.

The software might notmatch current work pro-cesses and data standards.

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Cloud, and Windows Azure Services Platform. Public cloud users can realize aconsiderable cost savings because the very high initial hardware, application,and bandwidth costs are paid for by the service provider and passed along tousers as a relatively small monthly fee or per-use fee. Furthermore, companiescan easily scale up or down the amount of services used, depending on userdemand for services. Cloud computing also provides the benefit of being able toeasily collaborate with others by sharing documents on the Internet.

Cloud services are often given popular acronyms such as SaaS (software as aservice), PaaS (platform as a service), IaaS (infrastructure as a service), and HaaS(hardware as a service). Software as a service (SaaS) allows organizations tosubscribe to Web-delivered application software. In most cases, the companypays a monthly service charge or a per-use fee. Many business activities are sup-ported by SaaS. SaaS vendors include Oracle, SAP, NetSuite, Salesforce, andGoogle. Each year, The Container Store sells over $200 million worth of storageand organization products through its 70 retail stores.34 The retail chain hasgrown rapidly, and it is committed to maintaining satisfaction for its 4,000employees—a goal that was becoming more difficult to achieve given the limitedresources of the company’s IT, benefits, and payroll departments. In order tofree up some of those internal resources, The Container Store migrated its pay-roll and benefit processes to UltiPro HCM, a SaaS provided by Ultimate Software.The SaaS solution helped the company streamline its payroll and benefits admin-istration while increasing employee satisfaction by providing them real-time,online access to up-to-date salary and benefits information.35

Tableau software allows users to import databases or spreadsheet datato create powerful visualizations that provide useful information. Figure 4.14shows a Tableau visualization that tracks the unemployment rate acrossthe country over time. Orange indicates an unemployment rate exceeding thenational average, whereas blue indicates rates below the national average.

Amazon is considered one of the leading public cloud service providersbecause of the variety of services that it provides through its Amazon Web Ser-vices (AWS) platform. Amazon delivers one of the most reliable public cloudplatforms available, and it is also rapidly adding new services, including toolsfor software developers and services to support version control and collabora-tion.36 Airbnb is an online marketplace that connects travelers and propertyowners who are looking to rent out their properties to vacationers. Airbnb sup-ports its business using cloud-based Web site, storage, and database-hosting

FIGURE 4.14Tableau softwareTableau is available in desktop andcloud versions and helps usersvisualize data, such as how theunemployment rate changes over a20-year period. ©


Software as a Service (SaaS): Aservice that allows businesses to sub-scribe to Web-delivered applicationsoftware.

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services from Amazon Web Services. The company chose AWS because itoffered the reliability and flexibility Airbnb requires to continue to grow itsbusiness—at a relatively low cost and with no minimum usage commitments.37

Google’s Chromebook line of personal computers is an example of aconsumer-focused implementation of the SaaS model. Built by Samsung andAcer, Chromebooks include only an Internet browser—with all software applica-tions accessed through an Internet connection. Rather than installing, storing,and running software on the Chromebook, users access software that is storedon and delivered from a Web server. Typically the data generated by the softwareis also stored on the Web server.

While SaaS and cloud computing offer many benefits, these softwaredelivery models also involve some risks. For example, sensitive informationcould be compromised by unauthorized access by employees or computerhackers. In addition, the company providing the hosting services might notkeep its computers and network up and running as consistently as necessary,or a disaster could disable the host’s data center, temporarily putting an orga-nization out of business. Some companies also find it is difficult to integratethe SaaS approach with some of its existing software.

Personal Application SoftwareHundreds of thousands personal software applications are available to meetthe needs of individuals at school, home, and work—with new applicationsreleased on a daily basis. New computer software under development,along with existing GPS technology, for example, will enable people to see3D views of where they are, along with directions and 3D maps to wherethey would like to go. The features of some popular types of personalapplication software are summarized in Table 4.8. In addition to thesegeneral-purpose programs, thousands of other personal computer applica-tions perform specialized tasks that help users prepare their taxes, get inshape, lose weight, get medical advice, write wills and other legal docu-ments, repair their computers, fix their cars, write music, and edit picturesand videos. This type of software, often called user software or personalproductivity software, includes the general-purpose tools and programsthat support individual needs.

The following sections discuss some of the most popular types of personalapplication software currently available.

Word ProcessingWord-processing applications are installed on most PCs today. These applica-tions come with a vast array of features, including those for checking spelling,creating tables, inserting formulas, and creating graphics. See Figure 4.15.Much of the work required to create this book involved the use of the popularword-processing software, Microsoft Word.

A team of people can use a word-processing program to collaborate on aproject. The authors and editors who developed this book, for example, usedthe Track Changes and Review features of Microsoft Word to track and makechanges to chapter files. With these features, you can add comments or makerevisions to a document that a coworker can review and either accept orreject. Some cloud-based word-processing applications, such as Google Docs,allow multiple authors to collaborate in real time.

Spreadsheet AnalysisMany individuals and organizations use spreadsheet applications that offerpowerful tools for manipulating and analyzing numbers and alphanumericdata. Common spreadsheet features include statistical analysis tools,built-in formulas, chart- and graphics-creation tools, and limited database

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capabilities. See Figure 4.16. Business functions include those that calculatedepreciation, present value, internal rate of return, and the monthly pay-ment on a loan. Optimization is another powerful feature of many spread-sheet programs that allows the spreadsheet to maximize or minimize aquantity subject to certain constraints. For example, a small furniture manu-facturer that produces chairs and tables might want to maximize its profits.The constraints could be a limited supply of lumber, a limited number ofworkers who can assemble the chairs and tables, or a limited amount ofavailable hardware fasteners. Using an optimization feature, such as Solverin Microsoft Excel, the spreadsheet can determine the number of chairs andtables that should be produced—given the labor and material constraints—to maximize profits.

While the built-in formulas available in many spreadsheet applicationsare powerful tools, they are not foolproof, as can be seen in the example ofCarmen Reinhart and Kenneth Rogoff’s famous 2010 study “Growth in a

TABLE 4.8 Examples of personal application softwareType of Software Use Example

Word processing Create, edit, and print text documents Apache OpenOfficeWriter

Apple PagesCorel WriteGoogle DocsMicrosoft WordWordPerfect

Spreadsheet Perform statistical, financial, logical, database, graphics,and date and time calculations using a wide range of built-in functions

Apache OpenOffice CalcApple NumbersGoogle SheetsIBM Lotus 1-2-3Microsoft Excel

Database Store, manipulate, and retrieve data Apache OpenOffice BaseMicrosoft AccessIBM Lotus Approach

Graphics Develop graphs, illustrations, drawings, and presentations Adobe FreeHandAdobe IllustratorApache OpenOfficeImpress

Microsoft PowerPoint

Personal informationmanagement

Helps people, groups, and organizations store usefulinformation, such as a list of tasks to complete or a set ofnames and addresses

Google CalendarMicrosoft CalendarMicrosoft OutlookOne Note

Project management Plan, schedule, allocate, and control people and resources(money, time, and technology) needed to complete a proj-ect according to schedule

Microsoft ProjectScitor Project Scheduler

Financial management Track income and expenses and create reports to createand monitor budgets (some programs also have investmentportfolio management features)

GnuCashIntuit MintIntuit QuickenMoneydanceYou Need a Budget(YNAB)

Desktop publishing (DTP) Use with personal computers and high-resolution printersto create high-quality printed output, including text andgraphics; various styles of pages can be laid out; art andtext files from other programs can also be integrated intopublished pages

Adobe InDesignApple PagesCorel Ventura PublisherMicrosoft PublisherQuarkXpress

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FIGURE 4.15Word-processing programWord-processing applications, suchas Microsoft Word, can be used towrite letters, professional docu-ments, work reports, and termpapers.

FIGURE 4.16Spreadsheet programConsider using a spreadsheet pro-gram, such as Microsoft Excel, whencalculations are required.





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Time of Debt,” which concluded that a country’s economic growth isreduced when its public debt level reaches 90 percent of GDP. In recentyears, this finding has been used as a justification to push countries toreduce their deficits. However, a more recent study by Thomas Herndon,Michael Ash, and Robert Pollin uncovered that the original study has threemajor flaws. First, it excluded three occurrences of high-debt, high-growthnations. Second, it made some questionable assumptions about weightingdifferent historical episodes. Third, it had an error in Excel spreadsheet for-mulas that excluded Belgium from their analysis. Correcting for these prob-lem leads to an entirely different conclusion—“The average real GDPgrowth rate for countries carrying a public debt-to-GDP ratio of over 90 per-cent is actually 2.2 percent, not −0.1 percent as published in Reinhart andRogoff.”38

Database ApplicationsDatabase applications are ideal for storing, organizing, and retrieving data.These applications are particularly useful when you need to manipulate a largeamount of data and produce reports and documents. Database manipulationsinclude merging, editing, and sorting data, and database applications can beused in a variety of ways. You could use a database application to keep trackof a CD collection, the items in your apartment, tax records, and expenses. Astudent club could use a database to store names, addresses, phone numbers,and dues paid. In business, a database application could be used to help pro-cess sales orders, control inventory, order new supplies, send letters to custo-mers, and pay employees. Database management systems can be used to trackorders, products, and customers; analyze weather data to make forecasts; andsummarize medical research results. A database can also be a front end toanother application. For example, you can use a database application to enterand store income tax information and then export the stored results to otherapplications, such as a spreadsheet or tax-preparation application.

Presentation Graphics ProgramIt is often said that a picture is worth a thousand words. With today’s availablegraphics programs, it is easy to develop attractive graphs, illustrations, anddrawings that help communicate important information. See Figure 4.17. The

FIGURE 4.17Presentation graphicsprogramPresentation graphics programs,such as Microsoft PowerPoint, canhelp you make a presentation forschool or work. Mi







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category of presentation graphics applications includes programs that can beused to perform a variety of tasks, including creating advertising brochures,event announcements, and full-color presentations; some presentation graphicsprograms can also be used to organize and edit photographic images. And ifyou need to make a presentation at school or work, you can use a special typeof graphics program called a presentation application—–such as MicrosoftPowerPoint—to develop slides and then display them while you are speaking.Because of their popularity, many colleges and departments require students tobecome proficient at using presentation graphics programs.

Many graphics and presentation programs, including Microsoft PowerPoint,consist of a series of slides. Each slide can be displayed on a computer screen,printed as a handout, or (more commonly) projected onto a large viewing screenfor audiences. In PowerPoint, you can select a template designed for a specifictype of presentation, such as recommending a strategy for managers, communicat-ing news to a salesforce, giving a training presentation, or facilitating a brainstorm-ing session. PowerPoint includes powerful built-in features that let you create apresentation step-by-step, including applying color and attractive formatting. Youcan also design a custom presentation using the many types of charts, drawings,and formatting available. Most presentation graphics programs also provide accessto online clip art, such as drawings and photos of people meeting, medical equip-ment, telecommunications equipment, entertainment, and much more.

Personal Information ManagersPersonal information management (PIM) software helps people, groups, andorganizations store useful information, such as a list of tasks to complete or aset of names and addresses. PIM software usually provides an appointmentcalendar, an address book or contacts list, and a place to take notes. In addi-tion, information in a PIM can typically be linked. For example, you can linkan appointment with a sales manager in the calendar to information on thesales manager in the address book. When you click the appointment in thecalendar, a window opens displaying information on the sales manager fromthe address book. Microsoft Outlook is an example of very popular PIM soft-ware. Increasingly, PIM software is moving online, where it can be accessedfrom any Internet-connected device. See Figure 4.18.

FIGURE 4.18Personal informationmanagement softwareEvernote lets you take notes, syncfiles across devices, save Webpages, and share your ideas withfriends and colleagues. It runs oncomputers and on smartphones. Ev


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Some PIMs allow you to schedule and coordinate group meetings. If acomputer or handheld device is connected to a network, you can upload thePIM data and coordinate it with the calendar and schedule of others who areusing the same PIM software on the network. You can also use some PIMs tocoordinate emails inviting others to meetings. As users receive their invita-tions, they click a link or button to be automatically added to the guest list.

Software Suites and Integrated Software PackagesA software suite is a collection of programs packaged together and sold ina bundle. A software suite might include a word processor, a spreadsheet pro-gram, a database management system, a graphics program, communicationsand note-taking tools, and organizers. Some suites support the developmentof Web pages, and some offer a speech-recognition feature—so that applica-tions in the suite can accept voice commands and record dictation. Softwaresuites offer many advantages. The software programs within a suite havebeen designed to work similarly so that after you learn the basics for oneapplication, the other applications are easy to learn and use. Buying softwarein a bundled suite is cost effective; the programs usually sell for a fraction ofwhat they would cost individually.

Table 4.9 lists several popular general-purpose software suites for per-sonal computer users. Microsoft Office has the largest market share. Most ofthese software suites include a spreadsheet program, a word processor, adatabase program, and graphics presentation software. All can exchangedocuments, data, and diagrams. In other words, you can create a spreadsheetand then cut and paste that spreadsheet into a document created using theword-processing application.

Some companies offer Web-based productivity software suites that do notrequire the installation of any software on your device—only a Web browser.Google, Thinkfree, and Zoho offer free online word processors, spreadsheetprograms, presentation applications, and other software that can be accessedvia the Internet.

After observing this trend, Microsoft responded with an online version ofits popular Office applications. Microsoft Office 365 is available in a range ofconfigurations designed for home or office use, for a monthly subscription fee.See Figure 4.19. Depending on the plan purchased, subscribers can accessMicrosoft Office applications such as Word, Outlook, Excel, Exchange for mes-saging, SharePoint for collaboration, and Skype for Business for conferencing.These cloud-based applications cost on the order of $10 per user per monthdepending on the features used. Microsoft offers plans for individuals, smallbusinesses, enterprises, and education institutions. For example, any institutionworldwide that licenses Office 365 ProPlus or Office Professional Plus for staffand faculty can provide access to Office 365 ProPlus for students at no

TABLE 4.9 Major components of leading software suitesPersonalProductivityFunction



ApacheOpenOffice Apple iWork Google Apps

Word processing Word WordPerfect Writer Pages Docs

Spreadsheet Excel Quattro Pro Calc Numbers Spreadsheet


PowerPoint Presentations Impress andDraw

Keynote Presentation

Database Access Base

software suite: A collection of pro-grams packaged together and sold in abundle.

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additional cost. The online versions of Word, Excel, PowerPoint, and OneNoteare tightly integrated with Microsoft’s desktop Office suite for easy sharing ofdocuments among computers and collaborators.

The H.J. Heinz Company, now part of Kraft Heinz Company, sells babyfood, frozen entrees, ketchup, mustard, sauces, and other products in morethan 200 countries. The firm wanted to help employees spend less time travel-ing and make it easier for them to share best practices, solve business pro-blems, and come up with new ideas, regardless of their geographicallocations. This led Heinz to adopt Microsoft Office 365 for its more than20,000 employees who will use Exchange Online for email and calendaring,Sync for Business for conferencing and instant messaging, and Yammer (anenterprise social network) to share ideas and collaborate on projects. Heinz isalso making the Office desktop suite available to its employees through Office365 ProPlus.39

Other Personal Application SoftwareIn addition to the software already discussed, many other interesting andpowerful application software tools are available for personal and businessuse. In some cases, the features and capabilities of these applications morethan justify the cost of an entire computer system. TurboTax, for example, isa popular tax-preparation program that annually saves millions of peoplemany hours and even dollars in preparing their taxes. With just a quick onlinesearch, you can find software for creating Web sites, composing music, andediting photos and videos. Many people use educational and reference soft-ware and software for entertainment, games, and leisure activities. Game-playing software is popular and can be very profitable for companies thatdevelop games and various game accessories, including virtual avatars suchas colorful animals, fish, and people. Some organizations have launched pro-grams designed to promote physical activity by incorporating the use of activevideo games (e.g., Wii Boxing and DanceDance Revolution) into broaderphysical education programs. Retirement communities also use video gamesto keep seniors physically active.40 Engineers, architects, and designers oftenuse computer-assisted design (CAD) software to design and develop build-ings, electrical systems, plumbing systems, and more. Autosketch, CorelCAD,

FIGURE 4.19Web-based application suiteMicrosoft Office 365 is a Web-basedapplication suite that offers basicsoftware suite features over theInternet using cloud computing.







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and AutoCad are examples of CAD software. Other programs perform a widearray of statistical tests. Colleges and universities often have a number ofcourses in statistics that use this type of application software. Two popularstatistical analytics applications in the social sciences are SPSS and SAS.

Mobile Application SoftwareThe number of applications (apps) for smartphones and other mobile deviceshas exploded in recent years. Besides the proprietary apps that come withthese devices, hundreds of thousands of mobile apps have been developedby third parties. As of July 2015, Apple’s App Store had over 1.5 million appsavailable for iOS device users, and Android users could choose from over1.6 million mobile apps on Google’s Play Store.41 Microsoft and other soft-ware companies are also investing in mobile applications for devices that runon their software. For example, SceneTap, an application for iPhones andAndroid devices, can determine the number of people at participating bars,pubs, or similar establishments and the ratio of males to females. The applica-tion uses video cameras and facial-recognition software to identify males andfemales. SocialCamera, an application for Android phones, allows people totake a picture of someone and then search their Facebook friends for amatch. However, many people consider facial-recognition software a potentialinvasion to privacy.

Table 4.10 lists a few mobile application categories. Many apps are free,whereas others range in price from 99 cents to hundreds of dollars.

Workgroup Application SoftwareWorkgroup application software is designed to support teamwork, whetherteam members are in the same location or dispersed around the world. Thissupport can be accomplished with software known as groupware, which

TABLE 4.10 Categories of mobile applicationsCategory Description

Books and reference Access e-books, subscribe to journals, or look up information on the Merriam-Webster orWikipedia Web sites

Business and finance Track expenses, trade stocks, and access corporate information systems

Entertainment Access all forms of entertainment, including movies, television programs, music videos, andinformation about local night life

Games Play a variety of games, from 2D games such as Pacman and Tetris to 3D games such as Needfor Speed, Call of Duty, and Minecraft

Health and fitness Track workout and fitness progress, calculate calories, and even monitor your speed andprogress from your wirelessly connected Nike shoes

Lifestyle Find good restaurants, make a dinner reservation, select wine for a meal, and more

Music Find, listen to, and create music

News and weather Access major news and weather providers, including Reuters, AP, the New York Times, andthe Weather Channel

Photography Organize, edit, view, and share photos taken on your phone’s camera

Productivity andutilities

Create grocery lists, practice PowerPoint presentations, work on spreadsheets, synchronizewith PC files, and more

Social networking Connect with others via major social networks, including Facebook, Twitter, and Instagram

Sports Keep up with your favorite team or track your own golf scores

Travel and navigation Use the GPS in your smartphone to get turn-by-turn directions, find interesting places to visit,access travel itineraries, and more

workgroup applicationsoftware: Software that supportsteamwork, whether team members arein the same location or dispersedaround the world.

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helps groups of people work together effectively. Microsoft Exchange Server,for example, has groupware and email features. Also called collaborative soft-ware, workgroup software allows a team to work together remotely, sharingideas and work via connected computer systems.

Examples of workgroup software include group-scheduling software,electronic mail, and other software that enables people to share ideas. IBMNotes and Domino are examples of workgroup software from IBM. SeeFigure 4.20. (Notes runs on the end user’s computing device, while Dominoruns on a server and supports the end user.) Web-based software is ideal forgroup use. Because documents are stored on an Internet server, anyone withan Internet connection can access them easily. Google provides workgroupoptions in its online applications, which allow users to share documents,spreadsheets, presentations, calendars, and notes with other specified usersor everyone on the Web. This sharing makes it convenient for several peopleto contribute to a document without concern for software compatibility orstorage. Google also provides a tool for creating Web-based forms and sur-veys. When invited parties fill out the form, the data is stored in a Googlespreadsheet.

Clark Realty Capital (CRC) is a national real estate firm with nineoffices across the United States. Its agents are constantly on the move, andin the past, they had difficulty staying connected to the latest version ofimportant documents. This created problems because the firm’s agents areconstantly working to close deals on tight deadlines, which requires the abilityto frequently and quickly update documents related to a transaction. The firmbegan sharing files via Google Drive to provide employees real-time access tothe current version of each document, thus eliminating the need for emailattachments and managing multiple versions of a file. Employees use GoogleApps to create, access, and update these documents.42

Enterprise Application SoftwareSoftware that benefits an entire organization—enterprise applicationsoftware—can be developed specifically for the business or purchased off the

FIGURE 4.20IBM Notes Social EditionIBM Notes Social Edition is a work-group software. C




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shelf. There are many categories of enterprise software, including thefollowing:

Accounts payableAccounts receivableAirline industry operationsAutomatic teller systemsCash-flow analysisCheck processingCredit and charge card administrationDistribution controlFixed asset accountingGeneral ledgerHuman resource managementInventory control

InvoicingManufacturing controlOrder entryPayrollReceivingRestaurant managementRetail operationsSales orderingSavings and time depositsShippingStock and bond managementTax planning and preparation

The total cost, ease of installation, ease of management, and the ability tointegrate the software with other enterprise applications are the major consid-erations of organizations when selecting enterprise software. The ability toextend enterprise applications so that they can run on smartphones and othermobile devices is increasingly becoming a priority for many organizations.

Advantage Sign & Graphic Solutions, based in Grand Rapids, Michigan,sells equipment and supplies to businesses in the sign and graphics industry.The company operates 10 regional facilities that allow it to provide next-daydelivery of most supplies to customers around the country.43 In order toimprove its profitability and attract more customers, the company implemen-ted several NetSuite enterprise applications, including NetSuite ERP, CRM+,E-commerce, and Advanced Shipping. With the NetSuite software, Advantagewas able to launch a new e-commerce site, reduce order-processing time by65 percent, and decrease its on-hand inventory by 15 percent. Implementingan integrated set of enterprise applications simplified the company’s opera-tions and helped it better connect with customers.44

Enterprise software also helps managers and workers stay connected. Atone time, managers and workers relied on email to stay in touch with eachother, but business collaboration and enterprise social networking tools—such as Asana, blueKiwi, Yammer, and Jive—are replacing traditional emailand text messaging.

Worldwide spending on enterprise software was estimated to be about$310 billion in 2015.45 Most software spending goes to application software,as shown in Figure 4.21.46

FIGURE 4.21Spending by type of softwareOf all software types, businessesspend the most on applicationsoftware.


Custom built


Operating systems




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Application Software for Transaction Processing, BusinessAnalytics, and Competitive AdvantageSpecialized application software for learning enhancement and manage-ment, business analytics, information, decision support, and competitiveadvantage is available in every industry. For example, many schools andcolleges use Blackboard or other learning management software to organizeclass materials and grades. Genetic researchers, as another example,are using software to visualize and analyze the human genome. Musicexecutives use business analytics software to help them pick the next hitsong.

Pima County Regional Wastewater Reclamation Department (RWRD) man-ages and maintains the Arizona county’s sanitary sewer system, which serves1 million people and treats 60 million gallons of wastewater each day.47 Thedepartment recently implemented Wonderware’s IntelaTrac mobile workforceand decision support software. The software, which is integrated with theautomated SCADA (supervisory control and data acquisition) system thatruns the sewer system, provides plant personnel with a range of reportingand analytics tools that have helped them to improve efficiency and reducecosts in RWRD’s two wastewater treatment plants and seven regional sub-facilities. RWRD has been able to reduce energy consumption by 10 percentand double its plant capacity, while operating with the same number ofpeople.48

But how are all these systems actually developed and built? The answeris through the use of programming languages, some of which are discussedin the next section.

Programming LanguagesBoth system and application software are written in coding schemes calledprogramming languages. The primary function of a programming languageis to provide instructions to the computer system so that it can perform aprocessing activity. Information systems professionals work with differentprogramming languages, which are sets of keywords, commands, symbols,and rules for constructing statements that people can use to communicateinstructions to a computer. Programming involves translating what a userwants to accomplish into a code that the computer can understand and exe-cute. Program code is the set of instructions that signal the CPU to performcircuit-switching operations. In the simplest coding schemes, a line of codetypically contains a single instruction such as, “Retrieve the data in memoryaddress X.” The instruction is then decoded during the instruction phase ofthe machine cycle.

Like writing a report or a paper in English, writing a computer programin a programming language requires the programmer to follow a set ofrules. Each programming language uses symbols, keywords, and commandsthat have special meanings and usage. Each language also has its own set ofrules, called the syntax of the language. The language syntax dictates howthe symbols, keywords, and commands should be combined into statementscapable of conveying meaningful instructions to the CPU. Rules such as“statements must terminate with a semicolon,” and “variable names mustbegin with a letter,” are examples of a language’s syntax. A variable is aquantity that can take on different values. Program variable names such asSALES, PAYRATE, and TOTAL follow the sample rule shown above becausethey start with a letter, whereas variables such as %INTEREST, $TOTAL, and#POUNDS do not.

programming languages: Sets ofkeywords, commands, symbols, andrules for constructing statements bywhich humans can communicateinstructions to a computer.

syntax: A set of rules associated witha programming language.

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With higher-level programming languages, each statement in the lan-guage translates into several instructions in machine language. A special soft-ware program called a compiler translates the programmer’s source codeinto the machine-language instructions, which consist of binary digits, asshown in Figure 4.22. A compiler creates a two-stage process for programexecution. First, the compiler translates the program into a machine language;second, the CPU executes that program. Another programming approach is touse an interpreter, which is a language translator that carries out the opera-tions called for by the source code. An interpreter does not produce a com-plete machine-language program. After the statement executes, the machine-language statement is discarded, the process continues for the next statement,and so on.

The majority of software used today is created using an integrateddevelopment environment. An integrated development environment (IDE)combines all the tools required for software engineering into one package.For example, the popular IDE Microsoft Visual Studio includes an editorthat supports several visual programming interfaces and languages (visualprogramming uses a graphical or “visual” interface combined with text-based commands), a compiler and an interpreter, programming automationtools, a debugger (a tool for finding errors in the code), and other toolsthat provide convenience to the developer.

Software development kits (SDKs) often serve the purpose of an IDE for aparticular platform. For example, software developers for Google’s Androidsmartphone platform use the Java programming language along with theAndroid Studio with built-in Android Developer Tools to streamline theirAndroid app development. They can also use special code libraries providedby Google for Android functionality, and they test out their applications in anAndroid Emulator.49 See Figure 4.23.

IDEs and SDKs have made software development easier than ever. Manynovice coders, including some who might have never considered developingsoftware, are publishing applications for popular platforms such as Facebookand the iPhone.

Table 4.11 lists some of the most commonly used programming languages.

FIGURE 4.22How a compiler worksA compiler translates a completeprogram into a complete set ofbinary instructions (Stage 1). Afterthis is done, the CPU can executethe converted program in its entirety(Stage 2).

Stage 1: Convert program

Stage 2: Execute program

Program execution




compiler: A special software pro-gram that converts the programmer’ssource code into the machine-languageinstructions, which consist of binarydigits.

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FIGURE 4.23Emulator for AndroidsmartphonesTo develop for the Android, you usean SDK with a mobile device emu-lator so you can prototype, develop,and test Android applications with-out having to transfer them to aphysical device. Co



TABLE 4.11 Commonly used programming languages for new software developmentLanguage Description

COBOL An English language-like programming language designed for business use, COBOL has been in usesince 1959. Billions of lines of COBOL code are still in use in systems around the world, includingcredit card systems, ATMs, retail/POS systems, banking and payroll systems, healthcare systems,government systems, reservation systems, and traffic signal systems. Due to its declining popularityand the retirement of experienced COBOL programmers, COBOL programs are gradually beingmigrated to new platforms, rewritten in modern languages, or replaced with software packages.

C Developed in the early 1970s, C is the base for other popular languages, such as C#, Java, JavaScript,and Python. C is mostly used for implementing operating systems and embedded applications.Because it provides the foundation for many other languages, it is advisable to learn C (and C++)before moving onto other languages.

C ++ Originally designed to enhance the C language, C++ is used to develop systems software, applicationsoftware, high-performance server and client applications, and video games.

Java Java is a programming language developed by Sun Microsystems in the 1990s, and it is still widelyused in the development of enterprise software, Web-based content, and games. Java is also used formobile apps that run on the Android operating system.

JavaScript A scripting language developed by Netscape, JavaScript derives much of its syntax from C. JavaScriptcan be used across multiple Web browsers and is considered essential for developing interactive oranimated Web functions. It is also used in game development and for writing desktop applications.

PHP (HypertextPreprocessor)

A popular programming language for Web developers, PHP is used to create dynamic Web sites and todevelop apps. PHP is used in more than 200 million Web sites, including WordPress, Digg, and Facebook.

Python Python is another scripting language used to develop Web sites and mobile apps. Python is consid-ered a fairly easy language for beginners to learn due to its readability and compact syntax, and it isused in Web apps for Google, Instagram, NASA, Pinterest, and Yahoo!

Ruby Ruby is a scripting language designed to be simple and easy to use for developing Web sites andmobile apps. It powers the Ruby on Rails (or Rails) framework, which is used on Scribd, GitHub,Groupon, and Shopify.

SQL A language for accessing data in relational database management systems, SQL is most commonlyused for its “Query” function, which searches relational databases. SQL was standardized in the1980s by the American National Standards Institute (ANSI) and the International Organization forStandardization (ISO).

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CriticalThinking Exercise

Walmart’s VMI SystemWalmart employs a special kind of enterprise system called an interorganizationalinformation system it calls vendor-managed inventory (VMI) to improve productflow and lower its store inventories. Under this program, suppliers are responsi-ble for managing the inventory of their products in Walmart’s warehouses. Suppli-ers are granted access to a Walmart database that contains item-level sales andinventory data for their products only, which help the vendors develop productdemand projections using a collaborative planning, forecasting, replenishmentprocess. Each link in the supply chain is interconnected using information tech-nology that includes a central database, store-level-point-of-sale systems, and asatellite network for fast and reliable communications.

Review Questions1. Do you think that the VMI software is off-the-shelf or proprietary software? Why?2. Should Walmart allow the suppliers to take a major role in defining and cus-

tomizing the features and capabilities of this system or should they insist on a“one size fits all” approach?

Critical Thinking Questions1. What special issues and considerations are likely to arise in the operation and

support of an interorganizational system?2. Given the business criticality of this system, would it make sense for Walmart

to consider moving this system into a public cloud environment? What wouldbe the advantages and disadvantage of such a move?

Software Issues and Trends

Because software is such an important part of today’s computer systems, issuessuch as software bugs, copyrights and licensing, freeware and open-source soft-ware, upgrades, and global software support are receiving increased attention.These topics are covered in the following sections.

Software BugsA software bug is a defect in a computer program that keeps it from performing asits users expect it to perform. While some bugs are subtle—allowing errors to creepinto your work undetected—other bugs are very obvious, causing programs to ter-minate unexpectedly. For example, not all goes smoothly when users upgrade to anew operating system. Applications that used to run without a problem under theold operating system may begin to experience difficulty. Users of Microsoft’s Officefor MAC 2016 who upgraded to Apple’s El Capitan OS initially experienced applica-tion crashes for Outlook, Excel, PowerPoint, and Word. Although the bugs wereeventually fixed, many users spent weeks dealing with the crashes.50

Most computer and software vendors say that as long as people designand program hardware and software, bugs are inevitable. The following listsummarizes tips for reducing the impact of software bugs:

● Register all software so that you receive bug alerts, fixes, and patches.● Check the manual or read-me files for solutions to known problems.● Access the support area of the manufacturer’s Web site for patches.● Install the latest software updates.● Before reporting a bug, make sure that you can recreate the circum-

stances under which it occurs.● After you can recreate the bug, call the manufacturer’s tech support line.

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● Consider waiting before buying the latest release of software to give the ven-dor a chance to discover and remove bugs. Many schools and businessesdon’t purchase software until the first major revision with patches is released.

Copyrights and LicensesMost companies aggressively guard and protect the source code of their soft-ware from competitors as well as customers. As a result, most software pro-ducts are protected by law using copyright or licensing provisions. Thoseprovisions can vary, however. In some cases, users are given unlimited useof software on one or two computers. This stipulation is typical for applica-tions developed for personal computers. In other cases, users pay based onusage: If you use the software more, you pay more. This approach is becom-ing popular, with software placed on networks or larger computers. Most ofthese protections prevent you from copying software and giving it to others.Some software now requires that you register or activate it before it canbe fully used. This requirement is another way software companies preventillegal distribution of their products.

In a recent survey of 50 companies with more than 10,000 employees,10 percent of the respondents indicated that their firm had been fined,assessed additional fees, or required to purchase backdated maintenance as aresult of license compliance issues uncovered in a software audit. The costsranged from less than $100,000 to more than $1 million.51

When people purchase software, they don’t actually own the software, butrather they are licensed to use the software on a computer. This is called asingle-user license. A single-user license permits you to install the softwareon one or more computers, used by one person. A single-user license does notallow you to copy and share the software with others. Table 4.12 describes dif-ferent types of software licenses.52 Licenses that accommodate multiple usersare usually provided at a discounted price.

Freeware and Open-Source SoftwareSome software developers are not concerned about profiting from theirintellectual property, which has given rise to alternative copyrights andlicensing agreements. Freeware is software that is made available to thepublic for free. Software developers might give away their product forseveral reasons. Some want to build customer interest and name recogni-tion. Others simply don’t need the money and want to make a valuabledonation to society. Still others, such as those associated with the Free Soft-ware Foundation (, believe that all software should be free.Freeware is placed in the public domain where anyone can use the softwarefree of charge. (All creative works that reach the end of their term of copy-right revert to the public domain.) Table 4.13 shows some examples offreeware.

