(Test Bank) Getting the Most Out of Information Systems

Gallaugher, 1

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Author(s): Gallaugher

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Getting the Most Out of Information Systems v. 1.3This is the book Getting the Most Out of Information Systems (v. 1.3). This book is licensed under a Creative Commons by-nc-sa 3.0 (http://creativecommons.org/licenses/by-nc-sa/ 3.0/) license. See the license for more details, but that basically means you can share this book as long as you credit the author (but see below), don't make money from it, and do make it available to everyone else under the same terms. This book was accessible as of December 29, 2012, and it was downloaded then by Andy Schmitz (http://lardbucket.org) in an effort to preserve the availability of this book. Normally, the author and publisher would be credited here. However, the publisher has asked for the customary Creative Commons attribution to the original publisher, authors, title, and book URI to be removed. Additionally, per the publisher's request, their name has been removed in some passages. More information is available on this project's attribution page (http://2012books.lardbucket.org/attribution.html?utm_source=header) . For more information on the source of this book, or why it is available for free, please see the project's home page (http://2012books.lardbucket.org/) . You can browse or download additional books there. iiTable of Contents About the Author .................................................................................................................. 1 Acknowledgments ................................................................................................................. 2 Dedication ............................................................................................................................... 5 Preface ..................................................................................................................................... 6 Chapter 1: Setting the Stage: Technology and the Modern Enterprise ..................... 8 Tech’s Tectonic Shift: Radically Changing Business Landscapes .............................................................. 9 It’s Your Revolution ..................................................................................................................................... 12 Geek Up—Tech Is Everywhere and You’ll Need It to Thrive ................................................................... 16 The Pages Ahead .......................................................................................................................................... 24 Chapter 2: Strategy and Technology: Concepts and Frameworks for Understanding What Separates Winners from Losers ................................................ 30 Introduction ................................................................................................................................................. 31 Powerful Resources ...................................................................................................................................... 39 Barriers to Entry, Technology, and Timing ............................................................................................... 58 Key Framework: The Five Forces of Industry Competitive Advantage .................................................. 63 Chapter 3: Zara: Fast Fashion from Savvy Systems ..................................................... 68 Introduction ................................................................................................................................................. 69 Don’t Guess, Gather Data ............................................................................................................................. 76 Moving Forward ........................................................................................................................................... 85 Chapter 4: Netflix in Two Acts: The Making of an E-commerce Giant and the Uncertain Future of Atoms to Bits .................................................................................. 88 Introduction ................................................................................................................................................. 89 Act I: Netflix Leverages Tech and Timing to Create Killer Assets in DVD-by-Mail ............................... 95 Act II: Netflix and the Shift from Mailing Atoms to Streaming Bits ..................................................... 111 Chapter 5: Moore’s Law: Fast, Cheap Computing and What It Means for the Manager .............................................................................................................................. 128 Introduction ............................................................................................................................................... 129 The Death of Moore’s Law? ....................................................................................................................... 146 Bringing Brains Together: Supercomputing and Grid Computing ....................................................... 152 E-waste: The Dark Side of Moore’s Law ................................................................................................... 159 iiiChapter 6: Understanding Network Effects ................................................................. 165 Introduction ............................................................................................................................................... 166 Where’s All That Value Come From? ....................................................................................................... 168 One-Sided or Two-Sided Markets? ........................................................................................................... 173 How Are These Markets Different? .......................................................................................................... 176 Competing When Network Effects Matter .............................................................................................. 180 Chapter 7: Social Media, Peer Production, and Web 2.0 .......................................... 197 Introduction ............................................................................................................................................... 198 Blogs ............................................................................................................................................................ 207 Wikis ............................................................................................................................................................ 213 Social Networks .......................................................................................................................................... 221 Twitter and the Rise of Microblogging .................................................................................................... 