Business Driven Technology

640 Pages·2009·14.266 MB·English

by  Paige Baltzan, Amy L. Phillips, Stephen Haag

Business
Driven
*
Technology
Paige Baltzan
Daniels College of Business
University of Denver
Amy Phillips
Daniels College of Business
University of Denver
Stephen Haag
Daniels College of Business
University of Denver
Boston Burr Ridge, IL Dubuque, IA New York
San Francisco St. Louis Bangkok Bogotá Caracas Kuala Lumpur
Lisbon London Madrid Mexico City Milan Montreal New Delhi
Santiago Seoul Singapore Sydney Taipei Toronto
BUSINESS DRIVEN TECHNOLOGY
Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221
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This book is printed on acid-free paper.
1 2 3 4 5 6 7 8 9 0 WCK/WCK 0 9 8
ISBN 978-0-07-337674-5
MHID 0-07-337674-4
Publisher: PaulDucham
Developmental editor II: TrinaHauger
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Library of Congress Cataloging-in-Publication Data
Baltzan, Paige.
Business driven technology / Paige Baltzan, Amy Phillips, Stephen
Haag.—3rd ed.
p. cm.
Rev. ed. of: Bussiness driven technology / Stephen Haag, Paige Baltzan,
Amy Phillips. 2nd ed. c2008.
Includes index.
ISBN-13: 978-0-07-337674-5 (alk. paper)
ISBN-10: 0-07-337674-4 (alk. paper)
1. Information technology—Management. 2. Management information
systems. 3. Information resources management. 4. Industrial management—
Technological innovations. I. Phillips Amy (Amy L.). II. Haag, Stephen.
III. Haag, Stephen. Business driven technology. IV. Title.
HD30.2.H32 2009
658.4'038—dc22
2008000848
www.mhhe.com
* DEDICATION
In memory of Allan R. Biggs, my father, my
mentor, and my inspiration.
Paige
To my mother, Jane E. Phillips, with much love
and affection. Without you, I would not be
here.
Amy
For Slim Cummings, James O’Brien, and Steve
Lunce. All truly men among men.
Stephen
BRIEF TABLE OF CONTENTS
UNITS
1. Achieving Business Success
Chapter 1: Business Driven Technology
Chapter 2: Identifying Competitive Advantages
Chapter 3: Strategic Initiatives for Implementing Competitive Advantages
Chapter 4: Measuring the Success of Strategic Initiatives
Chapter 5: Organizational Structures That Support Strategic Initiatives
2. Exploring Business Intelligence
Chapter 6: Valuing Organizational Information
Chapter 7: Storing Organizational Information—Databases
Chapter 8: Accessing Organizational Information—Data Warehouse
3. Streamlining Business Operations
Chapter 9: Enabling the Organization—Decision Making
Chapter 10: Extending the Organization—Supply Chain Management
Chapter 11: Building a Customer-centric Organization—Customer Relationship Management
Chapter 12: Integrating the Organization from End to End—Enterprise Resource Planning
4. Building Innovation
Chapter 13: Creating Innovative Organizations
Chapter 14: E-Business
Chapter 15: Creating Collaborative Partnerships
Chapter 16: Integrating Wireless Technology in Business
5. Transforming Organizations
Chapter 17: Building Software to Support an Agile Organization
Chapter 18: Outsourcing in the 21st Century
Chapter 19: Developing a 21st Century Organization
BUSINESS P LUG-INS
B1 Business Basics B9 Customer Relationship Management
B2 Business Process B10 Enterprise Resource Planning
B3 Hardware and Software B11 E-Business
B4 Enterprise Architectures B12 Emerging Trends and Technologies
B5 Networks and Telecommunications B13 Strategic Outsourcing
B6 Information Security B14 Systems Development
B7 Ethics B15 Project Management
B8 Supply Chain Management
TECHNOLOGY PLUG-INS
T1 Personal Productivity Using IT T8 Decision Making Using Access 2007