Freeware differs slightly from free software. Freeware simply implies thatthe software is distributed for free. The term “free software” was coined byRichard Stallman and the Free Software Foundation, and it implies that thesoftware is not only freeware, but also open source. Open-source software isdistributed, typically for free, with the source code also available so that itcan be studied, changed, and improved by its users. Over time, open-sourcesoftware evolves in response to the combined contributions of its users. TheCode For America (CFA) organization, for example, used open-source soft-ware to develop a map-based app for the city of Boston that allows indivi-duals, small businesses, and community organizations to volunteer to shovelout specific hydrants that might be completely covered with snow in the win-ter. After creating the app for Boston, CFA made its efforts available for free

single-user license: A softwarelicense that permits you to install thesoftware on one or more computers,used by one person.

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TABLE 4.13 Examples of freewareSoftware Description

Adobe Reader Software for viewing Adobe PDF documents

AVG Anti-Virus Antivirus security software

IrfanView Photo-editing software

Pidgin Instant messaging software

Thunderbird Email, news, and chat software

WinPatrol Anti-malware software

TABLE 4.12 Software licensesLicense Subtype Description


General This type of license allows the program to be installed and used on oneCPU that is not accessed by other users over a network. The software canbe used only on a single computer, and other users cannot access or runthe software while connected to your computer.

Perpetual license A perpetual license allows the customer to install and use the software indef-initely. Technical support is included for a limited term, usually 90 days.

Subscription license A subscription license allows the user to use the software for a specifiedtime period. This license usually includes technical support and access toupgrades and patches released during the term of the subscription. At theend of the term, the user has several options: (1) renew the subscription,(2) purchase a perpetual license at a discounted cost, or (3) remove thesoftware from the computer.

Freeware license This license type is offered as freeware by the author and does not requirepaying any fee for use.

Shareware license This is a license to use software for a limited trial period. If you want to con-tinue to use the software after the trial period, you must pay a shareware fee.

Individual/multi-user licenses

Volume licenses A volume license allows the licensee to install the software on a certainnumber of computers. The licensee has to satisfy a minimum purchaserequirement to receive a reduced price. When purchasing the licenses, thelicensee usually receives one copy of the media and documentation, withthe option of purchasing more.

Site/enterprise This license provides access to software at a single location. Typically,these licenses are individually negotiated with the publisher and varywidely in their provisions.

Network/multi-user licenses

Per server(network)

A per server license type requires that you have a single copy of the soft-ware residing on a file server. With per server licensing, a specified num-ber of client access licenses (CALs) are associated with a particular server.The number of devices that can legally access that server simultaneouslyis limited to the number of CALs purchased for that particular server.

Per seat (machine) A per machine/seat license requires that you purchase a license for eachclient computer and/or device that needs to access the software. Thislicense type is typically used in conjunction with a network license.

Per processor Under the per processor model, you acquire a processor license for eachprocessor in the server on which the software is running. A processorlicense usually includes access for an unlimited number of users to con-nect. You do not need to purchase additional server licenses, CALs, orInternet connector licenses.

Source: “Software License Types,” Tulane University,, accessed November 28, 2015.

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to other cities and municipalities. Table 4.14 provides examples of popularopen-source software applications.

Open-source software is not completely devoid of restrictions. Much ofthe popular free software in use today is protected by the GNU General Pub-lic License (GPL). The GPL grants you the right to do the following:

● Run the program for any purpose● Study how the program works and adapt it to your needs● Redistribute copies so you can help others● Improve the program and release improvements to the public

Software under the GPL is typically protected by a “copyleft” (a play onthe word “copyright”), which requires that any copies of the work retain thesame license. A copyleft work cannot be owned by any one person, and noone is allowed to profit from its distribution. The Free Software Directory( lists over 5,000 software titles of application software,systems software, and programming tools (e.g., compilers).

Why would an organization run its business using software that’s free? Cansomething that’s given away over the Internet be stable, reliable, or sufficientlysupported to place at the core of a company’s day-to-day operations? Theanswer is surprising—many believe that open-source software is often morereliable and secure than commercial software. How can this be? First, becausea program’s source code is readily available, users can fix any problems theydiscover. A fix is often available within hours of a problem’s discovery. Second,because the source code for a program is accessible to thousands of people, thechances of a bug being discovered and fixed before it does any damage aremuch greater than with traditional software packages.

However, using open-source software does have some disadvantages.Although open-source systems can be obtained for next to nothing, the up-frontcosts are only a small piece of the total cost of ownership that accrues overthe years that the system is in place. Some claim that open-source systemscontain many hidden costs, particularly in terms for user support and debug-ging. Licensed software comes with guarantees and support services, whereasopen-source software does not. Still, many businesses appreciate the addi-tional freedom that open-source software provides. The question of softwaresupport is typically the biggest stumbling block to the acceptance of open-source software at the corporate level. Getting support for traditional softwarepackages is easy—you call a company’s toll-free support number or access itsWeb site. But how do you get help if an open-source package doesn’t workas expected? Because the open-source community lives on the Internet, youlook there for help. Through the use of Internet discussion areas, you cancommunicate with others who use the same software, and you might even

TABLE 4.14 Examples of open-source softwareSoftware Category

Drupal Web publishing

Gimp Photo editing

Grisbi Personal accounting

Linux Operating system

Mozilla Firefox Internet browser

MySQL Database software

Apache OpenOffice Application software

ProjectLibre OpenProject

Project management

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reach someone who helped develop it. Ideally, users of popular open-sourcepackages can get correct answers to their technical questions within a fewhours of asking for help on the appropriate Internet forum. Another approachis to contact one of the many companies emerging to support and servicesuch software—for example, Red Hat for Linux and Sendmail, Inc., for Send-mail. These companies offer high-quality, for-pay technical assistance.

Burton Snowboards was founded in 1977 by Jake Burton, who sold hisfirst snowboards out of his Vermont barn. Since then, The Burton Corporationhas become one of the world’s leading manufacturers of snowboarding equip-ment and apparel.53 As part of an upgrade of the company’s existing SAP andOracle applications, Burton decided to migrate its operating platform to SUSELinux Enterprise Server, an open-source solution. SUSE, which is certified byboth SAP and Oracle, offered the company a highly dependable and flexibleplatform for its business-critical systems. With SUSE, Burton is able to quicklymake its own updates to adapt to changing business needs, but it also hasaccess to ongoing support, including technical information and expert adviceavailable through the SUSE Web site—all with the lower software cost that anopen-source solution offers.54

Software UpgradesSoftware companies revise their programs periodically. Software upgrades, whichare an important source of increased revenue for software manufacturers, varywidely in the benefits that they provide, and what some people call a benefit,others might call a drawback. Deciding whether to upgrade to a new version ofsoftware can be a challenge for corporations and people with a large investmentin software. Some users choose not to immediately download the most currentsoftware version or upgrade unless it includes significant improvements or capa-bilities. Developing an upgrading strategy is important for many businesses.American Express, for example, has standardized its software upgrade processaround the world to make installing updated software faster and more efficient.The standardized process also helps the company make sure that updated soft-ware is more stable, with fewer errors and problems.

Global Software SupportLarge global companies have little trouble persuading vendors to sell them soft-ware licenses for even the most far-flung outposts of their company. But canthose same vendors provide adequate support for their software customers in alllocations? Supporting local operations is one of the biggest challenges IS teamsface when putting together standardized companywide systems. Slower technol-ogy growth markets, such as Eastern Europe and Latin America, might not haveany official vendor presence. Instead, large vendors such as Sybase, IBM, andHewlett-Packard typically contract with local providers to support their softwarein such regions.

One approach that has been gaining acceptance in North America is tooutsource global support to one or more third-party distributors. The usercompany still negotiates its license with the software vendor directly, but itthen hands the global support contract to a third-party supplier. The supplieracts as a middleman between the software vendor and user, often providingdistribution, support, and invoicing.

In today’s computer systems, software is an increasingly critical compo-nent. Whatever approach people and organizations take to acquire software,everyone must be aware of the current trends in the industry. Informed usersare wise consumers.

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CriticalThinking Exercise

Organization Weighs Use of Open Source SoftwareYou began operating a small general electric contracting company two years ago.Originally, it was just you and your cousin, but it has grown to five licensed elec-tricians, plus one office manager who takes calls from customers, schedules thework, and orders parts and supplies. Your company handles a wide range ofwork, including installing new circuit breaker panels, rewiring existing electricalsystems for renovations and additions, and installing residential light fixtures,security lighting systems, swimming pool lighting, and ceiling fans. Business hasreally taken off, and your current manual systems and procedures can no longerkeep pace. The office manager has been exploring several options and has identi-fied three different software packages designed for small contractors. Each one ofthe packages includes software designed for managing parts and supplies inven-tory, scheduling jobs, and invoicing customers. Two of the software packages arefrom large, well-known companies, and each has an initial licensing cost ofroughly $550 plus $100 per year for software support. The other software pack-age is open-source software, with no initial cost and no support cost. The officemanager is unsure how to proceed.

Review Questions1. What is the primary difference between purchasing licensed software from a

software manufacturer and using open-source software?2. What are the pros and cons of using open-source software?

Critical Thinking Questions1. What risks and start-up issues are associated with the use of any new software

that is designed to replace manual procedures?2. What actions can be taken to reduce these risks?


Principle:Software is valuable in helping individuals, workgroups, and entireenterprises achieve their goals.

Software consists of programs that control the workings of the computerhardware. Software can be divided into two types: systems software, whichconsists of operating systems, utilities, and middleware, and application soft-ware, which consists of programs that help users solve particular computingproblems.

One useful way of classifying the many potential uses of information sys-tems is to identify the scope of problems and opportunities addressed by a par-ticular organization or its sphere of influence. For most companies, the spheresof influence are personal, workgroup, and enterprise.

Principle:The operating system is called the “soul of the computer” because it con-trols how you enter data into your computer, perform meaningful work,and display results.

An operating system is a set of programs that controls a computer’s hard-ware and acts as an interface with application software.

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There are various combinations of operating systems and computers, andusers, including single computer with a single user, single computer with mul-tiple simultaneous users, multiple computers with multiple users, and special-purpose computers.

The kernel is the heart of the operating system and controls its most criticalprocesses.

The operating system performs a myriad of functions including controllingcommon hardware functions, providing a user interface and input/output man-agement, providing a degree of hardware independence, managing systemmemory, managing processing tasks, providing networking capability, control-ling access to system resources, and managing files.

Operating systems use multitasking, multiprocessing, and multithreading toincrease the amount of processing that can be accomplished in a given amountof time. With multitasking, users can run more than one application at a time.Multiprocessing supports running a program on more than one CPU. Multi-threading allows different threads of a single program to run concurrently.

The ability of a computer to handle an increasing number of concurrentusers smoothly is called scalability, a feature critical for systems expected tohandle a large number of users.

Software applications access and use the OS and other software applica-tions by requesting services through a defined application programming inter-face (API). Programmers can use APIs to create application software withouthaving to understand the inner workings of the operating system. APIs alsoprovide a degree of hardware independence so that the underlying hardwarecan change without necessarily requiring a rewrite of the software applications.

Over the years, many OSs have been developed for the individual sphereof influence including Microsoft Windows, the Mac OS X, Linux, and GoogleAndroid and Chrome.

Microsoft Windows Server, UNIX, Red Hat Linux, Mac OS X Server, andHP-UX are operating systems used for workgroups.

IBM z/os, HP-UX, and Linux are operating systems used in the enterprisesphere of influence.

Smartphones now employ full-fledged personal computer operating systemssuch as the Google Android, Apple iOS, and Microsoft Windows Phone.

An embedded system is a computer system (including some sort of proces-sor) that is implanted in and dedicated to the control of another device.

Mac iOS, Windows Embedded, Symbian, Android, and variations of Linuxhave been developed to support mobile communications and consumerappliances.

Utility programs can perform many useful tasks, typically related to sys-tem resource maintenance and management, and often come installed oncomputers along with the OS. This type of software is used to merge andsort sets of data, keep track of computer jobs being run, compress files ofdata, protect against harmful computer viruses, monitor hardware and net-work performance, and perform dozens of other important tasks.

Virtualization software simulates a computer’s hardware architecture insoftware so that computer systems can run operating systems and softwaredesigned for other architectures, or run several operating systems simulta-neously on one system.

Middleware is software that allows different systems to communicate andtransfer data back and forth.

Principle:Organizations typically use off-the-shelf application software to meet com-mon business needs and proprietary application software to meet uniquebusiness needs and provide a competitive advantage.

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Proprietary software is one-of-a-kind software designed for a specific appli-cation and owned by the company, organization, or person that uses it.

Off-the-shelf-software is produced by software vendors to address needsthat are common across businesses, organizations, or individuals.

The software as a service (SaaS) model and recent Web-developmenttechnologies have led to a new paradigm in computing called cloud comput-ing. “Cloud computing” refers to the use of computing resources, includingsoftware and data storage, on the Internet (the cloud), rather than on localcomputers. Instead of installing, storing, and running software on your owncomputer, with cloud computing, you access software stored on and deliveredfrom a Web server.

Personal application software includes general-purpose programs thatenable users to improve their personal effectiveness, increasing the qualityand amount of work that can be done. Word-processing, spreadsheet analysis,database, presentation graphics, and personal information management appli-cations are examples of this type of software. Sometimes these applications arebundled together and sold in what is called a software suite.

Apple’s App Store has over 1.5 million apps available for iOS device users,and Android users can choose from over 1.6 million mobile apps on Google’sPlay Store.

Software that helps groups work together is often called workgroup appli-cation software. The category of software includes group-scheduling software,electronic mail, and other software that enables people to share ideas.

Software that benefits an entire organization—enterprise applicationsoftware—can be developed specifically for the business or purchased off theshelf. There are many categories of enterprise software that support commonbusiness activities, such as accounts receivable, accounts payable, inventorycontrol, and other management activities.

All software applications are written in coding schemes called program-ming languages, which are sets of keywords, commands, symbols, and rulesfor constructing statements to provide instructions to a computer to performsome processing activity.

Today, many software applications are being written or maintained usingthe following programming languages: COBOL, C, C++, Java, Java Script, PHP,Python, Ruby, and SQL.

Integrated development environments (IDEs) and software developmentkits (SDKs) have simplified and streamlined the coding process and havemade it easier for more people to develop software.

Principle:The software industry continues to undergo constant change; computerusers need to be aware of recent trends and issues in the software indus-try to be effective in their business and personal life.

Software bugs, software copyrights and licensing, freeware and open-sourcesoftware, software upgrades, and global software support are all important soft-ware issues and trends.

A software bug is a defect in a computer program that keeps it from per-forming in the manner intended. Software bugs are common, even in keypieces of business software.

Most companies aggressively guard and protect the source code of theirsoftware from competitors as well as customers. As a result, most softwareproducts are protected by law using copyright or licensing provisions

Freeware is software that is made available to the public for free. Open-source software is freeware that also has its source code available so thatothers may modify it. Open-source software development and maintenanceis a collaborative process, with developers around the world using the

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Internet to download the software, communicate about it, and submit newversions of it.

Software upgrades are an important source of increased revenue for soft-ware manufacturers and can provide useful new functionality and improvedquality for software users.

Global software support is an important consideration for large globalcompanies putting together standardized companywide systems. A commonsolution is to outsource global support to one or more third-party softwaredistributors.

Key Terms

application programming interface (API)

application software

command-based user interface


embedded system

enterprise application integration (EAI)

enterprise sphere of influence

graphical user interface (GUI)

hardware independence



off-the-shelf software

operating system (OS)

personal productivity software

personal sphere of influence

programming language

proprietary software

rich Internet application (RIA)

service-oriented architecture (SOA)

single-user license

software as a service (SaaS)

software suite

sphere of influence


system software

user interface

utility program


workgroup application software

workgroup sphere of influence

Chapter 4: Self-Assessment Test

Software is valuable in helping individuals, work-groups, and entire enterprises achieve their goals.

1. The two main categories of softwareare .a. enterprise and workgroupb. operating system and applicationc. application and systemd. utilities and operating system

2. Application software that enables users todevelop a spreadsheet for tracking theirexercise and eating habits is software for theworkgroup sphere of influence. True or False?

The operating system is called the “soul of the com-puter” because it controls how you enter data intoyour computer, perform meaningful work, and dis-play results.

3. The heart of the operating system thatcontrols its most critical processes is calledthe .

4. Software applications use the OS by requestingservices through a(n) .a. integrated development environmentb. application program interfacec. utility programd. software development kit

5. is an operating system that can runin all three spheres of influence.a. IBM z/osb. Windows 10c. MAC iOSd. Linux

6. A(n) server simulates a compu-ter’s hardware architecture in software so thata single server can run operating systems andsoftware designed for other architectures, orrun several operating systems simultaneouslyon one system.

Organizations typically use off-the-shelf applica-tion software to meet common business needs

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and proprietary application software to meetunique business needs and provide a competitiveadvantage.

7. software is one-of-a-kind soft-ware designed for a specific application andowned by the company, organization, or per-son that uses it.

8. computing refers to the use ofcomputing resources, including software anddata storage, on the Internet, rather than on localcomputers.

9. Software that enables users to improve their per-sonal effectiveness, increasing the amount ofwork they can do and its quality, iscalled .a. workgroup softwareb. enterprise softwarec. utility softwared. personal application software

10. Each programming language has its own set ofrules, called the of the language.

The software industry continues to undergo con-stant change; computer users need to be awareof recent trends and issues in the software indus-try to be effective in their business and personallife.

11. is software that makes its sourcecode available so that others may modify it.a. Freewareb. Off-the-shelf softwarec. Open-source softwared. Software in the public domain

12. Software are an importantsource of increased revenue for software man-ufacturers and can provide useful new func-tionality and improved quality for softwareusers.a. bugsb. upgradesc. open source licensesd. third-party distributors

Chapter 4: Self-Assessment Test Answers

1. c2. False3. kernel4. b5. d6. virtual

7. Proprietary8. Cloud9. d10. syntax11. c12. b

Review Questions

1. Identify and briefly discuss the three spheresof influence used to identify the scope ofproblems and opportunities that softwareaddresses.

2. What is the role of the computer operatingsystem? Identify several activities performed bythis key piece of software.

3. What is an application programming interface(API)? What purpose does it serve?

4. What is the kernel of the operatingsystem?

5. Identify and briefly discuss five types of operat-ing system user interfaces.

6. Identify and briefly describe the five basicapproaches to task management employed inoperating systems.

7. What role does a Linux distributor play?

8. The Mac OS X supports dual booting. What isthis, and what benefits does it provide?

9. What is an embedded system? Give three exam-ples of such a system.

10. Distinguish between proprietary software andoff-the-shelf software.

11. What is middleware?12. What is software as a service (SaaS)?13. What is cloud computing? What are some pros

and cons of cloud computing?14. What is open-source software? What are the

benefits and drawbacks for a business thatuses open-source software?

15. Briefly discuss the advantages and disadvantagesof frequent software upgrades.

16. What is the difference between freeware andopen-source software?

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Discussion Questions

1. How does Microsoft envision the future forWindows 10? Do you support this vision? Why orwhy not?

2. Assume that you must take a computer-programming language course next semester.How would you decide which language would bebest for you to study? Do you think that a pro-fessional programmer needs to know more thanone programming language? Why or why not?

3. Assume you are going to buy a personal computer.What operating system features are important to you?What operating system would you select and why?

4. You have been asked to develop a user interface fora person with limited sight—someone without theability to recognize letters or shapes on a computerscreen. Describe the user interface you wouldrecommend.

5. You are using a new release of an applicationsoftware package. You think that you have dis-covered a bug. Outline the approach that you

would take to confirm that it is indeed a bug. Whatactions would you take if it truly were a bug?

6. What are some of the advantages and disadvan-tages of employing software as a service (SaaS)?What precautions might you take to minimize therisk of using one?

7. If you were the IS manager for a largemanufacturing company, what concerns mightyou have about your organization using open-source software? What advantages might there befor use of such software?

8. Identify four types of frequently used softwarelicenses. Which approach does the best job ofensuring a steady, predictable stream of revenuefrom customers? Which approach is best for asmall company with only a few dozenemployees?

9. How have software development kits (SDKs)influenced software development?

10. How can virtualization save an organization money?

Problem-Solving Exercises

1. Do research to compare the costs and features aswell as the pros and cons of using MicrosoftOffice versus Office 365. Summarize your resultsusing a spreadsheet. Which choice is the bestsolution for you? Why? Using presentation soft-ware, outline your thought process and keypoints in three or four slides.

2. Use graphics software to develop a chart showingthe worldwide market share of smartphoneoperating systems for Apple iPhone OS and

Google Android over the past five quarters. Nowdo the same for just the U.S. market share. Whatconclusions do you draw from these charts?

3. Do research to identify the embedded operatingsystems used in BMW, Chevrolet, Chrysler, Ford,Honda, Mercedes Benz, Nissan, and Toyotaautomobiles. Create a spreadsheet that displaysthe embedded system and make of automobilealong with the auto manufacturer’s name forsystem.

Team Activities

1. You and your team must make a recommenda-tion to the director of information systems onwhich is the best cloud computing service foryour school—from the perspective of the student.Do research on any three of the following, andthen decide which service to recommend: Ama-zon Elastic Compute Cloud (EC2), IBM’s BlueCloud, Sun Cloud, Google AppEngine, and Win-dows Azure Services Platform. What factorsinfluenced your recommendation?

2. You and your team members should learn how touse a computer operating system with which you

are unfamiliar. Explore how to launch applica-tions, minimize and maximize windows, closeapplications, save and view files on the system,and change system settings, such as how quicklya screen is turned off when not in use. Assessease of learning and ease of use for the operatingsystem. Team members should collaborate on areport, using the track changes features of Wordor the collaborative features of Google Docs tosummarize the team’s findings and opinionsabout three personal computer operatingsystems.

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3. “Spreadsheets, even after careful development,contain errors in 1 percent or more of all formulacells,” according to Ray Panko, a professor of ITmanagement at the University of Hawaii and anauthority on bad spreadsheet practices. Thismeans that in large spreadsheets there could be

dozens of undetected errors.55 Imagine that youand your team have been hired as consultants toa large organization. Outline several measuresthat the organization should take to ensure theaccuracy of key spreadsheets that are used tomake key business decisions.

Web Exercises

1. The Google Android operating system hasover an 80 percent share of the worldwidesmartphone operating system market. Doresearch to find out if industry observers areconcerned that that such a strong positionby one company may stifle competitionand innovation. Write a few paragraphssummarizing your findings.

2. Do research on the Web to learn whichprogramming language skills are currently

most in demand in the job market. Writea brief report discussing the sources ofinformation you used and summarizing yourfindings.

3. Use the Internet to search for information onreal-time operating systems. Identify the keydifferences between real-time and non-real-time operating systems. Identify three situa-tions in which real-time operating systems areneeded.

Career Exercises

1. Think of your ideal job. Would it help you tolearn a programming language to be effective inthis position? Why or why not?

2. Identify three specific smartphone applicationsthat would be of significant help to you in yourcurrent or next job. (You can include applications

that already exist as well as ones that you wishexisted.) Describe specific features of each appli-cation and how you would use them.

3. Think of your ideal job. Identify two existingsoftware applications for each sphere of influencethat you would likely use in this career.

Case Studies

Case One

Société de transport de Montréal (STM) ImplementsInnovative Mobile AppMontreal, in the Canadian province of Quebec, isconsidered one of the world’s most livable cities. Thecity, whose official language is French, is the culturecapital of Canada with opera, museums of history and fineart, a symphony orchestra, cathedrals, many finerestaurants, and international jazz and comedy festivals.The Société de transport de Montréal (STM) is the bus andmetro public transit system serving roughly 1.4 milliondaily passengers in the greater Montreal area. STM riders canuse a rechargeable smart fare card—called Opus—on whichriders can add and maintain a balance to cover their transitfares.

STM tracks use of the Opus card to capture passengerriding history. This data has revealed an alarmingproblem—STM is losing about 13 percent of its ridersthrough attrition each year. Analysis shows that this attritioncan be attributed to a variety of causes, including deaths andmoves out of the city. STM also determined that some

amount of attrition is due to university students who, upongraduation, quit riding the STM and purchase or lease anauto to commute to their job.

After a year of looking at options, STM decided tolaunch a six-month pilot loyalty project to combat thisproblem. The scope of the project, which is limited to about20,000 current riders, will test if the proposed solutionworks, identify full implementation costs, and identify anypotential barriers to success as well as unintendedconsequences of the program. Results from the pilot willbe used to modify the initial solution and/or rollout plan.The pilot project must meet certain predefined successcriteria in order to support a recommendation for a fullrollout.

The foundation of the loyalty program is a mobile appcalled STM Merci, which presents riders with exclusive,personalized offers based on their user profiles, travel habits,and level of ridership: top-tier, mid-tier, and first-tier. For aparticular offer, for example, tickets to the Opera deMontreal, 100 top-tier riders might receive an offer for freetickets, while 100 mid-tier riders are offered 50 percent offtickets and 100 first-tier riders are offered 20 percent off

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tickets. STM hopes to recruit a large number of event andcommercial partners willing to participate in the program inreturn for the strong geomarketing opportunities createdfrom having riders view an offer on their mobile phones,often when they are literally feet from the promotedcommercial location.

The STM Merci app can also communicate usefulinformation to riders in real time. For example, it can letriders know that by taking a slightly later car from their usualstation on a given day, they would have a much better chanceof getting a seat. Or it could point out when they werespending more on single fares than the cost of a monthlypass (about $77 per month).

The app is carefully designed to allow riders to selecthow they want to interact with the STM Merci system.Riders who enter their Opus card number into the STMMerci app will receive more targeted and relevant offersbased on the data in their profile. For example, riderswhose profile indicates an interest in painting mightreceive an offer for a discount admission to MontrealMuseum of Fine Art. Sushi lovers might get an offer for afree appetizer at a restaurant within a stop or two of theircurrent location.

The data needed to support the STM Merci app issplit into two separate databases to protect riders’ rightto privacy. Data deemed critical to running the STMoperation—such as a rider’s email address and ticketpurchase history—are stored in one database under therider’s first name. This data is used to notify ridersabout delays, closures, and other mission-criticalissues. Noncritical rider profile data, including foodpreferences, hobbies, and interests, is stored in asecond database under the rider’s last name. No marketercan access the two databases and merge them to sendmessages to an individual rider. This separation ofdatabases satisfies Quebec’s strict privacy laws, whichprohibit collecting rider data beyond what is deemedcritical for the organization.

Critical Thinking Questions1. Identify four success criteria for the STM Merci pilot

project that address retention of riders, cost/benefits,recruitment of STM Merci partners, and usability of theapplication. The criteria should specific, quantifiable,and time constrained to occur within a certain timeperiod.

2. Do you believe that the database design will safeguardthe privacy of STM riders? Why or why not? If not,what further changes are needed?

3. How might STM Merci pilot project members identifyadditional capabilities or features that could be addedto the STM Merci app to encourage increasedridership?

SOURCES: Murphy, Ken, “Société de transport de Montréal (STM) Aimsto Boost Ridership by 40% With a Mobile App,” SAP Insider, January 1,2014,; “About the STM,” Société de transport de Montréal,, accessedNovember 14, 2015.

Case Two

FIMC Launches Mobile App to Provide EnhancedRoadside Assistance ServicesIn any given year, more than 40 million people in the UnitedStates require some form of roadside assistance—whetherit’s to get a battery restarted, a flat tire changed, or a cartowed to a local repair shop. No one wants to be stuck onthe side of the road, so many consumers choose to purchasea roadside assistance plan that gives them access to help inthe event of an emergency. Consumers have choice when itcomes to purchasing a plan, with options available fromautomotive aftermarket retailers and service providers,employee groups, insurance and financial institutions, andtrade associations.

Since 1974, Financial Insurance ManagementCorporation (FIMC), headquartered in Sarasota, Florida,has been developing, marketing, and implementingoutsourced, membership-based roadside assistanceprograms for customers such as AAMCO Transmissions,Citibank, Precision Tune Auto Care, and Wells Fargo.Through its customized programs, which also offerhealth, home, and travel services and discounts, thecompany provides roadside assistance benefits to morethan 2 million members in the United States, Puerto Rico,and Canada.

When an emergency happens—even if it’s just a set ofkeys locked in a car—customers need and expect promptservice. And while FIMC prided itself on the high-qualitycustomer service it provided via its call center and Website, offering customers access to services via a mobileapp was a logical next step. A primary goal for thecompany was developing an app that would deliverincreased value to members by making it easier for themto access their benefits and take advantage of currentpromotions.

After researching alternatives, FIMC opted to go with amobile solution developed by PointSource, a local softwaredevelopment firm, using IBM’s MobileFirst platform. Toensure that the app was firmly grounded in the company’sbusiness objectives, FIMC and PointSource staff spent timetranslating the business requirements into a mobile strategythat fit within FIMC’s time and budget constraints. Once thegroundwork was completed, PointSource was able to build aprototype of the FIMC mobile app in less than four weeks—deploying the final application just three months after theproject started.

An important project requirement for FIMC was that theapp be integrated with the company’s back-end systems,which hold membership data and benefits information.FIMC also needed an app that would be accessible by all ofits members—no matter what type of mobile device theyused. Rather than create multiple apps, PointSourcedeveloped a single, hybrid application that can run on bothAndroid and Apple iOS devices. The app’s intuitive interfaceprovides members with one-touch roadside assistance,personalized discounts and promotions, claim submissiontools, and deductible-management features. The mobileapp’s tools have improved the quality of the company’scommunications with its members. And, because members

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who have easy access to their benefits are more likely torenew their memberships, the app has helped FIMCincrease its renewal rates. Using the app, customers canquickly renew their membership from any location,ensuring continuous service.

Working with PointSource, FIMC plans on launching anew version of its mobile app every month. ThePointSource development team uses cloud-baseddevelopment services that allow it to create work items toshare with FIMC on an ongoing basis. This allows FIMC toremain involved with the development process and helpsPointSource stay in touch with FIMC’s priorities andchanging business needs.

Critical Thinking Questions1. How important do you think it is for FIMC and

other companies offering roadside assistanceservices to provide customers with access to servicesvia a mobile app? Do you think a mobile app willprovide FIMC with a competitive advantage, or ismobile access something that most customers havecome to expect?

2. A recent survey by IBM of 585 mobile applicationdevelopers and managers found that only one-third ofmobile development projects successfully met project

criteria in terms of budget, schedule, and projectobjectives. Given that, what are some of thepotential risks for companies, such as FIMC, thatdevelop and deploy a mobile app on such a tightschedule?

3. When developing the FIMC app, PointSource usedan IBM tool called Rational Test Workbench,which allowed developers to find and fix many soft-ware bugs before the app was released. Do researchon the Web to find out more about this tool and how itmight help developers cut down on the number ofsoftware bugs.

SOURCES: “What We Do,” FIMC,,accessed January 12, 2016; “The American Traveler Motor Club &Home Benefits, Inc.,” FIMC,, accessed January 12,2016; “IBM MobileFirst PointSource FIMC,” IBM,, accessed January 12, 2016; IBM MobileFirst,” IBM,, accessed January 13, 2016; “About Us,”PointSource,, accessed January 13,2016; “Rational Test Workbench,” IBM,, accessed January 12, 2016; “Star Qualities: What isTakes for Mobile Development Projects to Succeed”, IBM,, accessed January 13,2016.


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6. Olenick, Doug, “Google Drops Chrome Support forOlder Microsoft and Apple Operating System,” SC Mag-azine, November 12, 2015,

7. Whittaker, Zack, “A 23-Year-Old Windows 3.1 SystemFailure Crashed Paris Airport,” ZD Net, November 16,2015,

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9. Rash, Wayne, “Microsoft Says Windows 10 Will Be theLast OS Upgrade You’ll Ever Need,” eWeek, January 21,2015,

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11. “Linux Definition,” The Linux Information Project,, accessed November 20, 2015.

12. “About Red Hat,” Red Hat,,accessed January 2, 2016.

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14. “Cerner Boosts Performance and Stability,” Red Hat,, accessedJanuary 2, 2016.

15. Taves, Max and Richard Nieva, “Google I/O by theNumbers: 1B Android Users, 900M on Gmail,” CNET,May 28, 2015,

16. Furrier, John and Dave Vellante, “Analysis: Is Sun BetterOff after Acquiring Sun?,” Forbes, July 9, 2013,

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17. “How Office Depot Optimizes ERP by 20% With SPARCand Solaris,” Oracle,, accessedNovember 23, 2015.

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49. “Android Studio,” Android,, accessed November 28,2015.

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5Database Systemsand Big Data

Rafal Olechowski/

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Know?Did You

• The amount of data in the digital universe is expectedto increase to 44 zettabytes (44 trillion gigabytes) by2020. This is 60 times the amount of all the grains ofsand on all the beaches on Earth. The majority ofdata generated between now and 2020 will not beproduced by humans, but rather by machines as theytalk to each other over data networks.

• Most major U.S. wireless service providers haveimplemented a stolen-phone database to report andtrack stolen phones. So if your smartphone or tablet

goes missing, report it to your carrier. If someone elsetries to use it, he or she will be denied service on thecarrier’s network.

