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Aligning IT Strategies to Business Strategies
Delta Corporation has been very impressed with the progress it has made with its new product line and the new marketing approach that you recommended and instigated. As a result, it is now considering expanding this approach for its other product lines, providing them with the ability to market and sell all of its products online. However, it has not considered the implications for its IT department in developing this type of plan. As the Social Media Marketing Consultant, you are familiar with integrating business and IT strategic planning. They have called upon you to provide advice. You need to:
A. Introduction (one strong paragraph with a solid thesis statement that is related to the topic of the assignment, which is the main point you are making in the paper).
B. Body (where you will integrate your responses to the following questions):
   Q1. Explain what the company needs to consider if it is going to move to a more on-line approach for its sales and marketing activities.
   Q2. In particular, describe the consequences for its IT department and why they need to be involved in the planning phase.
   Q3. Given the likely increase in costs associated with this move, you need to outline the potential benefits and possible pitfalls of outsourcing the IT maintenance and development.
   Q4. Outline some strategic technology trends that the company may wish to monitor and consider for the future.
   Q5. Finally, research a company in Saudi Arabia and discuss whether they were able to align their overall strategy and their IT strategy.
   i. If they were successful discuss how they managed this alignment and what benefits they gained from doing so.
    ii. If they were not so successful, explain how and why you felt that occurred.
C. Conclusion (explain and summarize your thoughts on all the topics or the most of the important points of the assignment very well).
– Special Instructions:
* Answer all questions provided to meet the following learning outcomes:
– Examine the ways in which IT strategic planning impacts competitive advantage.
-Articulate the importance of aligning IT strategy with business strategy.
-Recommend IT sourcing strategies given a specific business scenario.
-Identify reasons for investing in strategic technology trends.In text citation: (Turban et al., 2021)
Turban, E., Pollard, C., & Wood, G. R. (2021). Information Technology for Management: Ondemand strategies for performance, growth and Sustainability. Wiley.
Information Technology
for Management
On-Demand Strategies for Performance,
Growth and Sustainability
Eleventh Edition
Information Technology
for Management
On-Demand Strategies for Performance,
Growth and Sustainability
Eleventh Edition
Appalachian State University
Canisius College
Mike McDonald
Lise Johnson
Ethan Lipson
Judy Howarth
Lisa Wojcik
Nichole Urban
Nicole Repasky
Loganathan Kandan
Billy Ray
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ISBN: 978-1-118-89079-0 (PBK)
ISBN: 978-1-119-39783-0 (EVALC)
Library of Congress Cataloging in Publication Data:
Names: Turban, Efraim, author. | Pollard, Carol (Carol E.), author. | Wood,
Gregory R., author.
Title: Information technology for management : on-demand strategies for
performance, growth and sustainability / Efraim Turban, Carol Pollard,
Gregory R. Wood.
Description: 11th edition. | Hoboken, NJ : John Wiley & Sons, 2018. |
Includes bibliographical references and index. |
Identifiers: LCCN 2017037711 (print) | LCCN 2017046158 (ebook) | ISBN
9781118890868 (epub) | ISBN 9781119172390 (pdf) | ISBN 9781118890790 (pbk.)
Subjects: LCSH: Management information systems.
Classification: LCC T58.6 (ebook) | LCC T58.6 .T765 2017 (print) | DDC
LC record available at https://lccn.loc.gov/2017037711
The inside back cover will contain printing identification and country of origin if omitted from this
page. In addition, if the ISBN on the back cover differs from the ISBN on this page, the one on the
back cover is correct.
Brief Contents
8 Retail, E-commerce, and Mobile Commerce
Technology 240
PART 1 Reshaping Enterprises and Consumers
in the On-Demand Economy
Disruptive IT Impacts Companies,
Competition, and Careers 1
Information Systems, IT Architecture, Data
Governance, and Cloud Computing 25
Data Management, Data Analytics,
and Business Intelligence 65
Networks, Collaborative Technology,
and the Internet of Things 101
Cybersecurity and Risk Management
Technology 127
PART 2 Winning, Engaging, and Retaining
Consumers for Growth
Search, Semantic, and Recommendation
Technology 165
Web 2.0 and Social Technology
PART 3 Optimizing Performance, Processes,
and Productivity
9 Functional Business Systems 269
Enterprise Systems 300
Data Visualization and Geographic
Information Systems 331
PART 4 Managing Business Relationships,
Projects, and Ethical Responsibilities
IT Strategy, Sourcing, and Strategic
Technology Trends 354
Systems Development and Project
Management 385
IT Ethics, Privacy, and Sustainability 417
PART 1 Reshaping Enterprises
and Consumers in the On-Demand
1 Disruptive IT Impacts Companies,
Competition, and Careers
Case 1.1 Opening Case: Uber and Airbnb Revolutionize
Business Models in the On-Demand Economy 3
Doing Business in the On-Demand Economy 4
Growth of the On-Demand Economy 5
Digital Business Models 6
IT’s Role in the On-Demand Economy 7
IT Business Objectives 8
1.2 Business Process Improvement and Competitive
Advantage 8
What Is a Business Process? 9
Improving Business Processes 9
Don’t Automate, Obliterate! 10
Gaining a Competitive Advantage 11
Software Support for BPM 13
1.3 IT Innovation and Disruption 13
Social–Mobile–Analytics–Cloud (SMAC) Model 13
Technology Mega Trends 14
Lessons Learned from Companies Using Disruptive
Technologies 16
1.4 IT and You 17
On-Demand Workers 17
IT Adds Value to Your Performance and Career 19
Becoming an Informed IT User 21
Case 1.2 Business Case: The Internet of Things Comes
to the NFL 23
Case 1.3 Video Case: Knowing More and Doing More
2 Information Systems,
IT Architecture, Data Governance,
and Cloud Computing 25
Case 2.1 Opening Case: Detoxing Location-Based
Advertising Data at MEDIATA 27
IS Concepts and Classification
Components of an IS 29
Data, Information, Knowledge, and Wisdom 30
Types of ISs 31
Transaction Processing System (TPS) 32
Management Information System (MIS) 33
Decision Support System (DSS) 34
Executive Information System (EIS) 35
ISS Exist within Corporate Culture 36
2.2 IT Infrastructure, IT Architecture, and Enterprise
Architecture 37
EA Helps to Maintain Sustainability 38
Developing an Enterprise Architecture (EA) 41
2.3 Information Management and Data
Governance 42
Information Management Harnesses
Scattered Data 43
Reasons for Information Deficiencies 43
Factors Driving the Shift from Silos to Sharing
and Collaboration 45
Business Benefits of Information Management 45
Data Governance: Maintaining Data Quality
and Cost Control 46
2.4 Data Centers and Cloud Computing 48
Data Centers 48
Integrating Data to Combat Data Chaos 50
Cloud Computing 52
Selecting a Cloud Vendor 52
Cloud Infrastructure 54
Issues in Moving Workloads from the Enterprise
to the Cloud 54
2.5 Cloud Services and Virtualization 55
Anything as a Service (XAAS) Models 55
Going Cloud 58
Virtualization and Virtual Machines 58
Case 2.2 Business Case: Data Chaos Creates Risk 62
Case 2.3 Video Case: Cloud Computing at Coca-Cola Is
Changing Everything 63
3 Data Management, Data Analytics,
and Business Intelligence
Case 3.1 Opening Case: Coca-Cola Strategically Manages
Data to Retain Customers and Reduce Costs 66
Data Management and Database Technologies
Database Management Systems and SQL 69
DBMS and Data Warehousing Vendors
Respond to Latest Data Demands 72
Centralized and Distributed Database
Architectures 73
Garbage In, Garbage Out 75
Data Ownership and Organizational Politics 76
Data Life Cycle and Data Principles 77
Master Data and Master Data Management 78
3.3 Data Warehouses 79
Procedures to Prepare EDW Data for Analytics 80
Building a Data Warehouse 80
Real-Time Support from an Active Data
Warehouse 81
3.4 Big Data Analytics and Data Discovery 83
Human Expertise and Judgment are Needed 85
Data and Text Mining 88
Creating Business Value 88
Text Analytics Procedure 90
Analytics Vendor Rankings 90
3.5 Business Intelligence and
Electronic Records Management 91
Business Benefits of BI 92
Common Challenges: Data Selection
and Quality 92
Aligning BI Strategy with Business Strategy 92
BI Architecture and Analytics 93
Electronic Records Management 94
Legal Duty to Retain Business Records 94
ERM Best Practices 94
ERM Benefits 95
ERM for Disaster Recovery,
Business Continuity, and Compliance 95
Case 3.2 Business Case: Big Data Analytics is the “Secret
Sauce” for Revitalizing McDonald’s 98
Comparing 3G, 4G, 4G LTE, and 5G Network
Standards 110
Circuit versus Packet Switching 111
Application Program Interfaces and Operating
Systems 111
4.3 Mobile Networks and Near-Field
Communication 113
Increase in Mobile Network Traffic and Users 114
Higher Demand for High-Capacity Mobile
Networks 115
Mobile Infrastructure 115
Two Components of Wireless Infrastructure 116
Business Use of Near-Field Communication 117
Choosing Mobile Network Solutions 118
4.4 Collaborative Technologies and the Internet
of Things 119
Virtual Collaboration 120
Group Work and Decision Processes 120
The Internet of Things (IoT) 121
IoT Sensors, Smart Meters, and the Smart Grid 121
Case 4.2 Business Case: Google Maps API for
Business 125
Case 4.3 Video Case: Small Island Telecom Company
Goes Global 126
5 Cybersecurity and Risk
Management Technology
4 Networks, Collaborative
Technology, and the Internet
of Things 101
Network Fundamentals 104
Network Types 104
Intranets, Extranets, and Virtual Private
Networks 105
Network Terminology 105
Functions Supported by Business Networks
Quality of Service 107
Internet Protocols (IP), APIs, and Network
Capabilities 109
Case 5.1 Opening Case: Yahoo Wins the Gold and Silver
Medal for the Worst Hacks in History! 129
Case 3.3 Video Case: Verizon Improves Its
Customer Experience with Data Driven
Decision-Making 99
Case 4.1 Opening Case: Sony Builds an IPv6 Network
to Fortify Competitive Edge 102
vi i
The Face and Future of Cyberthreats 130
Intentional Threats 132
Unintentional Threats 132
Hacking 133
Cyber Social Engineering and Other Related
Web-Based Threats 134
Denial-of-Service 137
Insider and Privilege Misuse 137
Physical Theft or Loss 138
Miscellaneous Errors 138
New Attack Vectors 138
Cyberattack Targets and Consequences 139
“High-Profile” and “Under-the-Radar” Attacks 139
Critical Infrastructure Attacks 140
Theft of Intellectual Property 141
Identity Theft 142
Bring Your Own Device 142
Social Media Attacks 144
Cyber Risk Management 146
IT Defenses 146
Business Continuity Planning 149
Government Regulations 149
7 Web 2.0 and Social
Defending Against Fraud 150
Occupational Fraud Prevention
and Detection 151
General Controls 152
Internal Controls 153
Cyber Defense Strategies 153
Auditing Information Systems 155
5.5 Frameworks, Standards, and Models 155
Risk Management and IT Governance
Frameworks 155
Industry Standards 157
IT Security Defense-In-Depth Model 157