231 Other Key Web 2.0 Terms and Concepts .................................................................................................. 241 Prediction Markets and the Wisdom of Crowds ..................................................................................... 251 Crowdsourcing ........................................................................................................................................... 254 Get SMART: The Social Media Awareness and Response Team ............................................................ 257 Chapter 8: Facebook: Building a Business from the Social Graph .......................... 276 Introduction ............................................................................................................................................... 277 Does Facebook Want to Eat Your Firm’s Lunch? Enveloping Markets across the Internet ............... 283 The Social Graph ........................................................................................................................................ 290 Facebook Feeds—Ebola for Data Flows .................................................................................................... 294 Facebook as a Platform .............................................................................................................................. 297 Advertising and Social Networks: A Work in Progress .......................................................................... 303 Privacy Peril, Beacon, and the TOS Debacle: What Facebook’s Failures Can Teach Managers about Technology Planning and Deployment .................................................................................................... 313 One Graph to Rule Them All: Facebook Reaches across the Web with Open Graph ........................... 319 Is Facebook Worth It? ................................................................................................................................ 329 Chapter 9: Understanding Software: A Primer for Managers ................................. 334 Introduction ............................................................................................................................................... 335 Operating Systems ..................................................................................................................................... 339 Application Software ................................................................................................................................. 346 Distributed Computing .............................................................................................................................. 353 Writing Software ........................................................................................................................................ 362 Understanding Technology beyond the Price Tag: Total Cost of Ownership (TCO) and the Cost of Tech Failure ................................................................................................................................................ 367 ivChapter 10: Software in Flux: Partly Cloudy and Sometimes Free ......................... 372 Introduction ............................................................................................................................................... 373 Open Source ................................................................................................................................................ 376 Why Open Source? ..................................................................................................................................... 380 Examples of Open Source Software .......................................................................................................... 384 Why Give It Away? The Business of Open Source ................................................................................... 386 Cloud Computing: Hype or Hope? ............................................................................................................ 394 The Software Cloud: Why Buy When You Can Rent? ............................................................................. 397 SaaS: Not without Risks ............................................................................................................................. 404 The Hardware Cloud: Utility Computing and Its Cousins ...................................................................... 408 Clouds and Tech Industry Impact ............................................................................................................ 415 Virtualization: Software That Makes One Computer Act Like Many ................................................... 421 Make, Buy, or Rent ..................................................................................................................................... 424 Chapter 11: The Data Asset: Databases, Business Intelligence, and Competitive Advantage ........................................................................................................................... 427 Introduction ............................................................................................................................................... 428 Data, Information, and Knowledge .......................................................................................................... 432 Where Does Data Come From? .................................................................................................................. 438 Data Rich, Information Poor ..................................................................................................................... 450 Data Warehouses and Data Marts ............................................................................................................. 453 The Business Intelligence Toolkit ............................................................................................................ 458 Data Asset in Action: Technology and the Rise of Wal-Mart ................................................................. 467 Data Asset in Action: Caesars’ Solid Gold CRM for the Service Sector ................................................. 472 Chapter 12: A Manager’s Guide to the Internet and Telecommunications .......... 480 Introduction ............................................................................................................................................... 481 Internet 101: Understanding How the Internet Works .......................................................................... 482 Getting Where You’re Going ..................................................................................................................... 497 Last Mile: Faster Speed, Broader Access .................................................................................................. 511 Chapter 13: Information Security: Barbarians at the Gateway (and Just About Everywhere Else) ............................................................................................................... 