• You know those banner and tile ads that pop up onyour browser screen (usually for products andservices you’ve recently viewed)? Criteo, one ofmany digital advertising organizations, automates therecommendation of ads up to 30 billion times each day,with each recommendation requiring a calculationinvolving some 100 variables.

Principles Learning Objectives

• The database approach to data management hasbecome broadly accepted.

• Data modeling is a key aspect of organizing data andinformation.

• A well-designed and well-managed database is anextremely valuable tool in supporting decision making.

• We have entered an era where organizations aregrappling with a tremendous growth in the amount ofdata available and struggling to understand how tomanage and make use of it.

• A number of available tools and technologies alloworganizations to take advantage of the opportunitiesoffered by big data.

• Identify and briefly describe the members of the hier-archy of data.

• Identify the advantages of the database approach todata management.

• Identify the key factors that must be considered whendesigning a database.

• Identify the various types of data models and explainhow they are useful in planning a database.

• Describe the relational database model and its funda-mental characteristics.

• Define the role of the database schema, data definitionlanguage, and data manipulation language.

• Discuss the role of a database administrator and dataadministrator.

• Identify the common functions performed by all data-base management systems.

• Define the term big data and identify its basiccharacteristics.

• Explain why big data represents both a challenge andan opportunity.

• Define the term data management and state its overallgoal.

• Define the terms data warehouse, data mart, and datalakes and explain how they are different.

• Outline the extract, transform, load process.

• Explain how a NoSQL database is different from anSQL database.

• Discuss the whole Hadoop computing environment andits various components.

• Define the term in-memory database and explain itsadvantages in processing big data.

Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

Why Learn about Database Systems and Big Data?Organizations and individuals capture prodigious amounts of data from a myriad of sources every day.Where does all this data come from, where does it go, how is it safeguarded, and how can you use it toyour advantage? In this chapter, you will learn about tools and processes that enable users to manageall this data so that it can be used to uncover new insights and make effective decisions. For example,if you become a marketing manager, you can access a vast store of data related to the Web-surfinghabits, past purchases, and even social media activity of existing and potential customers. You can usethis information to create highly effective marketing programs that generate consumer interest andincreased sales. If you become a biologist, you may use big data to study the regulation of genes andthe evolution of genomes in an attempt to understand how the genetic makeup of different cancersinfluences outcomes for cancer patients. If you become a human resources manager, you will be ableto use data to analyze the impact of raises and changes in employee-benefit packages on employeeretention and long-term costs. Regardless of your field of study in school and your future career, usingdatabase systems and big data will likely be a critical part of your job. As you read this chapter, you willsee how you can use databases and big data to extract and analyze valuable information to help yousucceed. This chapter starts by introducing basic concepts related to databases and data managementsystems. Later, the topic of big data will be discussed along with several tools and technologies usedto store and analyze big data.

As you read this chapter, consider the following:

• Why is it important that the development and adoption of data management, data modeling, andbusiness information systems be a cross-functional effort involving more than the IS organization?

• How can organizations manage their data so that it is a secure and effective resource?

A database is a well-designed, organized, and carefully managed collection ofdata. Like other components of an information system, a database should helpan organization achieve its goals. A database can contribute to organizationalsuccess by providing managers and decision makers with timely, accurate,and relevant information built on data. Databases also help companies ana-lyze information to reduce costs, increase profits, add new customers, trackpast business activities, and open new market opportunities.

A database management system (DBMS) consists of a group of pro-grams used to access and manage a database as well as provide an interfacebetween the database and its users and other application programs. A DBMSprovides a single point of management and control over data resources,which can be critical to maintaining the integrity and security of the data. Adatabase, a DBMS, and the application programs that use the data make up adatabase environment.

Databases and database management systems are becoming evenmore important to organizations as they deal with rapidly increasingamounts of information. Most organizations have many databases; how-ever, without good data management, it is nearly impossible for anyoneto find the right and related information for accurate and business-criticaldecision making.

Data Fundamentals

Without data and the ability to process it, an organization cannot successfullycomplete its business activities. It cannot pay employees, send out bills, ordernew inventory, or produce information to assist managers in decision making.Recall that data consists of raw facts, such as employee numbers and sales fig-ures. For data to be transformed into useful information, it must first be orga-nized in a meaningful way.

database: A well-designed,organized, and carefully managedcollection of data.

database managementsystem (DBMS): A group ofprograms used to access and managea database as well as provide aninterface between the database and itsusers and other application programs.

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Hierarchy of DataData is generally organized in a hierarchy that begins with the smallest piece ofdata used by computers (a bit), progressing up through the hierarchy to a data-base. A bit is a binary digit (i.e., 0 or 1) that represents a circuit that is eitheron or off. Bits can be organized into units called bytes. A byte is typically eightbits. Each byte represents a character, which is the basic building block ofmost information. A character can be an uppercase letter (A, B, C, …, Z), a low-ercase letter (a, b, c, …, z), a numeric digit (0, 1, 2, …, 9), or a special symbol(., !, þ, �, /, etc.).

Characters are put together to form a field. A field is typically a name, anumber, or a combination of characters that describes an aspect of a businessobject (such as an employee, a location, or a plant) or activity (such as a sale).In addition to being entered into a database, fields can be computed fromother fields. Computed fields include the total, average, maximum, and mini-mum value. A collection of data fields all related to one object, activity, orindividual is called a record. By combining descriptions of the characteristicsof an object, activity, or individual, a record can provide a complete descrip-tion of it. For instance, an employee record is a collection of fields about oneemployee. One field includes the employee’s name, another field contains theaddress, and still others the phone number, pay rate, earnings made to date,and so forth. A collection of related records is a file—for example, anemployee file is a collection of all company employee records. Likewise, aninventory file is a collection of all inventory records for a particular companyor organization.

At the highest level of the data hierarchy is a database, a collection of inte-grated and related files. Together, bits, characters, fields, records, files, anddatabases form the hierarchy of data. See Figure 5.1. Characters are combinedto make a field, fields are combined to make a record, records are combined tomake a file, and files are combined to make a database. A database houses notonly all these levels of data but also the relationships among them.

Data Entities, Attributes, and KeysEntities, attributes, and keys are important database concepts. An entity is aperson, place, or thing (object) for which data is collected, stored, and main-tained. Examples of entities include employees, products, and customers.Most organizations organize and store data as entities.

FIGURE 5.1Hierarchy of dataTogether, bits, characters, fields,records, files, and databases formthe hierarchy of data.


Hierarchy of data Example




Each character isrepresented as

8 bits

Personnel file

Department file

Payroll file

(Project database)

(Personnel file)

(Record containingemployee #, last andfirst name, hire date)

(Last name field)

098 – 40 – 1370 Fiske, Steven 01-05-2001


(Letter F in ASCII)1000110

098 – 40 – 1370 Fiske, Steven 01-05-2001549 – 77 – 1001 Buckley, Bill 02-17-1995005 – 10 – 6321 Johns, Francine 10-07-2013

bit: A binary digit (i.e., 0 or 1) thatrepresents a circuit that is either onor off.

character: A basic building block ofmost information, consisting of upper-case letters, lowercase letters, numericdigits, or special symbols.

field: Typically a name, a number,or a combination of characters thatdescribes an aspect of a businessobject or activity.

record: A collection of data fieldsall related to one object, activity, orindividual.

file: A collection of related records.

hierarchy of data: Bits, characters,fields, records, files, and databases.

entity: A person, place, or thing forwhich data is collected, stored, andmaintained.

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An attribute is a characteristic of an entity. For example, employee num-ber, last name, first name, hire date, and department number are attributesfor an employee. See Figure 5.2. The inventory number, description, numberof units on hand, and location of the inventory item in the warehouse areattributes for items in inventory. Customer number, name, address, phonenumber, credit rating, and contact person are attributes for customers. Attri-butes are usually selected to reflect the relevant characteristics of entitiessuch as employees or customers. The specific value of an attribute, called adata item, can be found in the fields of the record describing an entity.A data key is a field within a record that is used to identify the record.

Many organizations create databases of attributes and enter data items tostore data needed to run their day-to-day operations. For instance, databasetechnology is an important weapon in the fight against crime and terrorism, asdiscussed in the following examples:

● The Offshore Leaks Database contains the names of some 100,000secretive offshore companies, trusts, and funds created in locationsaround the world. Although creating offshore accounts is legal in mostcountries, offshore accounts are also established to enable individuals andorganizations to evade paying the taxes they would otherwise owe. Thedatabase has been used by law enforcement and tax officials to identifypotential tax evaders.1

● Major U.S. wireless service providers have implemented a stolen-phonedatabase to report and track stolen 3G and 4G/LTE phones. The providersuse the database to check whether a consumer’s device was reported lostor stolen. If a device has been reported lost or stolen, it will be deniedservice on the carrier’s network. Once the device is returned to therightful owner, it may be reactivated. The next step will be to tie foreignservice providers and countries into the database to diminish the exportof stolen devices to markets outside the United States.2

● The Global Terrorism Database (GTD) is a database including data onover 140,000 terrorist events that occurred around the world from 1970through 2014 (with additional annual updates). For each terrorist event,information is available regarding the date and location of the event, theweapons used, the nature of the target, the number of casualties, and,when identifiable, the group or individual responsible.3

● Pawnshops are required by law to report their transactions to lawenforcement by providing a description of each item pawned or soldalong with any identifying numbers, such as a serial number. LEADSOnline is a nationwide online database system that can be used to fulfillthis reporting responsibility and enable law enforcement officers to trackmerchandise that is sold or pawned in shops throughout the nation. For

FIGURE 5.2Keys and attributesThe key field is the employeenumber. The attributes include lastname, first name, hire date, anddepartment number.

Employee #




Last name First name Hire date Dept. number


















attribute: A characteristic of anentity.

data item: The specific value of anattribute.

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example, if law enforcement has a serial number for a stolen computer,they can enter this into LEADS Online and determine if it has been sold orpawned, when and where the theft or transaction occurred and, in thecase of an item that was pawned, who made the transaction.4

As discussed earlier, a collection of fields about a specific object is a record.A primary key is a field or set of fields that uniquely identifies the record. Noother record can have the same primary key. For an employee record, such asthe one shown in Figure 5.2, the employee number is an example of a primarykey. The primary key is used to distinguish records so that they can beaccessed, organized, and manipulated. Primary keys ensure that each record ina file is unique. For example, eBay assigns an “Item number” as its primarykey for items to make sure that bids are associated with the correct item. SeeFigure 5.3.

In some situations, locating a particular record that meets a specific set ofcriteria might be easier and faster using a combination of secondary keys ratherthan the primary key. For example, a customer might call a mail-order com-pany to place an order for clothes. The order clerk can easily access the custo-mer’s mailing and billing information by entering the primary key—usually acustomer number—but if the customer does not know the correct primary key,a secondary key such as last name can be used. In this case, the order clerkenters the last name, such as Adams. If several customers have a last name ofAdams, the clerk can check other fields, such as address and first name, to findthe correct customer record. After locating the correct record, the order can becompleted and the clothing items shipped to the customer.

The Database ApproachAt one time, information systems referenced specific files containing relevantdata. For example, a payroll system would use a payroll file. Each distinctoperational system used data files dedicated to that system.

Today, most organizations use the database approach to data manage-ment, where multiple information systems share a pool of related data.

FIGURE 5.3Primary keyeBay assigns an Item number as a primary key to keep track of each item in its database.

primary key: A field or set of fieldsthat uniquely identifies the record.

database approach todata management: An approachto data management where multipleinformation systems share a pool ofrelated data.

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CriticalThinking Exercise

A database offers the ability to share data and information resources. Federaldatabases, for example, often include the results of DNA tests as an attributefor convicted criminals. The information can be shared with law enforcementofficials around the country. Often, distinct yet related databases are linked toprovide enterprise-wide databases. For example, many Walgreens storesinclude in-store medical clinics for customers. Walgreens uses an electronichealth records database that stores the information of all patients across allstores. The database provides information about customers’ interactions withthe clinics and pharmacies.

To use the database approach to data management, additional software—a database management system (DBMS)—is required. As previously discussed,a DBMS consists of a group of programs that can be used as an interfacebetween a database and the user of the database. Typically, this software actsas a buffer between the application programs and the database itself.Figure 5.4 illustrates the database approach.

Vehicle Theft DatabaseYou are a participant in an information systems project to design a vehicletheft database for a state law enforcement agency. The database will provideinformation about stolen vehicles (e.g., autos, golf carts, SUVs, and trucks),with details about the vehicle theft as well as the stolen vehicle itself.These details will be useful to law enforcement officers investigating the vehicletheft.

Review Questions1. Identify 10 data attributes you would capture for each vehicle theft incident.

How many bytes should you allow for each attribute?2. Which attribute would you designate as the primary key?

FIGURE 5.4Database approach to datamanagementIn a database approach to datamanagement, multiple informationsystems share a pool of related data.













Database Interface Applicationprograms





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Critical Thinking Questions1. Should the database include data about the status of the theft investigation? If

so, what sort of data needs to be included?2. Can you foresee any problems with keeping the data current? Explain.

Data Modeling and Database Characteristics

Because today’s businesses must keep track of and analyze so muchdata, they must keep the data well organized so that it can be usedeffectively. A database should be designed to store all data relevant tothe business and to provide quick access and easy modification. More-over, it must reflect the business processes of the organization. Whenbuilding a database, an organization must carefully consider the followingquestions:

● Content. What data should be collected and at what cost?● Access. What data should be provided to which users and when?● Logical structure. How should data be arranged so that it makes sense to

a given user?● Physical organization. Where should data be physically located?● Archiving. How long must this data be stored?● Security. How can this data be protected from unauthorized access?

Data ModelingWhen organizing a database, key considerations include determiningwhat data to collect, what the source of the data will be, who will haveaccess to it, how one might want to use it, and how to monitor databaseperformance in terms of response time, availability, and other factors.AppDynamics offers its i-nexus cloud-based business execution solutionto clients for use in defining the actions and plans needed to achievebusiness goals. The service runs on 30 Java virtual machines and eightdatabase servers that are constantly supervised using database perfor-mance monitoring software. Use of the software has reduced the meantime to repair system problems and improved the performance andresponsiveness for all its clients.5

One of the tools database designers use to show the logical relationshipsamong data is a data model. A data model is a diagram of entities and theirrelationships. Data modeling usually involves developing an understandingof a specific business problem and then analyzing the data and informationneeded to deliver a solution. When done at the level of the entire organiza-tion, this procedure is called enterprise data modeling. Enterprise datamodeling is an approach that starts by investigating the general data andinformation needs of the organization at the strategic level and then moveson to examine more specific data and information needs for the functionalareas and departments within the organization. An enterprise data modelinvolves analyzing the data and information needs of an entire organizationand provides a roadmap for building database and information systems bycreating a single definition and format for data that can ensure compatibilityand the ability to exchange and integrate data among systems. SeeFigure 5.5.

data model: A diagram of data enti-ties and their relationships.

enterprise data model: A datamodel that provides a roadmap forbuilding database and informationsystems by creating a single definitionand format for data that can ensuredata compatibility and the ability toexchange and integrate data amongsystems.

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The IBM Healthcare Provider Data Model is an enterprise data modelthat can be adopted by a healthcare provider organization to organize andintegrate clinical, research, operational, and financial data.6 At one time,the University of North Carolina Health Care System had a smorgasbord ofinformation system hardware and software that made it difficult to integratedata from its existing legacy systems. The organization used the IBMHealthcare Provider Data Model to guide its efforts to simplify its informa-tion system environment and improve the integration of its data. As a result,it was able to eliminate its dependency on outdated technologies, build anenvironment that supports efficient data management, and integrate datafrom its legacy systems to create a source of data to support future analyticsrequirements.7

Various models have been developed to help managers and databasedesigners analyze data and information needs. One such data model is anentity-relationship (ER) diagram, which uses basic graphical symbols toshow the organization of and relationships between data. In most cases,boxes in ER diagrams indicate data items or entities contained in data tables,and lines show relationships between entities. In other words, ER diagramsshow data items in tables (entities) and the ways they are related.

ER diagrams help ensure that the relationships among the data entities in adatabase are correctly structured so that any application programs developed areconsistent with business operations and user needs. In addition, ER diagrams canserve as reference documents after a database is in use. If changes are made tothe database, ER diagrams help design them. Figure 5.6 shows an ER diagram foran order database. In this database design, one salesperson serves many custo-mers. This is an example of a one-to-many relationship, as indicated by the one-to-many symbol (the “crow’s-foot”) shown in Figure 5.6. The ER diagram alsoshows that each customer can place one-to-many orders, that each order includesone-to-many line items, and that many line items can specify the same product

FIGURE 5.5Enterprise data modelThe enterprise data model providesa roadmap for building databaseand information systems.



Systems and data

Enables capture of business opportunities

Increases business effectiveness

Reduces costs

Enables simpler system interfaces

Reduces data redundancy

Ensures compatible data

The enterprise

Data model

entity-relationship(ER) diagram: A data model thatuses basic graphical symbols to showthe organization of and relationshipsbetween data.

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(a many-to-one relationship). This database can also have one-to-one relation-ships. For example, one order generates one invoice.

Relational Database ModelThe relational database model is a simple but highly useful way to organize datainto collections of two-dimensional tables called relations. Each row in the tablerepresents an entity, and each column represents an attribute of that entity. SeeFigure 5.7.

FIGURE 5.6Entity-relationship (ER)diagram for a customer orderdatabaseDevelopment of ER diagrams helpsensure that the logical structure ofapplication programs is consistentwith the data relationships in thedatabase.








Includes Specifies



relational database model:A simple but highly useful way toorganize data into collections oftwo-dimensional tables calledrelations.

FIGURE 5.7Relational database modelIn the relational model, data isplaced in two-dimensional tables, orrelations. As long as they share atleast one common attribute, theserelations can be linked to provideoutput useful information. In thisexample, all three tables include theDept. number attribute.

Data Table 1: Project Table

Project Description Dept. number

155 Payroll 257

498 Widgets 632

226 Sales manual 598

Data Table 2: Department Table

Dept. Dept. name Manager SSN

257 Accounting 005-10-6321

632 Manufacturing 549-77-1001

598 Marketing 098-40-1370

Data Table 3: Manager Table

SSN Last name First name

005-10-6321 Johns Francine

549-77-1001 Buckley Bill

098-40-1370 Fiske Steven

Hire date Dept. number

10-07-2013 257

02-17-1995 632

01-05-2001 598

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Each attribute can be constrained to a range of allowable values called itsdomain. The domain for a particular attribute indicates what values can beplaced in each column of the relational table. For instance, the domain foran attribute such as type employee could be limited to either H (hourly) orS (salary). If someone tried to enter a “1” in the type employee field, the datawould not be accepted. The domain for pay rate would not include negativenumbers. In this way, defining a domain can increase data accuracy.

Manipulating DataAfter entering data into a relational database, users can make inquiries andanalyze the data. Basic data manipulations include selecting, projecting, andjoining. Selecting involves eliminating rows according to certain criteria. Sup-pose the department manager of a company wants to use an employee tablethat contains the project number, description, and department number for allprojects a company is performing. The department manager might want tofind the department number for Project 226, a sales manual project. Usingselection, the manager can eliminate all rows except the one for Project 226and see that the department number for the department completing the salesmanual project is 598.

Projecting involves eliminating columns in a table. For example,a department table might contain the department number, department name,and Social Security number (SSN) of the manager in charge of the project.A sales manager might want to create a new table that contains only the depart-ment number and the Social Security number of the manager in charge of thesales manual project. The sales manager can use projection to eliminate thedepartment name column and create a new table containing only the depart-ment number and Social Security number.

Joining involves combining two or more tables. For example, you cancombine the project table and the department table to create a new table withthe project number, project description, department number, departmentname, and Social Security number for the manager in charge of the project.

As long as the tables share at least one common data attribute, the tablesin a relational database can be linked to provide useful information andreports. Linking, the ability to combine two or more tables through commondata attributes to form a new table with only the unique data attributes, isone of the keys to the flexibility and power of relational databases. Supposethe president of a company wants to find out the name of the manager of thesales manual project as well as the length of time the manager has been withthe company. Assume that the company has Manager, Department, and Proj-ect tables as shown in Figure 5.7. These tables are related as depicted inFigure 5.8.

domain: The range of allowablevalues for a data attribute.

selecting: Manipulating data toeliminate rows according to certaincriteria.

projecting: Manipulating data toeliminate columns in a table.

joining: Manipulating data to combinetwo or more tables.

linking: The ability to combine two ormore tables through common dataattributes to form a new table with onlythe unique data attributes.

FIGURE 5.8Simplified ER diagramThis diagram shows the relationshipamong the Manager, Department,and Project tables.






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Note the crow’s-foot by the Project table. This symbol indicates that adepartment can have many projects. The manager would make the inquiry tothe database, perhaps via a personal computer. The DBMS would start withthe project description and search the Project table to find out the project’sdepartment number. It would then use the department number to searchthe Department table for the manager’s Social Security number. The depart-ment number is also in the Department table and is the common element thatlinks the Project table to the Department table. The DBMS uses the manager’sSocial Security number to search the Manager table for the manager’s hire date.The manager’s Social Security number is the common element between theDepartment table and the Manager table. The final result is that the manager’sname and hire date are presented to the president as a response to the inquiry.See Figure 5.9.

One of the primary advantages of a relational database is that it allows tablesto be linked, as shown in Figure 5.9. This linkage reduces data redundancy andallows data to be organized more logically. The ability to link to the manager’sSocial Security number stored once in the Manager table eliminates the need tostore it multiple times in the Project table.

The relational database model is widely used. It is easier to control,more flexible, and more intuitive than other approaches because it orga-nizes data in tables. As shown in Figure 5.10, a relational database manage-ment system, such as Microsoft Access, can be used to store data in rowsand columns. In this figure, hyperlink tools available on the ribbon/toolbarcan be used to create, edit, and manipulate the database. The ability to linkrelational tables also allows users to relate data in new ways without havingto redefine complex relationships. Because of the advantages of the rela-tional model, many companies use it for large corporate databases, such asthose for marketing and accounting.

FIGURE 5.9Linking data tables to answeran inquiryTo find the name and hire date ofthe manager working on the salesmanual project, the president needsthree tables: Project, Department,and Manager. The project descrip-tion (Sales manual) leads tothe department number (598) in theProject table, which leads to themanager’s Social Security number(098-40-1370) in the Departmenttable, which leads to the manager’slast name (Fiske) and hire date(01-05-2001) in the Manager table.

Data Table 1: Project Table

Project number







Sales manual

Dept. number




Data Table 2: Department Table

Dept. number




Dept. name




Manager SSN




Data Table 3: Manager Table





Last name




First name




Hire date




Dept. number




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Databases based on the relational model include Oracle, IBM DB2, Micro-soft SQL Server, Microsoft Access, MySQL, Sybase, and others. The relationaldatabase model has been an outstanding success and is dominant in the com-mercial world today, although many organizations are beginning to use newnonrelational models to meet some of their business needs.

Data CleansingData used in decision making must be accurate, complete, economical,flexible, reliable, relevant, simple, timely, verifiable, accessible, and secure.Data cleansing (data cleaning or data scrubbing) is the process of detect-ing and then correcting or deleting incomplete, incorrect, inaccurate, or irrele-vant records that reside in a database. The goal of data cleansing is toimprove the quality of the data used in decision making. The “bad data” mayhave been caused by user data-entry errors or by data corruption during datatransmission or storage. Data cleansing is different from data validation,which involves the identification of “bad data” and its rejection at the time ofdata entry.

One data cleansing solution is to identify and correct data by cross-checking it against a validated data set. For example, street number, streetname, city, state, and zip code entries in an organization’s database may becross-checked against the United States Postal Zip Code database. Datacleansing may also involve standardization of data, such as the conversionof various possible abbreviations (St., St, st., st) to one standard name(Street).

Data enhancement augments the data in a database by adding relatedinformation—such as using the zip code information for a given record toappend the county code or census tract code.

The cost of performing data cleansing can be quite high. It is prohibi-tively expensive to eliminate all “bad data” to achieve 100 percent databaseaccuracy, as shown in Figure 5.11.

FIGURE 5.10Building and modifying a relational databaseRelational databases provide many tools, tips, and shortcuts to simplify the process of creating andmodifying a database.

Data cleansing (data cleaningor data scrubbing): The process ofdetecting and then correcting or delet-ing incomplete, incorrect, inaccurate, orirrelevant records that reside in adatabase.






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CriticalThinking Exercise

Banco Popular is the largest bank in Puerto Rico. Some 3,000 bankemployees in 200 branches use a customer database to obtain a completeview of 5.7 million personal and business accounts. The bank uses a datacleansing process to eliminate duplicate records and build an accurate andcomplete record of each customer, reflecting all of their various accounts(checking, savings, auto loan, credit card, etc.) with the bank. Part of this pro-cess includes identifying how many account holders live at the same addressto eliminate duplicate mailings to the same household, thus saving over$840,000 in mailing expenses each year.8

Cleansing Weather DataThe process of weather forecasting begins with the collection of as much dataas possible about the current state of the atmosphere. Weather data (barometricpressure, humidity, temperature, and wind direction and speed) is collectedfrom a variety of sources, including aircraft, automatic weather stations,weather balloons, buoys, radar, satellites, ships, and trained observers. Due tothe variety of data types taken from multiple data sources, weather data iscaptured in a variety of data formats, primarily Binary Universal Form for theRepresentation of meteorological data (BUFR) and Institute of Electricaland Electronics Engineers (IEEE) binary. These observations are then convertedto a standard format and placed into a gridded 3D model space called theGlobal Data Assimilation System (GDAS). Once this process is complete, thegridded GDAS output data can be used to start the Global Forecast System(GFS) model.

For purposes of this exercise, imagine that the accuracy of the weatherforecasts has been slipping. In your role as project manager at the NationalCenter for Environmental Information (NCEI), you have been assigned to lead aproject reviewing the processing of the initial data and placing it into theGDAS.

Review Questions1. NCEI is responsible for hosting and providing access to one of the most signif-

icant archives on Earth, with comprehensive oceanic, atmospheric, and geo-physical data. Good database design would suggest that an enterprise datamodel exists for the NCEI. Why?

FIGURE 5.11Tradeoff of cost versusaccuracyThe cost of performing data cleans-ing to achieve 100 percent databaseaccuracy can be prohibitivelyexpensive.








00% 20% 40% 60%

Accuracy80% 100%


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2. Define the domain of acceptable values for barometric pressure, humidity, andtemperature.

Critical Thinking Questions1. What issues could cause the raw weather data received to be incomplete or

inaccurate?2. How might incomplete or inaccurate data be identified and corrected or

deleted from the forecasting process? Are there risks in such datacleansing?

Relational Database Management Systems (DBMSs)

Creating and implementing the right database system ensures that the data-base will support both business activities and goals. But how do we actuallycreate, implement, use, and update a database? The answer is found in thedatabase management system (DBMS). As discussed earlier, a DBMS is agroup of programs used as an interface between a database and applicationprograms or between a database and the user. Database management systemscome in a wide variety of types and capabilities, ranging from small inexpen-sive software packages to sophisticated systems costing hundreds of thou-sands of dollars.

SQL DatabasesSQL is a special-purpose programming language for accessing and manipulat-ing data stored in a relational database. SQL was originally defined by DonaldD. Chamberlin and Raymond Boyce of the IBM Research Center and describedin their paper “SEQUEL: A Structured English Query Language,” published in1974. Their work was based on the relational database model described byEdgar F. Codd in his groundbreaking paper from 1970, “A Relational Model ofData for Large Shared Data Banks.”

SQL databases conform to ACID properties (atomicity, consistency, isola-tion, durability), defined by Jim Gray soon after Codd’s work was published.These properties guarantee database transactions are processed reliably andensure the integrity of data in the database. Basically, these principles meanthat data is broken down to atomic values—that is, values that have no compo-nent parts—such as employee_ID, last_name, first_name, address_line_1,address_line_2, and city. The data in these atomic values remains consistentacross the database. The data is isolated from other transactions until the currenttransaction is finished, and it is durable in the sense that the data should neverbe lost.9

SQL databases rely upon concurrency control by locking database recordsto ensure that other transactions do not modify the database until the firsttransaction succeeds or fails. As a result, 100 percent ACID-compliant SQLdatabases can suffer from slow performance.

In 1986, the American National Standards Institute (ANSI) adoptedSQL as the standard query language for relational databases. Since ANSI’sacceptance of SQL, interest in making SQL an integral part of relationaldatabases on both mainframe and personal computers has increased. SQLhas many built-in functions, such as average (AVG), the largest value(MAX), and the smallest value (MIN). Table 5.1 contains examples of SQLcommands.

SQL: A special-purposeprogramming language for accessingand manipulating data stored in arelational database.

ACID properties: Properties (atom-icity, consistency, isolation, durability)that guarantee relational databasetransactions are processed reliably andensure the integrity of data in thedatabase.

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SQL allows programmers to learn one powerful query language and use iton systems ranging from PCs to the largest mainframe computers. SeeFigure 5.12. Programmers and database users also find SQL valuable becauseSQL statements can be embedded into many programming languages, such asthe widely used C++ and Java. Because SQL uses standardized and simplifiedprocedures for retrieving, storing, and manipulating data, many programmersfind it easy to understand and use—hence, its popularity.

Database ActivitiesDatabases are used to provide a user view of the database, to add and modifydata, to store and retrieve data, and to manipulate the data and generate

FIGURE 5.12Structured Query Language (SQL)SQL has become an integral part of most relational databases, as shown by this example from MicrosoftAccess 2013.

TABLE 5.1 Examples of SQL commandsSQL Command Description

SELECT ClientName,Debt FROM ClientWHERE Debt > 1000

This query displays clients (ClientName) and the amount they owe the company (Debt) froma database table called Client; the query would only display clients who owe the companymore than $1,000 (WHERE Debt > 1000).

SELECT ClientName,ClientNum, OrderNumFROM Client, OrderWHERE Client.Client-Num=Order.ClientNum

This command is an example of a join command that combines data from two tables: theClient table and the Order table (FROM Client, Order). The command creates a new tablewith the client name, client number, and order number (SELECT ClientName, ClientNum,OrderNum). Both tables include the client number, which allows them to be joined.This ability is indicated in the WHERE clause, which states that the client number in theClient table is the same as (equal to) the client number in the Order table (WHERE Client.ClientNum=Order.ClientNum).

GRANT INSERT ONClient to Guthrie

This command is an example of a security command. It allows Bob Guthrie to insert newvalues or rows into the Client table.






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reports. Each of these activities is discussed in greater detail in the followingsections.

Providing a User ViewBecause the DBMS is responsible for providing access to a database, one ofthe first steps in installing and using a large relational database involves “tell-ing” the DBMS the logical and physical structure of the data and the relation-ships among the data for each user. This description is called a schema (as ina schematic diagram). In a relational database, the schema defines the tables,the fields in each table, and the relationships between fields and tables. Largedatabase systems, such as Oracle, typically use schemas to define the tablesand other database features associated with a person or user. The DBMS canreference a schema to find where to access the requested data in relation toanother piece of data.

Creating and Modifying the DatabaseSchemas are entered into the DBMS (usually by database personnel) via a datadefinition language. A data definition language (DDL) is a collection ofinstructions and commands used to define and describe data and relationshipsin a specific database. A DDL allows the database’s creator to describe thedata and relationships that are to be contained in the schema. In general, aDDL describes logical access paths and logical records in the database.Figure 5.13 shows a simplified example of a DDL used to develop a generalschema. The use of the letter X in Figure 5.13 reveals where specific informa-tion concerning the database should be entered. File description, area descrip-tion, record description, and set description are terms the DDL defines anduses in this example. Other terms and commands can also be used, depend-ing on the DBMS employed.

Another important step in creating a database is to establish a data dictio-nary, a detailed description of all data used in the database. Among other things,the data dictionary contains the following information for each data item:

FIGURE 5.13Data definition language(DDL)A data definition language (DDL) isused to define a schema.







schema: A description that definesthe logical and physical structure of thedatabase by identifying the tables, thefields in each table, and the relation-ships between fields and tables.

data definition language (DDL):A collection of instructions and com-mands used to define and describedata and relationships in a specificdatabase.

data dictionary: A detaileddescription of all the data used in thedatabase.

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● Name of the data item● Aliases or other names that may be used to describe the item● Range of values that can be used● Type of data (such as alphanumeric or numeric)● Amount of storage needed for the item● Notation of the person responsible for updating it and the various users

who can access it● List of reports that use the data item

A data dictionary can also include a description of data flows, informationabout the way records are organized, and the data-processing requirements.Figure 5.14 shows a typical data dictionary entry.

Following the example in Figure 5.14, the information in a data dictionary forthe part number of an inventory item can include the following information:

● Name of the person who made the data dictionary entry (D. Bordwell)● Date the entry was made (August 4, 2016)● Name of the person who approved the entry (J. Edwards)● Approval date (October 13, 2016)● Version number (3.1)● Number of pages used for the entry (1)● Data element name is Part name (PARTNO)● A description of the element● Other names that might be used (PTNO)● Range of values (part numbers can range from 100 to 5000)● Type of data (numeric)● Storage required (four positions are required for the part number)

A data dictionary is a valuable tool for maintaining an efficient databasethat stores reliable information with no redundancy, and it simplifies the pro-cess of modifying the database when necessary. Data dictionaries also helpcomputer and system programmers who require a detailed description of dataelements stored in a database to create the code to access the data.

