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PRINCIPLES OF

THIRDEDITION

RALPH STAIR,GEORGE REYNOLDSAND THOMAS CHESNEY

/V CENGAGEAustralia •Brazil •Mexico • Singapore • United Kingdom • United States

Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WON 02-200-202

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» * CENGAGE« %

Principles of Business InformationSystems 3rd EditionRalph Stair, George Reynolds andThomas Chesney

© 2018, Cengage Learning EMEA

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ISBN: 978-1-4737-4841-5

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For Tahseena



Brief Contents

1 Overview ^1 An Introduction to Information Systems 3

2 Information Systems in Organizations 33

Information Technology Concepts 63

3 Hardware: Input, Processing, Output and Storage Devices 652

4 Software: Systems and Application Software 115

5 Organizing and Storing Data 157

6 Computer Networks 187

Business Information Systems 231

7 Operational Systems 2333

8 Management Information and Decision Support Systems 265

9 Knowledge Management and Specialized Information Systems 305

10 Pervasive Computing 335

Systems Development 365

11 Systems Analysis 367

12 Systems Design and Implementation 409

4

447

Security, Privacy and Ethical Issues in Information Systems 449



Contents

Preface xiiiApproach of the Text xiiiGoals of this Text xiv

Changes to the Second Edition xviiStructure of the Text xixAbout the Authors xxi

Acknowledgements xxiDigital Resources Page xxii

Systems Development 19Systems Investigation and Analysis 20Systems Design, Implementation, and

Maintenance and Review 20Information Systems in Society, Business

and Industry 21Ethical and Societal Issues: Robots on the

Loose! 21Security, Privacy and Ethical Issues in

Information Systems and the Internet 22Computer and Information Systems

Literacy 23Information Systems in the Functional Areas

of Business 24Information Systems in Industry 24

Global Challenges in Information Systems 24Summary 26Self-Assessment Test 28Review Questions 28Discussion Questions 28Web Exercises 28Case One: When Online Surveys Go Awry 29Case Two: Health Information Systems in South

Africa 30Case Three: Australian Drones Join The Postal

Service 31Notes 32

1 Overview

1 An Introduction to InformationSystems 3Principles 3Learning Objectives 3Why Learn About Information Systems? 4What is an Information System? 4

What is a System? 4What is Information? 6What is an Information System? 6The Characteristics of Valuable Information 7Manual and Computerized Information

Systems 8Business Information Systems 12

Information Systems @ Work: TranslatingShakespeare into Dothraki 12

Enterprise Systems: Transaction ProcessingSystems and Enterprise ResourcePlanning 13

MIS and DSS 16Knowledge Management, Artificial Intelligence,

Expert Systems and Virtual Reality 17

2 Information Systemsin Organizations 33Principles 33Learning Objectives 33Why Learn About Information Systemsin Organizations? 34An Introduction to Organizations 34

Organizational Structures 36Organizational Change 39



CONTENTS

Ethical and Societal Issues: CustomersOut of Pocket After Direct Transfer Error 41

Reengineering and Continuous Improvement 43User Satisfaction and Technology

Acceptance 44Information Systems @ Work: Neto Helps

Australian Small Businesses Get Online 45The Applications Portfolio 46Success Factors 47

Competitive Advantage 48Factors That Lead Firms to Seek Competitive

Advantage 48Evaluating IS 49

Productivity 49Return on Investment and the Value

of Information Systems 50Careers in Information Systems 51

Operations 51Systems Development 51Support 52Information Service Units 53Typical IS Titles and Functions 53

Summary 54Self-Assessment Test 56Review Questions 56Discussion Questions 56Web Exercises 56Case One: Cloud Computing and Social Media

Make Nail Polish Success 57Case Two: Can You Solve It? 58Case Three: Raining Wine from the Cloud 60Notes 60World Views Case: ABAZONG Training and

Consulting (Pty) Ltd Helps Organizations andUsers With Information Security Consultationand Training Awareness 61

Computer Systems: Integrating the Powerof Technology 66Hardware Components 67Hardware Components in Action 68

Processing and Memory Devices: Power,Speed and Capacity 68Processing Characteristics and Functions 69Memory Characteristics and Functions 70Multiprocessing 72Parallel Computing 73

Secondary Storage 74Access Methods 75Secondary Storage Devices 75Enterprise Storage Options 78

Input and Output Devices: The Gatewayto Computer Systems 81Characteristics and Functionality 81Input Devices 82Output Devices 87