T2 Basic Skills Using Excel 2007 T9 Designing Web Pages
T3 Problem Solving Using Excel 2007 T10 Creating Web Pages Using HTML
T4 Decision Making Using Excel 2007 T11 Creating Web Pages Using Dreamweaver
T5 Designing Database Applications T12 Creating Gantt Charts with Excel
T6 Basic Skills and Tools Using Access 2007 and Microsoft Project
T7 Problem Solving Using Access 2007
Apply Your Knowledge Projects Notes
Glossary Index
iv * Brief Table of Contents
TABLE OF CONTENTS
Preface xvii Chapter 3 Case: Consolidating Touchpoints
About the Authors xv for Saab 34
>> Plug-In Pointer: T2 35
UNIT 1
CHAPTER 4: MEASURING THE SUCCESS OF
Achieving Business Success 2
STRATEGIC INITIATIVES 36
Apple—Merging Technology, Business, and Measuring Information Technology’s
Entertainment 3 Success 36
Introduction 7 Efficiency and Effectiveness 37
Benchmarking—Baseline Metrics 37
CHAPTER 1: BUSINESS DRIVEN TECHNOLOGY 8 The Interrelationships of Efficiency and Effectiveness
Information Technology’s Role in Business 8 IT Metrics 38
Information Technology’s Impact on Business Metrics for Strategic Initiatives 40
Operations 8 Web Site Metrics 40
Information Technology Basics 9 Supply Chain Management (SCM) Metrics 41
Data, Information, and Business Intelligence 10 Customer Relationship Management (CRM)
IT Resources 11 Metrics 41
IT Cultures 13 Business Process Reengineering (BPR) and
Chapter 1 Case: The World Is Flat—Thomas Enterprise Resource Planning (ERP) Metrics 42
Friedman 14 Chapter 4 Case: How Do You Value Friendster? 44
>> P lug-In Pointers: B1, B2, B3, B4, B5, T1 15
CHAPTER 5: ORGANIZATIONAL STRUCTURES THAT
CHAPTER 2: IDENTIFYING COMPETITIVE SUPPORT STRATEGIC INITIATIVES 46
ADVANTAGES 17 Organizational Structures 46
Identifying Competitive Advantages 17 IT Roles and Responsibilities 46
The Five Forces Model—Evaluating Business The Gap between Business Personnel and IT
Segments 17 Personnel 48
Buyer Power 18 Improving Communications 48
Supplier Power 18 Organizational Fundamentals—Ethics and
Threat of Substitute Products or Services 19 Security 48
Threat of New Entrants 19 Ethics 49
Rivalry among Existing Competitors 20 Security 50
The Three Generic Strategies—Creating a Business Chapter 5 Case: Executive Dilemmas in the
Focus 20 Information Age 52
Value Chain Analysis—Targeting Business >> Plug-In Pointers: B6, B7 53
Processes 21 Unit Summary 54
Value Creation 21 Key Terms 54
Chapter 2 Case: Say “Charge It” with Your Cell Phone 24 Unit Closing Case One: How Levi’s Jeans Got into
Wal-Mart 55
CHAPTER 3: STRATEGIC INITIATIVES FOR
Unit Closing Case Two: Business 2.0: Bad Business
IMPLEMENTING COMPETITIVE ADVANTAGES 26
Decisions 57
Strategic Initiatives 26
Making Business Decisions 59
Supply Chain Management 26
Apply Your Knowledge 61
Customer Relationship Management 28
CRM Strategy 29
UNIT 2
Business Process Reengineering 30
Exploring Business Intelligence 68
Finding Opportunity Using BPR 30
Pitfalls of BPR 31 It Takes a Village to Write an Encyclopedia 69
Enterprise Resource Planning 31 Introduction 72
Table of Contents * v
CHAPTER 6: VALUING ORGANIZATIONAL Transaction Processing Systems 119
INFORMATION 72 Decision Support Systems 120
Organizational Information 73 Executive Information Systems 122
The Value of Transactional and Analytical Digital Dashboards 122
Information 74 Artificial Intelligence (AI) 124
The Value of Timely Information 75 Expert Systems 125
The Value of Quality Information 76
Neural Networks 126
Understanding the Costs of Poor Information 77
Genetic Algorithms 127
Understanding the Benefits of Good Information 78
Intelligent Agents 127
