Information Systems: A Manager's Guide to Harness Technology Information Systems: A Manager's Guide to Harness Technology [Author removed at request of original publisher] University of Minnesota Libraries Publishing edition, 2015. This edition adapted from a work originally produced in 2011 by a publisher who has requested that it not receive attribution. Minneapolis, MN Information Systems: A Manager's Guide to Harness Technology by [Author removed at request of original publisher] is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted. Contents Publisher Information vii About the Author viii Acknowledgments ix Dedication xi Preface xii Chapter 1: Setting the Stage: Technology and the Modern Enterprise 1.1 Tech’s Tectonic Shift: Radically Changing Business Landscapes 2 1.2 It’s Your Revolution 4 1.3 Geek Up—Tech Is Everywhere and You’ll Need It to Thrive 7 1.4 The Pages Ahead 13 Chapter 2: Strategy and Technology: Concepts and Frameworks for Understanding What Separates Winners from Losers 2.1 Introduction 18 2.2 Powerful Resources 24 2.3 Barriers to Entry, Technology, and Timing 35 2.4 Key Framework: The Five Forces of Industry Competitive Advantage 38 Chapter 3: Zara: Fast Fashion from Savvy Systems 3.1 Introduction 43 3.2 Don’t Guess, Gather Data 48 3.3 Moving Forward 54 Chapter 4: Netflix: The Making of an E-commerce Giant and the Uncertain Future of Atoms to Bits 4.1 Introduction 58 4.2 Tech and Timing: Creating Killer Assets 61 4.3 From Atoms to Bits: Opportunity or Threat? 71 Chapter 5: Moore’s Law: Fast, Cheap Computing and What It Means for the Manager 5.1 Introduction 78 5.2 The Death of Moore’s Law? 91 5.3 Bringing Brains Together: Supercomputing and Grid Computing 95 5.4 E-waste: The Dark Side of Moore’s Law 99 iv Chapter 6: Understanding Network Effects 6.1 Introduction 105 6.2 Where’s All That Value Come From? 107 6.3 One-Sided or Two-Sided Markets? 111 6.4 How Are These Markets Different? 113 6.5 Competing When Network Effects Matter 117 Chapter 7: Peer Production, Social Media, and Web 2.0 7.1 Introduction 128 7.2 Blogs 137 7.3 Wikis 141 7.4 Electronic Social Networks 146 7.5 Twitter and the Rise of Microblogging 152 7.6 Other Key Web 2.0 Terms and Concepts 158 7.7 Prediction Markets and the Wisdom of Crowds 165 7.8 Crowdsourcing 168 7.9 Get SMART: The Social Media Awareness and Response Team 171 Chapter 8: Facebook: Building a Business from the Social Graph 8.1 Introduction 184 8.2 What’s the Big Deal? 187 8.3 The Social Graph 191 8.4 Facebook Feeds—Ebola for Data Flows 194 8.5 Facebook as a Platform 196 8.6 Advertising and Social Networks: A Work in Progress 200 8.7 Privacy Peril: Beacon and the TOS Debacle 207 8.8 Predators and Privacy 211 8.9 One Graph to Rule Them All: Facebook Takes Over the Web 213 8.10 Is Facebook Worth It? 218 Chapter 9: Understanding Software: A Primer for Managers 9.1 Introduction 223 9.2 Operating Systems 226 9.3 Application Software 231 9.4 Distributed Computing 236 9.5 Writing Software 242 9.6 Total Cost of Ownership (TCO): Tech Costs Go Way beyond the Price Tag 246 Chapter 10: Software in Flux: Partly Cloudy and Sometimes Free 10.1 Introduction 251 10.2 Open Source 253 10.3 Why Open Source? 257 10.4 Examples of Open Source Software 260 10.5 Why Give It Away? The Business of Open Source 262 10.6 Cloud Computing: Hype or Hope? 267 10.7 The Software Cloud: Why Buy When You Can Rent? 269 10.8 SaaS: Not without Risks 275 10.9 The Hardware Cloud: Utility Computing and Its Cousins 278 v 10.10 Clouds and Tech Industry Impact 282 10.11 Virtualization: Software That Makes One Computer Act Like Many 286 10.12 Make, Buy, or Rent 288 Chapter 11: The Data Asset: Databases, Business Intelligence, and Competitive Advantage 11.1 Introduction 292 11.2 Data, Information, and Knowledge 295 11.3 Where Does Data Come From? 299 11.4 Data Rich, Information Poor 306 11.5 Data Warehouses and Data Marts 309 11.6 The Business Intelligence Toolkit 313 11.7 Data Asset in Action: Technology and the Rise of Wal-Mart 319 11.8 Data Asset in Action: Harrah’s Solid Gold CRM for the Service Sector 323 Chapter 12: A Manager’s Guide to the Internet and Telecommunications 12.1 Introduction 329 12.2 Internet 101: Understanding How the Internet Works 330 12.3 Getting Where You’re Going 339 12.4 Last Mile: Faster Speed, Broader Access 347 Chapter 13: Information Security: Barbarians at the Gateway (and Just About Everywhere Else) 13.1 Introduction 357 13.2 Why Is This Happening? Who Is Doing It? And What’s Their Motivation? 