Case 5.2 Business Case: Lax Security at LinkedIn
Exposed 161
Case 7.1 Opening Case: Social Customer Service Takes
Off at KLM 200
Using Search Technology for Business
Success 168
How Search Engines Work 168
Web Directories 168
How Crawler Search Engines Work 169
Why Search Is Important for Business 172
6.2 Organic Search and Search Engine
Optimization 178
Strategies for Search Engine Optimization 178
Content and Inbound Marketing 180
Black Hat versus White Hat SEO: Ethical Issues
in Search Engine Optimization 181
6.3 Pay-Per-Click and Paid Search Strategies 182
Creating a PPC Advertising Campaign 182
Metrics for Paid Search Advertising 184
6.4 A Search for Meaning—Semantic Technology 184
What Is the Semantic Web? 185
The Language(s) of Web 3.0 185
Semantic Web and Semantic Search 186
Semantic Web for Business 187
6.5 Recommendation Engines 188
Recommendation Filters 189
Case 6.2 Business Case: Deciding What to Watch—Video
Recommendations at Netflix 195
Web 2.0—The Social Web 201
The Constantly Changing Web 201
Invention of the World Wide Web 202
A Platform for Services and Social Interaction 202
Emergence of Social Applications, Networks,
and Services 203
Why Managers Should Understand Web
Technology 205
Communicating on the Web 206
Social Media Applications and Services 207
Social Media Is More than Facebook, YouTube, and
Twitter 207
With Web 2.0, Markets are Conversations 209
7.2 Social Networking Services and Communities 210
The Power of the Crowd 212
Crowdfunding 212
Social Networking Services 213
Facebook Dominates Social Networking 214
Google Takes on Facebook with G+ 216
Be in the Now with Snapchat 217
And Now for Something Different: Second Life 218
Private Social Networks 219
Future of Social Networking Systems 220
7.3 Engaging Consumers with Blogs and
Microblogs 220
What Is the Purpose of a Blog? 220
Blogging and Public Relations 222
Reading and Subscribing to Blogs 222
Blogging Platforms 222
Microblogs 223
Twitter 223
Tumblr Blogs 225
7.4 Mashups, Social Metrics, and
Monitoring Tools 226
What Makes a Mashup Social 226
RSS Technology 227
Social Monitoring Services 227
7.5 Enterprise 2.0: Workplace Collaboration and
Knowledge Sharing 229
Tools for Meetings and Discussions 230
Social Tools for Information Retrieval and
Knowledge Sharing 230
Social Bookmarking Tools 231
Content Creation and Sharing 232
Case 7.2 Business Case: Facebook Helps Songkick Rock
the Ticket Sales Industry 236
Case 6.3 Video Case: Power Searching with
Google 196
Case 7.3 Business Case: AT&T’s “It Can Wait” Campaign
against Distracted Driving 237
Case 5.3 Video Case: Botnets, Malware Security, and
Capturing Cybercriminals 163
PART 2 Winning, Engaging, and
Retaining Consumers for Growth
6 Search, Semantic, and
Recommendation Technology
Case 6.1 Opening Case: Mint.com Uses Search
Technology to Rank Above Established
Competitors 166
8 Retail, E-commerce, and Mobile
Commerce Technology
Case 8.1 Opening Case: Macy’s Races Ahead with Mobile
Retail Strategies 241
Retailing Technology 243
Keeping Up with Consumer Demands and
Behavior 243
The Omni-Channel Retailing Concept 244
8.2 Business-to-Consumer (B2C) E-commerce 246
Online Banking 246
International and Multiple-Currency
Banking 246
Online Recruiting 246
Issues in Online Retailing 250
Online Business and Marketing Planning 250
8.3 Business-to-Business (B2B) E-commerce and
E-procurement 251
Sell-Side Marketplaces 251
E-Sourcing 252
E-Procurement 252
Electronic Data Interchange (EDI) Systems 253
Public and Private Exchanges 253
8.4 Mobile Commerce 253
Information: Competitive Advantage in Mobile
Commerce 255
Mobile Entertainment 258
Hotel Services and Travel Go Wireless 259
Mobile Social Networking 259
8.5 Mobile Transactions and Financial Services 260
Mobile Payment Systems 260
Mobile Banking and Financial Services 262
Short Codes 263
Security Issues 263
Case 8.2 Business Case: Chegg’s Mobile Strategy 266
Case 8.3 Video Case: Searching with Pictures
Using MVS 267
PART 3 Optimizing Performance,
Processes, and Productivity
9 Functional Business Systems
Case 9.1 Opening Case: Ducati Redesigns Its
Operations 271
Business Management Systems and Functional
Business Systems 272
Business Management Systems (BMSs) 273
Management Levels 273
Business Functions vs. Cross-Functional Business
Processes 274
Transaction Processing Systems 275
Production and Operations Management
Systems 277
Transportation Management Systems 278
Logistics Management 278
Inventory Control Systems 279
Computer-Integrated Manufacturing and
Manufacturing Execution Systems 281
9.3 Sales and Marketing Systems 282
Data-Driven Marketing 284
Sales and Distribution Channels 284
Social Media Customer Service 284
Marketing Management 285
9.4 Accounting, Finance, and Regulatory Systems 286
Financial Disclosure: Reporting and
Compliance 286
Fraud Prevention and Detection 289
Auditing Information Systems 291
Financial Planning and Budgeting 291
9.5 Human Resource Systems, Compliance, and
Ethics 293
HR Information Systems 293
Management and Employee Development 295
HR Planning, Control, and Management 295
Case 9.2 Business Case: HSBC Combats Fraud in Splitsecond Decisions 297
Case 9.3 Video Case: United Rentals Optimizes Its
Workforce with Human Capital Management
10 Enterprise Systems
Case 10.1 Opening Case: 3D Printing Drives the “AlwaysOn” Supply Chain 301
10.1 Enterprise Systems 303
Implementation Challenges of Enterprise
Systems 305
Investing in Enterprise Systems 305
Implementation of Best Practices 306
Enterprise Systems Insights 307
10.2 Enterprise Resource Planning (ERP) 307
Brief History of ERP 308
Technology Perspective 308
Achieving ERP Success 311
10.3 Supply Chain Management Systems 313
Managing the Flow of Materials, Data,
and Money 315
Order Fulfillment and Logistics 315
Steps in the Order Fulfillment Process 315
Innovations Driving Supply Chain Strategic
Priorities 316
10.4 Customer Relationship Management Systems 319
How are CRM Apps Different from ERP? Why are they
Different? 319
CRM Technology Perspective 320
Customer Acquisition and Retention 320
CRM for a Competitive Edge 320
Common CRM Mistakes: How to Avoid
Them 321
Justifying CRM 322
10.5 Enterprise Social Platforms 323
Growth of Enterprise Social Investments
and Markets 323
Sharepoint 324
Oracle’s Social Network 326
Jive 326
Chatter 326
Case 10.2 Business Case: Lowe’s Fresh Approach to
Supply Chain Management 328
Case 10.3 Video Case: Procter & Gamble: Creating
Conversations in the Cloud with 4.8 Billion
Consumers 329
11 Data Visualization and Geographic
Information Systems
Case 11.1 Opening Case: Safeway and PepsiCo
Collaborate to Reduce Stock Outages using Data
Visualization 332
11.1 Data Visualization and Learning 334
Learning, Exploration, and Discovery with
Visualization 336
Data Discovery Market Separates from the
BI Market 336
How Is Data Visualization Used in Business? 340
Data Visualization Tools 341
11.2 Enterprise Data Mashups 342
Mashup Architecture 343
Why Do Business Users Need Data Mashup
Technology? 344
Enterprise Mashup Technology 344
11.3 Digital Dashboards 345
Dashboards are Real Time 347
How Operational and Strategic
Dashboards Work 348
Benefits of Digital Dashboards 348
11.4 Geographic Information Systems and
Geospatial Data 349
Geocoding 350
GIS Is Not Your Grandfather’s Map 350
Infrastructure and Location-Aware Collection
of Geospatial Data 350
Applying GIS in Business 351
Case 11.2 Visualization Case: Are You Ready for
Football? 353
Case 11.3 Video Case: The Beauty of Data
Visualization—Data Detective 353
PART 4 Managing Business
Relationships, Projects, and Ethical
12 IT Strategy, Sourcing, and Strategic
Technology Trends
Case 12.1 Opening Case: Intel Reaps Rewards from
Sustainable IT Strategy 355
12.1 IT Strategic Planning 357
Value Drivers 358
IT Strategic Plan Objectives 358
IT and Business Disconnects 359
Corporate and IT Governance 359
Reactive Approach to IT Investments Will Fail 359
IT Strategic Planning Process 359
12.2 Aligning IT with Business Objectives 362
Achieving and Sustaining a Competitive
Advantage 364
12.3 IT Sourcing Strategies 367
Sourcing and Cloud Services 368
Factors Driving Outsourcing 369
Outsourcing Risks and Hidden Costs 370
Offshoring 370
Outsourcing Life Cycle 371
Managing IT Vendor Relationships 373
Contracts: Get Everything in Writing 373
12.4 Balanced Scorecard 374
The Balanced Scorecard 374
Using the Balance Scorecard 375
Applying the BSC 377
12.5 Strategic Technology Trends 378
Strategic Technology Scanning 380
Finding Strategic Technologies 380
Case 12.2 Business Case: Cisco IT Improves Strategic
Vendor Management 382
Case 12.3 Data Analysis: Third-Party versus CompanyOwned Offshoring 383
13 Systems Development and Project
Case 13.1 Opening Case: Denver International Airport
Learns from Mistakes Made in Failed BaggageHandling System Project 386
13.1 System Development Life Cycle 388
Stages of the SDLC 388
13.2 Systems Development Methodologies 391
Waterfall Model 391
Object-Oriented Analysis and Design 392
Agile Methodology 392
The DevOps Approach to Systems
Development 394
13.3 Project Management Fundamentals 395
What Is a Project? 396
Choosing Projects 396
The Triple Constraint 397
The Project Management Framework 397
13.4 Initiating, Planning, and Executing Projects 399
Project Initiation 400
Project Planning 400
Project Execution 403
13.5 Monitoring/Controlling and Closing
Projects 404
Project Monitoring and Controlling 404
Project Closing or Post Mortem 407
Why Projects Fail 408
IT Project Management Mistakes 410
Case 13.2 Business Case: Steve Jobs’ Shared Vision
Project Management Style 412
Case 13.3 Demo Case: Mavenlink Project Management
and Planning Software 413
14 IT Ethics, Privacy, and
Case 14.1 Opening Case: Lessons Learned: How Google
Glass Raised Risk and Privacy Challenges 418
14.1 IT Ethics 420
Ethical versus Unethical Behavior 420
Competing Responsibilities 423
14.2 Privacy and Civil Rights 424
Privacy and the New Privacy
Paradox 424
Social Media Recruiting 425
Legal Note: Civil Rights 426
Competing Legal Concerns 427
Financial Organizations Must Comply with Social
Media Guidelines 428
14.3 Technology Addictions and Focus
Management 430
Digital Distractions and Loss of Focus 430
Focus Management 430
14.4 ICT and Sustainable Development 432
Global Temperature Rising Too Much
Too Fast 432
IT and Global Warming 433
Technology to Transform Business and
Society 436
Next Wave of Disruption Will Be More
Disruptive 438
Case 14.2 Business Case: Android Auto and
CarPlay Keep Drivers Safe, Legal, and
Productive 439
Case 14.3 Video Case: IT Ethics in the
Workplace 440
Information Technology for Management discusses a variety of
business strategies and explains how they rely on data, digital
technology, and mobile devices to support them in the ondemand economy. Our goal is to provide students from any
business discipline with a strong foundation for understanding the critical role that digital technology plays in enhancing
business sustainability, profitability, and growth and excel in
their careers. Enabling technologies discussed in this textbook
include the following:
has applied her innovative teaching and learning techniques to
create a stronger pedagogical focus and more engaging format
for the text.