Adherence to the standards defined in the data dictionary also makes iteasy to share data among various organizations. For example, the U.S. Depart-ment of Energy (DOE) developed a data dictionary of terms to provide a stan-dardized approach for the evaluation of energy data. The Building EnergyData Exchange Specification (BEDES) provides a common language of keydata elements, including data formats, valid ranges, and definitions that are

FIGURE 5.14Data dictionary entryA data dictionary provides a detaileddescription of all data used in thedatabase.





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designed to improve communications between contractors, software vendors,finance companies, utilities, and Public Utility Commissions. Adherence tothese data standards allows information to be easily shared and aggregatedwithout the need for extensive data scrubbing and translation. All stake-holders can use this standard set of data to answer key questions related tothe energy savings and usage.10

Storing and Retrieving DataOne function of a DBMS is to be an interface between an application programand the database. When an application program needs data, it requests thedata through the DBMS. Suppose that to calculate the total price of a newcar, a pricing program needs price data on the engine option—for example,six cylinders instead of the standard four cylinders. The application programrequests this data from the DBMS. In doing so, the application program fol-lows a logical access path (LAP). Next, the DBMS, working with various sys-tem programs, accesses a storage device, such as a disk drive or solid statestorage device (SSD), where the data is stored. When the DBMS goes to thisstorage device to retrieve the data, it follows a path to the physical location—physical access path—where the price of this option is stored. In the pricingexample, the DBMS might go to a disk drive to retrieve the price data for six-cylinder engines. This relationship is shown in Figure 5.15.

This same process is used if a user wants to get information from thedatabase. First, the user requests the data from the DBMS. For example, a usermight give a command, such as LIST ALL OPTIONS FOR WHICH PRICE ISGREATER THAN $200. This is the logical access path. Then, the DBMS might goto the options price section of a disk to get the information for the user. This isthe physical access path.

Two or more people or programs attempting to access the same record atthe same time can cause a problem. For example, an inventory control pro-gram might attempt to reduce the inventory level for a product by 10 unitsbecause 10 units were just shipped to a customer. At the same time, a pur-chasing program might attempt to increase the inventory level for the sameproduct by 200 units because inventory was just received. Without properdatabase control, one of the inventory updates might be incorrect, resultingin an inaccurate inventory level for the product. Concurrency control can beused to avoid this potential problem. One approach is to lock out all other

FIGURE 5.15Logical and physical accesspathsWhen an application requests datafrom the DBMS, it follows a logicalaccess path to the data. When theDBMS retrieves the data, it follows apath to the physical access path tothe data.


Physical accesspath (PAP)

Logical accesspath (LAP)




Data onstorage device

concurrency control: A method ofdealing with a situation in which two ormore users or applications need toaccess the same record at the sametime.

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application programs from access to a record if the record is being updated orused by another program.

Manipulating Data and Generating ReportsAfter a DBMS has been installed, employees, managers, and other authorizedusers can use it to review reports and obtain important information. Using aDBMS, a company can manage this requirement. Some databases use Queryby Example (QBE), which is a visual approach to developing database queriesor requests. With QBE, you can perform queries and other database tasks byopening windows and clicking the data or features you want—similar to theway you work with Windows and other GUI (graphical user interface) operat-ing systems and applications. See Figure 5.16.

In other cases, database commands can be used in a programming lan-guage. For example, C++ commands can be used in simple programs that willaccess or manipulate certain pieces of data in the database. Here’s anotherexample of a DBMS query:


The asterisk (*) tells the program to include all columns from theEMPLOYEE table. In general, the commands that are used to manipulate thedatabase are part of the data manipulation language (DML). This specificlanguage, provided with the DBMS, allows managers and other databaseusers to access and modify the data, to make queries, and to generate reports.Again, the application programs go through schemas and the DBMS beforegetting to the data stored on a device such as a disk.

After a database has been set up and loaded with data, it can producedesired reports, documents, and other outputs. See Figure 5.17. These outputsusually appear in screen displays or on hard copy printouts. The output-control features of a database program allow a user to select the records andfields that will appear in a report. Formatting controls and organizationoptions (such as report headings) help users customize reports and createflexible, convenient, and powerful information-handling tools.

FIGURE 5.16Query by ExampleSome databases use Query byExample (QBE) to generate reportsand information. M






data manipulationlanguage (DML): A specificlanguage, provided with a DBMS,which allows users to access andmodify the data, to make queries,and to generate reports.

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A DBMS can produce a wide variety of documents, reports, and other out-put that can help organizations make decisions and achieve their goals. Often,organizations have standard reports that are run on a regular basis. The mostcommon reports select and organize data to present summary informationabout some aspect of company operations. For example, accounting reportsoften summarize financial data such as current and past due accounts. Manycompanies base their routine operating decisions on regular status reportsthat show the progress of specific orders toward completion and delivery.

Database AdministrationDatabase administrators (DBAs) are skilled and trained IS professionals whohold discussions with business users to define their data needs; apply databaseprogramming languages to craft a set of databases to meet those needs; test andevaluate databases; implement changes to improve their performance; andassure that data is secure from unauthorized access. Database systems require askilled database administrator (DBA), who must have a clear understanding ofthe fundamental business of the organization, be proficient in the use ofselected database management systems, and stay abreast of emerging technolo-gies and new design approaches. The role of the DBA is to plan, design, create,operate, secure, monitor, and maintain databases. Typically, a DBA has a degreein computer science or management information systems and some on-the-jobtraining with a particular database product or more extensive experience with arange of database products. See Figure 5.18.

FIGURE 5.17Database outputA database application offerssophisticated formatting andorganization options to produce theright information in the right format.

FIGURE 5.18Database administratorThe role of the databaseadministrator (DBA) is to plan,design, create, operate, secure,monitor, and maintain databases.

database administrators(DBAs): Skilled and trained IS pro-fessionals who hold discussions withbusiness users to define their dataneeds; apply database programminglanguages to craft a set of databases tomeet those needs; test and evaluatedatabases; implement changes toimprove the performance of databases;and assure that data is secure fromunauthorized access.









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The DBA works with users to decide the content of the database—todetermine exactly what entities are of interest and what attributes are tobe recorded about those entities. Thus, not only is it important that aDBA understand the business of an organization, but personnel outside ofIS must also have some idea of what the DBA does and why thisfunction is important. The DBA can play a crucial role in the developmentof effective information systems to benefit the organization, employees, andmanagers.

The DBA also works with programmers as they build applications toensure that their programs comply with database management system stan-dards and conventions. After the database has been built and is operating,the DBA monitors operations logs for security violations. Database perfor-mance is also monitored to ensure that the system’s response time meetsusers’ needs and that it operates efficiently. If there is a problem, the DBAattempts to correct it before it becomes serious.

An important responsibility of a DBA is to protect the database fromattack or other forms of failure. DBAs use security software, preventivemeasures, and redundant systems to keep data safe and accessible. In spiteof the best efforts of DBAs, database security breaches are all too common.For example, customer records of more than 83 million customers of JPMor-gan Chase were stolen between June 2014 and August 2014. This representsthe largest theft of consumer data from a U.S. financial institution inhistory.11

Some organizations have also created a position called the dataadministrator, an individual responsible for defining and implementingconsistent principles for a variety of data issues, including setting datastandards and data definitions that apply across all the databases in anorganization. For example, the data administrator would ensure that aterm such as “customer” is defined and treated consistently in all corpo-rate databases. The data administrator also works with business managersto identify who should have read or update access to certain databasesand to selected attributes within those databases. This information isthen communicated to the database administrator for implementation.The data administrator can be a high-level position reporting to top-levelmanagers.

Popular Database Management SystemsMany popular database management systems address a wide range of individ-ual, workgroup, and enterprise needs as shown in Table 5.2. The complete

TABLE 5.2 Popular database management systems

Open-SourceRelational DBMS

Relational DBMSfor Individualsand Workgroups

Relational DBMSfor Workgroupsand Enterprise

MySQL Microsoft Access Oracle

PostgreSQL IBM Lotus Approach IBM DB2

MariaDB Google Base Sybase Adaptive Server

SQL Lite OpenOffice Base Teradata

CouchDB Microsoft SQL Server

Progress OpenEdge

data administrator: An individualresponsible for defining and imple-menting consistent principles for avariety of data issues.

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DBMS market encompasses software used by people ranging from nontechni-cal individuals to highly trained, professional programmers and runs on alltypes of computers from tablets to supercomputers. The entire market gener-ates billions of dollars per year in revenue for companies such as IBM, Oracle,and Microsoft.

Selecting a DBMS begins by analyzing the information needs of theorganization. Important characteristics of databases include the size of thedatabase, the number of concurrent users, database performance, the abilityof the DBMS to be integrated with other systems, the features of the DBMS,the vendor considerations, and the cost of the database managementsystem.

CouchDB by Couchbase is an open-source database system used byZynga, the developer of the popular Internet game FarmVille, to process250 million visitors a month.

With database as a service (DaaS), the database is stored on a serviceprovider’s servers and accessed by the service subscriber over the Internet,with the database administration handled by the service provider. Morethan a dozen companies are now offering DaaS services, including Amazon,, Google, Heroku, IBM, Intuit, Microsoft, MyOwnDB, Oracle,and Trackvia. Amazon Relational Database Service (Amazon RDS) is a DaaSthat enables organizations to set up and operate their choice of a MySQL,Microsoft SQL, Oracle, or PostgreSQL relational database in the cloud. Theservice automatically backs up the database and stores those backupsbased on a user-defined retention period.

TinyCo is a mobile gaming firm whose games Tiny Monsters, Tiny Village,and Tiny Zoo Friends can be found at the Amazon, Google Play, and iTunesapp stores.12 The company employs Amazon Web Services (AWS) to enable itto support the rapid growth in the number of its users without having todevote constant time and effort to organize and configure its information sys-tems infrastructure. This arrangement has allowed the company to focus itsresources on developing and marketing its new games. TinyCo applicationdata is stored in the Amazon Relational Database Service (Amazon RDS) forMySQL.13

Using Databases with Other SoftwareDatabase management systems are often used with other software and tointeract with users over the Internet. A DBMS can act as a front-end applica-tion or a back-end application. A front-end application is one that peopleinteract with directly. Marketing researchers often use a database as a frontend to a statistical analysis program. The researchers enter the results ofmarket questionnaires or surveys into a database. The data is then trans-ferred to a statistical analysis program to perform analysis, such as determin-ing the potential for a new product or the effectiveness of an advertisingcampaign. A back-end application interacts with other programs or applica-tions; it only indirectly interacts with people or users. When people requestinformation from a Web site, the site can interact with a database (the backend) that supplies the desired information. For example, you can connect toa university Web site to find out whether the university’s library has a bookyou want to read. The site then interacts with a database that contains a cat-alog of library books and articles to determine whether the book you want isavailable. See Figure 5.19.

database as a service (DaaS):An arrangement where the database isstored on a service provider’s serversand accessed by the service subscriberover a network, typically the Internet,with the database administrationhandled by the service provider.

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CriticalThinking Exercise

Database as a ServiceYou are the database administrator for the customer database of a medium-sizedmanufacturing firm. The database runs on an Oracle database management systeminstalled on a server owned and managed by your firm’s small IT organization.Recently you have been receiving a number of complaints from users of the data-base about extremely slow response time to their queries and report requests.Management has asked you to prepare a set of proposed solutions.

Review Questions1. What advantages might be gained from moving to a database as a service

environment?2. Can you think of any possible disadvantages to this approach?

Critical Thinking Questions1. What additional questions need to be answered before you can decide if the

database as a service approach is right for your firm?2. How might such a move affect you and your role?

Big Data

Big data is the term used to describe data collections that are so enormous(terabytes or more) and complex (from sensor data to social media data) thattraditional data management software, hardware, and analysis processes areincapable of dealing with them.

FIGURE 5.19Library of Congress Web siteThe Library of Congress (LOC) provides a back-end application that allows Web access to itsdatabases, which include references to books and digital media in the LOC collection.


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Characteristics of Big DataComputer technology analyst Doug Laney associated the three characteristicsof volume, velocity, and variety with big data14:

● Volume. In 2014, it was estimated that the volume of data that exists in thedigital universe was 4.4 zettabytes (one zettabyte equals one trillion gigabytes).The digital universe is expected to grow to an amazing 44 zettabytes by 2020,with perhaps one-third of that data being of value to organizations.15

● Velocity. The velocity at which data is currently coming at us exceeds 5trillion bits per second.16 This rate is accelerating rapidly, and the volume ofdigital data is expected to double every two years between now and 2020.17

● Variety. Data today comes in a variety of formats. Some of the data iswhat computer scientists call structured data—its format is known inadvance, and it fits nicely into traditional databases. For example, the datagenerated by the well-defined business transactions that are used toupdate many corporate databases containing customer, product, inven-tory, financial, and employee data is generally structured data. However,most of the data that an organization must deal with is unstructured data,meaning that it is not organized in any predefined manner.18 Unstruc-tured data comes from sources such as word-processing documents, socialmedia, email, photos, surveillance video, and phone messages.

Sources of Big DataOrganizations collect and use data from a variety of sources, including busi-ness applications, social media, sensors and controllers that are part of themanufacturing process, systems that manage the physical environment in fac-tories and offices, media sources (including audio and video broadcasts),machine logs that record events and customer call data, public sources (suchas government Web sites), and archives of historical records of transactionsand communications. See Figure 5.20. Much of this collected data is unstruc-tured and does not fit neatly into traditional relational database management

MediaImages, audio, video,

live data feeds, podcasts

Sensor dataProcess control devices,

smart electric meters,

packing line counters

Social mediaTwitter, Facebook,

LinkedIn, Pinterest

Data from business appsERP, CRM, PLM, HR

DocumentseMail, Power Point,

Word, Excel, .PDF, HTML

ArchivesHistorical records

of communications

and transactions

Public dataLocal, state, and federal

government Web sites

Machine log dataCall detail data event logs,

business process logs,

application logs

An organization’scollection of useful


FIGURE 5.20Sources of an organization’s useful dataAn organization has many sources of useful data.

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systems. Table 5.3 provides a starter list of some of the many Web portals thatprovide access to free sources of useful big data sets.

Big Data UsesHere are just a few examples of how organizations are employing big data toimprove their day-to-day operations, planning, and decision making:

● Retail organizations monitor social networks such as Facebook, Google,LinkedIn, Twitter, and Yahoo to engage brand advocates, identify brandadversaries (and attempt to reverse their negative opinions), and evenenable passionate customers to sell their products.

TABLE 5.3 Portals that provide access to free sources of useful big dataData Source Description URL

Amazon Web Services(AWS) public data sets

Portal to a huge repository of public data, includingclimate data, the million song data set, and datafrom the 1000 Genomes project.

Bureau of LaborStatistics (BLS)

Provides access to data on inflation and prices,wages and benefits, employment, spending andtime use, productivity, and workplace injuries

CIA World Factbook Portal to information on the economy, government,history, infrastructure, military, and population of267 countries Portal providing access to over 186,000 governmentdata sets, related to topics such as agriculture,education, health, and public safety

Facebook Graph Provides a means to query Facebook profile datanot classified as private

FBI Uniform CrimeReports

Portal to data on Crime in the United States, LawEnforcement Officers Killed and Assaulted, andHate Crime Statistics

Justia Federal DistrictCourt Opinions andOrders database

A free searchable database of full-text opinions andorders from civil cases heard in U.S. Federal DistrictCourts

Gapminder Portal to data from the World Health Organizationand World Bank on economic, medical, and socialissues

Google Finance Portal to 40 years of stock market data Portal to 125 years of U.S. healthcare data, includingnational healthcare expenditures, claim-levelMedicare data, and data related to healthcarequality, epidemiology, and population, amongmany other topics

National Centers forEnvironmentalInformation

Portal for accessing a variety of climate and weatherdata sets

New York Times Portal that provides users with access to NYT arti-cles, book and movie reviews, data on politicalcampaign contributions, and other material

Social Institutions andGender Index

Provides access to country profiles and data thatmeasures the degree of cross-country discriminationagainst women in social institutions


U.S. Census Bureau Portal to a huge variety of government statistics anddata relating to the U.S. economy and its population

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● Advertising and marketing agencies track comments on social media tounderstand consumers’ responsiveness to ads, campaigns, andpromotions.

● Hospitals analyze medical data and patient records to try to identifypatients likely to need readmission within a few months of discharge,with the goal of engaging with those patients in the hope of preventinganother expensive hospital stay.

● Consumer product companies monitor social networks to gain insight intocustomer behavior, likes and dislikes, and product perception to identifynecessary changes to their products, services, and advertising.

● Financial services organizations use data from customer interactions toidentify customers who are likely to be attracted to increasingly targetedand sophisticated offers.

● Manufacturers analyze minute vibration data from their equipment, whichchanges slightly as it wears down, to predict the optimal time to performmaintenance or replace the equipment to avoid expensive repairs orpotentially catastrophic failure.

Challenges of Big DataIndividuals, organizations, and society in general must find a way to deal withthis ever-growing data tsunami to escape the risks of information overload. Thechallenge is manifold, with a variety of questions that must be answered, includ-ing how to choose what subset of data to store, where and how to store thedata, how to find those nuggets of data that are relevant to the decision makingat hand, how to derive value from the relevant data, and how to identify whichdata needs to be protected from unauthorized access. With so much data avail-able, business users can have a hard time finding the information they need tomake decisions, and they may not trust the validity of the data they can access.

Trying to deal with all this data from so many different sources, muchof it from outside the organization, can also increase the risk that the orga-nization fails to comply with government regulations or internal controls(see Table 5.4). If measures to ensure compliance are not defined and fol-lowed, compliance issues can arise. Violation of these regulations can leadnot only to government investigations but also to dramatic drops in stockprices, as when computer chipmaker Marvell Technologies alarmed

TABLE 5.4 Partial list of rules, regulations, and standards with which U.S. information systemorganizations must comply

Rule, Regulation, orStandard Intent

Bank Secrecy Act Detects and prevents money laundering by requiring financial institutions to report certaintransactions to government agencies and to withhold from clients that such reports werefiled about them

Basel II Accord Creates international standards that strengthen global capital and liquidity rules, with thegoal of promoting a more resilient banking sector worldwide

California Senate Bill1386

Protects against identity theft by imposing disclosure requirements for businesses andgovernment agencies that experience security breaches that might put the personalinformation of California residents at risk; the first of many state laws aimed at protectingconsumers from identity theft

European Union DataProtection Directive

Protects the privacy of European Union citizens’ personal information by placing limitationson sending such data outside of the European Union to areas that are deemed to have lessthan adequate standards for data security

Foreign Account TaxCompliance Act

Identifies U.S. taxpayers who hold financial assets in non-U.S. financial institutions andoffshore accounts, to ensure that they do not avoid their U.S. tax obligations

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investors by announcing that it had found problems with the way it bookedrevenue, resulting in a 16 percent drop in its stock price in just one day.19

Optimists believe that we can conquer these challenges and that moredata will lead to more accurate analyses and better decision making, which inturn will result in deliberate actions that improve matters.

Not everyone, however, is happy with big data applications. Some peoplehave privacy concerns about the fact that corporations are harvesting hugeamounts of personal data that can be shared with other organizations. Withall this data, organizations can develop extensive profiles of people withouttheir knowledge or consent. Big data also introduces security concerns. Areorganizations able to keep big data secure from competitors and malicioushackers? Some experts believe companies that collect and store big datacould be open to liability suits from individuals and organizations. Even withthese potential disadvantages, many companies are rushing into big data dueto the lure of a potential treasure trove of information and new applications.

Data ManagementData management is an integrated set of functions that defines the processesby which data is obtained, certified fit for use, stored, secured, and processedin such a way as to ensure that the accessibility, reliability, and timeliness ofthe data meet the needs of the data users within an organization. The DataManagement Association (DAMA) International is a nonprofit, vendor-independent, international association whose members promote the under-standing, development, and practice of managing data as an essential enterpriseasset. This organization has identified 10 major functions of data management,as shown in Figure 5.21. Data governance is the core component of data man-agement; it defines the roles, responsibilities, and processes for ensuring thatdata can be trusted and used by the entire organization, with people identifiedand in place who are responsible for fixing and preventing issues with data.

TABLE 5.4 Partial list of rules, regulations, and standards with which U.S. information systemorganizations must comply (continued)

Rule, Regulation, orStandard Intent

Foreign Corrupt PracticesAct

Prevents certain classes of persons and entities from making payments to foreigngovernment officials in an attempt to obtain or retain business

Gramm-Leach-Bliley Act Protects the privacy and security of individually identifiable financial information collectedand processed by financial institutions

Health Insurance Porta-bility and AccountabilityAct (HIPAA)

Safeguards protected health information (PHI) and electronic PHI (ePHI) data gathered inthe healthcare process and standardizes certain electronic transactions within the healthcareindustry

Payment Card Industry(PCI) Data SecurityStandard

Protects cardholder data and ensures that merchants and service providers maintain strictinformation security standards

Personal InformationProtection and ElectronicDocuments Act (Canada)

Governs the collection, use, and disclosure of personally identifiable information in thecourse of commercial transactions; created in response to European Union data protectiondirectives

Sarbanes-Oxley Act Protects the interests of investors and consumers by requiring that the annual reports ofpublic companies include an evaluation of the effectiveness of internal control overfinancial reporting; requires that the company’s CEO and CFO attest to and report on thisassessment

USA PATRIOT Act This wide-ranging act has many facets; one portion of the Act relating to informationsystem compliance is called the Financial Anti-Terrorism Act and is designed to combat thefinancing of terrorism through money laundering and other financial crimes

data management: An integratedset of functions that defines theprocesses by which data is obtained,certified fit for use, stored, secured, andprocessed in such a way as to ensurethat the accessibility, reliability, andtimeliness of the data meet the needs ofthe data users within an organization.

data governance: The core com-ponent of data management; it definesthe roles, responsibilities, and pro-cesses for ensuring that data can betrusted and used by the entire organi-zation, with people identified and inplace who are responsible for fixing andpreventing issues with data.

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The need for data management is driven by a variety of factors, includingthe need to meet external regulations designed to manage risk associated withfinancial misstatement, the need to avoid the inadvertent release of sensitivedata, or the need to ensure that high data quality is available for key deci-sions. Haphazard or incomplete business processes and controls simply willnot meet these requirements. Formal management processes are needed togovern data.

Effective data governance requires business leadership and activeparticipation—it cannot be an effort that is led by the information systemorganization. The use of a cross-functional team is recommended becausedata and information systems are used by many different departments. Noone individual has a complete view of the organization’s data needs.Employment of a cross-functional team is particularly important for ensuringthat compliance needs are met. The data governance team should be a cross-functional, multilevel data governance team, consisting of executives, projectmanagers, line-of-business managers, and data stewards. The data stewardis an individual responsible for the management of critical data elements,including identifying and acquiring new data sources; creating and maintain-ing consistent reference data and master data definitions; and analyzing datafor quality and reconciling data issues. Data users consult with a data stew-ard when they need to know what data to use to answer a business ques-tion, or to confirm the accuracy, completeness, or soundness of data withina business context.

The data governance team defines the owners of the data assets in theenterprise. The team also develops a policy that specifies who is accountablefor various portions or aspects of the data, including its accuracy, accessibility,consistency, completeness, updating, and archiving. The team defines pro-cesses for how the data is to be stored, archived, backed up, and protected

FIGURE 5.21Data managementThe Data Management Association(DAMA) International has identified10 basic functions associated withdata management.Source: “Body of Knowledge,” DAMAInternational, Copyright DAMAInternational.








Reference &Master DataManagement

DataWarehousing& BusinessIntelligence


Document &Content


Meta DataManagement



data steward: An individualresponsible for the management ofcritical data elements, including identi-fying and acquiring new data sources;creating and maintaining consistentreference data and master data defini-tions; and analyzing data for quality andreconciling data issues.

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CriticalThinking Exercise

from cyberattacks, inadvertent destruction or disclosure, or theft. It also devel-ops standards and procedures that define who is authorized to update, access,and use the data. The team also puts in place a set of controls and audit pro-cedures to ensure ongoing compliance with organizational data policies andgovernment regulations.

Data lifecycle management (DLM) is a policy-based approach to manag-ing the flow of an enterprise’s data, from its initial acquisition or creation andstorage to the time when it becomes outdated and is deleted. See Figure 5.22.Several vendors offer software products to support DLM such as IBM Informa-tion Lifecycle Governance suite of software products.

Walgreens Data AssimilationAs of this writing, Walgreens is making moves to acquire Rite Aide in a move thatwould combine the nation’s second- and third-largest drugstore chains by marketshare, behind only fierce rival CVS Health. If this acquisition is approved, RiteAide customer data will need to be assimilated into Walgreens’ information sys-tems. For pharmacy customers, this includes sensitive information, such as per-sonal data, details of medications prescribed, health insurance identificationcodes, and doctors used. Walgreens will need this data to provide smooth anduninterrupted service to the old Rite Aide customers. In addition, Walgreen has inplace a system that automatically checks each new medication prescribed againstother medications the customer is taking to ensure there will be no adverse druginteractions. The data must be captured in such a way that ensures its accuracyand completeness.

FIGURE 5.22The big data life cycleA policy-based approach to man-aging the flow of an enterprise’sdata, from its initial acquisition orcreation and storage to the timewhen it becomes outdated and isdeleted.



or discard

Define data


Evaluate alternate




Store data

Publish data



and use

data lifecycle management(DLM): A policy-based approach tomanaging the flow of an enterprise’sdata, from its initial acquisition orcreation and storage to the time when itbecomes outdated and is deleted.


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Review Questions1. Identify specific federal regulations that apply to the use and management of

Walgreens and Rite Aide data.2. Would it make sense for Walgreen to appoint a data governance team to over-

see the Rite Aide data assimilation process? What might the responsibilities ofsuch a team be?

Critical Thinking Questions1. Do you think that Walgreens should attempt to automate the process of assim-

ilating Rite Aide customer, insurance, and medication data into its systems?Or, should Walgreens design an efficient manual process for former Rite Aidecustomers to provide the necessary data prior to or on their initial visit to aWalgreens pharmacy? What are the pros and cons of each approach? Whichapproach would you recommend?

2. Identify several potential negative consequences resulting from poor execu-tion of the data assimilation process.

Technologies Used to Process Big Data

Data Warehouses, Data Marts, and Data LakesThe raw data necessary to make sound business decisions is typically storedin a variety of locations and formats. This data is initially captured, stored,and managed by transaction-processing systems that are designed to supportthe day-to-day operations of an organization. For decades, organizations havecollected operational, sales, and financial data with their online transactionprocessing (OLTP) systems. These OLTP systems put data into databases veryquickly, reliably, and efficiently, but they do not support the types of big dataanalysis that today’s businesses and organizations require. Through the use ofdata warehouses and data marts, organizations are now able to access thedata gathered via OLTP system and use it more effectively to support decisionmaking.

Data WarehousesA data warehouse is a database that holds business information from manysources in the enterprise, covering all aspects of the company’s processes,products, and customers. Data warehouses allow managers to “drill down” toget greater detail or “roll up” to generate aggregate or summary reports. Theprimary purpose is to relate information in innovative ways and help man-agers and executives make better decisions. A data warehouse stores histori-cal data that has been extracted from operational systems and external datasources. See Figure 5.23.

Companies use data warehouses in a variety of ways, as shown in the fol-lowing examples:

● Walmart operates separate data warehouses for Walmart and Sam’s Cluband allows suppliers access to almost any data they could possibly needto determine which of their products are selling, how fast, and evenwhether they should redesign their packaging to fit more product onstore shelves.20

● UPS manages a 16-petabyte data warehouse containing data on some 16.3million packages it ships per day for 8.8 million customers, who make anaverage of 39.5 million tracking requests per day.21

● Orscheln (a billion dollar retailer that sells farm- and home-related pro-ducts through its some 150 stores spread across the Midwest)

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implemented an Oracle data warehouse that is used by merchants,buyers, planners, and store managers to perform analysis on inventorymanagement, sales performance, pricing and promotions effectiveness,vendor compliance, and loss prevention.22

● General Electric uses a data warehouse to hold data from sensors on theperformance of the blades on jet engines it manufactures.23

Because data warehouses are used for decision making, maintaining ahigh quality of data is vital so that organizations avoid wrong conclusions.For instance, duplicated or missing information will produce incorrect or mis-leading statistics (“garbage in, garbage out”). Due to the wide range of possi-ble data inconsistencies and the sheer data volume, data quality is consideredone of the biggest issues in data warehousing.

Data warehouses are continuously refreshed with huge amounts of datafrom a variety of sources so the probability that some of the sources contain“dirty data” is high. The ETL (extract, transform, load) process takes datafrom a variety of sources, edits and transforms it into the format used in thedata warehouse, and then loads this data into the warehouse, as shown inFigure 5.23. This process is essential in ensuring the quality of the data in thedata warehouse.

● Extract. Source data for the data warehouse comes from many sourcesand may be represented in a variety of formats. The goal of this process isto extract the source data from all the various sources and convert it intoa single format suitable for processing. During the extract step, data thatfails to meet expected patterns or values may be rejected from furtherprocessing (e.g., blank or nonnumeric data in net sales field or a productcode outside the defined range of valid codes).

FIGURE 5.23Elements of a data warehouseA data warehouse can helpmanagers and executives relateinformation in innovative ways tomake better decisions.


Transform andload



Query andanalysis tools

End-user access






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● Transform. During this stage of the ETL process, a series of rules oralgorithms are applied to the extracted data to derive the data that willbe stored in the data warehouse. A common type of transformation is toconvert a customer’s street address, city, state, and zip code to anorganization-assigned sales district or government census tract. Also, datais often aggregated to reduce the processing time required to create antic-ipated reports. For example, total sales may be accumulated by store orsales district.

● Load. During this stage of the ETL process, the extracted and transformeddata is loaded into the data warehouse. As the data is being loaded into thedata warehouse, new indices are created and the data is checked againstthe constraints defined in the database schema to ensure its quality. As aresult, the data load stage for a large data warehouse can take days.

A large number of software tools are available to support these ETL tasks,including Ab Initio, IBM InfoSphereDatastage, Oracle Data Integrator, and theSAP Data Integrator. Several open-source ETL tools are also available, includ-ing Apatar, Clover ETL, Pentaho, and Talend. Unfortunately, much of the ETLwork must be done by low-level proprietary programs that are difficult towrite and maintain.

Data MartsA data mart is a subset of a data warehouse. Data marts bring the data ware-house concept—online analysis of sales, inventory, and other vital businessdata that have been gathered from transaction processing systems—to small-and medium-sized businesses and to departments within larger companies.Rather than store all enterprise data in one monolithic database, data martscontain a subset of the data for a single aspect of a company’s business—forexample, finance, inventory, or personnel.

Data LakesA traditional data warehouse is created by extracting (and discarding somedata in the process), transforming (modifying), and loading incoming data forpredetermined and specific analyses and applications. This process can belengthy and computer intensive, taking days to complete. A data lake (alsocalled an enterprise data hub) takes a “store everything” approach to bigdata, saving all the data in its raw and unaltered form. The raw data residingin a data lake is available when users decide just how they want to use thedata to glean new insights. Only when the data is accessed for a specific anal-ysis is it extracted from the data lake, classified, organized, edited, or trans-formed. Thus a data lake serves as the definitive source of data in its original,unaltered form. Its contents can include business transactions, clickstreamdata, sensor data, server logs, social media, videos, and more.

NoSQL DatabasesA NoSQL database provides a means to store and retrieve data that is mod-eled using some means other than the simple two-dimensional tabular rela-tions used in relational databases. Such databases are being used to deal withthe variety of data found in big data and Web applications. A major advantageof NoSQL databases is the ability to spread data over multiple servers so thateach server contains only a subset of the total data. This so-called horizontalscaling capability enables hundreds or even thousands of servers to operateon the data, providing faster response times for queries and updates. Mostrelational database management systems have problems with such horizontalscaling and instead require large, powerful, and expensive proprietary serversand large storage systems.

data mart: A subset of a datawarehouse that is used by small- andmedium-sized businesses anddepartments within large companiesto support decision making.

data lake (enterprise data hub):A “store everything” approach to bigdata that saves all the data in its rawand unaltered form.

NoSQL database: A way to storeand retrieve data that is modeled usingsome means other than the simple two-dimensional tabular relations used inrelational databases.

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Another advantage of NoSQL databases is that they do not require apredefined schema; data entities can have attributes edited or assigned tothem at any time. If a new entity or attribute is discovered, it can be addedto the database dynamically, extending what is already modeled in thedatabase.

Most NoSQL databases do not conform to true ACID properties when pro-cessing transactions. Instead they provide for “eventual consistency” in whichdatabase changes are propagated to all nodes eventually (typically withinmilliseconds), so it is possible that user queries for data might not return themost current data.

The choice of a relational database management system versus a NoSQLsolution depends on the problem that needs to be addressed. Often, the datastructures used by NoSQL databases are more flexible than relational databasetables and, in many cases, they can provide improved access speed andredundancy.

The four main categories of NoSQL databases and offerings for each cate-gory are shown in Table 5.5 and summarized below. Note that some NoSQLdatabase products can meet the needs of more than one category.

● Key–value NoSQL databases are similar to SQL databases, but have onlytwo columns (“key” and “value”), with more complex information some-times stored within the “value” columns.