Chapter 6 Case: Fishing for Quality 78 Data Mining 128
CHAPTER 7: STORING ORGANIZATIONAL Cluster Analysis 129
INFORMATION—DATABASES 80 Association Detection 129
Storing Organizational Information 80 Statistical Analysis 130
Relational Database Fundamentals 80 Chapter 9 Case: Defense Advanced Research Projects
Entities and Attributes 81 Agency (DARPA) Grand Challenge 132
Keys and Relationships 81 >> Plug-In Pointers: T4, T8 132
Relational Database Advantages 83
Increased Flexibility 83 CHAPTER 10: EXTENDING THE ORGANIZATION—SUPPLY
CHAIN MANAGEMENT 133
Increased Scalability and Performance 83
Supply Chain Management 133
Reduced Information Redundancy 84
Basics of Supply Chain 133
Increased Information Integrity (Quality) 84
Information Technology’s Role in the Supply
Increased Information Security 84
Chain 134
Database Management Systems 85
Visibility 136
Data Driven Web Sites 85
Consumer Behavior 137
Integrating Information among Multiple Databases 87
Competition 137
Chapter 7 Case: Keeper of the Keys 90
Speed 138
>> Plug-In Pointers: T5, T6 91
Supply Chain Management Success Factors 138
CHAPTER 8: ACCESSING ORGANIZATIONAL Make the Sale to Suppliers 139
INFORMATION—DATA WAREHOUSE 92 Wean Employees off Traditional Business
Accessing Organizational Information 92 Practices 139
History of Data Warehousing 92 Ensure the SCM System Supports the
Data Warehouse Fundamentals 93
Organizational Goals 139
Multidimensional Analysis and Data Mining 94
Deploy in Incremental Phases and Measure
Information Cleansing or Scrubbing 95
and Communicate Success 140
Business Intelligence 98
Be Future Oriented 140
Enabling Business Intelligence 98
SCM Success Stories 1 140
Chapter 8 Case: Mining the Data Warehouse 99
Chapter 10 Case: BudNet 141
>> Plug-In Pointers: T3, T7 100
>> Plug-In Pointer: B8 142
Unit Summary 101
Key Terms 101 CHAPTER 11: BUILDING A CUSTOMER-CENTRIC
Unit Closing Case One: Harrah’s—Gambling Big on ORGANIZATION—CUSTOMER RELATIONSHIP
Technology 102 MANAGEMENT 143
Unit Closing Case Two: Searching for Customer Relationship Management (CRM) 143
Revenue—Google 104 Recency, Frequency, and Monetary Value 144
Making Business Decisions 107 The Evolution of CRM 144
Apply Your Knowledge 108 The Ugly Side of CRM: Why CRM Matters More Now than
Ever Before 145
UNIT 3 Customer Relationship Management’s
Streamlining Business Operations 112 Explosive Growth 147
Using Analytical CRM to Enhance Decisions 148
Second Life: Succeeding in Virtual Times 113
Customer Relationship Management Success
Introduction 117
Factors 149
CHAPTER 9: ENABLING THE ORGANIZATION—DECISION Chapter 11 Case: The Ritz-Carlton—Specializing
MAKING 118 in Customers 151
Decision Making 118 >> Plug-In Pointer: B9 152
vi * Table of Contents
CHAPTER 12: INTEGRATING THE ORGANIZATION FROM Content Management Systems 205
END TO END—ENTERPRISE RESOURCE PLANNING 153 Working Wikis 206
Enterprise Resource Planning (ERP) 153 Workflow Management Systems 207
Bringing the Organization Together 154 Groupware Systems 209
The Evolution of ERP 155 Video Conferencing 210
Integrating SCM, CRM, and ERP 156 Web Conferencing 211
Integration Tools 158
Instant Messaging 211
Enterprise Resource Planning’s Explosive Growth 159
Chapter 15 Case: Dreamworks Animation
Chapter 12 Case: Gearing Up at REI 160
Collaboration 212
>> P lug-In Pointer: B10 161
Unit Summary 162 CHAPTER 16: INTEGRATING WIRELESS TECHNOLOGY
Key Terms 162 IN BUSINESS 214
Unit Closing Case One: Dell’s Famous Supply Chain 163 Wireless Fidelity (Wi-Fi) 214
Unit Closing Case Two: Revving Up Sales Business Drivers for Wireless Technologies 214