• Performance Combining the latest capabilities in big data
analytics, reporting, collaboration, search, and digital communication helps enterprises be more agile and cuts costs to
optimize business performance and profitability.
Strong Pedagogical Approach To encourage improved learning outcomes, we employed a blended learning approach, in
which different types of delivery and learning methods, enabled
and supported by technology, are blended with traditional
learning methods. For example, case study and theoretical
content are presented visually, textually, and/or interactively
to enable different groups of students to use different learning
strategies in different combinations to fit their individual learning style and enhance their learning. Throughout the book,
content has been reorganized to improve development of the
topics and improve understanding and readability. A large
number of images that did not enhance understanding have
been removed and replaced with informative and interactive
figures and tables that better convey critical concepts.
• Growth Strategic technologies enable business to create
new core competencies, expand their markets, and move
into new markets to experience exponential growth in the
on-demand economy.
• Sustainability Cloud services are fundamental to sustaining business profitability and growth in today’s ondemand economy. They play a critical role in managing
projects and sourcing agreements, respecting personal privacy, encouraging social responsibility, and attracting and
engaging customers across multimedia channels to promote
sustainable business performance and growth.
In this 11th edition, students learn, explore, and understand
the importance of IT’s role in supporting the three essential
components of business performance improvement: technology,
business processes, and people.
What’s New in the
11th Edition?
In the 11th edition of IT for Management, we present and discuss concepts in a comprehensive yet easy-to-understand format by actively engaging students through a wide selection of
case studies, interactive figures, video animations, tech notes,
concept check questions, online and interactive exercises, and
critical thinking questions. We have enhanced the 11th edition
in the following ways:
New Author Dr. Carol Pollard, Professor of Computer Information Systems at the Walker College of Business and former
Executive Director of the Center for Applied Research in Emerging Technologies (CARET) at Appalachian State University in
North Carolina, has taken the helm for the 11th edition. Carol
Diverse Audience IT for Management is directed toward
undergraduate, introductory MBA courses, and Executive Education courses in Management Information Systems and General
Business programs. Concepts are explained in a straightforward
way, and interactive elements, tools, and techniques provide
tangible resources that appeal to all levels of students.
Leading-Edge Content Prior to and during the writing process, we consulted with a number of vendors, IT professionals,
and managers who are hands-on users of leading technologies,
to learn about their IT/business successes, challenges, experiences, and recommendations. To integrate the feedback of
these business and IT professionals, new or updated chapter
opening and closing cases have been added to many of the
chapters along with the addition of relevant, leading-edge
content in the body of the chapters.
New Technologies and Expanded Topics New to this edition
are the IT framework, business process reengineering, geocoding, systems developments methodologies, including Waterfall, object-oriented analysis, Agile and DevOps, advances
in Search Technology, the growth of Mobile Commerce and
Mobile Payment Systems, the Always-On Supply Chain, and
the Project Management framework. In addition, with more
purchases and transactions starting online and attention being
a scarce resource, students learn how search, semantic, and
recommendation technologies function to improve revenue.
Table P-1 provides a detailed list of new and expanded topics.
Useful Tools and Techniques New to this edition is a feature
we call the “IT Toolbox.” This involves the provision of a set of
useful tools or techniques relevant to chapter content. Collectively, these tools and techniques equip readers with a suite of
IT tools that will be useful in their university classes, workplace,
and personal life.
Engaging Students
to Assure Learning
• IT at Work boxes spotlight real-world cases and innovative uses of IT.
The 11th edition of Information Technology for Management
engages students with up-to-date coverage of the most important IT trends today. Over the years, this IT textbook has distinguished itself with an emphasis on illustrating the use of
cutting-edge business technologies for supporting and achieving managerial goals and objectives. The 11th edition continues this tradition with more interactive activities and analyses.
• Tech Note boxes explore topics such as “Key
Performance Indicators” and “Six Basic Systems
Development Guidelines.”
Real-World Case Studies Each chapter contains numerous
real-world examples illustrating how businesses use IT to increase
productivity, improve efficiency, enhance communication and
collaboration, and gain a competitive edge. Faculty will appreciate
a variety of options for reinforcing student learning that include
three different types of Case Studies (opening case, video case,
and business case), along with interactive figures and whiteboard
animations that provide a multimedia overview of each chapter.
Interactive Figures and Whiteboard Animations The unique
presentation of interactive figures and whiteboard animations facilitates reflection on the textual content of the book
and provides a clear path to understanding key concepts. The
whiteboard animations fit particularly well with the “flipping
the classroom” model and complement additional functionality and assets offered throughout the 11th edition. The interactive figures actively engage the students in their own learning
to effectively reinforce concepts.
• Definitions of Key Terms appear in the margins
throughout the book.
• Career Insight boxes highlight different jobs in the IT
for management field.
End-of-Chapter Activities At the end of each chapter,
features designed to assure student learning include the
• Critical Thinking Questions are designed to facilitate
student discussion.
• Online and Interactive Exercises encourage students
to explore additional topics.
• Analyze and Decide questions help students apply IT
concepts to business decisions.
• Concept Questions test students’ comprehension of
each learning objective at the end of each chapter to
ensure that the students are clear on the concepts.
Students are provided with immediate feedback on
their performance.
Learning Aids Each chapter contains various learning aids,
which include the following:
Details of New and Enhanced
Features of the 11th Edition
• Learning Objectives are listed at the beginning of each
chapter to help students focus their efforts and alert
them to the important concepts that will be discussed.
The textbook consists of 14 chapters organized into four modules. All chapters have new or updated sections, as shown in
Table P-1.
TA BL E P- 1
Overview of New and Expanded Topics and Innovative Enterprises Discussed in the Chapters
New and Expanded IT and Business Topics
Innovative Enterprises
1. Disruptive IT Impacts
Companies, Competition,
and Careers
• IT’s role in the on-demand economy
• Business process improvement
• Business process re-engineering
• SMAC model
• Nature of on-demand work
• Becoming an informed IT user
• Technology mega trends
• Uber
• Airbnb
• FitBit
• Teradata
2. Information Systems, IT Architecture, Data Governance, and
Cloud Computing
• IS concepts and framework
• Information, knowledge, wisdom model
• Software-defined data center
• Mediata
• National Climatic Data center
• U.S. National Security Agency
• Apple
• Uber
• WhatsApp
• Slack
• Vanderbilt University Medical Center
• Coca-Cola
Overview of New and Expanded Topics and Innovative Enterprises Discussed in the Chapters (continued)
New and Expanded IT and Business Topics
Innovative Enterprises
3. Data Management, Data
Analytics, and Business
• Dirty data costs and consequences
• Coca-Cola
• Data life cycle
• Capitol One
• Genomics and big data
• Travelocity
• Aligning business intelligence with business strategy
• First Wind
• Argo Corporation
• Walmart
• Infinity Insurance
• DoD and Homeland Security
• CarMax
• McDonald’s
• Verizon
4. Networks, Collaborative
Technology, and the
Internet of Things
• IPv6 protocol
• Sony
• Types of networks
• AT & T
• Network terminology
• Time-Warner
• Quality of service
• Amazon
• Net neutrality
• Warner Music
• Mobile networks and near-field communication
• Proctor & Gamble
• Internet of Things
• Walmart
• Ford
• Asda
• Unilever
• Caterpillar
• Santander
• Google
• Isle of Man
5. Cybersecurity and Risk
Management Technology
6. Search, Semantic, and Recommendation Technology
• Data breaches
• Yahoo
• Major sources of cyberthreats
• Global Payments, Inc.