● Document NoSQL databases are used to store, retrieve, and managedocument-oriented information, such as social media posts and multime-dia, also known as semi-structured data.

● Graph NoSQL databases are used to understand the relationships amongevents, people, transactions, locations, and sensor readings and are well-suited for analyzing interconnections such as when extracting data fromsocial media.

● Column NoSQL databases store data in columns, rather than in rows, andare able to deliver fast response times for large volumes of data.

Criteo is a digital-advertising organization serving up ads to over one billionunique Internet users around the world every month. The firm automates therecommendation of ads and the selection of products from advertiser catalogsup to 30 billion times each day. A recommendation can require a calculationinvolving some 100 variables, and it must be completed quickly—within100 milliseconds or less. Criteo has deployed a Couchbase Server NoSQL data-base across 1,000 servers grouped into 24 clusters, providing access to a total of107 terabytes of database storage to meet these demanding processingrequirements.24

The National Security Agency (NSA), through its controversial PRISMprogram, uses NoSQL technology to analyze email messages, phone conver-sations, video chats, and social media interactions gleaned from the servers

TABLE 5.5 Popular NoSQL database products, by categoryKey–Value Document Graph Column

HyperDEX Lotus Notes Allegro Accumulo

Couchbase Server Couchbase Server Neo4J Cassandra

Oracle NoSQLDatabase

Oracle NoSQLDatabase

InfiniteGraph Druid

OrientDB OrientDB OrientDB Vertica

MongoDB Virtuoso HBase

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of major service providers, including Apple, Facebook, Google, Microsoft,Skype, Yahoo, and YouTube. The Accumulo NoSQL database enables itsusers to assign each piece of data a security tag that defines how people canaccess that data and who can access that data. This feature makes it possiblefor NSA agents to interrogate certain details while blocking access to person-ally identifiable information.25

Amazon DynamoDB is a NoSQL database that supports both documentand key–value store models. MLB Advanced Media (MLBAM) uses DynamoDBto power its revolutionary Player Tracking System, which reveals detailedinformation about the nuances and athleticism of the game. Fans, broadcas-ters, and teams are finding this new data entertaining and useful. The systemtakes in data from ballparks across North America and provides enough com-puting power to support real-time analytics and produce results in seconds.26

HadoopHadoop is an open-source software framework that includes several softwaremodules that provide a means for storing and processing extremely large datasets, as shown in Figure 5.24. Hadoop has two primary components: a dataprocessing component (a Java-based system called MapReduce, which is dis-cussed in the next section) and a distributed file system (Hadoop DistributedFile System, HDFS) for data storage. Hadoop divides data into subsets anddistributes the subsets onto different servers for processing. A Hadoop clustermay consist of thousands of servers. In a Hadoop cluster, a subset of the datawithin the HDFS and the MapReduce system are housed on every server inthe cluster. This places the data processing software on the same serverswhere the data is stored, thus speeding up data retrieval. This approachcreates a highly redundant computing environment that allows the applicationto keep running even if individual servers fail.

FIGURE 5.24Hadoop environmentHadoop can be used as a stagingarea for data to be loaded into a datawarehouse or data mart.

Historical data from legacy system

Data fromexternal source #1

Data fromexternal source #2

Data from Facebook

Data from ERP system

Data from CRM system

Hadoop cluster runningon 100s of servers

Data mart

Data mart


Data from sensorson production floor

Data from visitorsto organization’sWeb site





Hadoop: An open-source softwareframework including several softwaremodules that provide a means forstoring and processing extremely largedata sets.

Hadoop DistributedFile System (HDFS): A systemused for data storage that divides thedata into subsets and distributes thesubsets onto different servers forprocessing.

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A MapReduce program is composed of a Map procedure that performsfiltering and sorting (such as sorting customer orders by product ID into queues,with one queue for each product ID) and a Reduce method that performs asummary operation (such as counting the number of orders in each queue, thusdetermining product ID frequencies). MapReduce employs a JobTracker thatresides on the Hadoop master server as well as TaskTrackers that sit on eachserver within the Hadoop cluster of servers. The JobTracker divides the comput-ing job up into well-defined tasks and moves those tasks out to the individualTaskTrackers on the servers in the Hadoop cluster where the needed data resides.These servers operate in parallel to complete the necessary computing. Once theirwork is complete, the resulting subset of data is reduced back to the central nodeof the Hadoop cluster.

For years, Yahoo! used Hadoop to better personalize the ads and articlesthat its visitors see. Now Hadoop is used by many popular Web sites and ser-vices (such as eBay, Etsy, Twitter, and Yelp). Verizon Wireless uses big datato perform customer churn analysis to get a better sense of when a customerbecomes dissatisfied. Hadoop allows Verizon to include more detailed dataabout each customer, including clickstream data, chats, and even social mediasearches, to predict when a customer might switch to a new carrier.

Hadoop has a limitation in that it can only perform batch processing; itcannot process real-time streaming data such as stock prices as they flow intothe various stock exchanges. However, Apache Storm and Apache Spark areoften integrated with Hadoop to provide real-time data processing. ApacheStorm is a free and open source distributed real-time computation system.Storm makes it easy to reliably process unbounded streams of data. ApacheSpark is a framework for performing general data analytics in a distributedcomputing cluster environment like Hadoop. It provides in memory computa-tions for increased speed of data processing. Both Storm and Spark run on topof an existing Hadoop cluster and access data in a Hadoop data store (HDFS).

Medscape MedPulse is a medical news app for iPhone and iPad users thatenables healthcare professionals to stay up-to-date on the latest medical newsand expert perspectives. The app uses Apache Storm to include an automaticTwitter feed (about 500 million tweets per day are tweeted on Twitter) tohelp users stay informed about important medical trends being shared in realtime by physicians and other leading medical commentators.27,28

In-Memory DatabasesAn in-memory database (IMDB) is a database management system thatstores the entire database in random access memory (RAM). This approachprovides access to data at rates much faster than storing data on some formof secondary storage (e.g., a hard drive or flash drive) as is done with tradi-tional database management systems. IMDBs enable the analysis of big dataand other challenging data-processing applications, and they have becomefeasible because of the increase in RAM capacities and a correspondingdecrease in RAM costs. In-memory databases perform best on multiple multi-core CPUs that can process parallel requests to the data, further speedingaccess to and processing of large amounts of data.29 Furthermore, the adventof 64-bit processors enabled the direct addressing of larger amounts of mainmemory. Some of the leading providers of IMDBs are shown in Table 5.6.

KDDI Corporation is a Japanese telecommunications company that pro-vides mobile cellular services for some 40 million customers. The companyconsolidated 40 existing servers into a single Oracle SuperCluster running theOracle Times Ten in-memory database to make its authentication system thatmanages subscriber and connectivity data run faster and more efficiently.This move reduced its data center footprint by 83 percent and power con-sumption by 70 percent while improving the overall performance and

MapReduce program: A compos-ite program that consists of a Mapprocedure that performs filtering andsorting and a Reduce method thatperforms a summary operation.

in-memory database (IMDB): Adatabase management system thatstores the entire database in randomaccess memory (RAM).

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CriticalThinking Exercise

availability of the system. As a result, system costs were reduced and customerservice improved.30

Telefonica BrasilTelefonica Brasil is one of the largest telecommunications companies in Brazil,and it provides landline and mobile services under the brand name Vivo for mil-lions of consumers. The company is considering using big data to perform cus-tomer churn analysis in order to anticipate when a customer is unhappy andlikely to drop its service for that of a competitor.

Review Questions1. What sources of data might Telefonica Brasil use to perform customer churn

analysis?2. What database technology options might the firm elect to use?

Critical Thinking Questions1. Why is it unlikely that a traditional SQL database would be able to meet the

firm’s needs?2. In addition to a database management system, what other information system

technology and resources are likely needed for this type of project?


Principle:The database approach to data management has become broadlyaccepted.

Data is one of the most valuable resources that a firm possesses. It is orga-nized into a hierarchy that builds from the smallest element to the largest. Thesmallest element is the bit, a binary digit. A byte (a character such as a letter ornumeric digit) is made up of eight bits. A group of characters, such as a nameor number, is called a field (an object). A collection of related fields is a record;a collection of related records is called a file. The database, at the top of thehierarchy, is an integrated collection of records and files.

An entity is a generalized class of objects (such as a person, place, or thing)for which data is collected, stored, and maintained. An attribute is a character-istic of an entity. Specific values of attributes—called data items—can be foundin the fields of the record describing an entity. A data key is a field within arecord that is used to identify the record. A primary key uniquely identifies arecord, while a secondary key is a field in a record that does not uniquelyidentify the record.

TABLE 5.6 IMDB providersDatabase SoftwareManufacturer Product Name Major Customers

Altibase HDB E*Trade, ChinaTelecom

Oracle Times Ten Lockheed Martin,Verizon Wireless

SAP High-Performance AnalyticAppliance (HANA)

eBay, Colgate

Software AG Terracotta Big Memory AdJuggler

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Principle:Data modelling is a key aspect of organizing data and information.

When building a database, an organization must consider content, access,logical structure, physical organization, archiving, and security of the database.One of the tools that database designers use to show the logical structure andrelationships among data is a data model. A data model is a map or diagram ofentities and their relationships. Enterprise data modeling involves analyzing thedata and information needs of an entire organization and provides a roadmapfor building database and information systems by creating a single definitionand format for data that can ensure compatibility and the ability to exchangeand integrate data among systems. Entity-relationship (ER) diagrams can beused to show the relationships among entities in the organization.

The relational database model places data in two-dimensional tables.Tables can be linked by common data elements, which are used to accessdata when the database is queried. Each row in a relational database tablerepresents a record, and each column represents an attribute (or field). Theallowable values for each attribute are called the attribute’s domain. Basicdata manipulations include selecting, projecting, joining, and linking. The rela-tional model is easier to control, more flexible, and more intuitive than otherdatabase models because it organizes data in tables.

Data cleansing is the process of detecting and then correcting or deletingincomplete, incorrect, inaccurate, or irrelevant records that reside in the data-base. The goal of data cleansing is to improve the quality of the data used indecision making.

Principle:A well-designed and well-managed database is an extremely valuable toolin supporting decision making.

A database management system (DBMS) is a group of programs used as aninterface between a database and its users and between a database and otherapplication programs. When an application program requests data from thedatabase, it follows a logical access path. The actual retrieval of the data followsa physical access path. Records can be considered in the same way: A logicalrecord is what the record contains; a physical record is where the record is storedon storage devices. Schemas are used to describe the entire database, its recordtypes, and its relationships to the DBMS. Schemas are entered into the computervia a data definition language, which describes the data and relationships in aspecific database. Another tool used in database management is the data dictio-nary, which contains detailed descriptions of all data in the database.

A DBMS provides four basic functions: offering user views, creating andmodifying the database, storing and retrieving data, and manipulating dataand generating reports. After a DBMS has been installed, the database can beaccessed, modified, and queried via a data manipulation language. A type ofspecialized data manipulation language is the query language, the most com-mon being Structured Query Language (SQL). SQL is used in several populardatabase packages today and can be installed in PCs and mainframes.

A database administrator (DBA) plans, designs, creates, operates, secures,monitors, and maintains databases. A data administrator is a person positionresponsible for defining and implementing consistent principles for a variety ofdata issues, including setting data standards and data definitions that applyacross all the databases in an organization.

Selecting a DBMS begins by analyzing the information needs of the organi-zation. Important characteristics of databases include the size of the database,the number of concurrent users, the performance of the database, the ability ofthe DBMS to be integrated with other systems, the features of the DBMS, thevendor considerations, and the cost of the database management system.

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In database as a service (DaaS) arrangement, the database is stored on aservice provider’s servers and accessed by the subscriber over a network, typi-cally the Internet. In DaaS, database administration is provided by the serviceprovider.

Principle:We have entered an era where organizations are grappling with a tremen-dous growth in the amount of data available and struggling how to man-age and make use of it.

“Big data” is the term used to describe data collections that are so enor-mous and complex that traditional data management software, hardware, andanalysis processes are incapable of dealing with them.

There are many challenges associated with big data, including how tochoose what subset of data to store, where and how to store the data, how tofind those nuggets of data that are relevant to the decision making at hand,how to derive value from the relevant data, and how to identify which dataneeds to be protected from unauthorized access.

Data management is an integrated set of 10 functions that defines the pro-cesses by which data is obtained, certified fit for use, stored, secured, and pro-cessed in such a way as to ensure that the accessibility, reliability, andtimeliness of the data meet the needs of the data users within an organization.Data governance is the core component of data management; it defines theroles, responsibilities, and processes for ensuring that data can be trusted andused by the entire organization with people identified and in place who areresponsible for fixing and preventing issues with data.

Principle:A number of available tools and technologies allow organizations to takeadvantage of the opportunities offered by big data.

Traditional online transaction processing (OLTP) systems put data intodatabases very quickly, reliably, and efficiently, but they do not support thetypes of data analysis that today’s businesses and organizations require. Toaddress this need, organizations are building data warehouses specificallydesigned to support management decision making.

An extract, transform, load process takes data from a variety of sources,edits and transforms it into the format to be used in the data warehouse, andthen loads the data into the warehouse.

Data marts are subdivisions of data warehouses and are commonly devotedto specific purposes or functional business areas.

A data lake (also called an enterprise data hub) takes a “store everything”approach to big data, saving all the data in its raw and unaltered form.

A NoSQL database provides a means to store and retrieve data that is mod-elled using some means other than the simple two-dimensional tabular rela-tions used in relational databases. There are four types of NoSQL databases—key-value, document, graph, and column.

Hadoop is an open-source software framework that includes several soft-ware modules that provide a means for storing and processing extremely largedata sets. Hadoop has two primary components—a data processing component(MapReduce) and a distributed file system (Hadoop Distributed File System orHDFS) for data storage. Hadoop divides data into subsets and distributes thesubsets onto different servers for processing. A Hadoop cluster may consist ofthousands of servers. A subset of the data within the HDFS and the MapReducesystem are housed on every server in the cluster.

An in-memory database (IMDB) is a database management system thatstores the entire database in random access memory to improve storage andretrieval speed.

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Key Terms

ACID properties




concurrency control

data administrator

data cleansing (data cleaning or data scrubbing)

data definition language (DDL)

data dictionary

data governance

data item

data lake (enterprise data hub)

data lifecycle management (DLM)

data management

data manipulation language (DML)

data mart

data model

data steward


database administrators (DBAs)

database approach to data management

database as a service (DaaS)

database management system (DBMS)


enterprise data model


entity-relationship (ER) diagram




Hadoop Distributed File System (HDFS)

hierarchy of data

in-memory database (IMDB)



MapReduce program

NoSQL database

primary key



relational database model




Chapter 5: Self-Assessment Test

The database approach to data management hasbecome broadly accepted.

1. A field or set of fields that uniquely identifies arecord in a database is called a(n) .a. attributeb. data itemc. recordd. primary key

2. The key concept of the database approach to datamanagement is that .a. all records in the database are stored in a two-

dimensional tableb. multiple information systems share access to a

pool of related datac. only authorized users can access the datad. a database administrator “owns” the data

Data modeling is a key aspect of organizing dataand information.

3. A(n) provides an organizational-level roadmap for building databases and infor-mation systems by creating a single definition andformat for data.

a. databaseb. enterprise data modelc. entity relationship diagramd. database management system

4. The model is a simple but highlyuseful way to organize data into collections oftwo-dimensional tables called relations.

5. The ability to combine two or more tablesthrough common data attributes to form a newtable with only the unique data attributes iscalled .

6. SQL databases conform to ACID properties,which include atomicity, consistency, isolation,and .

A well-designed and well-managed database is anextremely valuable tool in supporting decisionmaking.

7. The process of detecting and then correcting ordeleting incomplete, incorrect, inaccurate, orirrelevant records that reside in a database iscalled .

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8. Because the DBMS is responsible for providingaccess to a database, one of the first steps ininstalling and using a relational database involves“telling” the DBMS the logical and physicalstructure of the data and relationships among thedata in the database. This description of an entiredatabase is called a(n) .

9. A(n) is an individual responsible forthe management of critical data elements, includ-ing identifying and acquiring new data sources;creating and maintaining consistent reference dataand master data definitions; and analyzing data forquality and reconciling data issues.

10. Data administrators are skilled and trained ISprofessionals who hold discussions with users todefine their data needs; apply database program-ming languages to craft a set of databases to meetthose needs; and assure that data is secure fromunauthorized access. True or False?

11. With , the database is stored on aservice provider’s servers and accessed by theservice subscriber over the Internet, with thedatabase administration handled by the serviceprovider.

We have entered an era where organizations aregrappling with a tremendous growth in the amountof data available and struggling to understand howto manage and make use of it.

12. Three characteristics associated with big datainclude volume, velocity, and .

13. The Data Management Association has defined 10major functions of data management, with thecore component being .a. data quality managementb. data security managementc. data governanced. data architecture management

A number of available tools and technologies alloworganizations to take advantage of the opportu-nities offered by big data.

14. A(n) database provides a means tostore and retrieve data that is modeled usingsome means other than simple two-dimensionalrelations used in relational databases.

15. Hadoop has two primary components—a dataprocessing component and a distributed file sys-tem called .a. MapReduce and HDFSb. TaskTracker and JobTrackerc. Key-value and graphd. SQL and NoSQL

16. An is a database management sys-tem that stores the entire database in randomaccess memory to provide fast access.

Chapter 5: Self-Assessment Test Answers

1. d2. b3. b4. relational database5. linking6. durability7. data cleansing, data cleaning, or data scrubbing8. schema

9. data steward10. False11. database as a service (DaaS)12. variety13. c14. NoSQL15. a16. in-memory database

Review Questions

1. How would you define the term “database”? Howwould you define the term “database manage-ment system”?

2. In the hierarchy of data, what is the differencebetween a data attribute and a data item? What isthe domain of an attribute?

3. What is meant by the database approach to datamanagement?

4. What is meant by data archiving? Why is this animportant consideration when operating adatabase?

5. What is an entity-relationship diagram, and whatis its purpose?

6. Identify four basic data manipulations performedon a relational database using SQL.

7. What is data scrubbing?8. What is database as a service (DaaS)? What are

the advantages and disadvantages of using theDaaS approach?

9. What is Hadoop? What are its primary compo-nents, and what does each do?

10. What is a schema, and how is it used?11. What is concurrency control? Why is it

important?12. What is in-memory database processing, and

what advantages does it provide?

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13. What is the difference between projecting andjoining?

14. What is big data? Identify three characteristicsassociated with big data.

15. What is a data warehouse, and how is it differentfrom a traditional database used to support OLTP?

16. What is a data lake, and how is it different from adata warehouse?

17. How does an in-memory database provide fastaccess to data?

Discussion Questions

1. What concerns might be raised by performingdata cleansing on a large set of raw data before itis used for analysis? How might these concerns beaddressed?

2. Outline some specific steps an organization mighttake to perform data cleansing to ensure theaccuracy and completeness of its customer data-base before adding this data to a data warehouse.How would you decide when the data is accurateenough?

3. SQL databases conform to ACID properties.Briefly describe the ACID properties, and statethe purpose of each. How does conformance toACID properties affect the performance of SQLdatabases?

4. Describe how a NoSQL database differs from arelational database. Identify and briefly discussthe four types of NoSQL databases.

5. Review Table 5.4, which provides a list of rules,regulations, and standards with which U.S. infor-mation systems organizations must comply.Which of these standards do you think has themost impact on safeguarding the security of per-sonal information? Which of these standards haveminimal impact on you personally?

6. Identify and briefly describe the steps in the ETLprocess. What is the goal of the ETL process?

7. Consider three organizations that have databasesthat likely store information about you—the Fed-eral Internal Revenue Service, your state’s Bureauof Motor Vehicles, and Equifax, the consumerreporting agency. Go to the home page of each ofthese organizations, and find answers to the fol-lowing questions. How is the data in each data-base captured? Is it possible for you to request aprintout of the contents of your data record fromeach database? Is it possible for you to correcterrors you find in your data record? What dataprivacy concerns do you have concerning howthese databases are managed?

8. Identity theft, where people steal personal infor-mation, continues to be a problem for consumersand businesses. Assume that you are the databaseadministrator for a corporation with a large data-base that is accessible from the Web. What stepswould you implement to prevent people fromstealing personal information from the corporatedatabase?

9. Read the article “Why ‘Big Data’ Is a Big Deal” byJonathan Shaw in the March-April 2014 HarvardMagazine. What does Shaw think is the revolu-tion in big data? Which of the many big dataapplications that he mentions do you find to bethe most interesting? Why?

Problem-Solving Exercises

1. Develop a simple data model for a student data-base that includes student contact data, studentdemographic data, student grades data, and stu-dent financial data. Determine the data attributesthat should be present in each table, and identifythe primary key for each table. Develop a com-plete ER diagram that shows how these tables arerelated to one another.

2. A company that provides a movie-streaming sub-scription service uses a relational database tostore information on movies to answer customerquestions. Each entry in the database contains thefollowing items: Movie ID (the primary key),movie title, year made, movie type, MPAA rating,starring actor #1, starring actor #2, starring

actor #3, and director. Movie types are action,comedy, family, drama, horror, science fiction,and western. MPAA ratings are G, PG, PG-13, R,NC-17, and NR (not rated). Using a graphics pro-gram, develop an entity-relationship diagram fora database application for this database.

3. Use a database management system to build adata-entry screen to enter this data. Build a smalldatabase with at least a dozen entries.

4. To improve service to their customers, theemployees of the movie-streaming company haveproposed several changes that are being consid-ered for the database in the previous exercise.From this list, choose two database modifications,and then modify the data-entry screen to capture

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and store this new information. The proposedchanges are as follows:

a. Add the date that the movie was first releasedto the theaters.

b. Add the executive producer’s name.

c. Add a customer rating of one, two, three,four, or five stars, based on the number ofrentals.

d. Add the number of Academy Awardnominations.

Team Activities

1. Imagine that you and your team have been hiredto develop an improved process for evaluatingwhich students should be accepted to your col-lege and, of those, which should be awardedacademic scholarships. What data besides collegeentrance scores and high school transcripts mightyou consider using to make these determinations?Where might you get this data? Develop an ERdiagram showing the various tables of data thatmight be used.

2. You and your team have been selected to repre-sent the student body in defining the userrequirements for a new student database for yourschool. What actions would you take to ensurethat the student reporting needs and data privacyconcerns of the students are fully identified? What

other resources might you enlist to help you indefining these requirements?

3. As a team of three or four classmates, interviewmanagers from three different organizations thathave implemented a customer database. Whatdata entities and data attributes are contained ineach database? What database management sys-tem did each company select to implement itsdatabase, and why? How does each organizationaccess its database to perform analysis? Have themanagers and their staff received training in anyquery or reporting tools? What do they like abouttheir databases, and what could be improved?Weighing the information obtained, identifywhich company has implemented the best cus-tomer database.

Web Exercises

1. Do research to find out more about the contro-versial NSA PRISM program. What is the sourceof data for this program? What is the purpose ofthe program? Are you a supporter of the PRISMprogram? Why or why not?

2. Do research to find an example of an organiza-tion struggling to deal with the rapid growth of

the big data it needs for decision making. Whatare the primary issues it is facing? What is theorganization doing to get a good grip on datamanagement and data governance?

3. Do research to find three different estimates of therate at which the amount of data in our digital uni-verse is growing. Discuss why these estimates differ.

Career Exercises

1. Describe the role of a database administrator.What skills, training, and experiences are neces-sary to fulfill this role? How does this differ fromthe role of a data administrator? What about the

role of a data steward? Is any one of these roles ofinterest to you? Why or why not?

2. How could you use big data to do a better job atwork? Give some specific examples of how youmight use big data to gain valuable new insights.

Case Studies

Case One

WholeWorldBand: Digital Recording StudioWholeWorldBand is a collaborative online music and videoplatform that enables anyone to collaborate with others tocreate music videos. The service was founded by KevinGodley, a musician and music video director, and isaccessible via a Web-based app available on the iPhone andiPad and on Windows and MacOS computers. Anyone can

contribute to WholeWorldBand using just the camera andmicrophone in their computer or mobile device. The serviceenables users—whatever their level of musical ability—torecord and perform with music legends and friends. UsingWholeWorldBand, you can start a video-recording sessionthat others may join, create your own personal video mixwith up to six performers, and then share the results withyour friends and fans via Facebook, Twitter, or YouTube.Users can also pay to collaborate with other musicians who

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have posted their own content. Collaborating on a projectmight mean providing new audio or video components orremixing existing ones.

WholeWorldBand uses a sophisticated digital rightsmanagement system to ensure that artists earn revenue for thework they contribute—if your work gets used, you get paid.WholeWorldBand provides users the opportunity to performand record with popular artists. A number of major recordingartists have already uploaded tracks including The Edge (U2),Ronnie Wood (Rolling Stones), Taylor Hawkins (Foo Fighters),Stewart Copeland (The Police), Liam Ó Maonlaí (Hot HouseFlowers), Michael Bublé, Phil Manzanera (Roxy Music), DaveStewart (Eurythmics), and Danny O’Reilly (The Coronas).

The platform generates revenue from registered userswho purchase subscriptions (or sessions) and from royaltiespaid by third parties in situations where users have sharedand distributed content using the app or the Web site. Eachsession artist is entitled to receive a share of the revenuegenerated when other registered users purchase sessions forthe purpose of creating contributions and/or mixes inrelation to their original track. Keeping track of contributingartists, royalty payments, and the necessary revenue splitsamong artists, third parties, and WholeWorldBand canbecome quite detailed and tedious.

Critical Thinking Questions:1. Identify some of the challenges associated with build-

ing an information system infrastructure to supportthis new service. Would cloud computing be anappropriate solution to address these challenges? Whyor why not?

2. Would WholeWorldBand be likely to employ SQL,NoSQL, or a mix of both kinds of databases? Explainyour answer.

3. Go to the WholeWorldBand Web site at, and find its Terms of Use.Summarize the measures outlined to protect theunauthorized use of copyrighted material. Do youthink these measures are adequate? Why or why not?

SOURCES: “WholeWorldBand” YouTube video, 0:33,, accessed October 7,2015; “EnterpriseDB’sPostgres Plus Cloud Database Strikesa Chord with WholeWorldBand,” EntrepriseDB,, accessedOctober 7, 2015; John, “WholeWorldBand Wins “Buma MusicMeets Tech” Award at EurosonicNoorsderslag in Holland,”Irish Tech News, January 18, 2014,; “WholeWorldBandTerms of Use,” WholeWorldBand,, accessed October 7, 2015.

Case Two

Mercy’s Big Data Project Aims to Boost OperationsMaking the most of the data it collects is a challenge for anyorganization, and those in the healthcare industry are noexception. Based in St. Louis, Missouri, Mercy health systemincludes 46 acute care and specialty hospitals, with more

than 700 outpatient facilities and physician practices inArkansas, Kansas, Missouri, and Oklahoma. With more than40,000 employees, including over 2,000 physicians, Mercy’svision is to deliver a “transformative health experience”through a new model of care. With such ambitious goals,Mercy has a compelling interest in harnessing the power ofthe data it collects. To do so, the health system needed tooverhaul is data-management infrastructure and move intothe world of big data.

To make that move, Mercy partnered with softwareprovider Hortonworks to create the Mercy Data Library, aHadoop-based data lake that contains batch data as well asreal-time data (stored in HBase, a distributed nonrelationaldatabase structure) from sources such as the Mercy’s ERP andelectronic health record (EHR) systems. According to PaulBoal, director of data engineering and analytics at Mercy,“The blending of base batch data and real-time updateshappens on demand when a query is run against the system.”Mercy’s new Hadoop environment, which containsinformation on more than 8 million patients, holds over 40terabytes of data housed on 41 servers spread out over fourclusters.

Outside of improving patient care, a primary motive forthe move to Hadoop was to improve Mercy’s administrativeefficiency, particularly in the areas of medical documentationand claims generation. Ensuring that physicians, nurses, andlab staff complete the necessary documentation for a patientprior to discharge improves the chances that the hospital willgenerate an accurate and complete claim-reimbursementrequest. Prior to its Hadoop implementation, the health systemhad already initiated an automatic-documentation-reviewprocess. Now, Mercy plans to make use of real-time data alongwith the power of Hadoop to further improve upon thisprocess. For instance, documentation specialists can generatereports that help them follow up with physicians regardingmissing documentation during each morning’s clinical rounds.The hospital expects the new system will generate more than$1 million annually in new revenue based on claims thataccurately reflect hospital patients’ diagnoses and treatment.

Mercy is also focusing the power of its new technologyon areas directly related to clinical care. “What we’re buildingout is a real-time clinical applications platform, so we’relooking for other opportunities to turn that into decisionsupport,” says Boal. One such project involves leveraging theHadoop environment to make better use of data generated bythe electronic monitors in the intensive care units (ICUs)across the health system. Mercy now gathers 900 timesmore detailed data from its ICUs than it did before itsimplementation of Hadoop. The previous database systemwas only capable of pulling vital sign information for Mercy’smost critically ill patients every 15 minutes; the new systemcan do it once every second. The goal is to use the real-timedata for better analysis, such as refining the health system’spredictive models on the early-warning signs of life-threatening medical problems in the ICU setting.

Like all healthcare providers, Mercy is required tomaintain an audit trail for its EHR system. The audit trailkeeps track of everyone who accesses any piece of patientinformation via the EHR. In addition to satisfying thisregulatory requirement, Mercy expects Hadoop will help itput that audit trail data to a new use—analyzing staffbehavior patterns and developing a better understanding of

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how processes actually get done. And in another Hadoop-related project, lab staff are now able to quickly searchthrough terabytes worth of lab notes that were previouslyinaccessible.

Critical Thinking Questions1. One of the advantages of a Hadoop implementation is

that it provides a high level of computing redundancy.Why is that particularly important in a healthcaresetting?

2. Explain how the three characteristics of big data(volume, velocity, and variety) apply to the databeing collected by healthcare providers suchas Mercy.

3. How might Mercy benefit from an enterprise datamodel? Does Mercy’s move into big data make it moreor less important that it have a clearly developedmodel that states the organizations’ data needs andpriorities?

SOURCES: “Transforming the Health of Our Communities,”Mercy,, accessed December 16, 2015; “Towards aHealthcare Data Lake: Hadoop at Mercy,” Hortonworks,, accessed December 16,2015; Wilson, Linda, “Mercy’s Big Data Project Aims to BoostOperations,” Information Management, October 7, 2015,; Perna, Gabriel, “Moving DataDown I-44 and Making it Actionable,” HealthcareInformatics, May 13, 2015,; Henschen, Doug, “Hadoop’s Growing EnterprisePresence Demonstrated by Three Innovative Use Cases,”ZDNet, September 10, 2015,;“Handling Electronic Health Records(EHR) Access Logs with Hadoop,” StampedeCon,, accessed December 17, 2015.


1. Zettel, Jonathan, “Offshore Leaks Database Allows Pub-lic to Search Offshore Tax Haven Info,” CTV News, June15, 2013,

2. “FAQ on Lost/Stolen Devices,” CTIA Wireless Associa-tion,, accessed September 4, 2015.

3. “Overview of the GTD,” Global Terrorism Database,, accessed September 4,2015.

4. Hibbard, Katharine, “New Resource Available in Recover-ing Stolen Property,” Leads Online, August 14, 2015,

5. “I-Nexus Selects AppDynamics to Drive Continuous Perfor-mance Improvement,”AppDynamics,, accessed September 6, 2015.

6. “IBM Healthcare Provider Data Model,” IBM,, accessed September 6, 2015.

7. “Complete Data Integration from Legacy Systems andEpic, In Half the Time,”Perficient,, accessed September 6, 2015.

8. “Banco Popular,” Trillium Software,,accessed September 7, 2015.

9. Proffitt, Brian, “FoundationDB’s NoSQL BreakthroughChallenges Relational Database Dominance,” ReadWrite, March 8, 2013,

10. Golden, Matt, “New DOE Effort to Standardize theEnergy Efficiency Data Dictionary,” EDF Blogs, August 8,


11. “Three Charged for Largest-Ever Bank Data Breach,” CBSNews, November 10, 2015,

12. “About TinyCo,”TinyCo,,accessed September 8, 2015.

13. “AWS Case Study: TinyCo,” Amazon Web Services,,accessed September 8, 2015.

14. Laney, Doug, “3D Data Management: Controlling DataVolume, Velocity, and Variety,” META Group, February6, 2001,

15. Turner, Vernon, David Reinsel, John F. Gantz, and Ste-phen Minton, “The Digital Universe of Opportunities:Rich Data and the Increasing Value of the Internet ofThings,” EMC2, April 2014,

16. “Seminars about Long-Term Thinking,” The Long NowFoundation,, accessed November 8, 2013.

17. Rosenbaum, Steven, “Is It Possible to Analyze DigitalData If It’s Growing Exponentially?” Fast Company,January 13, 2013,

18. Ibid.19. Krantz, Matt, “Lack of Accuracy Can Wreak Havoc on

Stock Market,” USA Today-The Enquirer, September 12,2015, p. 6B.

20. Harris, Derrick, “Why Apple, eBay, and Walmart HaveSome of the Biggest Data Warehouses You’ve EverSeen,” GIGAOM, March 27, 2013,

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21. Davenport, Thomas H. and Jill Dyché, “Big Data in BigCompanies,” International Institute for Analytics,, accessed April 1, 2015.