at Harley-Davidson 165 Advantages of Enterprise Mobility 215
Making Business Decisions 167 Bluetooth 216
Apply Your Knowledge 169 Radio Frequency Identification (RFID) 217
Satellite 219
UNIT 4
The Future of Wireless 220
Building Innovation 174
Chapter 16 Case: UPS versus FedEx: Head-to-Head
EBay—The Ultimate E-Business 175 on Wireless 221
Introduction 178 >> P lug-In Pointer: B12 222
Unit Summary 223
CHAPTER 13: CREATING INNOVATIVE Key Terms 223
ORGANIZATIONS 179
Unit Closing Case One: Improving Highway Safety
Disruptive Technology 179
through Collaboration 224
Disruptive versus Sustaining Technology 179 Unit Closing Case Two: Amazon.com—Not Your Average
The Internet—Business Disruption 180 Bookstore 225
Evolution of the Internet 181 Making Business Decisions 227
Evolution of the World Wide Web 182 Apply Your Knowledge 228
Web 2.0 184
The Future—Web 3.0 185 UNIT 5
Chapter 13 Case: Failing to Innovate 186 Transforming Organizations 236
>> P lug-In Pointers: T9, T10 188
The Digital Hospital 237
CHAPTER 14: E-BUSINESS 189 Introduction 239
E-Business 189
CHAPTER 17: BUILDING SOFTWARE TO SUPPORT AN
E-Business Models 189
AGILE ORGANIZATION 240
Business-to-Business (B2B) 191
Systems Development 240
Business-to-Consumer (B2C) 191
Developing Software—The Systems Development Life
Consumer-to-Business (C2B) 192 Cycle (SDLC) 241
Consumer-to-Consumer (C2C) 192 Software Development Methodologies 243
E-Business Benefits and Challenges 193 Waterfall Methodology 244
Mashups 193 Rapid Application Development Methodology (RAD) 244
Chapter 14 Case: eBiz 196 Extreme Programming Methodology 245
>> P lug-In Pointers: B11, B12 198 Agile Methodology 246
Developing Successful Software 246
CHAPTER 15: CREATING COLLABORATIVE
PARTNERSHIPS 199 Slash the Budget 246
Teams, Partnerships, and Alliances 199 If It Doesn’t Work, Kill It 247
Collaboration Systems 200 Keep Requirements to a Minimum 247
Knowledge Management 202 Test and Deliver Frequently 247
KM in Business 202 Assign Non-IT Executives to Software Projects 247
Knowledge Management Systems 203 Project Managing the Systems Development Effort 247
Explicit and Tacit Knowledge 203 Chapter 17 Case: Transforming the Entertainment
KM Technologies 205 Industry—Netflix 250
KM and Social Networking 205 >> Plug-In Pointers: B14, B15, T11, T12 251
Table of Contents * vii
CHAPTER 18: OUTSOURCING IN THE 21ST CENTURY 252 Management Information Systems 290
Outsourcing Development 252 Plug-In Summary 292
Insourcing 252 Key Terms 293
Outsourcing 253 Closing Case One: Battle of the Toys—FAO Schwarz
Financial Savings 253 Is Back! 293
Increased Technical Abilities 253 Closing Case Two: Innovative Business Managers 295
Market Agility 254 Making Business Decisions 297
Developing Strategic Outsourcing Partnerships 255
>> Plug-In B 2
Sourcing’s New Surge—Offshoring 255
Business Process 298
Chapter 18 Case: UPS in the Computer Repair
Business 256 Introduction 298
>> Plug-In Pointer: B13 257 Examining Business Processes 298
Understanding the Importance of Business
CHAPTER 19: DEVELOPING A 21ST CENTURY Processes 299
ORGANIZATION 258
Business Process Improvement 302
Developing Organizations 258
Business Process Reengineering (BPR) 303
21st Century Organization Trends 258
Business Process Design 304
Increased Focus on IT Infrastructure 258
Selecting a Process to Reengineer 306
Increased Focus on Security 259
Business Process Management (BPM) 307
Increased Focus on E-Business 261
Is BPM for Business or IT? 307
Increased Focus on Integration 261
BPM Tools 308
Chapter 19 Case: Creating a Clearer Picture for Public