• Classes of hackers
• Government of China
• Spear phishing
• Google
• Crimeware categories
• U.S. Chamber of Commerce
• Denial of service
• Brookings Institution
• KPMG data loss barometer
• LinkedIn
• Enterprise risk management framework
• Damballa
• Social search technologies
• Mint.com
• Personal assistant and voice search
• Google
• Mobile search and mobile SEO
• Microsoft
• On-page and off-page SEO factors
• Yahoo
• Updates to Google’s ranking algorithm
• Netflix
• Semantic search technologies
• Apple
• Amazon
• Diigo
• World Wide Web Consortium (W3C)
TA BL E P- 1
Overview of New and Expanded Topics and Innovative Enterprises Discussed in the Chapters (continued)
New and Expanded IT and Business Topics
Innovative Enterprises
7. Web 2.0 and Social Technology
• Snapchat, the #2 social platform
• KLM Royal Dutch Airlines
• Social bookmarking
• Facebook, Inc.
• Social customer service moves from optional
to essential
• Myntra
• Role of APIs in development of new Web applications
and functionality
• Kickstarter.com
• The dominance of Facebook and the demise
of Google+
• Emerging virtual-world technology
• Snap, Inc.
• GoFundMe.com
• Oculus VR
• High Fidelity
• Twitter
• Social Mention
• Diigo
• Clipix
• Dropbox
8. Retail, E-commerce, and
Mobile Commerce Technology
• Direct and marketplace B2B ecommerce
• Macys Department Stores
• In-store retail technology
• Amazon.com
• Omni-channel retailing
• Ally Bank
• Growth of mobile commerce
• LinkedIn.com
• Growth of the mobile gaming market
• Alibaba.com
• Mobile payment methods
• Dell, Inc.
• Mobile visual search
• The Walt Disney Company
• PayPal, Inc.
• Chegg.com
9. Functional Business Systems
• Business management systems
• Ducati Motor Holding S.p.A.
• Cross-functional coordination and integration
of systems
• Office Depot
• Systems that support supply-chain management
• BAE Systems
• Social customer service
• eXtensible Business Reporting Language (XBRL)
• Schurman Fine Papers
• Adweek
• Salesforce.com
• LinkedIn
• HSBC Bank
• United Rentals
10. Enterprise Systems
• 3D printing impact on supply chain
• Organovo
• Selecting an ERP vendor
• Ferrari
• Factors for ERP success
• GE
• Order fulfillment
• Siemens
• Always-on supply chain
• Organic Valley Family of Farms
• Enterprise social platforms
• Boers & Co.
• Peters Ice Cream
• ScanSource
• Avanade
• Dillards
• FoxMeyer Drugs
• Joint Munitions Command
• Flower.com
• Red Robin
• Lowe’s
• Procter & Gamble
Overview of New and Expanded Topics and Innovative Enterprises Discussed in the Chapters (continued)
New and Expanded IT and Business Topics
Innovative Enterprises
11. Data Visualization and
Geographic Information
• Increasing reliance on data discovery
• Safeway
• Data visualization tools
• PepsiCo
• Enterprise data mashups
• Geocoding
• ADP Corp.
• Department of Veterans Affairs
• General Motors
12. IT Strategy, Sourcing, and
Strategic Technology Trends
• Business–IT alignment
• Intel
• IT strategic planning
• Nestle Nespresso
• Porter’s competitive forces model
• LinkedIn
• Porter’s value chain model
• ESSA Academy
• Five-phase outsourcing life cycle
• Cisco
• IT sourcing strategies
• Citigroup
• Strategic technology trends
• Technology scanning
13. Systems Development and
Project Management
• SDLC stages
• Denver International Airport
• Systems development methodologies
• U.S. Census Bureau
• DevOps
• Apple
• Project management framework
• Mavenlink
• PM core and support knowledge areas
• Responsibility matrix
14. IT Ethics, Privacy, and
• Ethical vs. unethical behavior
• Google
• Privacy paradox
• Target
• Climate change
• Facebook
• Technology addiction
• SnapChat
• “People-first” approach to technology
• Disruptive technologies
• Apple
Supplemental Materials
An extensive package of instructional materials is available
to support this 11th edition. These materials are accessible
from the book companion website at www.wiley.com/college/
• Instructor’s Manual The Instructor’s Manual presents
objectives from the text with additional information to make
them more appropriate and useful for the instructor. The
manual also includes practical applications of concepts,
case-study elaboration, answers to end-of-chapter questions, questions for review, questions for discussion, and
Internet exercises.
• Test Bank The test bank contains over 1,000 questions and problems (about 75 per chapter) consisting of
multiple-choice, short answer, fill-ins, and critical thinking/
essay questions.
• PowerPoint Presentation A series of slides designed
around the content of the text incorporates key points from
the text and illustrations where appropriate.
• Chapter Summary Whiteboard Animations A series of
video animations that summarize the content of each chapter
in an entertaining way to engage the students in grasping the
subject matter.
No book is produced through the sole efforts of its authors, and
this book is no exception. Many people contributed to its creation, both directly and indirectly, and we wish to acknowledge
their contributions.
Special thanks go to the team at John Wiley, particularly
Darren Lalonde, Emma Townsend-Merino, Ethan Lipson, and
Loganathan Kandan for their ongoing and encouraging editorial expertise and leadership. Their guidance, patience, humor,
and support during the development and production of this
most recent version of the textbook made the process much
easier. We couldn’t have done it without you!
Our sincere thanks also go to the following reviewers of the
11th edition. Their feedback, insights, and suggestions were
invaluable in ensuring the accuracy and readability of the book:
Joni Adkins, Northwest Missouri State University
Ahmad Al-Omari, Dakota State University
Rigoberto Chinchilla, Eastern Illinois University
Michael Donahue, Towson University
Samuel Elko, Seton Hill University
Robert Goble, Dallas Baptist University
Eileen Griffin, Canisius College
Binshan Lin, Louisiana State University in Shreveport
Thomas MacMullen, Eastern Illinois University
James Moore, Canisius College
Beverly S. Motich, Messiah College
Barin Nag, Towson University
Luis A. Otero, Inter-American University of Puerto Rico,
Metropolitan Campus
John Pearson, Southern Illinois University
Daniel Riding, Florida Institute of Technology
Josie Schneider, Columbia Southern University
Derek Sedlack, South University
Eric Weinstein, The University of La Verne
Patricia White, Columbia Southern University
Gene A. Wright, University of Wisconsin–Milwaukee
Many thanks also go to our dedicated graphic designers,
Kevin Hawley and Nathan Sherrill, without whose help we
would not have been able to create the innovative Whiteboard
Animations, and to Senior Photo Editor, Billy Ray, whose extensive and expert research into the images used in the textbook
greatly enhanced the overall “look” of this 11th edition.
Extra special thanks go to our families, friends, and colleagues for the enormous encouragement, support, and understanding they provided as we dedicated time and effort to
creating this new edition.
Finally, we dedicate the 11th edition of Information
Technology for Management to the Memory of Dr. Linda
Volonino, the driving force behind editions 7 through 10 of IT
for Management. Thank you Linda, for all your hard work in
providing the foundation for this latest edition of the textbook.
Disruptive IT Impacts Companies,
Competition, and Careers
Case 1.1 Opening Case: Uber, Airbnb, and the
On-Demand Economy
1.1 Doing Business in the On-Demand Economy
1.1 Describe how the on-demand economy is changing the way
that business is conducted.
1.2 Business Process Improvement and
Competitive Advantage
1.2 Explain the role of IT in business process improvement.
Understand the concepts of business process reengineering
and competitive advantage.
1.3 IT Innovation and Disruption
1.3 Describe innovating technologies and explain how they are
disrupting enterprises.
1.4 IT and You
1.4 Understand the value of being an “informed user” of IT and
the ways in which IT can add value to your career path and
performance in the on-demand economy.
Case 1.2 Business Case: The Internet of Things
Comes to the NFL
Case 1.3 Video Case: What Is the Value of Knowing
More and Doing More?
The more digital technology advances, the more it is almost instantly integrated into our daily
lives. Many managers and entrepreneurs recognize the need to integrate digital technology
into their products and services. For example, it has been estimated that 78% of business
Disruptive IT Impacts Companies, Competition, and Careers
leaders expect their organizations to be a digital business by 2020. Outdated and complex
application architectures with a mix of interfaces can delay or prevent the release of new
products and services, and maintaining these obsolete systems absorbs large portions of the
information technology (IT) budget.
Companies such as Uber, Airbnb, Shyp, TaskRabbit, and other participants in the ondemand economy are leveraging IT to create exciting new business models and revolutionize the way workers, businesses, and customers interact and compete. Peter Hinssen, a
well-known business author, university lecturer, and digital consultant, described the change
in digital technology as follows:
Technology used to be nice. It used to be about making things a little bit better, a little
bit more efficient. But, technology stopped being nice: it’s disruptive. It’s changing our
business models, our consumer markets, our organizations. (MacIver, 2015)
As businesses continue to join the on-demand economy, IT professionals must constantly
scan for innovative new technologies to provide business value and help shape the future of
the business. For example, smart devices, mobile apps, sensors, and technology platforms—
along with increased customer demand for digital interactions and on-demand services—have
moved commerce in fresh new directions. We’ve all heard the phrase “there’s an app for that”
and that kind of consumer thinking is what drives the on-demand economy.
Business leaders today need to know what steps to take to get the most out of mobile,
social, cloud, big data, analytics, visualization technologies, and the Internet of Things (IoT) to
move their business forward and enable new on-demand business models. Faced with opportunities and challenges, managers need to know how to leverage IT earlier and more efficiently
than their competitors.
A goal of this book is to empower you to improve your use and management of IT at
work by raising your understanding of IT terminology, practices, and tools and developing
your IT skills to transform you into an informed IT user. Throughout this book, you will learn
how digital technology is transforming business and society in the on-demand economy as
the IT function takes on key strategic and operational roles that determine an enterprise’s
success or failure. You will also be provided with an in-depth look at IT trends that have
immediate and future capacity to influence products, services competition, and business
relationships. Along the way, we’ll describe many different ways in which IT is being used
and can be used in business and provide you with the some of the terminology, techniques
and tools that enable organizations to leverage IT to improve growth, performance, and
In this opening chapter, you will learn about the powerful impacts of digital technology
on people, business, government, entertainment, and society that are occurring in today’s ondemand economy. You will also discover how leading companies are deploying digital technology and changing their business models, business processes, customer experiences, and
ways of working. We will present examples of innovative products, services, and distribution
channels to help you understand the digital revolution that is currently shaping the future of
business, the economy and society and changing management careers. And, we’ll explain why
IT is important to you and how becoming an “informed user” of IT will add significant value to
your career and overall quality of life.