22. “Yormari Customer Success Stories: Orscheln Farm &Home,”Yomari,, accessed November 12, 2015.

23. Davenport, Thomas H. and Jill Dyché, “Big Data in BigCompanies,” International Institute for Analytics,, accessed April 1, 2015.

24. “Customer Story:Criteo Boosts Performance, Scale ofDigital Ad Platform with Couchbase Server,”Couchbase,, accessedSeptember 19, 2015.

25. Henschen, Doug, “Defending NSA Prism’s Big DataTools,” InformationWeek, June 11, 2013,

26. “AWS Case Study: MLB Advanced Media,” Amazon WebServices,, accessed November 12,2015.

27. Dvorkin, Eugene, “Scalable Big Data Stream Processingwith Storm and Groovy,” November 4, 2014,

28. “Press Release: WebMD Medscape,” Newswire,April 24, 2014,

29. Brocke, Jan vom, “In-Memory Database Business Value,”Business Innovation, July 25, 2013.

30. “Oracle Press Release:KDDI Selects Oracle SuperCluster toStrengthen Authentication System for Mobile Core Net-work and Support Rapid Data Growth,” Oracle, January22, 2014,

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6 Networks and Cloud Computing


Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

Know?Did You

• Auto insurers are testing usage-based insurance programsin which premiums are based on data gathered from adevice installed in the insured auto. Instead of setting thepremium based on traditional factors such as the driver’sage and gender, it is based on miles driven per year, whereand when they drive, and how safely they drive. The goal isto charge a premium that is commensurate with the riskassociated with auto owner’s driving habits.

• Sensors embedded in General Electric (GE) aircraftengines collect some 5,000 individual data points persecond. This data is analyzed while the aircraft is in

flight to adjust the way the aircraft performs, therebyreducing fuel consumption. The data is also used toplan predictive maintenance on the engines based onengine component wear and tear. In 2013, this tech-nology helped GE earn $1 billion in incremental incomeby delivering performance improvements, less down-time, and more flying miles.

• It is estimated that in just one year, mobile operators lost$23 billion in revenue as teens shifted away from textingover cellular networks in favor of communicating with theirfriends over the Internet using instant messaging apps.1

Principles Learning Objectives

• A network has many fundamental components,which—when carefully selected and effectivelyintegrated—enable people to meet personal and orga-nizational objectives.

• Identify and briefly describe three network topologiesand four different network types, including the uses andlimitations of each.

• Identify and briefly discuss several types of bothguided and wireless communications.

• Identify several network hardware devices and definetheir functions.

• Together, the Internet and the World Wide Web providea highly effective infrastructure for delivering andaccessing information and services.

• Briefly describe how the Internet and the Web work,including various methods for connecting to theInternet.

• Outline the process and tools used in developing Webcontent and applications.

• List and briefly describe several Internet and Webapplications.

• Explain how intranets and extranets use Internet tech-nologies, and describe how the two differ.

• Organizations are using the Internet of Things (IoT) tocapture and analyze streams of sensor data to detectpatterns and anomalies—not after the fact, but whilethey are occurring—in order to have a considerableimpact on the event outcome.

• Define what is meant by the Internet of Things (IoT),and explain how it works.

• Identify and briefly discuss several practical applica-tions of the Internet of Things (IoT).

• Categorize and summarize several potential issues andbarriers associated with the expansion of the Internet ofThings (IoT).

• Cloud computing provides access to state-of-the-arttechnology at a fraction of the cost of ownership andwithout the lengthy delays that can occur when anorganization tries to acquire its own resources.

• Discuss how cloud computing can increase the speed andreduce the costs of new product and service launches.

• Summarize three common problems organizationsencounter in moving to the cloud.

• Discuss the pros and cons of private and hybrid cloudcomputing compared to public cloud computing.

Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

Why Learn about Networks and Cloud Computing?Today’s decision makers need to access data wherever it resides. They must be able to establish fast,reliable connections to exchange messages, upload and download data and software, route businesstransactions to processors, connect to databases and network services, and send output to whereverit is needed. Regardless of your chosen major or future career field, you will make use of thecommunications capabilities provided by networks, including the Internet, intranets, and extranets.This is especially true for those whose role is connected to the supply chain and who rely heavily onnetworks to support cooperation and communication among workers in inbound logistics, warehouseand storage, production, finished product storage, outbound logistics, and, most importantly, withcustomers, suppliers, and shippers. Many supply chain organizations make use of the Internet topurchase raw materials, parts, and supplies at competitive prices. All members of the supply chainmust work together effectively to increase the value perceived by the customer, so partners mustcommunicate well. Other employees in human resources, finance, research and development, marketing,manufacturing, and sales positions must also use communications technology to communicate withpeople inside and outside the organization. To be a successful member of any organization, you mustbe able to take advantage of the capabilities that these technologies offer you. This chapter begins bydiscussing the importance of effective communications.

As you read this chapter, consider the following:

• How are organizations using networks to support their business strategies and achieve organizationalobjectives?

• What benefits do search engines, social networks, and other Internet services provide to make orga-nizations successful?

In today’s high-speed global business world, organizations need always-on,always-connected computing for traveling employees and for networkconnections to their key business partners and customers. Forward-thinkingorganizations strive to increase revenue, reduce time to market, and enablecollaboration with their suppliers, customers, and business partners by usingnetworks. Here are just a few examples of organizations using networks tomove ahead:

• Many retail organizations are launching their own mobile payment sys-tem, with the hopes of reducing payments to financial services organiza-tions while also increasing customer loyalty. Some of these new systemsinclude Android Pay, Apple Pay, Chase Pay, PayPal, Paydiant, SamsungPay, Urban Airship, and Walmart Pay.2

• Networks make it possible for you to access a wealth of educationalmaterial and earn certifications or an online degree. A wide range ofcourses are available online from such leading educational institutions asCornell, Carnegie Mellon, Harvard, MIT, and Yale. Many educational orga-nizations such as Coursera, ed2Go, and Kahn Academy offer continuingeducation, certification programs, and professional development courses.Hundreds of schools such as DeVry, Kaplan University, University ofPhoenix, and Strayer University enable students to earn online degrees.

• Levi Stadium, home of the San Francisco 49ers, is deploying new wirelesstechnology to make it easier for fans to use a special stadium navigationapp on their smartphones and other devices. With the app, fans canwatch instant replays and order food directly from their mobile devices.3

• Telemedicine provides remote access to a physician via a network (typicallyvia a phone or videoconference) to address a healthcare issue. Its use hasbecome well established in rural areas for specialty consultations and evenmany primary care practices like pediatrics. There are currently about 200telemedicine networks, with 3,500 service sites in the United States alone.4

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Advances in network technology allow us to communicate in real timewith customers, clients, business partners, and coworkers almost anywhere inthe world. Networks also reduce the amount of time required to transmitinformation necessary for driving and concluding business transactions.

Network Fundamentals

A computer network consists of communications media, devices, and soft-ware connecting two or more computer systems or devices. Communicationsmedia are any material substance that carries an electronic signal to supportcommunications between a sending and a receiving device. The computersand devices on the networks are also sometimes called network nodes. Orga-nizations can use networks to share hardware, programs, and databases andto transmit and receive information, allowing for improved organizationaleffectiveness and efficiency. Networks enable geographically separated work-groups to share documents and opinions, which fosters teamwork, innovativeideas, and new business strategies. Effective use of networks can help a com-pany grow into an agile, powerful, and creative organization, giving it a long-term competitive advantage.

Network TopologyNetwork topology is the shape or structure of a network, including thearrangement of the communication links and hardware devices on the net-work. The transmission rates, distances between devices, signal types, andphysical interconnection may differ between networks, but they may all havethe same topology. The three most common network topologies in use todayare the star, bus, and mesh.

In a star network, all network devices connect to one another througha single central device called the hub node. See Figure 6.1. Many homenetworks employ the star topology. A failure in any link of the star net-work will isolate only the device connected to that link. However, shouldthe hub fail, all devices on the entire network will be unable tocommunicate.

In a bus network, all network devices are connected to a commonbackbone that serves as a shared communications medium. See Figure 6.2.To communicate with any other device on the network, a device sends abroadcast message onto the communications medium. All devices on the net-work can “see” the message, but only the intended recipient actually acceptsand processes the message.

FIGURE 6.1Star networkIn a star network, all network devicesconnect to one another through asingle central hub node.

computer network: The communi-cations media, devices, and softwareconnecting two or more computer sys-tems or devices.

communications medium: Anymaterial substance that carries anelectronic signal to support communi-cations between a sending and areceiving device.

network topology: The shape orstructure of a network, including thearrangement of the communicationlinks and hardware devices on thenetwork.

star network: A network in which allnetwork devices connect to oneanother through a single central devicecalled the hub node.

bus network: A network in which allnetwork devices are connected to acommon backbone that serves as ashared communications medium.


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Mesh networks use multiple access points to link a series of devices thatspeak to each other to form a network connection across a large area. SeeFigure 6.3. Communications are routed among network nodes by allowing forcontinuous connections and by bypassing blocked paths by “hopping” fromnode to node until a connection can be established. Mesh networks are veryrobust: if one node fails, all the other nodes can still communicate with eachother, directly or through one or more intermediate nodes.

Saudi Telecom Company (STC) is the largest communications servicesprovider in the Middle East and North Africa. STC recently deployed a meshnetwork that ensures network survivability even in the case of multipleoutages with restoration of service within 50 milliseconds. The mesh networkoffers STC customers faster transmission speeds and improved networkreliability.5

Network TypesA network can be classified as personal area, local area, metropolitan, or widearea network depending on the physical distance between the nodes on thenetwork and the communications and services it provides.

FIGURE 6.2Bus networkIn a bus network, all network devicesare connected to a common back-bone that serves as a shared com-munications medium.

FIGURE 6.3Mesh networkMesh networks use multiple accesspoints to link a series of devices thatspeak to each other to form a net-work connection across a large area.

mesh network: A network that usesmultiple access points to link a series ofdevices that speak to each other toform a network connection across alarge area.





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Personal Area NetworksA personal area network (PAN) is a wireless network that connects informa-tion technology devices close to one person. With a PAN, you can connect alaptop, digital camera, and portable printer without cables. You can downloaddigital image data from the camera to the laptop and then print it on a high-quality printer—all wirelessly. A PAN could also be used to enable data cap-tured by sensors placed on your body to be transmitted to your smartphoneas input to applications that can serve as calorie trackers, heart monitors, glu-cose monitors, and pedometers.

Local Area NetworksA network that connects computer systems and devices within a small area,such as an office, home, or several floors in a building is a local area net-work (LAN). Typically, LANs are wired into office buildings and factories,as shown in Figure 6.4. Although LANs often use unshielded twisted-paircopper wire, other media—including fiber-optic cable—is also popular.Increasingly, LANs use some form of wireless communications. You canbuild LANs to connect personal computers, laptop computers, or powerfulmainframe computers.

A basic type of LAN is a simple peer-to-peer network that a small busi-ness might use to share files and hardware devices, such as printers. In apeer-to-peer network, you set up each computer as an independent com-puter, but you let other computers access specific files on its hard drive orshare its printer. These types of networks have no server. Instead, eachcomputer is connected to the next machine. Examples of peer-to-peer net-works include ANts, BitTorrent, StealthNet, Tixati, and Windows 10 Home-group. Performance of the computers on a peer-to-peer network is usuallyslower because one computer is actually sharing the resources of anothercomputer.

Increasingly, home and small business networks are being set up to con-nect computers, printers, scanners, and other devices. A person working onone computer on a home network, for example, can use data and programsstored on another computer’s hard disk. In addition, several computers onthe network can share a single printer.

FIGURE 6.4Typical LANAll network users within an officebuilding can connect to each other’sdevices for rapid communication.For instance, a user in research anddevelopment could send a docu-ment from her computer to beprinted at a printer located in thedesktop publishing center. Mostcomputer labs employ a LAN toenable the users to share the use ofhigh-speed and/or color printers andplotters as well as to download soft-ware applications and save files.

Executive computersand devices

Production centercomputers and devices

Marketing andsales computers

and devices

Research anddevelopment

computers anddevices

Finance andaccountingcomputersand devices

Copy center, printing,and desktop publishingcomputers and devices

personal area network (PAN): Anetwork that supports the interconnec-tion of information technology devicesclose to one person.

local area network (LAN): A net-work that connects computer systemsand devices within a small area, suchas an office, home, or several floors in abuilding.

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Metropolitan Area NetworksA metropolitan area network (MAN) is a network that connects users andtheir computers in a geographical area that spans a campus or city. A MANmight redefine the many networks within a city into a single larger networkor connect several LANs into a single campus MAN. Often, the MAN is ownedeither by a consortium of users or by a single network provider who sells theservice to users. PIONIER is a Polish national research and education networkcreated to provide high-speed Internet access and to conduct network-basedresearch. The network connects 21 MANs and 5 high-performance computingcenters using 6,467 km of fiber optic transmission media.6

Wide Area NetworksA wide area network (WAN) is a network that connects large geographicregions. A WAN might be privately owned or rented and includes public(shared-users) networks. When you make a long-distance phone call or accessthe Internet, you are using a WAN. WANs usually consist of computer equip-ment owned by the user, together with data communications equipment andnetwork links provided by various carriers and service providers.

WANs often provide communications across national borders, whichinvolves national and international laws regulating the electronic flow of dataacross international boundaries, often called transborder data flow. Somecountries have strict laws limiting the use of networks and databases, makingnormal business transactions such as payroll processing costly, slow, orextremely difficult.

Client/Server SystemsIn client/server architecture, multiple computer platforms are dedicated tospecial functions, such as database management, printing, communications,and program execution. These platforms are called servers. Each server isaccessible by all computers on the network. Servers can be computers of allsizes; they store both application programs and data files and are equippedwith operating system software to manage the activities of the network. Theserver distributes programs and data to the other computers (clients) on thenetwork as they request them. An application server holds the programs anddata files for a particular application, such as an inventory database. The cli-ent or the server might do the actual data processing.

A client is any computer (often a user’s personal computer) that sendsmessages requesting services from the servers on the network. A client canconverse with many servers concurrently. Consider the example of a user ata personal computer who initiates a request to extract data that resides in adatabase somewhere on the network. A data request server intercepts therequest and determines on which database server the data resides. Theserver then formats the user’s request into a message that the databaseserver will understand. When it receives the message, the database serverextracts and formats the requested data and sends the results to the client.The database server sends only the data that satisfies a specific query—notthe entire file. When the downloaded data is on the user’s machine, it canthen be analyzed, manipulated, formatted, and displayed by a program thatruns on the user’s personal computer.

Channel BandwidthNetwork professionals consider the capacity of the communications path orchannel when they recommend transmission media for a network. Channelbandwidth refers to the rate at which data is exchanged, usually measured inbits per second (bps)—the broader the bandwidth, the more information can

metropolitan area network(MAN): A network that connects usersand their computers in a geographicalarea that spans a campus or city.

wide area network (WAN): Anetwork that connects large geographicregions.

client/server architecture: Anapproach to computing wherein multi-ple computer platforms are dedicated tospecial functions, such as databasemanagement, printing, communica-tions, and program execution.

channel bandwidth: The rate atwhich data is exchanged, usuallymeasured in bits per second (bps).

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be exchanged at one time. In the context of Internet access, the term broad-band communications refers to any high-speed Internet access that is alwayson and that is faster than traditional dial-up access. Most organizations needhigh bandwidth to accommodate the transaction volume and transmissionspeed required to carry out their daily functions.

Communications MediaThe communications media selected for a network depends on the amount ofinformation to be exchanged, the speed at which data must be exchanged, thelevel of concern about data privacy, whether the users are stationary ormobile, and a variety of business requirements. Transmission media can bedivided into two broad categories guided (also called wired) transmissionmedia, in which communications signals are guided along a solid medium,and wireless, in which the communications signal is broadcast over airwavesas a form of electromagnetic radiation.

Guided Transmission Media TypesThere are many different guided transmission media types. Table 6.1 summarizesthe guided media types by physical media form. The three most commonguided transmission media types are shown in Figure 6.5.

10-Gigabit Ethernet is a standard for transmitting data at the speed of10 billion bps for limited distances over high-quality twisted-pair wire. The10-Gigabit Ethernet cable can be used for the high-speed links that connectgroups of computers or to move data stored in large databases on large com-puters to stand-alone storage devices.

Chi-X Japan provides investors with an alternative venue for trading inTokyo-listed stocks. Its goal is to attract new international investors, in turn,

TABLE 6.1 Guided transmission media typesMedia Form Description Advantages Disadvantages

Twisted-pair wire Twisted pairs of copper wire,shielded or unshielded; used fortelephone service

Widely available Limitations ontransmission speedand distance

Coaxial cable Inner conductor wire surroundedby insulation

Cleaner and faster data trans-mission than twisted-pair wire

More expensivethan twisted-pairwire

Fiber-optic cable Many extremely thin strands ofglass bound together in a sheath-ing; uses light beams to transmitsignals

Diameter of cable is much smal-ler than coaxial cable; less dis-tortion of signal; capable of hightransmission rates

Expensive to pur-chase and install

FIGURE 6.5Types of guided transmissionmediaCommon guided transmission mediainclude twisted-pair wire, coaxialcable, and fiber-optic cable.




broadband communications:High-speed Internet access that isalways on and that is faster than tradi-tional dial-up access.





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increasing overall Japanese market volumes, reducing transaction costs, andimproving investment performance.7 The firm implemented 10 Gbps Ethernetnetwork adapters to upgrade its network and ensure customers minimal trans-action processing delays.

Wireless TechnologiesWireless communications coupled with the Internet are revolutionizinghow and where we gather and share information, collaborate in teams, lis-ten to music or watch video, and stay in touch with our families and cow-orkers while on the road. With wireless capability, a coffee shop canbecome our living room and the bleachers at a ballpark can become ouroffice. The many advantages and freedom provided by wireless communi-cations are causing many organizations to consider moving to an all-wireless environment.

Wireless communication is the transfer of information between two ormore points that are not connected by an electrical conductor. All wirelesscommunications signals are sent within a range of frequencies of the elec-tromagnetic spectrum that represents the entire range of light that existsfrom long waves to gamma rays as shown in Figure 6.6.

The propagation of light is similar to waves crossing an ocean. Like anyother wave, light has two fundamental properties that describe it. One is itsfrequency, measured in hertz (Hz), which counts the number of waves thatpass by a stationary point in one second. The second fundamental property iswavelength, which is the distance from the peak of one wave to the peak ofthe next. These two attributes are inversely related so the higher thefrequency, the shorter the wavelength.

All wireless communication devices operate in a similar way. A trans-mitter generates a signal, which contains encoded voice, video, or data ata specific frequency, that is broadcast into the environment by anantenna. This signal spreads out in the environment, with only a verysmall portion being captured by the antenna of the receiving device,which then decodes the information. Depending on the distance involved,the frequency of the transmitted signal, and other conditions, the receivedsignal can be incredibly weak, perhaps one trillionth of the original signalstrength.

The signals used in wireless networks are broadcast in one of three fre-quency ranges: microwave, radio, and infrared, as shown in Table 6.2.

Because there are so many competing uses for wireless communica-tion, strict rules are necessary to prevent one type of transmission frominterfering with the next. And because the spectrum is limited—there areonly so many frequency bands—governments must oversee appropriatelicensing of this valuable resource to facilitate use in all bands. In theUnited States, the Federal Communications Commission (FCC) decideswhich frequencies of the communications spectrum can be used for whichpurposes. For example, the portion of the electromagnetic spectrumbetween 700 MHz and 2.6 GHz has been allocated for use by mobilephones. Most of the spectrum in this range has already been allocated foruse. This means that when a wireless company wants to add more spec-trum to its service to boost its capacity, it may have problems obtainingthe necessary licenses because other companies are already using theavailable frequencies.

Some of the more widely used wireless communications options are dis-cussed next.

Near field communication (NFC) is a very short-range wireless connec-tivity technology that enables two devices placed within a few inches of eachother to exchange data. With NFC, consumers can swipe their credit cards—or even their smartphones—within a few inches of NFC point-of-sale

wireless communication: Thetransfer of information between two ormore points that are not connected byan electrical conductor.

near field communication(NFC): A very short-range wirelessconnectivity technology that enablestwo devices placed within a few inchesof each other to exchange data.

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terminals to pay for purchases. Apple Pay, the mobile payment and digitalwallet service that lets users make payments using an iPhone, an iPad, or anApple Watch–compatible device, uses NFC to communicate between theuser’s device and the point-of-sale terminal.

Many retailers—including Target, Macys, and Walgreens—already haveNFC-based contactless pay terminals in place. Shoppers in these stores canalso use their smartphones and NFC to gain access to loyalty programs toearn points, view marketing information, and share content and interact withbrands via social media.

Bluetooth is a wireless communications specification that describes howcell phones, computers, printers, and other electronic devices can be intercon-nected over distances of 10 to 30 feet at a transmission rate of about 2 Mbps.

FIGURE 6.6The electromagnetic spectrumThe range of all possible frequenciesof electromagnetic radiation.Source: https//




cy (H













10111000 MHz





500 MHz

100 MHz





10650 MHz

Long-waves1000 m

100 m

10 m

1 m

10 cm

1 cm

1000 mm1mm

100 mm

10 mm

1000 nm1 mm

100 nm

400 nm

500 nm

600 nm

700 nm

10 nm

1 nm

1 Å0.1 nm

0.1 Å


Far IR

Thermal IR


Near IRVisible



Radio, TV



Bluetooth: A wireless communica-tions specification that describes howcell phones, computers, faxes, printers,and other electronic devices can beinterconnected over distances of 10 to30 feet at a rate of about 2 Mbps.

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Using Bluetooth technology, users of multifunctional devices can synchronizedata on their device with information stored in a desktop computer, send orreceive faxes, and print. The Bluetooth G-Shock watch enables you to make aconnection between your watch and your smartphone. With a G-shock watch,you can control your phone’s music player from the watch and the watch’stimekeeping functions from your phone.

Wi-Fi is a wireless network brand owned by the Wi-Fi Alliance, whichconsists of about 300 technology companies, including AT&T, Dell, Microsoft,Nokia, and Qualcomm. The alliance exists to improve the interoperability ofwireless local area network products based on the IEEE 802.11 series of com-munications standards. IEEE stands for the Institute of Electrical and Electron-ics Engineers, a nonprofit organization and one of the leading standards-setting organizations. Table 6.3 summarizes several variations of the IEEE802.11 standard.

In a Wi-Fi wireless network, the user’s computer, smartphone, or othermobile device has a wireless adapter that translates data into a radio signaland transmits it using an antenna. A wireless access point, which consists ofa transmitter with an antenna, receives the signal and decodes it. The accesspoint then sends the information to the Internet over a wired connection.

TABLE 6.2 Frequency ranges used for wireless communicationsTechnology Description Advantages Disadvantages

Radio frequencyrange

Operates in the 3 KHz–300 MHz range

Supports mobile users;costs are dropping

Signal is highly susceptible tointerception

Microwave—terrestrial and satel-lite frequency range

High-frequency radio signal(300 MHz–300 GHz) sentthrough the atmosphere andspace (often involves com-munications satellites)

Avoids cost and effort to laycable or wires; capable ofhigh-speed transmission

Must have unobstructed lineof sight between sender andreceiver; signal is highly sus-ceptible to interception

Infrared frequencyrange

Signals in the 300 GHz–400 THz frequency range

Lets you move, remove, andinstall devices withoutexpensive wiring

Must have unobstructed line ofsight between sender andreceiver; transmission is effec-tive only for short distances

TABLE 6.3 IEEE 802.11 wireless local area networking standardsWirelessNetworkingProtocol

Maximum DataRate per DataStream Comments

IEEE 802.11a 54 Mbps Transmits at 5 GHz, which means it is incompatible with 802.11band 802.11g

IEEE 802.11b 11 Mbps First widely accepted wireless network standard and transmits at2.4 GHz; equipment using this protocol may occasionally suffer frominterference from microwave ovens, cordless telephones, and Bluetoothdevices

IEEE 802.11g 54 Mbps Equipment using this protocol transmits at 2.4 GHz and mayoccasionally suffer from interference from microwave ovens, cordlesstelephones, and Bluetooth devices

IEEE 802.11n 300 Mbps Employs multiple input, multiple output (MIMO) technology, whichallows multiple data streams to be transmitted over the same channelusing the same bandwidth that is used for only a single data stream in802.11a/b/g

IEEE 802.11ac 400 Mbps–1.3 Gbps An 802.11 standard that provides higher data transmission speeds andmore stable connections; it can transmit at either 2.4 GHz or 5 GHz

Wi-Fi: A medium-range wireless com-munications technology brand ownedby the Wi-Fi Alliance.

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See Figure 6.7. When receiving data, the wireless access point takes theinformation from the Internet, translates it into a radio signal, and sends itto the device’s wireless adapter. These devices typically come with built-inwireless transmitters and software to enable them to alert the user to theexistence of a Wi-Fi network. The area covered by one or more intercon-nected wireless access points is called a “hot spot.” Wi-Fi has proven so pop-ular that hot spots are popping up in places such as airports, coffee shops,college campuses, libraries, and restaurants. The availability of free Wi-Fiwithin a hotel’s premises has become very popular with business travelers.Meanwhile, hundreds of cities in the United States have implemented munic-ipal Wi-Fi networks for use by meter readers and other municipal workersand to provide Internet access to their citizens and visitors.

Microwave TransmissionMicrowave is a high-frequency (300 MHz to 300 GHz) signal sent through theair. Terrestrial (Earth-bound) microwaves are transmitted by line-of-sightdevices, so the line of sight between the transmitter and receiver must beunobstructed. Typically, microwave stations are placed in a series—one sta-tion receives a signal, amplifies it, and retransmits it to the next microwavetransmission tower. Such stations can be located roughly 30 miles apartbefore the curvature of the Earth makes it impossible for the towers to “see”one another. Because they are line-of-sight transmission devices, microwavedishes are frequently placed in relatively high locations, such as mountains,towers, or tall buildings.

A communications satellite also operates in the microwave frequencyrange. See Figure 6.8. The satellite receives the signal from the Earth station,amplifies the relatively weak signal, and then rebroadcasts it at a different fre-quency. The advantage of satellite communications is that satellites canreceive and broadcast over large geographic regions. Problems such as thecurvature of the Earth, mountains, and other structures that block the line-of-sight microwave transmission make satellites an attractive alternative. Geo-stationary, low earth orbit, and small mobile satellite stations are the mostcommon forms of satellite communications.

A geostationary satellite orbits the Earth directly over the equator, approx-imately 22,300 miles above the Earth, so that it appears stationary. The U.S.

FIGURE 6.7Wi-Fi networkIn a Wi-Fi network, the user’s com-puter, smartphone, or cell phone hasa wireless adapter that translatesdata into a radio signal and transmitsit using an antenna.

Existing wired network

Wireless network

Cable modem/routerWireless access point


Data transmitted and received

through airwaves

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National Weather Service relies on the Geostationary Operational Environ-mental Satellite program for weather imagery and quantitative data to supportweather forecasting, severe storm tracking, and meteorological research.

A low earth orbit (LEO) satellite system employs many satellites, each inan orbit at an altitude of less than 1,000 miles. The satellites are spaced sothat, from any point on the Earth at any time, at least one satellite is in a lineof sight. Iridium Communications provides a global communications networkthat spans the entire Earth, using 66 satellites in a near-polar orbit at an alti-tude of 485 miles. Calls are routed among the satellites to create a reliableconnection between call participants that cannot be disrupted by natural dis-asters such as earthquakes, tsunamis, or hurricanes that may knock outground-based wireless towers and wire- or cable-based networks.8 Every day,thousands of vessels and tankers traveling the world’s seas and oceans use Iri-dium’s network to establish reliable global communications to optimize theirdaily activities.

4G Wireless CommunicationsWireless communications has evolved through four generations of technologyand services. The first generation (1G) of wireless communications standardsoriginated in the 1980s and was based on analog communications. Thesecond-generation (2G) networks were fully digital, superseding 1G networksin the early 1990s. With 2G networks, phone conversations were encrypted,mobile phone usage was expanded, and short message services (SMS)—ortexting—was introduced. 3G wireless communications supports wirelessvoice and broadband speed data communications in a mobile environment atspeeds of 2 to 4 Mbps. Additional capabilities include mobile video, mobilee-commerce, location-based services, mobile gaming, and the downloadingand playing of music.

4G broadband mobile wireless delivers more advanced versions ofenhanced multimedia, smooth streaming video, universal access, and portabil-ity across all types of devices; eventually 4G will also make possible world-wide roaming. 4G can deliver 3 to 20 times the speed of 3G networks formobile devices such as smartphones, tablets, and laptops.

Each of the four major U.S. wireless network operators (AT&T, Verizon,Sprint, and T-Mobile) is rapidly expanding its 4G networks based on the LongTerm Evolution (LTE) standard. Long Term Evolution (LTE) is a standard forwireless communications for mobile phones based on packet switching, whichis an entirely different approach from the circuit-switching approach employed

FIGURE 6.8Satellite transmissionCommunications satellites are relaystations that receive signals from oneEarth station and rebroadcast themto another.






Long Term Evolution (LTE): Astandard for wireless communicationsfor mobile phones based on packetswitching.

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in 3G communications networks. To convert to the LTE standard, carriers mustreengineer their voice call networks.

The biggest benefit of LTE is how quickly a mobile device can connect tothe Internet and how much data it can download or upload in a given amountof time. LTE makes it reasonable to stream video to your phone, using servicessuch as Amazon Prime Instant Video, Hulu Plus, Netflix, or YouTube. It alsospeeds up Web browsing, with most pages loading in seconds. LTE enablesvideo calling using services such as Skype or Google Hangouts. LTE’s fasterspeed also makes sharing photos and videos from your phone quick and easy.

5G Wireless CommunicationsA new mobile communications generation has come on the scene about every10 years since the first 1G system. 5G is a term used to identify the next majorphase of mobile communications standards beyond 4G. No 5G mobile stan-dard has been formally defined yet, but 5G will bring with it higher datatransmission rates, lower power consumption, higher connect reliability withfewer dropped calls, increased geographic coverage, and lower infrastructurecosts. If 5G networks meet the goal of a 50 times faster data rate than themost advanced Wi-Fi networks today, they will be able to stream a two-hourmovie in less than three seconds. Verizon plans to start field trials of 5G tech-nology by late 2016, with some level of commercial deployment to start by2017—far sooner than the 2020 time frame that many industry observersanticipate for the initial adoption of 5G technology.9

Communications HardwareNetworks require various communications hardware devices to operate,including modems, fax modems, multiplexers, private branch exchanges,front-end processors, switches, bridges, routers, and gateways. These devicesare summarized in Table 6.4.

Communications SoftwareA network operating system (NOS) is systems software that controls thecomputer systems and devices on a network and allows them to communicate

TABLE 6.4 Common communications devicesDevice Function

Modem Translates data from a digital form (as it is stored in the computer) into an analog signal that canbe transmitted over ordinary telephone lines

Fax modem Combines a fax with a modem; facsimile devices, commonly called fax devices, allow businessesto transmit text, graphs, photographs, and other digital files via standard telephone lines

Multiplexer Allows several communications signals to be transmitted over a single communications mediumat the same time, thus saving expensive long-distance communications costs

PBX (private branchexchange)

Manages both voice and data transfer within a building and to outside lines; PBXs can be usedto connect hundreds of internal phone lines to a few outside phone company lines

Front-end processor Manages communications to and from a computer system serving many people

Switch Uses the physical device address in each incoming message on the network to determine whichoutput port it should forward the message to reach another device on the same network

Bridge Connects one LAN to another LAN where both LANs use the same communications protocol

Router Forwards data packets across two or more distinct networks toward their destinations through aprocess known as routing; often, an Internet service provider (ISP) installs a router in a subscri-ber’s home that connects the ISP’s network to the network within the home

Gateway Serves as an entrance to another network, such as the Internet

network operating system(NOS): Systems software that controlsthe computer systems and devices on anetwork and allows them to communi-cate with each other.

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with each other. The NOS performs similar functions for the network asoperating system software does for a computer, such as memory and taskmanagement and coordination of hardware. When network equipment(such as printers, plotters, and disk drives) is required, the NOS makessure that these resources are used correctly. Linux (used on workstations),OS X (used on Apple MACs), UNIX (used on servers), and WindowsServer (used on workstations and servers) are common network operatingsystems.

Because companies use networks to communicate with customers, busi-ness partners, and employees, network outages or slow performance canmean a loss of business. Network management includes a wide range of tech-nologies and processes that monitor the network and help identify andaddress problems before they can create a serious impact.

Software tools and utilities are available for managing networks. Withnetwork-management software, a manager on a networked personal com-puter can monitor the use of individual computers and shared hardware(such as printers), scan for viruses, and ensure compliance with softwarelicenses. Network-management software also simplifies the process of updat-ing files and programs on computers on the network—a manager can makechanges through a communications server instead of having to visit each indi-vidual computer. In addition, network-management software protects soft-ware from being copied, modified, or downloaded illegally. It can also locatecommunications errors and potential network problems. Some of the manybenefits of network-management software include fewer hours spent on rou-tine tasks (such as installing new software), faster response to problems, andgreater overall network control.