BPM Risks and Rewards 308
Broadcasting Service (PBS) 263
Critical Success Factors 309
Unit Summary 265
Business Process Modeling Examples 310
Key Terms 265
Plug-In Summary 313
Unit Closing Case One: RFID—Future Tracking 266
Key Terms 313
Unit Closing Case Two: Masters of Innovation,
Closing Case One: Streamlining Processes at Adidas 313
Technology, and Strategic Vision 267
Closing Case Two: 3Com Optimizes Product Promotion
Making Business Decisions 270
Processes 314
Apply Your Knowledge 272
Making Business Decisions 316
>> Plug-In B 1 >> Plug-In B 3
Business Basics 276 Hardware and Software 318
Introduction 276 Introduction 318
Types of Business 276 Hardware Basics 318
Sole Proprietorship 277 Central Processing Unit 319
Partnership 277 Primary Storage 321
Corporation 277 Secondary Storage 322
Internal Operations of a Corporation 279 Input Devices 324
Accounting 279
Output Devices 324
Financial Statements 280
Communication Devices 326
Finance 282
Computer Categories 326
Financial Analysis 282
Software Basics 329
Human Resources 282
System Software 329
Management Techniques 283
Application Software 330
Sales 284
Plug-In Summary 332
The Sales Process 284
Key Terms 332
Market Share 285 Closing Case One: Changing Circuits at Circuit City 332
Marketing 286 Closing Case Two: Electronic Breaking Points 334
Marketing Mix 287 Making Business Decisions 336
Customer Segmentation 288
>> Plug-In B 4
The Product Life Cycle 288
Enterprise Architectures 338
Operations/Production 288
Business Process Reengineering 288 Enterprise Architectures 338
Transforming Corporations 289 Information Architecture 339
viii * Table of Contents
Backup and Recover 340 >> Plug-In B 7
Disaster Recovery 340 Ethics 384
Information Security 342
Introduction 384
Infrastructure Architecture 343
Ethics 385
Flexibility 343
Information Has No Ethics 386
Scalability 344
Developing Information Management Policies 388
Reliability 344
Ethical Computer Use Policy 388
Availability 344
Information Privacy Policy 389
Performance 345
Acceptable Use Policy 390
Application Architecture 345
E-mail Privacy Policy 390
Web Services 345
Internet Use Policy 391
Open Systems 347
Anti-spam Policy 391
Plug-In Summary 348
Ethics in the Workplace 392
Key Terms 348
Monitoring Technologies 392
Closing Case One: Chicago Tribune’s Server Consolidation
Plug-In Summary 395
a Success 348
Key Terms 395
Closing Case Two: Fear the Penguin 350
Closing Case One: Sarbanes-Oxley: Where Information
Making Business Decisions 351
Technology, Finance, and Ethics Meet 396
>> Plug-In B 5 Closing Case Two: Invading Your Privacy 397
Networks and Telecommunications 354 Making Business Decisions 398
Networks and Telecommunications 354 >> Plug-In B 8
Network Basics 354 Supply Chain Management 400
Architecture 356
Introduction 400
Peer-to-Peer Networks 356
Supply Chain Drivers 400
Client/Server Networks 356
Facilities Driver 401
Topology 357
Inventory Driver 402
Protocols 357
Transportation Driver 403
Ethernet 357
Information Driver 404
Transmission Control Protocol/Internet Protocol 359
Applying a Supply Chain Design 405
Media 362
Future Trends 407
Wire Media 362
Plug-In Summary 409
Wireless Media 363
Key Terms 409
E-Business Networks 363
Closing Case One: Listerine’s Journey 409
Plug-In Summary 365
Closing Case Two: Katrina Shakes
Key Terms 365
Supply Chains 411
Closing Case One: Watching Where You
Making Business Decisions 413
Step—Prada 365
Closing Case Two: Banks Banking on Network
>> Plug-In B 9
Security 366
Customer Relationship Management 416
Making Business Decisions 368
Introduction 416
>> Plug-In B 6