Introduction 3
Case 1.1 Opening Case
Getty Images
Logistics Management
Offline Services Move Online
Vendor Management
Interface Layer
Ubiquitous Connectivity
Mobile Adoption
App Marketplace
Payment Systems
Cloud Services
CRM Platforms
1099 Community
Instant Gratification
Uber and Airbnb Revolutionize Business Models
in the On-Demand Economy
categories in the on-demand world. Forward-thinking companies are
reshaping these industries.
If you’ve used Uber or Airbnb, then you have participated in the
on-demand economy where speed, convenience, and simplicity
are key factors in consumer behavior and purchasing decisions.
Michael Boland, author of What’s Driving the Local On-Demand Economy, explains that as consumers, “We’re being conditioned to expect
everything on-demand as the mobile device increasingly becomes the
remote control for the physical world” (Boland, 2015). For example,
the majority of consumers who tap an Uber app to get a ride would
not consider dialing an 800 number for a taxi. With all transactions
performed by apps and automated processes, the entire process from
hailing to paying for a ride is slick, quick, and easy, without cash or
credit cards.
Uber Business Model
Tech Platforms Enabled On-Demand Services to Take Off
Decades of technological innovation have given us smartphone apps,
mobile payment platforms, GPS and map technology, and social
authentication. These technologies are being used to build the infrastructure needed for on-demand services. This infrastructure—also
referred to as a technology platform or technology stack—supports
the exchange and coordination of staggering amounts of data. The
term technology stack reflects the fact that the platform is made up of
multiple layers (stacks) of hardware, software, network connectivity,
and data analytics capabilities.
In many consumer markets today, companies that do not have
iPhone or Android apps or technology platforms that support the
exchange of goods and services—no matter how useful their website—
may find themselves losing their competitive edge.
On-Demand Economy Requires a New Business Model
Uber and Airbnb are popular examples of companies that developed
on-demand business models to transform slow-to-innovate industries. A simple definition of business model is the way a company
generates revenue and makes a profit. On-demand business models provide real-time fulfillment of goods and services, which have
attracted millions of users worldwide. This model fits best when
speed and convenience matter the most. The ground transportation, grocery, and restaurant industries are examples of hyper-growth
Uber disrupted the taxi industry with a workforce that is essentially
any person with a smartphone and a car. Location-aware smartphone
apps bring drivers and passengers together, while in-app accounts
make the cashless payment process effortless. By simply opening the
Uber app and pressing the middle button for several seconds (a long
press), customers can order a ride to their current location, selecting
the kind of car they want. Payment is automatically charged to the
credit card on file with receipts via email.
The Uber concept developed in response to taxi scarcities. It
started on a snowy Paris night in 2008 when the two founders could
not get a cab. They wanted a dead-simple app that could get them
a car with a tap. On June 1, 2015, the entrepreneurs celebrated
Uber fifth anniversary and announced that the company had grown
into a transportation network covering 311 cities in 58 countries in
North and South Americas, Europe, Africa, Asia Pacific, and the
Middle East.
Uber has invested in new and developing technologies and partnerships. The company partnered with Carnegie Mellon University to
build robotic cars and new mapping software. In March 2015, Uber purchased deCarta, a 40-person mapping start-up to reduce its dependence on Google maps.
Airbnb Business Model
Another disruption to a traditional industry occurred when Airbnb
blindsided the hotel industry. Airbnb allows anyone with a spare
apartment or room—even if only for a day—to run their own bed and
breakfast by giving them a technology platform to market themselves
to a global market. By 2016, the Airbnb site had over 1.5 million listings in 190 countries and 34,000 cities. Over 40 million guests have
used Airbnb worldwide. For comparison, Hilton, InterContinental, and
Marriott, the largest hotel chains in the world, have less than 1 million
rooms each.
Uber and Airbnb do not own inventory. Instead, they scale up
(expand) by improving their ability to acquire and match customers
and service providers.
Disruptive IT Impacts Companies, Competition, and Careers
Business Success in Terms of Company Growth
and Valuation
The ride-hailing app Uber and the housing rental app Airbnb are two
of the most valuable start-ups, as displayed in Figure 1.1. Valuation
of a company at its early stages is based heavily on its growth potential
and future value. In contrast, the valuation of an established company
is based on its present value, which is calculated using traditional
financial ratios and techniques related to revenues or other assets.
Uber’s massive market value—estimated at $60 billion—is
greater than 80% of all Standard & Poor (S&P) 500 companies, many
of which have been around for 25, 50, or 100 years. Investors valued
Airbnb at $24 billion—higher than the value of the hotel giant Marriott
Started in 2008
Airbnb—short for Air Bed and
The leading disrupter in the hotel
and vacation rental market
By 2016, Airbnb was valued at
about $25 billion. Exceeded the
value of Marriott International
International. These companies would never have been able to grow
in the old way as a traditional organization, with their own inventory of
products, services, and workforce and traditional forms of technology.
1. In what ways are the Uber and Airbnb business similar or
2. How did Uber achieve its new business model?
3. To what extent do you think changing their business models contributed to the success of Uber and Airbnb?
Sources: Compiled from Primack (2015), Storbaek (2015), Winkler and MacMillan
(2015,) Jaconi (2014), Uber.com (2017), Airbnb.com (2017).
Started in 2009. Founder Garrett
Camp wanted to tackle the taxi
shortage problem in San Francisco
Uber epitomizes disruption
Changed the way customers think
about grabbing a ride
By 2016, Uber had higher valuation
than companies that make the cars
its drivers use–GM, Honda, and Ford
On-demand business models of Airbnb and Uber have been extremely
Doing Business in the
On-Demand Economy
On-demand economy is the
economic activity created by
technology companies that fulfill
consumer demand through
the immediate provisioning of
products and services.
The on-demand economy is revolutionizing commercial activities in businesses around the
world. The businesses in this new economy are fueled by years of technology innovation and a
radical change in consumer behavior. As companies become more highly digitized, it becomes
more and more apparent that what companies can do depends on what their IT and data management systems can do. For over a decade, powerful new digital approaches to doing business
have emerged. And there is sufficient proof to expect even more rapid and dramatic changes
due to IT breakthroughs and advances.
In market segment after market segment, mobile communications and technology stacks
make it financially feasible for companies to bring together consumers and providers of products and services. These capabilities have created the on-demand economy. As Ev Williams,
cofounder of Twitter says,
The internet makes human desires more easily attainable. In other words, it offers
convenience. Convenience on the internet is basically achieved by two things: speed,
and cognitive ease. If you study what the really big things on the internet are, you
realize they are masters at making things fast and not making people think.
Doing Business in the On-Demand Economy
The proliferation of smartphone-connected consumers, simple and secure purchase flows, and
location-based services are a few of the market conditions and technological innovations that
are propelling the explosion of on-demand services.
Just as the rapid growth of online-only Amazon and eBay transformed retail, the even faster
growth of app-driven companies, like Uber, Airbnb, and Grubhub, has disrupted the taxi, hotel,
and restaurant markets. As you read in the opening case, in six short years, Uber changed the
taxi industry as it rose from start-up to the world’s most valuable private technology company,
and Airbnb tackled the fiercely competitive hotel market and attracted more than 60 million
customers to become the third most valuable venture-capital-backed company in the world.
Another example is Grubhub who became No. 1 in online food ordering, controlling over 20%
of that $9 billion market. What today’s successful technology businesses have in common are
platform-based business models. Platforms consist of hardware, software, and networks that
provide the connectivity for diverse transactions, such as ordering, tracking, user authentication, and payments. These business models are designed to serve today’s on-demand
economy, which is all about time (on-demand), convenience (tap an app), and personalized
service (my way). For example, millennials want the ease of online payment over cash and
insist on efficiency for all aspects of their lives, including shopping, delivery, and travel.
Key strategic and tactical questions that determine an organization’s profitability and
management performance are shown in Figure 1.2. Answers to each question require an
understanding of the capabilities of mundane to complex IT, which ones to implement and
how to manage them.
Strategic direction:
industry, markets,
and customers
• What do we do?
• What is our direction?
• What markets & customers should
we be targeting and how do we
prepare for them?
Business model
• How do we do it?
• How do we generate revenues &
profits to sustain ourselves and
build our brand?
and technology
• How well do we do it?
• How can we be more
Key strategic and tactical questions.
Growth of the On-Demand Economy
Whether it is ease of scheduled deliveries or the corresponding time savings, the growth of
the on-demand economy is a product of its alignment with consumers’ growing appetite
for greater convenience, speed, and simplicity. A recent survey reported that 86.5 million
Americans have used the services of at least one on-demand start-up company (Chriss, 2016).
The growth of the on-demand economy demonstrates the high level of interest consumers
have in on-demand services from dog walking to laundry services, short-term home rentals,
massages, and truck hauling. Although just applying a mobile app to an existing service will not
ensure a company’s success, IT is a vital and integral part of the all businesses that are part of
the on-demand economy.
Disruptive IT Impacts Companies, Competition, and Careers
Low Cost of Entry One of the reasons that the on-demand economy has taken off is
that it is easier than ever to become an on-demand business. Companies like Dispatch, a software as-a-service company, allow entrepreneurs to move into the on-demand world quickly
and inexpensively. For example, Aatlantic Fitness, a fitness equipment repair service company,
moved into the on-demand economy using Dispatch, and Handyman Connection, a 20-yearold home repair service company, is using Dispatch’s platform to compete with Handy, an ondemand service for house cleaning that has raised $60 million in venture capital.
Digital Business Models
The on-demand economy is driving the transformation of traditional business models to digital
business models to serve customers what they want and where they want it.
Business models are the ways enterprises generate revenue or sustain themselves. Digital
business models define how businesses make money via digital technology. Companies that
adopt digital business models are better positioned to take advantage of business opportunities and survive, according to the Accenture Technology Vision 2013 report (Accenture, 2013).
Figure 1.3 contains examples of new technologies that destroyed old business models and
created new ones.