525 Introduction ............................................................................................................................................... 526 Why Is This Happening? Who Is Doing It? And What’s Their Motivation? .......................................... 529 Where Are Vulnerabilities? Understanding the Weaknesses ............................................................... 536 Taking Action ............................................................................................................................................. 562 vChapter 14: Google in Three Parts: Search, Online Advertising, and Beyond .....575 Introduction ............................................................................................................................................... 576 Understanding Search ............................................................................................................................... 584 Understanding the Increase in Online Ad Spending .............................................................................. 596 Search Advertising ..................................................................................................................................... 599 Ad Networks—Distribution beyond Search ............................................................................................. 608 More Ad Formats and Payment Schemes ................................................................................................ 614 Customer Profiling and Behavioral Targeting ........................................................................................ 619 Profiling and Privacy ................................................................................................................................. 625 Search Engines, Ad Networks, and Fraud ................................................................................................ 632 The Battle Unfolds ..................................................................................................................................... 637 viAbout the Author John Gallaugher is an associate professor of information systems (IS) at Boston College’s Carroll School of Management. As lead faculty of the Boston College TechTrek programs, and co-lead to several of the university’s international field study courses, Professor Gallaugher has led his students on scores of master-class visits with executives at firms ranging from Amazon to Zynga. Gallaugher is also co-advisor to the Boston College Venture Competition, an organization whose affiliated businesses have gone on to win entrepreneurship awards at MIT and Yale, gain admittance to the elite Y-Combinator accelerator program, launch multiple products, and raise millions in capital. A dedicated teacher and active researcher, Professor Gallaugher has been recognized for excellence and innovation in teaching by several organizations, including Boston College, BusinessWeek ,Entrepreneur Magazine , and the Decision Sciences Institute. Professor Gallaugher’s research has been published in the Harvard Business Review ,MIS Quarterly , and other leading IS journals. Professor Gallaugher has been a featured speaker at Apple Inc’s AcademiX educator conference, and was the keynote speaker at AIBUMA (the African International Business and Management Conference) in Nairobi Kenya. He has consulted for and taught executive seminars for several organizations, including Accenture, Alcoa, Duke Corporate Education, ING, Partners Healthcare, Staples, State Street, the University of Ulster, and the U.S. Information Agency. His comments on business and technology have appeared in the New York Times , National Public Radio, BusinessWeek , the Boston Globe ,Wired , the Associated Press, Chronicle (WCVB-TV), The Daily Yomiuri (Japan), and the Nation (Thailand), among others. Professor Gallaugher publishes additional content related to his teaching and research at http://gallaugher.com . He is also active on twitter at @gallaugher . 1Acknowledgments Sincerest thanks to the cofounders of Unnamed Publisher , Jeff Shelstad and Eric Frank, for their leadership and passion in restructuring the textbook industry and for approaching me to be involved with their efforts. Thanks also to Flat World’s dynamite team of editorial, marketing, and sales professionals—in particular to Melissa Yu, Jenn Yee, Sharon Koch, Brett Sullivan, and Michael Boezi. A tremendous thanks to my student research team at Boston College. In particular, the work of Xin (Steven) Liu and Kathie Chang sped things along and helped me fill this project with rich, interesting examples. I am also deeply grateful to my colleagues at Boston College, especially to my department chair, Jim Gips, and dean, Andy Boynton, for their unwavering support of the project; to Rob Fichman and Jerry Kane for helping shape the social media section; to Sam Ransbotham for guiding me through the minefield of information security; and to Mary Cronin, Peter Olivieri, and Jack Spang for suggestions and encouragement. Thanks also to the many alumni, parents, and friends of Boston College who have so generously invited me to bring my students to visit with and learn from them. The East and West Coast leadership of the Boston College Technology Council have played a particularly important role in making this happen. From Bangalore to Boston, Seoul to Silicon Valley, you’ve provided my students with world-class opportunities, enabling us to meet with scores of CEOs, senior executives, partners, and entrepreneurs. My students and I remain deeply grateful for your commitment and support. And my enduring thanks to my current and former students, who continue to inspire, impress, and teach me more than I thought possible. It’s deeply rewarding to see so many former students return to campus as executive speakers and to host visiting students at their own start-ups. Serving as your professor has been my great privilege. I would also like to thank the following colleagues who so kindly offered their time and comments while reviewing this work: •Donald Army, Dominican University of California •David Bloomquist, Georgia State University 2•Teuta Cata, Northern Kentucky University •Chuck Downing, Northern Illinois University •John Durand, Pepperdine University •Marvin Golland, Polytechnic Institute of New York University •Brandi Guidry, University of Louisiana •Kiku Jones, The University of Tulsa •Fred Kellinger, Pennsylvania State University–Beaver Campus •Ram Kumar, University of North Carolina–Charlotte •Eric Kyper, Lynchburg College •Alireza Lari, Fayetteville State University •Mark Lewis, Missouri Western State University •Eric Malm, Cabrini College •Roberto Mejias, University of Arizona •Esmail Mohebbi, University of West Florida •John Preston, Eastern Michigan University •Shu Schiller, Wright State University •Tod Sedbrook, University of Northern Colorado •Richard Segall, Arkansas State University •Ahmad Syamil, Arkansas State University •Sascha Vitzthum, Illinois Wesleyan University I’m also grateful to