Banks use a special form of network-management software to monitorthe performance of their automated teller machines (ATMs). Status messagescan be sent over the network to a central monitoring location to inform sup-port people about situations such as low cash or receipt paper levels, cardreader problems, and printer paper jams. Once a status message is received,a service provider or branch location employee can be dispatched to fix theATM problem.

Today, most IS organizations use network-management software toensure that their network remains up and running and that every networkcomponent and application is performing acceptably. The software enables ISstaff to identify and resolve fault and performance issues before they affectend users. The latest network-management technology even incorporatesautomatic fixes: The network-management system identifies a problem, noti-fies the IS manager, and automatically corrects the problem before anyoneoutside the IS department notices it.

The Covell Group is a small IT consulting group in San Diego that pro-vides server and Web site monitoring for small- and medium-sized companies.The firm uses network-monitoring software to watch sensors and remoteprobes that track CPU, disk space, and Windows services. Constant monitor-ing enables the firm to detect if a communications line is down or if there isa power failure overnight so that everything is up and ready by the start ofthe next work day.10

Mobile device management (MDM) software manages and trouble-shoots mobile devices remotely, pushing out applications, data, patches, andsettings. With the software, a central control group can maintain group poli-cies for security, control system settings, ensure malware protection is inplace for mobile devices used across the network, and make it mandatory touse passwords to access the network. In addition to smartphones and tablets,laptops and desktops are sometimes supported using MDM software as mobiledevice management becomes more about basic device management and lessabout a specific mobile platform.

network-managementsoftware: Software that enables amanager on a networked desktop tomonitor the use of individual computersand shared hardware (such as prin-ters), scan for viruses, and ensurecompliance with software licenses.

mobile device management(MDM) software: Software thatmanages and troubleshoots mobiledevices remotely, pushing out applica-tions, data, patches, and settings whileenforcing group policies for security.

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CriticalThinking Exercise

Software-Defined Networking (SDN)A typical network is comprised of hundreds or thousands of network devicesthat perform such tasks as routing and switching of data through the network,providing network access and control, and enabling access to a variety ofapplications and services. In today’s current network environment, each net-work device must be configured individually, usually via manual keyboardinput. For a network of any size, this becomes a labor-intensive and error-prone effort, making it difficult to change the network so it can meet thechanging needs of the organization. Software-defined networking (SDN) isan emerging approach to networking that allows network administrators tomanage a network via a controller that does not require physical access to allthe network devices. This approach automates tasks such as configurationand policy management and enables the network to dynamically respond toapplication requirements. As a result, new applications can be made availablesooner, the risk of human error (a major contributor to network downtime) isreduced, and overall network support and operations costs are reduced.

Google is implementing Andromeda, the underlying software-defined net-working architecture that will enable Google’s cloud computing services toscale better, more cheaply and more quickly. With software-defined network-ing, even though many customers are sharing the same network, they can beconfigured and managed independently with their own address management,firewalls, and access control lists. Google competitors in cloud services likeMicrosoft and Amazon also employ software-defined networks.11

Network-Management Software for a UniversityThe Ohio State University has over 58,000 undergraduate students spread acrossseveral major campuses and research centers located around Ohio. Its informationsystem administrators are considering the use of network-management softwareand are evaluating the use of mobile device management software from variousvendors.

Review Questions1. What features should the administrators look for in choosing its network-

management software?2. What specific benefits would be gained by installing network-management


Critical Thinking Questions1. Should a goal of a mobile device management software implementation be to

reduce the number of information systems support staff dedicated to supportthe university’s students, administrators, and faculty? Or should any productiv-ity gains be applied to providing new services and superior support?

2. Identify common issues that students may have with the use of their devicesthat could be addressed through the use of mobile device managementsoftware.

The Internet and World Wide Web

The Internet has grown rapidly (see Figure 6.9) and is truly international inscope, with users on every continent—including Antarctica. Although theUnited States has high Internet penetration among its population, it doesnot constitute the majority of people online. As of November 2015, citizensof Asian countries make up about 48 percent, Europeans about 18 percent,

software-defined networking(SDN): An emerging approach to net-working that allows network adminis-trators to have programmable centralcontrol of the network via a controllerwithout requiring physical access to allthe network devices.

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Latin America/Caribbean about 10 percent, and North Americans about9 percent of all Internet users. China is the country with the most Internetusers, with 674 million—which is more users than the next two countriescombined (India 354 million and United States 280 million).12 Being con-nected to the Internet provides global economic opportunity to individuals,businesses, and countries.

The Internet and social media Web sites have emerged as important newchannels for learning about world events, protesting the actions of organiza-tions and governments, and urging others to support one’s favorite causes orcandidates. For example, some believe that Barack Obama’s effective use ofthe Internet and social media provided him with a distinct advantage over hisopponents in the presidential elections of 2008 and 2012.13 In another exam-ple, Syrian rebels used the Internet to communicate about events within thecountry and to provide a useful link to others around the world.14

On the other hand, Internet censorship, the control or suppression of thepublishing or accessing of information on the Internet, is a growing problem.For example, in May 2015, the Chinese-language version of Wikipedia wasblocked in China.15 The organizations Human Rights Watch and Amnesty Inter-national allege that the Saudi Arabian government uses malicious spyware totarget activists and it hunts down, silences, and flogs bloggers who criticize thegovernment.16 In Hungary the government employs fines, licensing, and taxesto coerce critical media, and it directs state advertising to friendly outlets.17

The ancestor of the Internet was the ARPANET, a project started by theU.S. Department of Defense (DoD) in 1969. The ARPANET was both anexperiment in reliable networking and a means to link DoD and militaryresearch contractors, including many universities doing military-fundedresearch. (ARPA stands for the Advanced Research Projects Agency, thebranch of the DoD in charge of awarding grant money. The agency is nowknown as DARPA—the added D is for Defense.) The ARPANET was highlysuccessful, and every university in the country wanted to use it. This wildfiregrowth made it difficult to manage the ARPANET, particularly the rapidlygrowing number of university sites. So, the ARPANET was broken into two












































































of In


et D


n S




FIGURE 6.9Internet growth: Number of Internet hostsThe number of worldwide Internet users is expected to continue growing.Source: Data from “ISC Domain Survey,”

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networks: MILNET, which included all military sites, and a new, smallerARPANET, which included all the nonmilitary sites. The two networksremained connected, however, through use of the Internet protocol (IP),which enables traffic to be routed from one network to another as needed.All the networks connected to the Internet use IP, so they all can exchangemessages.

How the Internet WorksIn the early days of the Internet, the major communications companiesaround the world agreed to connect their networks so that users on all thenetworks could share information over the Internet. These large communica-tions companies, called network service providers (NSPs), include Verizon,Sprint, British Telecom, and AT&T. The cables, routers, switching stations,communication towers, and satellites that make up these networks are thehardware over which Internet traffic flows. The combined hardware of theseand other NSPs—the fiber-optic cables that span the globe over land andunder sea—make up the Internet backbone.

The Internet transmits data from one computer (called a host) to another.See Figure 6.10. If the receiving computer is on a network to which the firstcomputer is directly connected, it can send the message directly. If the receiv-ing and sending computers are not directly connected to the same network,the sending computer relays the message to another computer that can for-ward it. The message is typically sent through one or more routers to reachits destination. It is not unusual for a message to pass through several routerson its way from one part of the Internet to another.

The various communications networks that are linked to form the Internetwork much the same way—they pass data around in chunks called packets,each of which carries the addresses of its sender and receiver along withother technical information. The set of rules used to pass packets from onehost to another is the IP protocol. Many other communications protocols areused in connection with IP. The best known is the Transmission Control Pro-tocol (TCP). Many people use “TCP/IP” as an abbreviation for the combina-tion of TCP and IP used by most Internet applications. After a networkfollowing these standards links to the Internet’s backbone, it becomes part ofthe worldwide Internet community.

Each computer on the Internet has an assigned address, called its IPaddress, that identifies it on the Internet. An IP address is a 64-bit numberthat identifies a computer on the Internet. The 64-bit number is typically

FIGURE 6.10Routing messages over theInternetData is transmitted from one hostcomputer to another on the Internet.






Hostcomputer 1

Hostcomputer 2

Hostcomputer 3

Hostcomputer 4

Internet Protocol (IP): A commu-nication standard that enables compu-ters to route communications trafficfrom one network to another asneeded.

Internet backbone: One of theInternet’s high-speed, long-distancecommunications links.

IP address: A 64-bit number thatidentifies a computer on the Internet.

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divided into four bytes and translated to decimal; for example, Internet is migrating to Internet Protocol version 6 (IPv6), which uses128-bit addresses to provide for many more devices; however, this change isexpected to take years.

Because people prefer to work with words rather than numbers, a systemcalled the Domain Name System (DNS) was created. Domain names such as are mapped to IP addresses such as using the DNS. Tomake room for more Web addresses, efforts are underway to increase the numberof available domain names.

A Uniform Resource Locator (URL) is a Web address that specifies theexact location of a Web page using letters and words that map to an IPaddress and a location on the host. The URL gives those who provide infor-mation over the Internet a standard way to designate where Internet resourcessuch as servers and documents are located. Consider the URL for CengageLearning,

The “http” specifies the access method and tells your software to access afile using the Hypertext Transport Protocol. This is the primary method forinteracting with the Internet. In many cases, you don’t need to include http://in a URL because it is the default protocol. The “www” part of the address sig-nifies that the address is associated with the World Wide Web service. TheURL is the domain name that identifies the Internet hostsite. The part of the address following the domain name—/us—specifies anexact location on the host site.

Domain names must adhere to strict rules. They always have at least twoparts, with each part separated by a dot (period). For some Internetaddresses, the far right part of the domain name is the country code, suchas au for Australia, ca for Canada, dk for Denmark, fr for France, de(Deutschland) for Germany, and jp for Japan. Many Internet addresses havea code denoting affiliation categories, such as com for business sites andedu for education sites. Table 6.5 contains a few popular domain affiliationcategories. The far left part of the domain name identifies the host networkor host provider, which might be the name of a university or business.Other countries use different top-level domain affiliations from the U.S.ones described in the table.

The Internet Corporation for Assigned Names and Numbers (ICANN) isresponsible for managing IP addresses and Internet domain names. One ofICANN’s primary concerns is to make sure that each domain name representsonly one individual or entity—the one that legally registers it. For example, ifyour teacher wanted to use for a course Web site, he orshe would discover that domain name has already been registered by Cen-gage Learning and is not available. ICANN uses companies called accrediteddomain name registrars to handle the business of registering domain names.

TABLE 6.5 Number of domains in U.S. top-level domain affiliations—Winter 2015Affiliation ID Affiliation Number of Hosts

Biz Business sites 2,428,269

Com All types of entities including nonprofits, schools, and privateindividuals


Edu Post-secondary educational sites 7,446

Gov Government sites 5,503

Net Networking sites 15,805,152

Org Nonprofit organization sites 10,984,293

Source: Domain Count Statistics for TLDs, http//

Uniform Resource Locator(URL): A Web address that specifiesthe exact location of a Web page usingletters and words that map to an IPaddress and a location on the host.

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For example, you can visit, an accredited registrar, tofind out if a particular name has already been registered. If not, you can regis-ter the name for around $9 per year. Once you do so, ICANN will not allowanyone else to use that domain name as long as you pay the yearly fee.

Accessing the InternetYou can connect to the Internet in numerous ways. See Figure 6.11. Whichaccess method you choose is determined by the size and capability of yourorganization or system, your budget, and the services available to you.

Connecting via a LAN ServerThis approach is used by businesses and organizations that manage a local areanetwork (LAN). By connecting a server on the LAN to the Internet using arouter, all users on the LAN are provided access to the Internet. Business LANservers are typically connected to the Internet at very fast data rates, sometimesin the hundreds of Mbps.

Connecting via Internet Service ProvidersCompanies and residences unable to connect directly to the Internet througha LAN server must access the Internet through an Internet service provider.An Internet service provider (ISP) is any organization that provides Internetaccess to people. Thousands of organizations serve as ISPs, ranging from uni-versities that make the Internet available to students and faculty to small Inter-net businesses to major communications giants such as AT&T and Comcast.To connect to the Internet through an ISP, you must have an account withthe service provider (for which you usually pay) along with software (such asa browser) and devices (such as a computer or smartphone) that support aconnection via TCP/IP.



Cell Tower

4. Cell Phone

I n te r

n e


1. Connect via a

LAN server





2. Connect via dial-up

3. Connect via high-speed service

Host computer

for an online



FIGURE 6.11Several ways to access the InternetUsers can access the Internet in several ways, including using a LAN server, telephone lines, a high-speed service, or a wireless network.

Internet service provider (ISP):Any organization that provides Internetaccess to people.

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Perhaps the least expensive but also slowest connection provided by ISPsis a dial-up connection. A dial-up Internet connection uses a modem and stan-dard phone line to “dial up” and connect to the ISP server. Dial-up is consid-ered the slowest of connections. A dial-up connection also ties up the phoneline so that it is unavailable for voice calls. While dial-up was originally theonly way to connect to the Internet from home, it is rapidly becomingreplaced by high-speed services.

Several high-speed Internet services are available for home and business.They include cable modem connections from cable television companies, DSLconnections from phone companies, and satellite connections from satellitetelevision companies.

Wireless ConnectionIn addition to connecting to the Internet through wired systems such asphone lines and fiber optic cables, wireless Internet service over cellular andWi-Fi networks has become common. Thousands of public Wi-Fi services areavailable in coffee shops, airports, hotels, and elsewhere, where Internetaccess is provided free, for an hourly rate, or for a monthly subscription fee.Wi-Fi has even made its way into aircraft, allowing business travelers to beproductive during air travel by accessing email and corporate networks.

Cell phone carriers also provide Internet access for smartphones, note-books, and tablets. The 4G mobile phone services rival wired high-speedconnections enjoyed at home and work. Sprint, Verizon, AT&T, and otherpopular carriers are working to bring 4G service to subscribers, beginning inlarge metropolitan areas as shown in Figure 6.12.


FIGURE 6.12Verizon 4G LTE CoverageWhile Verizon’s 4G LTE coverage is extensive, there are still vast expanses where there is no coverage.Source: Verizon 4G LTE Coverage,



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How the Web WorksThe World Wide Web was developed by Tim Berners-Lee at CERN, the Euro-pean Organization for Nuclear Research in Geneva. He originally conceivedof it as an internal document-management system. From this modest begin-ning, the Web has grown to become a primary source of news and informa-tion, an indispensable conduit for commerce, and a popular hub for socialinteraction, entertainment, and communication.

While the terms Internet and Web are often used interchangeably, techni-cally, the two are different technologies. The Internet is the infrastructure onwhich the Web exists. The Internet is made up of computers, network hard-ware such as routers and fiber-optic cables, software, and the TCP/IP proto-cols. The World Wide Web (Web), on the other hand, consists of server andclient software, the hypertext transfer protocol (http), standards, and markuplanguages that combine to deliver information and services over the Internet.

The Web was designed to make information easy to find and organize. Itconnects billions of documents, called Web pages, stored on millions of ser-vers around the world. Web pages are connected to each other using hyper-links, specially denoted text or graphics on a Web page, that, when clicked,open a new Web page containing related content. Using hyperlinks, users canjump between Web pages stored on various Web servers—creating the illu-sion of interacting with one big computer. Because of the vast amount ofinformation available on the Web and the wide variety of media, the Web hasbecome the most popular means of accessing information in the world today.

In short, the Web is a hyperlink-based system that uses the client/servermodel. It organizes Internet resources throughout the world into a series oflinked files, called pages, which are accessed and viewed using Web client soft-ware called a Web browser. Google Chrome, Mozilla Firefox, Microsoft Edge,Internet Explorer, Apple Safari, and Opera are popular Web browsers. SeeFigure 6.13. A collection of pages on one particular topic, accessed under oneWeb domain, is called a Web site. The Web was originally designed to supportformatted text and pictures on a page. It has evolved to support many moretypes of information and communication including user interactivity, animation,and video. Web plug-ins help provide additional features to standard Web sites.Adobe Flash and Real Player are examples of Web plug-ins.

Hypertext Markup Language (HTML) is the standard page descriptionlanguage for Web pages. HTML is defined by the World Wide Web Consortium

FIGURE 6.13Google ChromeWeb browsers such as GoogleChrome let you access Internetresources such as email and otheronline applications.

hyperlink: Highlighted text or gra-phics in a Web document that, whenclicked, opens a new Web page con-taining related content.

Web browser: Web client software—such as Chrome, Edge, Firefox, Inter-net Explorer, and Safari—used to viewWeb pages.

Hypertext Markup Language(HTML): The standard page descrip-tion language for Web pages.



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(referred to as “W3C”) and has developed through numerous revisions. It iscurrently in its fifth revision—HTML5. HTML tells the browser how to displayfont characteristics, paragraph formatting, page layout, image placement, hyper-links, and the content of a Web page. HTML uses tags, which are codes thattell the browser how to format the text or graphics as a heading, list, or bodytext, for example. Web site creators “mark up” a page by placing HTML tagsbefore and after one or more words. For example, to have the browser displaya sentence as a heading, you place the <h1> tag at the start of the sentenceand an </h1> tag at the end of the sentence. When that page is viewed in abrowser, the sentence is displayed as a heading. HTML also provides tags toimport objects stored in files—such as photos, graphics, audio, and movies—intoa Web page. In short, a Web page is made up of three components: text, tags, andreferences to files. The text is your Web page content, the tags are codes thatmark the way words will be displayed, and the references to files insert photosand media into the Web page at specific locations. All HTML tags are enclosed ina set of angle brackets (< and >), such as <h2>. The closing tag has a forwardslash in it, such as </b> for closing bold. Consider the following text and tags.

Extensible Markup Language (XML) is a markup language for Webdocuments containing structured information, including words and pictures.XML does not have a predefined tag set. With HTML, for example, the <hl>tag always means a first-level heading. The content and formatting are con-tained in the same HTML document. XML Web documents contain the contentof a Web page. The formatting of the content is contained in a style sheet. Afew typical instructions in XML follow:

<book><chapter>Hardware</chapter><topic>Input Devices</topic><topic>Processing and Storage Devices</topic><topic>Output Devices</topic></book>

A Cascading Style Sheet (CSS) is a file or portion of an HTML file thatdefines the visual appearance of content in a Web page. Using CSS is conve-nient because you only need to define the technical details of the page’sappearance once, rather than in each HTML tag. CSS uses special HTML tags toglobally define characteristics for a variety of page elements as well as howthose elements are laid out on the Web page. Rather than having to specify afont for each occurrence of an element throughout a document, formatting canbe specified once and applied to all occurrences. CSS styles are often definedin a separate file and then can be applied to many pages on a Web site.

For example, the visual appearance of the preceding XML content couldbe contained in the following style sheet:

chapter (font-size 18pt; color blue; font-weight bold; displayblock; font-family Arial; margin-top 10pt; margin-left 5pt)topic (font-size 12pt; color red; font-style italic; displayblock; font-family Arial; margin-left 12pt)

This style sheet specifies that the chapter title “Hardware” is displayed onthe Web page in a large Arial font (18 points). “Hardware” will also appear inbold blue text. The “Input Devices” title will appear in a smaller Arial font(12 points) and italic red text.

XML is extremely useful for organizing Web content and making dataeasy to find. Many Web sites use CSS to define the design and layout of Webpages, XML to define the content, and HTML to join the design (CSS) withthe content (XML). See Figure 6.14. This modular approach to Web designallows Web site developers to change the visual design without affecting thecontent and to change the content without affecting the visual design.

tag: A code that tells the Web browserhow to format text—as a heading, as alist, or as body text—and whetherimages, sound, and other elementsshould be inserted.

Extensible Markup Language(XML): The markup languagedesigned to transport and store data onthe Web.

Cascading Style Sheet (CSS): Amarkup language for defining the visualdesign of a Web page or group ofpages.

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Web Programming LanguagesMany of the services offered on the Web are delivered through the use of pro-grams and scripts. A Web program may be something as simple as a menuthat expands when you click it or as complicated as a full-blown spreadsheetapplication. Web applications may run on a Web server, delivering the resultsof the processing to the user, or they may run directly on a client, such as auser’s PC. These two categories are commonly referred to as server-side andclient-side software.

JavaScript is a popular programming language for client-side applications.Using JavaScript, you can create interactive Web pages that respond to useractions. JavaScript can be used to validate data entry in a Web form, to dis-play photos in a slideshow style, to embed simple computer games in a Webpage, and to provide a currency conversion calculator. Java is a programminglanguage from Sun Microsystems based on the Cþþ programming language,which allows small programs, called applets, to be embedded within anHTML document. When the user clicks the appropriate part of an HTML pageto retrieve an applet from a Web server, the applet is downloaded onto theclient workstation where it begins executing. Unlike other programs, Javasoftware can run on any type of computer. It can be used to develop client-side or server-side applications. Programmers use Java to make Web pagescome alive, adding splashy graphics, animation, and real-time updates.ASP.NET, C, Cþþ, Perl, PHP, and Python are among other widely usedclient-side programming languages.

FIGURE 6.14XML, CSS, and HTMLToday’s Web sites are created usingXML to define content, CSS to definethe visual style, and HTML to put it alltogether.

CSS File




XML File




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Web ServicesWeb services consist of standards and tools that streamline and simplify com-munication among Web sites and make it simpler to develop and use theWeb for business and personal purposes. The key to Web services is XML.Just as HTML was developed as a standard for formatting Web content intoWeb pages, XML is used within a Web page to describe and transfer databetween Web service applications.

Internet companies, including Amazon, eBay, and Google, are now usingWeb services.

Amazon Web Services (AWS) is the basic infrastructure that Amazonemploys to make the contents of its huge online catalog available to otherWeb sites or software applications. Airbnb is an online marketplace thatenables property owners and travelers to interact for the purpose of rentingdistinctive vacation spaces in more than 34,000 cities in 190 countries. Shortlyafter Airbnb began operations, it migrated its cloud computing functionsto AWS, which distributes incoming traffic to ensure high availability andfast response time. AWS also allows Airbnb to store backups and staticfiles, including 10 TB of user pictures, and to monitor all of its serverresources.18

Developing Web Content and ApplicationsIf you need to create a Web site, you have lots of options. You can hire some-one to design and build it, or you can do it yourself. If you do it yourself, youcan use an online service to create the Web pages, use a Web page creationsoftware tool, or use a plain text editor to create the site. The softwareincludes features that allow the developer to work directly with the HTMLcode or to use auto-generated code. Web development software also helpsthe designer keep track of all files in a Web site and the hyperlinks that con-nect them.

Popular tools for creating Web pages and managing Web sites includeAdobe Dreamweaver, RapidWeaver (for Mac developers), and Nvu (pro-nounced n-view). See Figure 6.15.

FIGURE 6.15Creating Web pagesNvu makes Web design nearly aseasy as using a word processor.Source: Nvu Tutorial: by Tim VanSlyke at

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Many products make it easy to develop Web content and interconnectWeb services. Microsoft, for example, provides a development and Webservices platform called .NET, which allows developers to use various pro-gramming languages to create and run programs, including those for theWeb. The .NET platform also includes a rich library of programming code tohelp build XML Web applications. Other popular Web development platformsinclude JavaServer Pages, Microsoft ASP.NET, and Adobe ColdFusion.

After you create Web pages, your next step is to place or publish the con-tent on a Web server. Popular publishing options include using ISPs, freesites, and Web hosting services. Web hosting services provide space on theirWeb servers for people and businesses that don’t have the financial resources,time, or skills to host their own Web sites. A Web host can charge $15 ormore per month, depending on services. Some Web hosting sites includedomain name registration, Web authoring software, activity reporting, andWeb site monitoring. Some ISPs also provide limited storage space, typically1 to 6 megabytes, as part of their monthly fee. If more disk space is needed,additional fees are charged. Free sites offer limited space for a Web site. Inreturn, free sites often require the user to view advertising or agree to otherterms and conditions.

Some Web developers are creating programs and procedures to combinetwo or more Web applications into a new service, called a mashup—namedafter the process of mixing two or more hip-hop songs into one song. Mapapplications such as Google Maps provide tool kits that allow them to becombined with other Web applications. For example, Google Maps can beused with Twitter to display the location where various tweets were posted.Likewise, Google Maps combined with Flickr can overlay photos of specificgeographic locations.

Internet and Web ApplicationsThe variety of Internet and Web applications available to individuals andorganizations around the world is vast and ever expanding. Using the Inter-net, entrepreneurs can start online companies and thrive. For example,Aaron Goldstein and Colin Hill met at the University of Pennsylvania’s Whar-ton School. At the time, Hill was battling Hodgkin’s lymphoma and undergo-ing chemotherapy. It was necessary for him to monitor his temperatureconstantly to avoid infections while his immune system was weakened.Although his temperature would be normal when he fell asleep, Hill oftenwoke up during the night with a high fever and had to be rushed to inten-sive care. He became exasperated with his inability to track his temperaturecontinuously and frustrated that his doctor couldn’t monitor him remotely.So Goldstein and Hill set out to find a solution. After two years and aninvestment of a few hundred thousand dollars, they developed Fever Smart,a small electronic monitor worn under the armpit that sends temperaturereadings to a relay device, which forwards the data to Fever Smart’s serversand, finally, to a smartphone or other device. Using a smartphone or anyInternet-connected device, a Fever Smart user, be it a parent or healthcareprovider, can constantly monitor the patient’s temperature in real time andeven receive alerts when the patient’s temperature begins to rise or reachesunsafe levels.19

Web 2.0 and the Social WebOver the years, the Web has evolved from a one-directional resource whereusers only obtain information to a two-directional resource where usersobtain and contribute information. Consider Web sites such as YouTube,Wikipedia, and Facebook as just a few examples. The Web has also grown

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in power to support full-blown software applications such as Google Docsand is becoming a computing platform itself. These two major trends inhow the Web is used and perceived have created dramatic changes in howpeople, businesses, and organizations use the Web, creating a paradigmshift to Web 2.0.

The original Web—Web 1.0—provided a platform for technology-savvydevelopers and the businesses and organizations that hired them to publishinformation for the general public to view. Web sites such as YouTube andFlickr allow users to share video and photos with other people, groups, andthe world. Microblogging sites such as Twitter allow people to post thoughtsand ideas throughout the day for friends to read. See Figure 6.16.

Social networking Web sites provide Web-based tools for users to shareinformation about themselves and to find, meet, and converse with othermembers. Instagram is a popular social networking service through whichusers can share photos and videos—either publicly or with a set group offriends. Another social network, LinkedIn, is designed for professional use toassist its members with creating and maintaining valuable professional con-nections. Ning provides tools for Web users to create their own social net-works dedicated to a topic or interest.

Social networks have become very popular for finding old friends,staying in touch with current friends and family, and making new friends.Besides their personal value, these networks provide a wealth of consumerinformation and opportunities for businesses as well. Some businesses areincluding social networking features in their workplaces.

The use of social media in business is called Enterprise 2.0. Enterprise 2.0applications, such as Salesforce’s Chatter, Jive Software’s Engage Dialog, andYammer, enable employees to create business wikis, support social network-ing, perform blogging, and create social bookmarks to quickly find informa-tion. Tyco, a fire protection and security company, recently went through amajor restructuring, changing from a conglomerate of holding companies to aunited global enterprise with more than 69,000 employees in 50 countries.Throughout its transition, Tyco relied on Yammer rather than email to educateits workforce on the differences between the old Tyco and the new Tyco andto increase employee engagement across the company.20

Not everyone is happy with social networking sites, however. Employersmight use social networking sites to get personal information about you.

FIGURE 6.16FlickrFlickr allows users to share photoswith other people around the world.Source:

Web 2.0: The Web as a computingplatform that supports software appli-cations and the sharing of informationamong users.

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Some people worry that their privacy will be invaded or their personal infor-mation used without their knowledge or consent.

NewsThe Web is a powerful tool for keeping informed about local, state, national,and global news. It has an abundance of special-interest coverage and pro-vides the capacity to deliver deeper analysis of the subject matter. Text andphotos are supported by the HTML standard. Video (sometimes called a Web-cast) and audio are provided in a browser through plug-in technology and inpodcasts.

As traditional news sources migrate to the Web, new sources are emerg-ing from online companies. News Web sites from Google, Yahoo!, Digg, andNewsvine provide popular or interesting stories from a variety of newssources. In a trend some refer to as social journalism or citizen journalism,ordinary citizens are more involved in reporting the news than ever before.Although social journalism provides important news not available elsewhere,its sources may not be as reliable as mainstream media sources. It is alsosometimes difficult to discern news from opinion.

Education and TrainingToday, institutions and organizations at all levels provide online educationand training, which can be accessed via PCs, tablets, and smartphones. KahnAcademy, for example, provides free online training and learning in econom-ics, math, banking and money, biology, chemistry, history, and many othersubjects.21 NPower helps nonprofit organizations, schools, and individualsdevelop information system skills. The nonprofit organization provides train-ing to hundreds of disadvantaged young adults through a 22-week trainingprogram that can result in certification from companies such as Microsoft andCisco.22

High school and college students are using mobile devices to read elec-tronic textbooks instead of carrying heavy printed textbooks to class. Andeducational support products, such as Blackboard, provide an integrated Webenvironment that includes virtual chat for class members; a discussion groupfor posting questions and comments; access to the class syllabus and agenda,student grades, and class announcements; and links to class-related material.Conducting classes over the Web with no physical class meetings is called dis-tance learning.

Job InformationThe Web is also an excellent source of job-related information. People lookingfor their first jobs or seeking information about new job opportunities canfind a wealth of information online. Search engines, such as Google or Bing(discussed next), can be a good starting point for searching for specific com-panies or industries. You can use a directory on Yahoo’s home page, forexample, to explore industries and careers. Most medium and large compa-nies have Web sites that list open positions, salaries, benefits, and people tocontact for further information. The IBM Web site,, has a linkto “Careers.” When you click this link, you can find information on jobs withIBM around the world. In addition, several sites specialize in helping youfind job information and even apply for jobs online, including (see Figure 6.17),, and

Search Engines and Web ResearchA search engine is a valuable tool that enables you to find information on theWeb by specifying words or phrases known as keywords, which are related toa topic of interest. You can also use operators such as AND, OR, and NOT formore precise search results.

search engine: A valuable tool thatenables you to find information on theWeb by specifying words that are key toa topic of interest, known as keywords.

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The search engine market is dominated by Google. Other popular searchengines include Yahoo! Search, Bing, Ask, Dogpile, and China’s Baidu.Google has taken advantage of its market dominance to expand into otherWeb-based services, most notably email, scheduling, maps, social networking,Web-based applications, and mobile device software. Search engines likeGoogle often have to modify how they display search results, depending onpending litigation from other Internet companies and government scrutiny,such as antitrust investigations.

The Bing search engine has attempted to innovate with its design. Bingrefers to itself as a decision engine because it attempts to minimize theamount of information that it returns in its searches that is not useful or perti-nent. Bing also includes media—music, videos, and games—in its searchresults. See Figure 6.18.

Savvy Web site operators know that the search engine results are toolsthat can draw visitors to certain Web sites. Many businesses invest in searchengine optimization (SEO)—a process for driving traffic to a Web site byusing techniques that improve the site’s ranking in search results. Normally,when a user gets a list of results from a Web search, the links listed higheston the first page of search results have a far greater chance of being clicked.SEO professionals, therefore, try to get the Web sites of their businessesto be listed with as many appropriate keywords as possible. They study thealgorithms that search engines use, and then they alter the contents of their

FIGURE 6.17LinkedIn jobs listingLinkedIn and many other Web sitesspecialize in helping people getinformation about jobs and apply forjobs online.Source: LinkedIn

FIGURE 6.18Microsoft Bing decisionengineMicrosoft calls its search engine adecision engine to distinguish it fromother search software.

search engine optimization(SEO): A process for driving traffic to aWeb site by using techniques thatimprove the site’s ranking in searchresults.






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Web pages to improve the page’s chance of being ranked number one. SEOprofessionals use Web analytics software to study detailed statistics about visi-tors to their sites.

Search engines offer just one option for performing research on the Web.Libraries typically provide access to online catalogs as well as links to publicand sometimes private research databases on the Web. Online research data-bases allow visitors to search for information in thousands of journal, magazine,and newspaper articles. Information database services are valuable becausethey offer the best in quality and convenience. They conveniently provide full-text articles from reputable sources over the Web. College and public librariestypically subscribe to many databases to support research. One of the mostpopular private databases is LexisNexis Academic Universe. See Figure 6.19.

Instant MessagingInstant messaging is online, real-time communication between two or morepeople who are connected via the Internet. With instant messaging, partici-pants build contact lists of people they want to chat with. Some applicationsallow you to see which of your contacts are currently logged on to the Inter-net and available to chat. If you send messages to one of your contacts, thatmessage appears within the messaging app on a smartphone or other mobiledevice, or, for those working on PCs, the message opens in a small dialogbox on the recipient’s computer. Although chat typically involves exchangingtext messages with one other person, many messaging apps allow for groupchats. And today’s instant messaging software supports not only text messagesbut also the sharing of images, videos, files, and voice communications. Popu-lar instant messaging services include Facebook Messenger, KIK, Instagram,Skype, Snapchat, WhatsApp, and WeChat. It is estimated that mobile opera-tors lost $23 billion in 2012 alone as teens shifted away from texting over cel-lular networks in favor of communicating with their friends over the Internetusing instant messaging apps.23

Instant messaging: The online,real-time communication between twoor more people who are connected viathe Internet.