Twitter dominates the
reporting of news and events
as they are still happening
Facebook became the most
powerful sharing network
in the world
Location-aware technologies
track items through
production and delivery to
reduce wasted time and
inefficiency in supply chains
and other business-tobusiness (B2B) transactions
Smartphones, tablets, other
touch devices, and their apps
reshaped how organizations
interact with customers—and
how customers want
businesses to interact with
FIGURE 1.3 Digital business models refer to how companies engage
their customers digitally to create value via websites, social channels, and
mobile devices.
The ways in which market leaders are transitioning to digital business models include the
• NBA talent scouts rely on sports analytics and advanced scouting systems NBA talent
scouts used to crunch players’ stats, watch live player performances, and review hours of
tapes to create player profiles. Now software that tracks players’ performance has changed
how basketball and soccer players are evaluated. For example, STATS’ SportVU technology
is revolutionizing the way sports contests are viewed, understood, played, and enjoyed.
SportVU uses six palm-sized digital cameras that track the movement of every player
on the court, record ball movement 25 times per second, and convert movements into
statistics. SportVU produces real-time and highly complex statistics to complement the traditional play-by-play. Predictive sport analytics can provide a 360-degree view of a player’s
performance and help teams make trading decisions. Sports analytics bring about small
competitive advantages that can shift games and even playoff series.
• Dashboards keep casino floor staff informed of player demand Competition in the
gaming industry is fierce, particularly during bad economic conditions. The use of manual
spreadsheets and gut-feeling decisions did not lead to optimal results. Casino operators facing pressure to increase their bottom line have invested in analytic tools, such as
Doing Business in the On-Demand Economy
Tangam’s Yield Management solution (TYM). TYM is used to increase the yield (profitability)
of blackjack, craps, and other table games. The analysis and insights from real-time apps
are used to improve the gaming experience and comfort of players.
Today, a top concern of well-established corporations, global financial institutions, born-on-theWeb retailers, and government agencies is how to design their digital business models in order to
• Deliver an incredible customer experience
• Turn a profit
• Increase market share
• Engage their employees
In the digital (online) space, the customer experience must measure up to the very best the
Web has to offer. Stakes are high for those who get it right—or get it wrong. Forrester research
repeatedly confirms there is a strong relationship between the quality of a firm’s customer
experience and loyalty, which, in turn, increases revenue (Schmidt-Subramanian et al., 2013).
IT’s Role in the On-Demand Economy
According to the 2016 survey conducted by the Society of Information Management (SIM), 1,213
IT leaders (including 490 chief information officers (CIOs)) from 801 companies reported companies that are more highly digitized and tightly connected are putting a greater emphasis on
the strategic use of IT to enhance growth and improve performance. As a result, IT priorities and
spending are changing (Kappelman et al., 2017).
A review of the top 10 IT management priorities reported in the survey results is shown
in Table 1.1. Along with business-IT alignment and security, Table 1.1 clearly demonstrates a
need for companies to focus on strategic and organizational priorities such as innovation, IT
and business agility, speed of IT delivery, and business productivity and efficiency.
TA B L E 1 . 1
10 Top IT Management Priorities
IT Management Issues
Technology Alignment with the Business
Security, Cybersecurity & Privacy
IT Agility & Flexibility
Business Agility & Flexibility
Business Cost Reduction & Controls
IT Cost Reduction & Controls
Speed of IT Delivery & IT Time to Market
Business Strategic Planning
Business Productivity & Efficiency
Adapted from Kappelman et al. (2017).
To address these issues, IT leaders said they need to focus on relationships, meet more
frequently with top management, and spend significant amounts of time with functional
leaders, customers, and suppliers. Companies also need to emphasize finding, keeping,
and developing IT talent and on improving IT to improve business performance. These
findings point to one clear message—IT in the on-demand economy is about meeting customer needs.
Disruptive IT Impacts Companies, Competition, and Careers
IT Business Objectives
Now, more than ever, IT must be responsive to the needs of consumers who are demanding a
radical overhaul of business processes in companies across diverse industry sectors. Intuitive
interfaces, around-the-clock availability, real-time fulfillment, personalized treatment, global
consistency, and zero errors—this is the world to which customers have become increasingly
accustomed. And, it’s not just about providing a superior user or customer experience—when
companies get it right, they can also offer more competitive prices because of lower costs, better operational controls, and open themselves up to less risk.
According to Chirantan Basu of Chron (Basu, 2017), to stay abreast of the ever-changing
business landscape and customer needs, IT today must concentrate on the following six
business objectives:
1. Product development From innovations in microprocessors to efficient drug-delivery
systems, IT helps businesses respond quickly to changing customer demands.
2. Stakeholder integration Companies use their investor relations websites to
communicate with shareholders, research analysts, and others in the market.
3. Process improvement An ERP system replaces dozens of legacy systems for finance,
human resources, and other functional areas, to increase efficiency and cost-effectiveness
of internal business processes.
4. Cost efficiencies IT allows companies to reduce transaction and implementation costs,
such as costs of duplication and postage of email versus snail mail.
5. Competitive advantage Companies can use agile development, prototyping, and other
systems methodologies to being a product to market cost-effectively and quickly.
6. Globalization Companies can outsource most of their noncore functions, such as HR
and finance, to offshore companies and use ICT to stay in contact with its global employees, customers, and suppliers 24/7.
Every technology innovation triggers opportunities and threats to business models and strategies. With rare exceptions, every business model depends on a mix of IT, knowledge of its
potential, the requirements for success, and, equally important, its limitations.
1. What precipitated the on-demand economy?
2. How is IT contributing to the success of the on-demand economy?
3. List the six IT business objectives.
4. What are the key strategic and tactical questions that determine an organization’s profitability and
management performance?
5. What is a business model?
6. What is a digital business model?
7. Give two examples of how companies are transitioning to digital business models.
8. What factors are driving the move to digital business models?
Business Process Improvement
and Competitive Advantage
Given that a company’s success depends on the efficiency of its business processes, even small
improvements in key processes can have significant payoff. All functions and departments in
the enterprise have tasks they need to complete to produce outputs, or deliverables, in order
to meet their objectives.
Business Process Improvement and Competitive Advantage
Before you can begin to improve something, you have to understand what it is you are
improving. We’ll start by defining a business process, looking at its characteristics, and then
exploring ways in which a business process can be improved either incrementally or radically
through Business Process Reengineering.
What Is a Business Process?
Business processes are series of steps by which organizations coordinate and organize tasks
to get work done. In the simplest terms, a process consists of activities that convert inputs into
outputs by doing work.
Examples of common business processes are as follows:
• Accounting Invoicing; reconciling accounts; auditing
• Finance
Credit card or loan approval; estimating credit risk and financing terms
• Human resources (HR) Recruiting and hiring; assessing compliance with regulations;
evaluating job performance
• IT or information systems Generating and distributing reports and data visualizations;
data analytics; data archiving
• Marketing Sales; product promotion; design and implementation of sales campaigns;
qualifying a lead
• Production and operations Shipping; receiving; quality control; inventory management
• Cross-functional business processes Involving two or more functions, for example,
order fulfillment and product development
Three Components of a Business Process Business processes have the three
basic components shown in Figure 1.4. They involve inputs, activities, and deliverables.
or actions
raw materials,
work that
inputs and acts
on data and
Three components of a business process.
Business Process
Processes can be formal or informal. Formal processes are documented and have wellestablished steps. Order taking and credit approval processes are examples. Routine formal
processes are referred to as standard operating procedures (SOPs). An SOP is a well-defined
and documented way of doing something. An effective SOP documents who will perform the
tasks; what materials to use; and where, how, and when the tasks are to be performed. SOPs
are needed for the handling of food, hazardous materials, or situations involving safety, security, or compliance. In contrast, informal processes are typically undocumented, have inputs
that may not yet been identified, and are knowledge-intensive. Although enterprises would
prefer to formalize their informal processes in order to better understand, share, and optimize
them, in many situations process knowledge remains in people’s heads.
Processes range from slow, rigid to fast-moving, adaptive. Rigid processes can be structured to be resistant to change, such as those that enforce security or compliance regulations.
Adaptive processes are designed to respond to change or emerging conditions, particularly in
marketing and IT.
Improving Business Processes
Designing an effective process can be complex because you need a deep understanding of the
inputs and outputs (also known as deliverables), how things can go wrong, and how to prevent
Deliverables are the outputs
or tangible things that are
produced by a business process.
Common deliverables are
products, services, actions, plans,
or decisions, such as to approve
or deny a credit application.
Deliverables are produced in order
to achieve specific objectives.
Disruptive IT Impacts Companies, Competition, and Careers
things from going wrong. For example, Dell had implemented a new process to reduce the time
that tech support spent handling customer service calls. In an effort to minimize the length of
the call, tech support’s quality dropped so much that customers had to call multiple times to
solve their problems. The new process had backfired—increasing the time to resolve computer
problems and aggravating Dell customers.
The importance of efficient business processes and continuous process improvement
cannot be overemphasized. Why? Because 100% of an enterprise’s performance is the result
of its processes. Maximizing the use of inputs in order to carry out similar activities better than
one’s competitors is a critical success factor (CSF). Poorly designed, flawed, or outdated
business processes waste resources, increase costs, cause delays, and aggravate customers.
For example, when customers’ orders are not filled on time or correctly, customer loyalty
suffers, returns increase, and reshipping increases costs. The blame may not be employee
incompetence, but a flawed order fulfillment process.
Don’t Automate, Obliterate!
In today’s on-demand economy, incrementally improving a business process isn’t always
sufficient to create the type of change required. Instead, radical changes need to occur to meet
higher customer expectations. To do this, companies have to go beyond simply automating
an existing process. They must reinvent the entire business process, including reducing the
number of steps required, eliminating documents, developing automated decision-making,
and dealing with regulatory and fraud issues. Operating models, skills, organizational structures, and roles need to be redesigned to match the reinvented processes. Data models should
be adjusted and rebuilt to enable better decision-making, performance tracking, and customer insights.
Leading organizations have come to recognize that it can take a long time to see the benefits
of traditional large-scale projects that migrate all current processes to digital and sometimes
they don’t work. Instead, successful companies are reinventing processes, challenging everything related to an existing process and rebuilding it using cutting-edge digital technology. For
example, rather than creating technology tools to help back-office employees type customer
complaints into their systems, leading organizations create self-serve options for customers to
type in their own complaints.