the kindness and insight provided by early adopters of this text. Your comments, encouragement, suggestions, and student feedback were extremely helpful in keeping me focused and motivated on advancing the current edition: •Animesh Animesh, McGill University •Michel Benaroch, Syracuse University •Barney Corwin, University of Maryland—College Park •Lauren B. Eder, Rider University •Rob Fichman, Boston College •James Gips, Boston College •Roy Jones, University of Rochester •Jerry Kane, Boston College •Fred Kellinger, Penn State University—Beaver Campus •Eric Kyper, Lynchburg College •Ann Majchrzak, University of Southern California •Eric Malm, Cabrini College •Michael Martel, Ohio University •Ido Millet, Pennsylvania State University—Erie Campus •Ellen Monk, University of Delaware •Marius (Florin) Niculescu, Georgia Tech •Sam Ransbotham, Boston College •Nachiketa Sahoo, Carnegie Mellon UniversityAcknowledgments 3•Shu Schiller, Wright State University •Tom Schambach, Illinois State University •Avi Seidman, University of Rochester •Jack Spang, Boston College •Sascha Vitzthum, Illinois Wesleyan University Boston College students Courtney Scrib and Nate Dyer also pointed me to examples I’ve used in this edition, as did ACU student Aaron Andrew. Thanks for thinking of me and for sharing your very useful ideas! I’ll continue to share what I hope are useful insights via my blog, The Week In Geek (http://www.gallaugher.com ), and Twitter (@gallaugher). Do feel free to offer comments, encouragement, ideas, and examples for future versions. Sincerest thanks to all who continue to share the word about this project with others. Your continued advocacy helps make this model work!Acknowledgments 4Dedication For Ian, Maya, Lily, and Kim—zettabytes of love! 5Preface Thanks for using this book. I very much hope that you enjoy it! I find the space where business and technology meet to be tremendously exciting, but it’s been painful to see the anemic national enrollment trends in tech disciplines. The information systems (IS) course should be the most exciting class within any university. No discipline is having a greater impact on restructuring work, disrupting industries, and creating opportunity. And none more prominently features young people as leaders and visionaries. But far too often students resist rather than embrace the study of tech. My university has had great success restructuring the way we teach our IS core courses, and much of the material used in this approach has made it into this book. The results we’ve seen include a fourfold increase in IS enrollments in four years, stellar student ratings for the IS core course, a jump in student placement, an increase in the number of employers recruiting on campus for tech-focused jobs, and the launch of several student-initiated start-ups. Material in this book is used at both the graduate and undergraduate levels. I think it’s a mistake to classify books as focused on just grad or undergrad students. After all, we’d expect our students at all levels to be able to leverage articles in the Wall Street Journal orBusinessWeek . Why can’t our textbooks be equally useful? You’ll also find this work to be written in an unconventional style for a textbook, but hey, why be boring? Let’s face it, Fortune and Wired wouldn’t sell a single issue if forced to write with the dry-encyclopedic prose used by most textbooks. Many students and faculty have written with kind words for the tone and writing style used in this book, and it’s been incredibly rewarding to hear from students who claim they have actually looked forward to assigned readings and have even read ahead or explored unassigned chapters. I hope you find it to be equally engaging. The mix of chapter and cases is also meant to provide a holistic view of how technology and business interrelate. Don’t look for an “international” chapter, an “ethics” chapter, a “mobile” chapter, or a “systems development and deployment” chapter. Instead, you’ll see these topics woven throughout many of our cases and within chapter examples. This is how professionals encounter these topics “in the wild,” so we ought to study them not in isolation but as integrated parts of real- world examples. Examples are consumer-focused and Internet-heavy for 6approachability, but the topics themselves are applicable far beyond the context presented. There’s a lot that’s different about this approach, but a lot that’s worked exceptionally well, too. I hope that you find the material to be as useful as we have. I also look forward to continually improving this work, and I encourage you to share your ideas with me via Twitter (@gallaugher) or the Web (http://www.gallaugher.com ). Best wishes! Professor John Gallaugher Carroll School of Management Boston CollegePreface 7Chapter 1 Setting the Stage: Technology and the Modern Enterprise 81.1Tech’s Tectonic Shift: Radically Changing Business Landscapes LEARNING OBJECTIVE 1.Appreciate how in recent years, technology has helped bring about radical changes across industries and throughout societies. This book is written for a world that has changed radically in the most recent years of your lifetime. At the start of the prior decade, Google barely existed and well-known strategists dismissed Internet advertising models. M. Porter, “Strategy and the Internet,” Harvard Business Review 79, no. 3 (March 2001): 62–78. By decade’s end, Google brought in more advertising revenue than any firm, online or off, and had risen to become the most profitable media company on the planet. Today billions in advertising dollars flee old media and are pouring into digital efforts, and this shift is reshaping industries and redefining skills needed to reach today’s consumers. A decade ago the iPod also didn’t exist, and Apple was widely considered a tech industry has-been. Within ten years Apple had grown to be the most valuable tech firm in the United States, selling more music and generating more profits from mobile device sales than any firm in the world. Moore’s Law and other factors that make technology faster and cheaper have thrust computing and telecommunications into the hands of billions in ways that are both empowering the poor and poisoning the planet. Social media barely warranted a mention a decade ago, but today, Facebook’s user base is larger than any nation, save for China and India. Firms are harnessing social media for new product ideas and for millions in sales. But with promise comes peril. When mobile phones are cameras just a short hop from YouTube, Flickr, and Twitter, every ethical lapse can be captured, every customer service flaw graffiti- tagged on the permanent record that is the Internet. The service and ethics bar for today’s manager has never been higher. Social media has also emerged as a catalyst for global change, with Facebook and Twitter playing key organizing roles in uprisings worldwide. While a status update alone won’t depose a dictator, technology can capture injustice, broadcast it to the world, disseminate ideas, and rally the far-reaching.Chapter 1 Setting the Stage: Technology and the Modern Enterprise 9