Computer System Types 91Portable Computers 93Nonportable Single-User Computers 95Multiple-User Computer Systems 96Information Systems @ Work: Printers Arrive

in the Operating Theatre 97Green Computing 101

Ethical and Societal Issues: MobileTechnology Fighting Human Trafficking 103

Summary 104Self-Assessment Test 105Review Questions 106Discussion Questions 106Web Exercises 106Case One: Moore’s Law About to Be Overturned

106Case Two: Sen.Se is Helping to Create the

Internet of Things 108Case Three: The 30 computer 109Notes 110Information

2 TechnologyConcepts 4 Software: Systems and Application

Software 115

Principles 115Learning Objectives 115Why Learn about Systems and ApplicationSoftware? 116

An Overview of Software 116Systems Software 116Application Software 117

3 Hardware: Input, Processing, Outputand Storage Devices 65

Principles 65Learning Objectives 65Why Learn About Hardware? 66



CONTENTS

Supporting Individual, Group andOrganizational Goals 117

Systems Software 118Operating Systems 118Current Operating Systems 122Information Systems @ Work: Privacy for

Everyone, Everywhere 123Workgroup Operating Systems 125Enterprise Operating Systems 126Operating Systems for Small Computers,

Embedded Computers and Special-Purpose Devices 126

Utility Programs 127Middleware 129

Application Software 129Overview of Application Software 129Personal Application Software 131Mobile Application Software 135Workgroup Application Software 136Enterprise Application Software 137Application Software for Information, Decision

Support and Competitive Advantage 138

Programming Languages 138Ethical and Societal Issues: Adblockers:

Salvation for Web Users Or a High-TechProtection Racket? 139

The Evolution of Programming Languages 140Visual, Object-Oriented and Artificial

Intelligence Languages 140Software Issues and Trends 142

Software Bugs 142Copyrights and Licences 143Freeware and Open-Source Software 143Software Upgrades 145Global Software Support 146

Summary 146Self-Assessment Test 148Review Questions 149Discussion Questions 149Web Exercises 149Case One: Software Cuts Legal Costs 149Case Two: Ready. Steady. Go! 151Case Three : Software Error Dooms

Spacecraft 152Notes 153

Relationships Between Tables 160Designing Relational Databases 161

Database Management Systems 165Creating and Modifying the Database 165Storing and Retrieving Data 166Manipulating Data and Generating Reports 167Database Administration 168Selecting a Database Management System 169Using Databases with Other Software 169

Database Applications 170Linking Databases to the Internet 170Big Data Applications 170Data Warehouses 171Ethical and Societal Issues: Three Words

and a Few Symbols Cost a Business40m 172

Data Mining 173Business Intelligence 174Information Systems @ Work: The IBM

Quantum Experience 175Distributed Databases 177Online Analytical Processing (OLAP) 178Visual, Audio and Other Database Systems 179

Summary 180Self-Assessment Test 181Review Questions 181Discussion Questions 181Web Exercises 181Case One: Just Tell Me My Password

Already! 182Case Two: Reading Every Book That’s Ever Been

Written 183Case Three: Life Is Short. Protect Your Data 184Notes 185

6 Computer Networks 187

Principles 187Learning Objectives 187Why Learn About Computer Networks? 188Telecommunications 188

Channel Bandwidth 189Guided Transmission Media Types 189Wireless Transmission Media Types 192Telecommunications Hardware 195

Networks and Distributed Processing 197Network Types 197Ethical and Societal Issues: The Great British

Data Grab 199Distributed Processing 202Client/Server Systems 203Communications Software 204

5 Organizing and Storing Data 157

Principles 157Learning Objectives 157Why Learn About Organizing Data? 158Data Management and Data Modelling 158



viii CONTENTS

Securing Data Transmission 206Virtual Private Network (VPN) 207

The Internet 208How the Internet Works 209

Internet Applications 211The World Wide Web 212Information Systems @ Work: Tech Firms

Plan the Highest Capacity Atlantic DataLink 214

Email 218Telnet and FTP 219Cloud Computing 219

Intranets and Extranets 219Summary 220Self-Assessment Test 223Review Questions 223Discussion Questions 223Web Exercises 223Case One: Instant Messaging Is Easier To

Secure Than Email 224Case Two: Anatomy Of A Hack 225Case Three: Digital Cartography Gets It

Wrong 226Notes 227World Views Case: IT Purchase Decisions -

What Should You Buy? 229

Information Systems @ Work: Fast FoodChain Yonghe King Upgrades TheirPOS 244

Traditional Transaction ProcessingApplications 245Order Processing Systems 245Purchasing Systems 247Accounting Systems 248

Electronic and Mobile Commerce 248Electronic Commerce 248Mobile Commerce 251Ethical and Societal Issues: Tracking Staff