Business Process Reengineering (BPR) The process by which these types of radical process change can be achieved is referred to as business process reengineering (BPR),
its slogan is “Don’t automate, obliterate!” (Hammer and Champy, 2006). Consisting of eight
stages, shown in Figure 1.5, BPR proposes that simply applying IT to a manual or outdated process does not always optimize it. Instead, processes need to be examined to determine whether
they are still necessary. After unnecessary processes are identified and eliminated, the remaining ones are redesigned (or reengineered) in order to automate or streamline them. Next, the
new process is implemented and put into operation and its performance is evaluated. Finally,
the process is reassessed over time to continually improve it.
The goal of BPR is to eliminate unnecessary, non-value-added processes, and simplify
and automate the remaining processes to significantly reduce cycle time, labor, and costs. For
example, reengineering the credit approval process cuts time from several days or hours to
minutes or less. Simplifying processes naturally reduces the time needed to complete the process, which also cuts down on errors.
After eliminating waste, technology can enhance processes by (1) automating existing
manual processes; (2) expanding the data flows to reach more functions in order to make it possible for sequential activities to occur in parallel; and (3) creating innovative business processes
that, in turn, create new business models. For instance, consumers can scan an image of a
product and land on an e-commerce site, such as Amazon.com, selling that product. This process flips the traditional selling process by making it customer-centric.
You will read more about optimizing business processes and role of business process
management (BPM) role in the alignment of IT and business strategy in Chapter 13.
Business Process Improvement and Competitive Advantage
1. Develop
Vision and
2. Understand
8. Perform
7. Evaluate New
Business Process
6. Make New
3. Identify
Process for
4. Identify
Change Levers
5. Implement
New Process
Eight phases of business process reengineering.
Gaining a Competitive Advantage
Understanding trends that affect the new ways business is being done and getting in front of
those trends by changing adding, deleting, and changing existing business processes gives
organizations an important competitive advantage over their competitors. Helping a
company gain, maintain, and sustain a competitive advantage in the market is a very important function of IT. In business, as in sports or politics, companies want to win—customers,
market share, and position in the industry. Basically, this requires gaining an edge over competitors by being first to take advantage of market opportunities, providing better customer
experiences, offering unique products or services, or convincing customers why your business
is a more attractive alternative than your competitors.
Influential industry leaders cite “new competition” as their largest business challenge.
Once an enterprise has developed a competitive edge, it can only be sustained by continually
pursuing new and better ways to compete. Maintaining a competitive advantage requires
forecasting trends and industry changes and figuring out what the company needs to do to stay
ahead of the game. It demands continuously tracking competitors and their future plans and
promptly taking corrective actions. Competitiveness depends heavily on IT agility and
responsiveness. The benefit of IT agility is that it enables organizations to take advantage of
opportunities faster or more effectively.
Closely related to IT agility is flexibility. For example, mobile networks are flexible—able
to be set up, moved, or removed easily, without dealing with cables and other physical requirements of wired networks. Mass migration to mobile devices from PCs has expanded the scope
of IT beyond traditional organizational boundaries—making location practically irrelevant.
IT agility, flexibility, and mobility are tightly interrelated and fully dependent on an organization’s IT infrastructure and architecture, which are discussed in Chapter 2.
With mobile devices, applications, platforms, and social media becoming inseparable
parts of work life and corporate collaboration and with more employees working from home,
the result is the rapid consumerization of IT. IT consumerization is the migration of consumer
Competitive advantage is an
edge that enables a company
to outperform its average
Agility means being able to
respond quickly.
Responsiveness means that IT
capacity can be easily scaled up or
down as needed, which essentially
requires cloud computing.
Flexibility means having
the ability to quickly integrate
new business functions or to
easily reconfigure software or
Disruptive IT Impacts Companies, Competition, and Careers
technology into enterprise IT environments. This shift has occurred because personally owned
IT is as capable and cost–effective as its enterprise equivalents. IT at Work 1.1 demonstrates
how FitBit has maintained a competitive advantage with its fitness tracker.
As evidenced by the mergers of Grubhub/Seamless in food delivery and Handybook/Exec
in home services, consolidation will accelerate as competition grows. This trend is underscored
in the following examples:
• Collaboration of complementary, noncompetitive businesses will become commonplace
as a means to collectively educate consumers about the benefits of on-demand services, increase awareness, and provide added value to core users. These range from
cross-promotions similar to that of Instacart/Washio to close partnerships such as that of
• Legacy providers in hospitality, transportation, and other Fortune 500s will “partner with”
or “acquire” more innovative on-demand companies. Ken Chenault, Chairman and CEO
of American Express, conceded in their annual report, “Our industry is being redefined by
many forces, including the continued revolution in online and mobile technologies, which
is transforming commerce and society.” Given the emerging influence of on-demand services, Amex launched a partnership with Uber earlier this year. American Express was able
to get a foot in the door by allowing customers to earn 2× points for its spend on Uber with
an American Express credit card.
• As on-demand businesses solve for the current technological and logistical challenges,
design will increasingly become one of the most meaningful forms of competitive advantage.
Creating a memorable, frictionless user interface is the next battleground for addressing consumers’ insatiable appetite for greater simplicity and convenience. Scott Belsky points out,
“A new cohort of design-driven companies are adding a layer of convenience between us and
the underlying services and utilities that improve our lives. This could change everything.”
IT at Work 1.1
FitBit: Smart, Connected Device Transforms
Competition and Promotes Sustainability
In the first year of its existence, FitBit sold 100,000 devices. At the
time, there were countless weight loss and exercise programs, plans,
and gimmicks. But smart, connected wearable activity trackers
were virtually nonexistent. Five years later, FitBit managed to take
the title biggest selling manufacturer of wearable tech when it sold
a whopping 21 million devices in 1 year. It still holds that title today.
Vision: Simple Approach Plus Smart Device
FitBit was launched in San Francisco, California, by Eric Friedman
and James Park. These entrepreneurs took a basic approach to
personal health and fitness—eating right and keeping active. Their
vision was to develop a smart device that would motivate users to
be more active, eat a well-rounded diet, and ultimately become
Throughout the day, FitBit logs data about the wearer’s activities, including the number of steps taken, distance travelled, calories
burned, and what needs to be done to reach a personal daily goal, for
example, walking 2 miles. FitBit’s internal memory can store at least a
week of activity data.
One of FitBit’s competitive strengths is the app that is accessible from a smartphone. Users can sync FitBit devices and view their
online profile, activity levels, and sleep patterns on dashboards that
display on more than 150 mobile devices, including iOS, Android, and
Windows Phone products. This compatibility maximizes the number
of friends and family in each user’s network to share performance
stats. It also motivates and increases user retention.
First Class Fitness
A smart wearable product that fits effortlessly into users’ life styles
launched an industry and made FitBit a market leader. In the second quarter of 2015 (2Q15), FitBit shipped 4.4 million units, up
159% from the same quarter a year ago (2Q14) and held 24.3%
global market share. Second in line was Apple with 3.6 million
units shipped in 2Q15 and 19.9% global market share. Thanks to
the technology that enabled FitBit and the company’s growing
reputation, Friedman and Park are likely to be in business for a
long time.
IT at Work Questions
1. How did FitBit manage to take the title of biggest selling
manufacturer of wearable technology tech and sustain it?
2. What could other companies who produce fitness trackers
challenge FitBit in the marketplace?
3. What other features do you think consumers would like FitBit to incorporate into its fitness tracker to further improve
it? How would consumers and FitBit benefit from these
Sources: Compiled from Ashcroft (2015), Nusca (2015), Grand View Research
(2016), and Fitbit.com (2016).
IT Innovation and Disruption
Software Support for BPM
The purpose of business process management (BPM) is to help enterprises become more agile
and effective by enabling them to better understand, manage, and adapt their business processes. Vendors, consulting and tech firms offer BPM expertise, services, software suites, and tools.
BPM software is used to map processes performed either by computers or manually—and
to design new ones. The software includes built-in templates showing workflows and rules
for various functions, such as rules for credit approval. These templates and rules provide
consistency and high-quality outcomes. For example, Oracle’s WebLogic Server Process Edition
includes server software and process integration tools for automating complex business
processes, such as handling an insurance claim.
But, BPM initiatives can be extremely challenging, and in order to be successful, BPM
requires buy-in from a broad cross section of the business, the right technology selection, and
highly effective change management processes.
1. What is a business process? Give three examples.
2. What is the difference between business deliverables and objectives?
3. List and give examples of the three components of a business process.
4. Explain the differences between formal and informal processes.
5. What is an SOP?
6. What is the purpose of BPM?
IT Innovation and Disruption
Digital technology creates new markets, businesses, products, and careers. As digital changes the
way consumers and retailers buy and sell products, companies must adapt and innovate to ensure
their product offerings, platforms, technologies, and search options cater to these changing needs.
Social–Mobile–Analytics–Cloud (SMAC) Model
We are in the era of social–mobile–analytics–cloud (SMAC) computing that is reshaping
business strategies and day-to-day operations (Figure 1.6).
Estimated 15 billion
devices are connected to
the Internet—forecasted
to hit 50 billion by 2020
as more devices connect
via mobile networks
79% of online adults and
68% of all Americans use
Facebook. Mobile use
generates 30% of
Facebook’s ad revenue.
Current 4.2 billion IoT
devices projected to
increase to 24 billion in
2020. This represents
73% of the total Internetconnected base
U.S. mobile commerce
sales top $104.05 billion
Facebook dominates all
other social platforms
with audience reach
SMAC reshapes business strategies and day-to-day
Business process
management consists of
methods, tools, and technology to
support and continuously improve
business processes.
Disruptive IT Impacts Companies, Competition, and Careers
The cloud consists of huge data centers accessible via the Internet and forms the core by
providing 24/7 access to storage, applications, and services. Handhelds and wearables, such
as FitBit, Pebble, and the Apple Watch, and their users form the edge. Social channels connect the core and edge. The SMAC integration creates the technical and services infrastructure
needed for digital business. This infrastructure makes it possible to meet the expectations of
employees, customers, and business partners given that almost everyone is connected (social),
everywhere they go (mobile), gets the information they need (analytics), and has 24/7 access to
products and services (cloud).
Here are three examples of SMAC’s influence:
1. Powerful social influences impact advertising and marketing Connections and feedback via social networks have changed the balance of influence. Consumers are more likely
to trust tweets from ordinary people than recommendations made by celebrity endorsements. And, negative sentiments posted or tweeted can damage brands.