FIGURE 6.19LexisNexisAt LexisNexis Academic Universe,you can search the news, legalcases, company information, peo-ple, or a combination of categories.Source:

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Microblogging, Status Updates, and News FeedsReferred to as a microblogging service, Twitter is a Web application thatallows users to send short text updates (up to 140 characters) from a smart-phone or a Web browser to their Twitter followers. While Twitter has beenhugely successful for personal use, many businesses are finding value in theservice as well. Business people use Twitter to stay in touch with associatesby sharing their location and activities throughout the day. Businesses alsofind Twitter to be a rich source of consumer sentiment that can be tapped toimprove marketing, customer relations, and product development. Many busi-nesses have a presence on Twitter, dedicating personnel to communicate withcustomers by posting announcements and reaching out to individual users.Village Books, an independent bookstore in Bellingham, Washington, usesTwitter to build relationships with its customers and to make them feel partof their community.

The popularity of Twitter has caused social networks, such as Face-book, LinkedIn, and Tumblr, to include Twitter-like news or blog postfeeds. Previously referred to as Status Updates, Facebook users share theirthoughts and activities with their friends by posting messages to Face-book’s News Feed.

ConferencingSome Internet technologies support real-time online conferencing. Partici-pants dial into a common phone number to share a multiparty phone conver-sation and, in many cases, live video of the participants. The Internet hasmade it possible for those involved in teleconferences to share computerdesktops. Using services such as WebEx or GoToMeeting, conference partici-pants log on to common software that allows them to broadcast their com-puter display to the group. This ability is quite useful for presenting withPowerPoint, demonstrating software, training, or collaborating on documents.Participants verbally communicate by phone or PC microphone. Some confer-encing software uses Webcams to broadcast video of the presenter and groupparticipants. The Addison Fire Protection District provides professional fireprotection and paramedic services to the 35,000 residents of Addison, Illinois.The district uses GoToMeeting to enable its employees to attend training andto support chief-to-chief meetings without requiring personnel to leave theirassigned stations.24

Telepresence takes videoconferencing to the ultimate level. Telepresencesystems, such as those from Cisco and Polycom, use high-resolution videoand audio with high-definition displays to make it appear that conference par-ticipants are actually sitting around a table. Participants enter a telepresencestudio where they sit at a table facing display screens that show other partici-pants in other locations. Cameras and microphones collect high-quality videoand audio at all locations and transmit them over high-speed network connec-tions to provide an environment that replicates actual physical presence. Doc-ument cameras and computer software are used to share views of computerscreens and documents with all participants.

You don’t need to be a big business to enjoy the benefits of video conver-sations. Free software is available to make video chat easy to use for anyonewith a computer, a Webcam, and a high-speed Internet connection. Onlineapplications such as Google Voice support video connections between Webusers. For spontaneous, random video chat with strangers, you can go to theChatroulette Web site. Software, such as FaceTime and Skype, providecomputer-to-computer video chat so users can speak to each other face-to-face. In addition to offering text, audio, and video chat on computers andmobile devices, Facetime and Skype offer video phone service over Internet-connected TVs. Recent Internet-connected sets from Panasonic and Samsung

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ship with the Skype software preloaded. You attach a Webcam to your TV tohave a video chat from your sofa.

Blogging and PodcastingA Web log, typically called a blog, is a Web site that people and businessesuse to share their observations, experiences, and opinions on a wide rangeof topics. The community of blogs and bloggers is often called the blogo-sphere. A blogger is a person who creates a blog, whereas blogging refersto the process of placing entries on a blog site. A blog is like a journal.When people post information to a blog, it is placed at the top of the blogpage. Blogs can include links to external information and an area for com-ments submitted by visitors. Many organizations launch blogs as a way tocommunicate with customers and generate new business. Video content canalso be placed on the Internet using the same approach as a blog. This isoften called a video log or vlog.

A podcast is an audio broadcast you can listen to over the Internet. Thename podcast originated from Apple’s iPod combined with the word broad-cast. A podcast is like an audio blog. Using PCs, recording software, andmicrophones, you can record podcast programs and place them on the Inter-net. Apple’s iTunes provides free access to tens of thousands of podcasts,which are sorted by topic and searchable by key word. See Figure 6.20. Afteryou find a podcast, you can download it to your PC (Windows or Mac), to anMP3 player such as an iPod, or to any smartphone or tablet. You can also sub-scribe to podcasts using RSS software included in iTunes and other digitalaudio software.

Online Media and EntertainmentLike news and information, all forms of media and entertainment have fol-lowed their audiences online. Music, movies, television program episodes,

FIGURE 6.20PodcastsiTunes and other sites provide freeaccess to tens of thousands ofpodcasts.Source:

Web log (blog): A Web site thatpeople and businesses use to sharetheir observations, experiences, andopinions on a wide range of topics.

podcast: An audio broadcast you canlisten to over the Internet.

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user-generated videos, e-books, and audio books are all available online todownload and purchase or stream.

Content streaming is a method of transferring large media files over theInternet so that the data stream of voice and pictures plays more or less con-tinuously as the file is being downloaded. For example, rather than wait foran entire 5 MB video clip to download before they can play it, users canbegin viewing a streamed video as it is being received. Content streamingworks best when the transmission of a file can keep up with the playback ofthe file.

Music The Internet and the Web have made music more accessible thanever, with artists distributing their songs through online radio, subscriptionservices, and download services. Spotify, Pandora, Napster, and Google PlayMusic are just a few examples of Internet music sites. Rhapsody Interna-tional has more than 3 million subscribers globally for its premium musicservices, including Napster, Rhapsody, and its Internet radio service, Rhap-sody unRadio.25 See Figure 6.21. Internet music has even helped sales ofclassical music by Mozart, Beethoven, and others. Internet companies,including Facebook, are starting to make music, movies, and other digitalcontent available on their Web sites. Facebook, for example, allows onlinemusic companies, such as Spotify and Rdio, to post music-related news onits Web site.

Apple’s iTunes was one of the first online music services to find success.Microsoft, Amazon, Walmart, and other retailers also sell music online. Down-loaded music may include digital rights management (DRM) technology thatprevents or limits the user’s ability to make copies or to play the music onmultiple players.

Podcasts are yet another way to access music on the Web. Many indepen-dent artists provide samples of their music through podcasts. Podcast Alleyincludes podcasts from unsigned artists.

Movies, Video, and Television Television and movies are expanding to theWeb in leaps and bounds. Online services such as Amazon Instant Video,Hulu, and Netflix provide television programming from hundreds of provi-ders, including most mainstream television networks. Walmart’s acquisition ofVudu has allowed the big discount retailer to successfully get into the Internetmovie business. Increasingly, TV networks offer apps for streaming TV con-tent to tablets and other mobile devices. Some TV networks charge viewers towatch episodes of their favorite shows online. The Roku LT Streaming MediaBox connects wirelessly to your TV and streams TV shows and movies from

FIGURE 6.21RhapsodyRhapsody provides streaming musicby subscription.Source:

content streaming: A method fortransferring large media files over theInternet so that the data stream of voiceand pictures plays more or less contin-uously as the file is being downloaded.

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online sources such as Amazon Instant, Crackle, Disney, Hulu, Netflix, Pan-dora, and Xfinity TV.

Popcorn Time is a free program that uses peer-to-peer networking todownload movies and TV programs. However, the software explicitly statesthat its users may be violating copyright law in their country. And indeed,Voltage Pictures has filed mass lawsuits against people who downloaded TheHurt Locker and Dallas Buyers Club. While these lawsuits aren’t always suc-cessful, they do create a risk for users who don’t anonymize their activitythrough a VPN service.26

No discussion of Internet video would be complete without mentioningYouTube. YouTube supports the online sharing of user-created videos.YouTube videos tend to be relatively short and cover a wide range of cate-gories from the nonsensical to college lectures. See Figure 6.22. It is esti-mated that 100 hours of video are uploaded to YouTube every minute andthat over 6 billion hours of video are watched each month on YouTube.YouTube reaches more U.S. adults in the 18 to 34 age category than anycable network.27 Other video-streaming sites include AOL Video, Metacafe,and Vimeo. As more companies create and post videos to Web sites likeYouTube, some IS departments are creating a new position—video contentmanager.

Online Games and Entertainment Video games have become a huge industrywith worldwide annual revenue projected to exceed $100 billion by 2017.28

Zynga, a fast-growing Internet company, sells virtual animals and other virtualitems for games, such as FarmVille. The company, for example, sells a clownpony with colorful clothes for about $5. Zynga has a VIP club for people thatspend a lot on virtual items it offers for sale. Some Internet companies alsosell food for virtual animals. People can feed and breed virtual animals andsell their offspring. The market for online gaming is very competitive and con-stantly changing. After Google included online games on its Web site, Face-book updated its online gaming offerings. Many video games are availableonline. They include single-user, multiuser, and massively multiuser games.The Web offers a multitude of games for all ages, including role-playinggames, strategy games, and simulation games.

FIGURE 6.22YouTube EDUYouTube EDU provides thousands ofeducational videos from hundreds ofuniversities.Source:

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Game consoles such as the PlayStation, Wii, and Xbox provide multi-player options for online gaming over the Internet. Subscribers can play withor against other subscribers in 3D virtual environments. They can even talk toeach other using a microphone headset.

Shopping OnlineShopping on the Web can be convenient, easy, and cost effective. You canbuy almost anything online, from books and clothing to cars and sportsequipment. Groupon, for example, offers discounts at restaurants, spas, autorepair shops, music performances, and almost any other product or serviceoffered in your area or city. Revenues for Groupon exceeded $3.1 billion in2015.29

Other online companies offer different services. Dell and many othercomputer retailers provide tools that allow shoppers to specify every aspectand component of a computer system to purchase. wouldbe happy to create your professional résumé. AmazonFresh, Instacart, andPeapod are all willing to deliver groceries to your doorstep. Products and ser-vices abound online.

Many online shopping options are available to Web users. Online versionsof retail stores often provide access to products that may be unavailable inlocal stores. JCPenney, Target, Walmart, and many others carry only a per-centage of their inventory in their retail stores; the other inventory is availableonline. To add to their other conveniences, many Web sites offer freeshipping and pickup for returned items that don’t fit or otherwise meet a cus-tomer’s needs.

Web sites such as,,,, and provide productprice quotations from numerous online retailers to help you to find the bestdeal. Apps such as BuyVia, Purchx, RedLaser, and Shop Savvy enable usersto compare prices at national and local outlets and lets you set up alerts(including location-based) for products. At a store and unsure if the price onthe shelf is the lowest you can find? Use the UPC barcode scanner to get ananswer on the spot.

Online clearinghouses, Web auctions, and marketplaces offer a platformfor businesses and individuals to sell their products and belongings. Onlineclearinghouses, such as, provide a method for manufacturersto liquidate stock and for consumers to find a good deal. Outdated or over-stocked items are put on the virtual auction block and users bid on the items.The highest bidder when the auction closes gets the merchandise—often forless than 50 percent of the advertised retail price.

The most popular online auction or marketplace is eBay, shown inFigure 6.23. The site provides a public platform for global trading where any-one can buy, sell, or trade practically anything. It offers a wide variety of

FIGURE 6.23eBayeBay provides an online market-place where anyone can buy, sell,or trade practically anything.Source:

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features and services that enable members to buy and sell on the site quicklyand conveniently. Buyers have the option to purchase items at a fixed priceor in an auction-style format, where the highest bid wins the product.

Auction houses such as eBay accept limited liability for problems thatbuyers or sellers may experience in their transactions. Transactions that makeuse of the PayPal service are protected on eBay. Others, however, may bemore risky. Participants should be aware that auction fraud is the most preva-lent type of fraud on the Internet.

Craigslist is a network of online communities that provides free onlineclassified advertisements. It is a popular online marketplace for purchasingitems from local individuals. Many shoppers turn to Craigslist rather thangoing to the classifieds in the local paper.

Businesses benefit from shopping online as well. Global supply manage-ment online services provide methods for businesses to find the best deals onthe global market for raw materials and supplies needed to manufacture theirproducts. Electronic exchanges provide an industry-specific Web resource cre-ated to deliver a convenient centralized platform for B2B e-commerce amongmanufacturers, suppliers, and customers.

Travel, Geolocation, and NavigationThe Web has had a profound effect on the travel industry and the way peopleplan and prepare for trips. From getting assistance with short trips across town toplanning long holidays abroad, travelers are turning to the Web to save time andmoney and to overcome much of the risk involved in visiting unknown places.

Travel Web sites such as Travelocity, Expedia, Kayak, and Priceline helptravelers find the best deals on flights, hotels, car rentals, vacation packages,and cruises. Priceline offers a slightly different approach from the other Websites. It allows shoppers to name a price they’re willing to pay for an airlineticket or a hotel room and then works to find an airline or hotel that canmeet that price.

Mapping and geolocation tools are among the most popular and success-ful Web applications. MapQuest, Google Maps, and Bing Maps are examples.See Figure 6.24. By offering free street maps for locations around the world,

FIGURE 6.24Google MapsMapping software, such as GoogleMaps, provides streetside views ofTimes Square.Source: Google

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these tools help travelers find their way. Provide your departure location anddestination, and these online applications produce a map that displays thefastest route. Using GPS technologies, these tools can detect your current loca-tion and provide directions from where you are.

Google Maps also provides extensive location-specific business informa-tion, satellite imagery, up-to-the-minute traffic reports, and Street View. Thelatter is the result of Google employees driving the streets of the world’s citiesin vehicles with high-tech camera gear, taking 360-degree images. Theseimages are integrated into Google Maps to allow users to get a “street view”of an area that can be manipulated as if the viewer were actually walkingdown the street looking around. Bing Maps and Google Maps both offerhigh-resolution aerial photos and street-level 3D photographs.

Geographic information systems (GISs) provide geographic informationlayered over a map. For example, Google Earth provides options for viewingtraffic, weather, local photos and videos, underwater features such as ship-wrecks and marine life, local attractions, businesses, and places of interest.Software such as Connect, Find My Friends, Phone Tracker, and Trackerallow you to find your friends on a map—with their permission—and willautomatically notify you if a friend is near.

Geo-tagging is technology that allows for tagging information with anassociated location. For example, Flickr and other photo software and servicesallow photos to be tagged with the location they were taken. Once tagged, itbecomes easy to search for photos taken, for example, in Florida. Geo-tagging also makes it easy to overlay photos on a map, as Google Maps andBing Maps have done. Facebook, Instagram, Snapchat, Twitter, and manyother social networks have also made it possible for users to geo-tag photos,comments, tweets, and posts.

Geolocation information does pose a risk to privacy and security. Manypeople prefer that their location remain unknown, at least to strangers andoften to acquaintances and even friends. Recently, criminals have made useof location information to determine when people are away from their resi-dences so that they can burglarize without fear of interruption.

Intranets and ExtranetsAn intranet is an internal corporate network built using Internet and WorldWide Web standards and products. Employees of an organization can use anintranet to gain access to corporate information. After getting their feet wetwith public Web sites that promote company products and services, corpora-tions are seizing the Web as a swift way to streamline—even transform—their organizations. These private networks use the infrastructure and stan-dards of the Internet and the World Wide Web. Using an intranet offers oneconsiderable advantage: many people are already familiar with Internet tech-nology, so they need little training to make effective use of their corporateintranet.

An intranet is an inexpensive yet powerful alternative to other forms ofinternal communication, including conventional computer setups. One of anintranet’s most obvious virtues is its ability to reduce the need for paper.Because Web browsers run on all types of computers, the same electronicinformation can be viewed by any employee. That means that all sorts ofdocuments (such as internal phone books, procedure manuals, training man-uals, and requisition forms) can be inexpensively converted to electronicform, posted online, and easily updated. An intranet provides employeeswith an easy and intuitive approach to accessing information that was previ-ously difficult to obtain. For example, it is an ideal solution to providinginformation to a mobile salesforce that needs access to rapidly changinginformation.

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CriticalThinking Exercise

A growing number of companies offer limited network access to selectedcustomers and suppliers. Such networks are referred to as extranets, whichconnect people who are external to the company. An extranet is a networkbuilt using Web technologies that links selected resources of the intranet of acompany with its customers, suppliers, or other business partners.

Corporate executives at a well-known global fast food chain wanted toimprove their understanding of what was happening at each restaurantlocation and needed to communicate with franchisees to better serve theircustomers. The firm implemented an extranet, enabling individual franchi-sees to fine-tune their location-specific advertising and get it approvedquickly by corporate-level staff. In addition, with the extranet, corporateemployees now have a much better understanding of customers, both bylocation and in aggregate, based on information they are receiving fromfranchisees.30

Security and performance concerns are different for an extranet than for aWeb site or network-based intranet. User authentication and privacy are criti-cal on an extranet so that information is protected. Obviously, the networkmust also be reliable and provide quick response to customers and suppliers.Table 6.6 summarizes the differences between users of the Internet, intranets,and extranets.

Secure intranet and extranet access applications usually require the use ofa virtual private network (VPN), a secure connection between two points onthe Internet. VPNs transfer information by encapsulating traffic in IP packetsand sending the packets over the Internet, a practice called tunneling. MostVPNs are built and run by ISPs. Companies that use a VPN from an ISP haveessentially outsourced their networks to save money on wide area networkequipment and personnel. To limit access to the VPN to just individualsauthorized to use it, authorized users may be issued a logon ID and a securitytoken assigned to that logon ID. The security token displays a 10- to 12-digitpassword that changes every 30 seconds or so. A user must enter their logonID and the security password valid for that logon ID at that moment in time.

Extranet to Support Craft BrewersThere are currently more than 3,000 breweries in the United States, double thenumber a decade ago. Much of this growth has come from the popularity of craftbrewers who, by definition, produce no more than 6 million barrels annually—many produce much less. Within the craft brewing industry, there is a strong trendtoward packaging beer in four packs of 16-ounce cans rather than the six packs of12-ounce cans, bottles, or jugs associated with the major U.S. brewers. One practi-cal reason for cans is that glass bottles typically cost more, which can make a bigimpact on the bottom line of many small brewers. In addition, craft brewers use16-ounce cans as a means to set themselves apart from traditional beverage compa-nies, and many have built their identities around the distinct look of their 16-ouncecan. However, most craft brewers are too small to afford their own canning lines.

Ball, Crown, and Rexam are major can manufacturers who work with manycraft brewers to fill their cans. But these companies recently raised their minimumcan order to the industry-standard truckload, which can range from roughly

TABLE 6.6 Summary of Internet, intranet, and extranet usersType User Need User ID and Password?

Internet Anyone No

Intranet Employees Yes

Extranet Business partners Yes

virtual private network (VPN): Asecure connection between two pointson the Internet; VPNs transfer informa-tion by encapsulating traffic in IP pack-ets and sending the packets over theInternet.

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155,000 to 200,000, depending on the size of the can. Typically the smaller brewer-ies and their distributors need only a few thousand cans at a time. The new mini-mum can orders translate into a lot of cash up front as well as an increased amountof storage space for breweries. Many small breweries are struggling as a result.

A new type of company, mobile canners, has emerged to address this prob-lem. These firms haul their equipment to breweries, spend less than a day fillingand labeling a few thousand cans, and then move on to the next customer. Overthe past three years, about two dozen mobile canner companies have startedoffering mobile canning across the United States.

You are the owner of one of these mobile canners serving craft breweriesacross the Midwest, a very competitive market. One of your employees hasapproached you with an idea to set up an extranet that will allow your craft brew-ery customers to communicate their production schedules to you electronically.Their individual production schedules would be fed into a master schedule thatwould enable you to see and plan three to six months into the future. This way youcould commit the people, equipment, and other resources to ensure that your cus-tomers’ needs will be met. Running out of cans is catastrophic for the brewers. Ifyou let down a customer who is depending on you, you’ve lost a customer for life.

Review Questions1. What advantages does use of an extranet provide versus more conventional

methods of communication—over the phone, via fax, etc.?2. What measures can you take to control access to the master production sched-

ule so that only authorized customers may enter their data?

Critical Thinking Questions1. What potential start-up issues may be involved in preparing your craft brew-

ery customers to use this new system? How will you overcome these issues?2. Can you identify any other purposes for the extranet in addition to one-way

communication of production schedules? Briefly elaborate.

The Internet of Things

The Internet of Things (IoT) is a network of physical objects or “things”embedded with sensors, processors, software, and network connectivitycapability to enable them to exchange data with the manufacturer of thedevice, device operators, and other connected devices. See Figure 6.25.

Sensors are being installed in a variety of machines and products, rangingfrom home appliances and parking garages to clothing and grocery products.A sensor is a device that is capable of sensing something about its surround-ings such as pressure, temperature, humidity, pH level, motion, vibration, orlevel of light. The sensor detects an event or changes in quantity and pro-duces a corresponding output, usually an electrical or optical signal. To betruly part of the IoT, these networked devices need IP addresses and a con-nection to the public Internet. The data is then transmitted over the Internetto an operational historical database containing data from many sensors. Thedatabase may be on a data storage device in a local control room, in an enter-prise data center in another state, or hundreds of miles away in the cloud. Theoperational data can be accessed via the Internet and analyzed by users withpersonal computers or portable devices including smartphones. Updates,alerts, or even automatic adjustments may be sent to the devices on the IoTbased on this analysis. According to Don DeLoach, CEO and president ofInfobright Inc., “manufacturing has been automated at various levels formany years, but IoT brings automation to a deep, broad level—one where

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interconnectivity between various elements in manufacturing exists in a way itdid not before.”31

Enlightened organizations apply analytics to these streams of data—evenbefore the data is stored for post event analysis. This enables workers todetect patterns and potential problems as they are occurring and to makeappropriate adjustments in the operation of the devices being measured. Forexample, sensors embedded in General Electric (GE) aircraft engines collectsome 5,000 individual data points per second. This data is analyzed while theaircraft is in flight to adjust the way the aircraft performs, thereby reducingfuel consumption. The data is also used to plan predictive maintenance onthe engines based on engine component wear and tear. In 2013, this technol-ogy helped GE earn $1 billion in incremental income by delivering perfor-mance improvements, less downtime, and more flying miles.32

Here are additional examples of organizations using sensors and the IoTto monitor and control key operational activities:

● Asset monitoring. Food and drug manufacturers can monitor shippingcontainers for changes in temperatures that could affect product qualityand safety using cheap battery-powered sensors and 4G LTE connectivity.

● Construction. SK Solutions is using IoT technology to prevent cranesfrom colliding on a crowded construction site with 37 cranes and5,000 workers near the world’s tallest building in the United Arab Emi-rates (UAE) city of Dubai. The Internet-connected system collects datafrom sensors mounted to the cranes and other equipment to detect if con-struction cranes are swinging too close to each other, and, if so, haltsthem from moving further.33

● Agriculture. Farmers are using IoT technology to collect data about watermoisture and nitrogen levels to improve yields while conserving water, aprecious commodity in many places.

● Manufacturing. IoT enabled sensors on plant-floor equipment, such as aconveyor line, can alert plant floor personnel to problems in real time.

FIGURE 6.25The Internet of ThingsThe IoT is a network of physicalobjects or “things” embedded withsensors, processors, software,and network connectivitycapability to enable them toexchange data with the manufac-turer of the device, device operators,and other connected devices.

5. Data is analyzed to gain insights Into operation of devices on IoT

1. Sensors gather data 2. Data passes over network

3. Data from across the IoT Is gathered and stored- often in the cloud


an K


































4. Data is combined with other data from other systems

6. Alerts sent to people, Enterprise systems, or IoT Devices based on these insights

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The data can also be analyzed to uncover patterns to allow techniciansto predict potential failures or redeploy resources in a more optimalfashion.

● Monitoring parking spaces. San Francisco uses connected sensors andmeters to determine the demand for parking on certain streets, periodi-cally adjusting hourly rates so drivers are more likely to find a spacewhen they arrive. Rates go up on more-crowded blocks and down onless-crowded ones. The city has deployed a low-power wide area net-work similar to a cellular network but designed for low-power IoTequipment—such as parking meters—to provide a low energy way fordevices that are slower and cheaper than the typical LTE cellularnetwork.

● Predictive Maintenance. Sensors are used extensively in the utilitiesindustry to capture operational data to achieve 24/7 uptime. Sensor datais carefully analyzed to predict when critical pieces of equipment orpower lines are about to fail so that quick, anticipatory corrective actioncan take place before any failure.

● Retailing. Retailers use in-store sensors to detect in-store behavior andoptimize the shopping experience in order to increase revenue and mar-ket share. Streaming data from sensors is analyzed, along with otherinformation (like inventory, social media chatter, and online-shop userprofiles), to send customized and personal offers while the shopper is inthe process of making a purchase decision.

● Traffic monitoring. The Aegan motorway is the oldest and most impor-tant motorway of Greece, connecting the country’s largest cities, Athensand Thessaloniki. More than 5,000 devices are deployed along a 200-km(124-mile) stretch of the highway to keep drivers safe and the roadwayrunning efficiently. All these devices must work in a smooth and coordi-nated fashion to monitor traffic, detect traffic incidents using traffic cam-eras, warn travelers of road conditions via electronic billboards, andoperate toll booths. The devices are connected to a central control systemusing Cisco’s Internet of Everything system to connect data, people, pro-cesses, and things.34

IoT applications can be classified into one of four types as shown inTable 6.7.

Unfortunately, there can be many issues with simply receiving and recog-nizing usable sensor data. Sometimes a faulty sensor or bad network connec-tion results in missing data or sensor data lacking time stamps indicatingwhen the reading occurred. As a result, sensor data can be incomplete or con-tain inconsistent values indicating a potential sensor failure or a drop in a net-work. Developers of IoT systems must be prepared for and be able to detectfaulty sensor data.

TABLE 6.7 Types of IoT applicationsType of IoTApplication Degree of Sensing Degree of Action

Connect and monitor Individual devices each gathering a smallamount of data

Enables manual monitoring using simplethreshold-based exception alerting

Control and react Individual devices each gathering a smallamount of data

Automatic monitoring combined with remotecontrol with trend analysis and reporting

Predict and adapt External data is used to augment sensor data Data used to preform predictive analysis andinitiate preemptive action

Transform andexplore

Sensor and external data used to provide newinsights

New business models, products, and servicesare created

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CriticalThinking Exercise

Security is a very major issue with IoT applications. In today’s manufactur-ing environment, the factory network is a closed environment designed to com-municate with plant sensors and devices but not typically with the outsideworld. So a key decision organizations must make when considering imple-mentation of an IoT is as follows: Are the benefits of doing so sufficient toovercome the risk of making detailed company information accessible throughthe Internet and exposing internal systems to hacking, viruses, and destructivemalware? Hackers who gain access to an organization’s IoT can steal data,transfer money out of accounts, and shut down Web sites, and they can alsowreck physical havoc by tampering with critical infrastructure like air trafficcontrol systems, healthcare devices, power grids, and supervisory control anddata acquisition (SCADA) systems. One of the first things developers of IoTapplication should focus on is building in security from the start. This needs toinclude ways of updating the system in a secure manner.

Manufacturer Weighs Converting to Internet of ThingsYou are a member of the plant information systems group for a small manufac-turer of all-natural ingredient cosmetics. Your firm promotes itself as adhering tothe highest standards of compliance and quality. Manufacturing is rigorously mon-itored via sensors and computer controls throughout the entire process, and auto-mated temperature controls ensure complete stability in the manufacturingenvironment. Sensor tracking is performed from the moment that raw materialsenter your facility, throughout the manufacturing process, packaging, and on todistribution. The sensors and computer controls were installed when the plantwas built in the 1990s and use proprietary communications protocols and are notInternet enabled. Data from these sensors is monitored by a group of three tech-nicians in the computer control room. Twelve workers are required to staff thecontrol room 24/7, including weekends and most holidays.

Your company has just purchased a plant previously owned by one of yourcompetitors in a nearby state. Your group has been asked to look at the feasibilityof upgrading the sensors used in both plants to Internet-enabled sensors con-nected to the Internet of Things. This would make it possible for technicians inone control room to monitor the operation of both plants. Plant staffing could bereduced by 12 workers saving $1.2 million in labor expenses per year. It is esti-mated that the cost of replacing the existing sensors and converting to the Inter-net of Things is in the vicinity of $1.5 million.

Review Questions1. Why is it necessary to replace the existing sensors to implement an IoT

network?2. What additional benefits may arise from converting the plants to the Internet

of Things?

Critical Thinking Questions1. What new risks are raised by placing the new system of sensors on the Inter-

net of Things?2. What actions could be taken to reduce these risks?

Cloud Computing

Cloud computing refers to a computing environment in which software andstorage are provided as an Internet service and accessed by users with theirWeb browser. See Figure 6.26. Google and Yahoo!, for example, store theemail of many users, along with calendars, contacts, and to-do lists. Apple

cloud computing: A computingenvironment where software and stor-age are provided as an Internet serviceand are accessed with a Web browser.

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developed its iCloud service to allow people to store their documents, music,photos, apps, and other content on its servers.35 In addition to its social net-working features, Facebook offers users the ability to store personal photosin the cloud—as does Flickr and a dozen other photo sites. Pandora deliversmusic, and Hulu and YouTube deliver movies via the cloud. Apache OpenOf-fice, Google Apps, Microsoft Office 365, Zoho, and others provide Web-delivered productivity and information management software. Communica-tions, contacts, photos, documents, music, and media are available to youfrom any Internet-connected device with cloud computing.

Cloud computing offers many advantages to businesses. With cloud com-puting, organizations can avoid large, up-front investments in hardware aswell as the ongoing investment in the resources that would be required tomanage that hardware. Instead, they can provision just the right type and sizeof information system resources from their cloud computing provider, pay forit on an ongoing basis, and let the service provider handle the system supportand maintenance. In most cases, the cloud computing service provider pro-vides access to state-of-the-art technology at a fraction of the cost of owningit and without the lengthy delays that can occur when an organizations triesto acquire its own resources. This can increase the speed and reduce thecosts of new product and service launches. For example, Spotify offers itsusers instant access to over 16 million licensed songs. The company faces anongoing struggle to keep pace with the rapid release of new music, addingover 20,000 tracks to its catalog each day. Emil Fredriksson, operations direc-tor for Spotify, explains why the company employs cloud computing, “Spotifyneeded a storage solution that could scale very quickly without incurring longlead times for upgrades. This led us to cloud storage.” While establishing newstorage previously required several months of preparation, it can now beobtained instantly through cloud computing.36

Cloud computing can be deployed in several different ways. The methodsdiscussed thus far in this chapter are considered public cloud services. Publiccloud computing refers to deployments in which service providers offer theircloud-based services to the general public, whether that is an individual usingGoogle Calendar or a corporation using the application. In aprivate cloud deployment, cloud technology is used within the confines of aprivate network.

Since 1992, The College Network and its partner universities have pro-vided accessible educational programs for individuals seeking degrees or pro-fessional certificates, entirely through distance learning. The College Network

FIGURE 6.26Cloud computingCloud computing uses applicationsand resources delivered via theWeb. He



280 PART 2 • Information Technology Concepts

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chose EarthLink to provide a customized private cloud with dedicated servers.Conversion to the private network reduced the capital required for computerhardware and software, increased systems availability and avoided outages,and reallocated its valuable IT resources while EarthLink resources trouble-shoot any systems issues.37

Many organizations are turning to cloud computing as an approach tooutsource some or all of their IT operations. This section defines cloud com-puting and its variations and points out some of its advantages as well assome potential issues, including problems associated with cost, scalability,security, and regulatory compliance.

Public Cloud ComputingIn a public cloud computing environment, a service provider organizationowns and manages the infrastructure (including computing, networking,and storage devices) with cloud user organizations (called tenants) accessingslices of shared hardware resources via the Internet. The service providercan deliver increasing amounts of computing, network, and storage capacityon demand and without requiring any capital investment on the part of thecloud users. Thus, public cloud computing is a great solution for organiza-tions whose computing needs vary greatly depending on changes indemand. Amazon, Cisco Systems, IBM, Microsoft, Rackspace, Verizon Com-munications Inc., and VMWare are among the largest cloud computing ser-vice providers. These firms typically offer a monthly or annual subscriptionservice model; they may also provide training, support, and data integrationservices.38

Public cloud computing can be a faster, cheaper, and more agile approachto building and managing your own IT infrastructure. However, since cloudusers are using someone else’s data center, potential issues with service levels,loss of control, disaster recovery, and data security should not be overlooked.Data security in particular is a key concern because when using a publiccloud computing service, you are relying on someone else to safeguard yourdata. In addition, your organization’s data may reside on the same storagedevice as another organization’s (perhaps even a competitor’s) data. All of thepotential issues of concern must be investigated fully before entering into apublic cloud computing arrangement. Organizations subject to tight regulationand complex regulatory requirements (e.g., financial, healthcare, and publicutility organizations) must ensure that their own processes and applicationsas well as those of the cloud provider are compliant.

A major start-up issue is the effort of getting your organization’s datamoved to the cloud in the first place. That introduces an issue of vendor lock-in—meaning once an organization’s servers and data are hosted with onecloud provider, it is not likely to be willing to go through the time-consumingmigration process a second time to move to a different provider in the future.So choose your cloud provider wisely, as it is a business relationship that youand your business will likely need to live with for the foreseeable future.

Cloud computing can be divided into three main types of services (seeFigure 6.27)

● Infrastructure as a service (IaaS) is an information systems strategy inwhich an