Beyond the Workplace 251Production and Supply Chain

Management 253Customer Relationship Management and

Sales Ordering 254Financial and Managerial Accounting 255

Hosted Software Model for EnterpriseSoftware 256

International Issues Associated withOperational Systems 256Different Languages and Cultures 257Disparities in Information System

Infrastructure 257Varying Laws and Customs Rules 257Multiple Currencies 257

Summary 258Self-Assessment Test 259Review Questions 259Discussion Questions 260Web Exercises 260Case One: Non-Linear Presentations 260Case Two: When Stock Becomes a Liability 262Case Three: Netflix Analytics Creates Content

That We’ll Watch 263Notes 264

Business3 Information

Systems

7 Operational Systems 233

Principles 233Learning Objectives 233Why Learn AboutOperational Systems? 234Introduction 234Enterprise Resource Planning 235

Advantages of ERP Systems 235Disadvantages of ERP Systems 237ERP for Small- and Medium-Sized

Enterprises (SMEs) 238

Transaction Processing Systems 238Traditional Transaction Processing Methods

and Objectives 239Transaction Processing Activities 241

8 Management Information andDecision Support Systems 265

Principles 265Learning Objectives 265Why Learn About ManagementInformation Systems and Decision SupportSystems? 266Decision Making and Problem Solving 266

Programmed versus Non-ProgrammedDecisions 267

Optimization, Satisficing and HeuristicApproaches 268



CONTENTS

Sense and Respond 268Big Data 269

An Overview of Management InformationSystems 269Inputs to a Management Information System 269Outputs of a Management Information

System 270Characteristics of a Management

Information System 273Functional MIS 274

Financial Management Information Systems 275Manufacturing Management Information

Systems 277Marketing Management Information Systems 280Fluman Resource Management Information

Systems 282Geographic Information Systems 284

Decision Support Systems 284Characteristics of a Decision Support

System 285Capabilities of a Decision Support System 286A Comparison of a DSS and an MIS 287Components of a Decision Support System 287Information Systems @ Work: Non-Linear

What-lf Analysis in OpenOffice 288Group Support Systems 291

Ethical and Societal Issues: Online DivorceForm Error ‘Could Have Led to UnfairSettlements' 292

Characteristics of a GSS that EnhanceDecision Making 293

Executive Support Systems 294Capabilities of Executive Support Systems 295

Summary 296Self-Assessment Test 298Review Questions 298Discussion Questions 299Web Exercises 299Case One: Smart Meters Capture Big Data For

Energy Decisions 299Case Two: Taking Designs into the Next

Dimension 300Case Three : Computer Games as Decision

Tools 301Notes 303

Knowledge Management Systems 306Overview of Knowledge Management

Systems 306Obtaining, Storing, Sharing and Using

Knowledge 307Technology to Support Knowledge

Management 308Artificial Intelligence 309

The Nature of Intelligence 309The Difference Between Natural and Artificial

Intelligence 311Information Systems @ Work: Playing with

Atoms 312The Major Branches of Artificial

Intelligence 312Ethical and Societal Issues: Augmented

Reality’s Killer App 317Expert Systems 318

When to Use Expert Systems 318Components of Expert Systems 319

Virtual Reality 325Interface Devices 325Forms of Virtual Reality 326Virtual Reality Applications 326

Summary 327Self-Assessment Test 328Review Questions 329Discussion Questions 329Web Exercises 329Case One: A ‘Soft’ Octopus Robot 329Case Two: 360° Video Makes Virtual Reality

Accessible 331Case Three: Game-Show-Winning Al Now

Diagnoses Rare Diseases 332Notes 333

10 Pervasive Computing 335

Principles 335Learning Objectives 335Why Learn About Pervasive Computing? 336Introduction 336Wireless Internet Access 337Mobile Devices 337

Smartphone 338Wearable Technology 339Ethical and Societal Issues: Pay Up Or Your

Data Gets It! 340Information Systems @ Work: The

Blockchain Creates Tamper-ProofTransactions 342

9 Knowledge Management andSpecialized Information Systems 305

Principles 305Learning Objectives 305Why Learn About Knowledge Management and E-Money 343SP l̂®te2^1^?nrg?gf1li2a9n§^#^?s3§§rved. May no.be copied, scannedfcQQiM&MGGlfaMln part. WCN 02-200-202


CONTENTS

Personal Robotics 345Virtual Pets 346

Computer Supported Cooperative Work 346Videoconferencing 347Messaging 347Interactive Whiteboards 347Wikis 348MMOGs 348Blogs and Podcasts 349

More Applications of Electronic and MobileCommerce 350Retail and Wholesale 350Manufacturing 350Marketing 352Investment and Finance 353Auctions 353Anywhere, Anytime Applications of Mobile