2. Consumer devices go digital and offer new services The Nike+ FuelBand wristband
helps customers track their exercise activities and calories burned. The device links to a
mobile app that lets users post their progress on Facebook.
3. eBay’s move to cloud technology improves sellers’ and buyers’ experiences The
world’s largest online marketplace, eBay, moved its IT infrastructure to the cloud. With
cloud computing, eBay is able to introduce new types of landing pages and customer
experiences without the delay associated with having to buy additional computing
The balance of power has shifted as business is increasingly driven by individuals for whom
mobiles are an extension of their body and mind. They expect to use location-aware services,
apps, alerts, social networks, and the latest digital capabilities at work and outside work. To a
growing extent, customer loyalty and revenue growth depend on a business’s ability to offer
unique customer experiences that wow customers more than competitors can.
Technology Mega Trends
Mega trends are forces that
shape or create the future
of business, the economy,
and society.
For 21st-century enterprises, connectivity, big data and analytics, and digitization are technology mega trends that cannot be ignored. Business breakthroughs and innovation would be
impossible without them. They also mark the difference between outdated 20th-century
business models and practices and those of today’s on-demand economy.
The most influential IT mega trends driving digital transformation of companies in the ondemand economy are discussed next.
Connectivity Companies need to connect with consumers and business partners across
multiple channels and devices using digital platforms that consist of hardware, software
(mobile apps), networks (social media), (embedded sensors), and cloud computing.
For example, rather than run applications or programs from software stored on a computer or server owned by the company, cloud computing allows companies to access the
same kinds of applications through the Internet. Major business cloud computing providers
include Amazon Web Services (AWS), Cisco Powered, Dell Cloud Solutions, Google Cloud, IBM
Cloud Solutions, and Teradata Cloud. One of the many benefits of cloud is that it provides the
flexibility to acquire or expand connectivity and computing power as needed for operations,
business transactions, and communication.
Expanded connectivity supports smart products, which have the ability to sense, process,
report, and take corrective action, such as smart clothing, watches, phones, to smart buildings
and smart cities. This IoT is becoming a driving force in the on-demand economy.
Connectivity pushes other sub trends, like big data, to create market opportunities for
new products and services, such as social sentiment analysis, open innovation, new insurance
business models, and micro personalized marketing and medicines. Big data is one of the many
disruptive technologies that are impacting people, processes, and profits.
IT Innovation and Disruption
Big Data and Data Analytics There is no question that the increasing volume of
data can be valuable, but only if they are processed and available when and where they are
needed. The problem is that the amount, variety, structure, and speed of data being generated
or collected by enterprises differ significantly from traditional data. Big data are what highvolume, mostly text data are called. Big data stream in from multiple channels and sources,
including the following:
• Mobile devices and machine-to-machine sensors embedded in everything from airport
runways to casino chips (Later in this chapter, you will read more about the IoT.)
• Social content from texts, tweets, posts, blogs
• Clickstream data from the Web and Internet searches
• Video data and photos from retail and user-generated content
• Financial, medical, research, customer, and business-to-business transactions.
Big data are 80% to 90% unstructured. Unstructured data do not have a predictable
format like a credit card application form. Huge volumes of unstructured data flooding into an
enterprise are too much for traditional technology to process and analyze quickly. Big data tend
to be more time-sensitive than traditional (or small) data. Data collected from social, mobile, and
other channels are analyzed to gain insights and make smart decisions that drive up the bottom
line. Machine-generated data from sensors and social media texts are main sources of big data.
Big data has been one of the most disruptive forces businesses have seen in a long time.
But when an enterprise harnesses its data and is able to act on analytic insights, it can turn the
challenges into opportunities.
Digitization Across industries, companies are attempting to transform their disconnected
or disjointed approaches to customers, products, services, and operating models to an
always-on, real-time, and information-rich marketplace. Some leaders are redesigning their
capabilities and operating models to take full advantage of digital technologies to keep step
with the “connected” consumer and attract talent. Others are creating qualitatively new
business models—and tremendous value—around disruptive digital opportunities. In doing so,
these companies secure not only continued relevance but also superior returns.
Digitization often requires that old wisdom be combined with new skills, for example, by
training a merchandising manager to program a pricing algorithm and creating new roles, such
as user-experience designer. The benefits of digitizing processes, through business process
reengineering, are huge. By digitizing information-intensive processes, costs can be cut by up
to 90% and turnaround times improved by several orders of magnitude.
Examples span multiple industries. For example, one bank digitized its mortgage application and decision process, cutting the cost per new mortgage by 70% and slashing time to
preliminary approval from several days to just one minute. A telecommunications company
created a self-serve, prepaid service where customers could order and activate phones without
back-office involvement. A shoe retailer built a system to manage its in-store inventory that
enabled it to know immediately whether a shoe and size was in stock—saving time for customers and sales staff. An insurance company built a digital process to automatically adjudicate a large share of its simple claims.
In addition, replacing paper and manual processes with software allows businesses to
automatically collect data that can be mined to better understand process performance, cost
drivers, and causes of risk. Real-time reports and dashboards on digital-process performance
enable managers to address problems before they get out of control. For example, quality
issues in a company’s supply chain can be identified and remedied more rapidly by monitoring
customer buying behavior and feedback in digital channels.
Machine-to-Machine Technology Sensors can be embedded in most products.
Objects that connect themselves to the Internet include cars, heart monitors, stoplights, and
appliances. Sensors are designed to detect and react, such as Ford’s rain-sensing front wipers that
use an advanced optical sensor to detect the intensity of rain or snowfall and adjust wiper speed
Digitization is the process of
transforming any kind of activity
or information into a digital
format that can be collected,
stored, searched, and analyzed
electronically—and efficiently.
Disruptive IT Impacts Companies, Competition, and Careers
Internet of Things (IoT) refers
to a set of capabilities enabled
when physical things are
connected to the Internet
via sensors.
TA BL E 1.2
accordingly. Machine-to-machine (M2M) technology enables sensor-embedded products to
share reliable real-time data via radio signals. M2M and the Internet of Things (IoT) are widely
used to automate business processes in industries ranging from transportation to health care. By
adding sensors to trucks, turbines, roadways, utility meters, heart monitors, vending machines,
and other equipment they sell, companies can track and manage their products remotely.
When devices or products are embedded with sensors, companies can track their movements or monitor interactions with them. Business models can be adjusted to take advantage
of what is learned from this behavioral data. For example, an insurance company offers to install
location sensors in customers’ cars. By doing so, the company develops the ability to price the
drivers’ policies on how a car is driven and where it travels. Pricing is customized to match the
actual risks of operating a vehicle rather than based on general proxies—driver’s age, gender, or
location of residence. Table 1.2 lists a number of opportunities for improvement through the
application of embedded physical things.
Improvement Opportunities from Embedded Sensors
Industry Sector
Oil and gas
Exploration and development rely on extensive sensor
networks placed in the earth’s crust. Sensors can
produce accurate readings of the location, structure,
and dimensions of potential fields
Lower development costs and improved oil flows
Health care
Sensors and data links can monitor patients’ behavior
and symptoms in real time and at low cost allowing
physicians to more precisely diagnose disease and
prescribe treatment regimens
Reduce hospitalization and treatment costs by $1 billion
per year in the United States
Sensors can capture shoppers’ profile data stored in
their membership cards to help close purchases
Additional information and discounts at point of sale
Ground sensors can take into account crop and field
conditions and adjust the amount of fertilizer that is
spread on areas that need more nutrients
Reduction in time and cost
Billboards can scan people passing by, assessing
how they fit consumer profiles, and instantly change
displayed messages based on those assessments
Better targeted marketing campaigns; flexibility;
increased revenues
Systems can detect imminent collisions and take evasive
action, such as automatic braking systems
Potential accident reduction savings of more than
$100 billion annually
Lessons Learned from Companies Using Disruptive
Those companies who have adapted to change by exploiting digital technology and software
are outperforming their peers. According to a survey conducted by CA Associates, companies
who have turned the way they use technology from being a cost center and operational
function to being a genuine competitive differentiator are reaping the benefits. Many reported
doubling their revenue growth, experiencing a higher profit by a factor of 2.5 and increasing
new business-based revenue by a factor of 1.5 (Vaughn-Brown, 2014). The five factors to which
companies attribute these benefits can be summed up in the following Lessons Learned:
1. Exploit the power of software Become “app-centric” and extend core business functions to include software development.
2. Develop, deliver, disrupt—quickly!
broadly implement DevOps.
Embrace agile development techniques and
3. Boost speed and efficiency with automated programming interfaces (APIs) Take a
managed approach to use APIs for building full-function Web applications (particularly
mobile apps) and for integrating back-office systems.
IT and You
4. Leverage third-party innovation Take a more managed approach to use APIs for
integrating third-party services into applications and enable external develop access to
systems and data.
5. Maximize returns with smarter IT investments Get smarter at assessing and prioritizing IT investments to maximize return on investment and put portfolio management in
place to prioritize and track IT programs.
Business opportunities and challenges presented by today’s technology innovations are on an
unprecedented scale. Cloud services, big data, mobility, digitization, and the IoT are likely to
disrupt many industries and shake up competitive positions.
Innovation is necessary for any company that wants to remain relevant, retain customers,
and increase profits. Increased competition, expanded global markets, and empowered
customers define today’s on-demand business environment.
1. What are the benefits of cloud computing?
2. What is M2M technology? Give an example of a business process that could be automated with M2M.
3. Describe the relationships in the SMAC model.
4. What impacts is the SMAC model having on business?
5. Why have mobile devices given consumers more power in the marketplace?
6. Explain why connectivity is important in today’s on-demand economy.
7. In what ways is IT disrupting business?
IT and You
Today, IT and information systems touch nearly all aspects of our lives. IT is a part of our social
life, our work, and every business process, and it is no longer the sole responsibility of the IT
department. Just think about much of your day you spend interacting with technology—your
iPad, PC, and smartphone. It has been reported that the average American checks his/her
phone 46 times every day! That’s an increase of 35% over the 33 looks per day reported in a
similar study just one year earlier. Aggregated across the 185 million American smartphone
users, that’s 8 billion “looks” per day (Eadicicco, 2015).
IT impacts the way you work, the way you learn, the way you communicate and socialize
and the way you entertain yourself. Today, success in any field, be it health care, marketing,
finance, accounting, law, education, sports, entertainment, etc. requires much more than a cursory kno…
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