Using IT to Drive Operational CRM 416
Information Security 370
Marketing and Operational CRM 416
Introduction 370 Sales and Operational CRM 418
The First Line of Defense—People 370 Customer Service and Operational CRM 420
The Second Line of Defense—Technology 372 Analytical CRM 423
Authentication and Authorization 374 Current Trends: SRM, PRM, and ERM 425
Prevention and Resistance 375 Supplier Relationship Management 425
Detection and Response 376 Partner Relationship Management 425
Plug-In Summary 379 Employee Relationship Management 425
Key Terms 379 Future Trends 426
Closing Case One: Thinking Like the Enemy 379 Plug-In Summary 427
Closing Case Two: Hacker Hunters 380 Key Terms 427
Making Business Decisions 382 Closing Case One: Fighting Cancer with Information 428
Table of Contents * ix
Closing Case Two: Calling All Canadians 429 The World’s Population Will Double in the Next
Making Business Decisions 430 40 Years 469
People in Developed Countries Are Living Longer 470
>> Plug-In B 10
The Growth in Information Industries Is Creating a
Enterprise Resource Planning 432
Knowledge-Dependent Global Society 470
Introduction 432 The Global Economy Is Becoming More Integrated 471
Core and Extended ERP Components 432 The Economy and Society Are Dominated by
Core ERP Components 434 Technology 472
Extended ERP Components 435 Pace of Technological Innovation Is Increasing 472
ERP Benefits and Risks (Costs) 436 Time Is Becoming One of the World’s Most Precious
The Future of ERP 437 Commodities 472
Internet 439 Technologies Shaping Our Future 473
Interface 439 Digital Ink 473
Wireless Technology 439 Digital Paper 473
Plug-In Summary 440 Teleliving 475
Key Terms 440 Alternative Energy Sources 476
Closing Case One: PepsiAmericas’ Enterprises 440
Autonomic Computing 476
Closing Case Two: Campus ERP 441
Plug-In Summary 478
Making Business Decisions 443
Key Terms 478
Closing Case One: Autonomic Railways 478
>> Plug-In B 11
Closing Case Two: Wireless Progression 479
E-Business 446
Making Business Decisions 480
Introduction 446
>> Plug-In B 13
Accessing Internet Information 446
Strategic Outsourcing 482
Intranet 447
Extranet 447 Introduction 482
Portal 447 The Outsourcing Phenomenon 482
Kiosk 448 Outsourcing Benefits 484
Providing Internet Information 448 Outsourcing Options 484
Internet Service Provider 448 Offshore Outsourcing 485
Online Service Provider 449 The Challenges of Outsourcing 491
Application Service Provider 450 Future Trends 492
Organizational Strategies for E-Business 450 Multisourcing 493
Marketing/Sales 450 Plug-In Summary 494
Financial Services 453 Key Terms 494
Closing Case One: Mobil Travel Guide 494
Procurement 454
Closing Case Two: Outsourcing Brew 495
Customer Service 455
Making Business Decisions 496
Intermediaries 455
Measuring E-Business Success 457
>> Plug-In B 14
Web Site Metrics 457 Systems Development 498
New Trends in E-Business: E-Government and
M-Commerce 460 Introduction 498
M-Commerce 460 Systems Development Life Cycle 499
Plug-In Summary 462 Phase 1: Planning 499
Key Terms 462 Phase 2: Analysis 501
Closing Case One: Mail with PostalOne 462 Phase 3: Design 504
Closing Case Two: Made-to-Order Businesses 464 Phase 4: Development 506
Making Business Decisions 465 Phase 5: Testing 506
Phase 6: Implementation 507
>> Plug-In B 12
Phase 7: Maintenance 508
Emerging Trends and Technologies 468
Software Problems Are Business Problems 509
Introduction 468 Unclear or Missing Business Requirements 510
Reasons to Watch Trends 468 Skipping SDLC Phases 510
Trends Shaping Our Future 469 Failure to Manage Project Scope 510
x * Table of Contents