Commerce 353Advantages of Electronic and Mobile

Commerce 354Summary 355Self-Assessment Test 356Review Questions 356Discussion Questions 357Web Exercises 357Case One: Someone to Share a Journey

With 357Case Two: Kids Finally Get a Real Magic Wand at

Disney 358Case Three: Let ’s Play and Become Famous 359Notes 360World Views Case: Information Systems at

Damelin, South Africa 362

Establishing Objectives for SystemsDevelopment 372

Systems Development Lifecycles 374The Traditional Systems Development

Lifecycle 374Prototyping 376Information Systems @ Work: Open Source

Software Conquers Data Science 378Rapid Application Development, Agile

Development, Joint ApplicationDevelopment and Other SystemsDevelopment Approaches 379

The End-User Systems DevelopmentLifecycle 380

Outsourcing and On-Demand Computing 380Factors Affecting System Development

Success 381Involvement 381Degree of Change 382Managing Change 382Quality and Standards 383Use of Project Management Tools 384Use of Computer-Aided Software Engineering

(CASE) Tools 386Systems Investigation 387

Initiating Systems Investigation 387Participants in Systems Investigation 388Feasibility Analysis 388The Systems Investigation Report 389Ethical and Societal Issues: The Very Last

Step in Systems Development 390Systems Analysis 391

General Considerations 391Participants in Systems Analysis 391Data Collection and Analysis 392Requirements Analysis 397Critical Success Factors 397The IS Plan 397Screen and Report Layout 398Requirements Analysis Tools 399Object-Oriented Systems Analysis 399The Systems Analysis Report 399

Summary 400Self-Assessment Test 403Review Questions 403Discussion Questions 404Web Exercises 404Case One: Hackathon Culture 404Case Two: Failover from Amazon 405Case Three: The Internet of Bananas 1.0 406Notes 408

A Systems w^ Development

11 Systems Analysis 367

Principles 367Learning Objectives 367Why Learn About Systems Analysis? 368An Overview of Systems Development 368

Participants in Systems Development 368Information Systems Planning and Aligning

Organization and IS Goals 370



CONTENTS

12 Systems Design andImplementation 409

Principles 409Learning Objectives 409Why Learn About Systems Designand Implementation? 410Systems Design 410

Interface Design and Controls 411Design of System Security and Controls 412Generating Systems Design Alternatives 415Freezing Design Specifications 420The Contract 420The Design Report 420Information Systems @ Work: Creating

Computer Games Without Needing toProgram 421

Systems Implementation 422Acquiring Hardware from an IS Vendor 423Acquiring Software: Make or Buy? 423Acquiring Database and Telecommunications

Systems 426User Preparation 426IS Personnel: Hiring and Training 426Site Preparation 427Data Preparation 427Installation 427Testing 427Ethical and Societal Issues: Modelling a

Mass Shooting 428Start-Up 429User Acceptance 430

Systems Operation and Maintenance 431Reasons for Maintenance 431Types of Maintenance 432The Request for Maintenance Form 432Performing Maintenance 433The Financial Implications of Maintenance 433The Relationship Between Maintenance and

Design 433Systems Review 434

Types of Review Procedures 434Factors to Consider During Systems Review 435System Performance Measurement 436

Summary 436Self-Assessment Test 438Review Questions 439Discussion Questions 439Web Exercises 439Case One: Open Source Project Aims to Create

Artificial Life 440

Case Two: Build Your Own Robot 441Case Three: GitHub 442Notes 443World Views Case: Systems Development at

Damelin, South Africa 445

13 Security, Privacy and Ethical Issuesin Information Systems 449

Principles 449Learning Objectives 449Why Learn About Security, Privacy and EthicalIssues in Information Systems? 450

Computer Waste and Mistakes 450Preventing Computer-Related Waste

and Mistakes 451Information Systems @ Work: Admiral to

Price Car Insurance Based on FacebookPosts 453

Computer Crime 454Preventing Computer-Related Crime 460

Crime Prevention by the State 460Crime Prevention by Organizations 461Crime Prevention by Individuals 463Using Intrusion Detection Software 463Using Managed Security Service Providers

(MSSPs) 464Preventing Crime on the Internet 464

Privacy 465Privacy and the Government 465Privacy at Work 465Email Privacy 465Privacy and the Internet 466Fairness in Information Use 467Individual Efforts to Protect Privacy 468

The Work Environment 469Health Concerns 469Avoiding Health and Environmental

Problems 470Ethical and Societal Issues: Kettle Botnet

Heats Up 471Ethical Issues in Information Systems 472



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