359 13.3 Where Are Vulnerabilities? Understanding the Weaknesses 363 13.4 Taking Action 381 Chapter 14: Google: Search, Online Advertising, and Beyond 14.1 Introduction 390 14.2 Understanding Search 396 14.3 Understanding the Increase in Online Ad Spending 403 14.4 Search Advertising 405 14.5 Ad Networks—Distribution beyond Search 411 14.6 More Ad Formats and Payment Schemes 416 14.7 Customer Profiling and Behavioral Targeting 420 14.8 Profiling and Privacy 424 14.9 Search Engines, Ad Networks, and Fraud 429 14.10 The Battle Unfolds 433 vi Publisher Information Information Systems: A Manager’s Guide to Harness Technology is adapted from a work produced and distributed under a Creative Commons license (CC BY-NC-SA) in 2010 by a publisher who has requested that they and the original author not receive attribution. This adapted edition is produced by the University of Minnesota Libraries Publishing through the eLearning Support Initiative. This adaptation has reformatted the original text, and replaced some images and figures to make the resulting whole more shareable. This adaptation has not significantly altered or updated the original 2011 text. This work is made available under the terms of a Creative Commons Attribution-NonCommercial-ShareAlike license. vii viii • INFORMATION SYSTEMS: A MANAGER'S GUIDE TO HARNESS TECHNOLOGY About the Author Information Systems: A Manager’s Guide to Harness Technology is adapted from a work produced by a publisher who has requested that they and the original author not receive attribution. This adaptation is produced by the University of Minnesota Libraries Publishing through the eLearning Support Initiative. Though the publisher has requested that they and the original author not receive attribution, this adapted edition reproduces all original text and sections of the book, except for publisher and author name attribution. Unnamed Author is an associate professor of information systems (IS) at Boston College’s Carroll School of Management. A dedicated teacher and active researcher, Professor Unnamed Author has been recognized for excellence and innovation in teaching by several organizations, including Boston College, BusinessWeek, the Decision Sciences Institute, Beta Gamma Sigma (the business honor society), and The Heights (Boston College’s student newspaper). Professor Unnamed Author’s research has been published in the Harvard Business Review, MIS Quarterly, and other leading IS journals. Professor Unnamed Author has consulted for and taught executive seminars for several organizations, including Accenture, Alcoa, Duke Corporate Education, ING, Partners Healthcare, Staples, State Street, the University of Ulster, and the U.S. Information Agency. His comments on business and technology have appeared in the New York Times, the Associated Press, The Daily Yomiuri (Japan), and The Nation (Thailand), and on National Public Radio and WCVB-TV, among others. Professor Unnamed Author’s courses and research focus on strategy and technology, and he has co-led the Boston College MBA program’s international field study courses to Europe and Asia. As coordinator of the graduate and undergraduate Boston College TechTrek West field studies, Unnamed Author regularly spends time with executives, managers, entrepreneurs, and venture capitalists in Silicon Valley and Seattle. This fieldwork helps him bring current, practice-oriented examples into both the classroom and his writing. He is also the faculty advisor for the BC Information Systems Academy, and co-advisor to the student-run Boston College Venture Competition (which has spawned several venture-backed start-ups). Professor Unnamed Author earned his PhD in information systems from the Syracuse University School of Management, and he holds an MBA and an undergraduate degree in computer science, both from Boston College. viii Acknowledgments Sincerest thanks to Jeff Shelstad and Eric Frank, for their leadership and passion in restructuring the textbook industry and for approaching me to be involved with their efforts. Thanks also to Flat World’s dynamite team of editorial, marketing, and sales professionals—in particular to Jenn Yee, Sharon Koch, and Brett Sullivan. A tremendous thanks to my student research team at Boston College. In particular, the work of Xin (Steven) Liu, Justin Tease, Liz Dean, Nina Stingo, Phil Gill, and Marco Barbosa sped things along and helped me fill this project with rich, interesting examples. I am also deeply grateful to my colleagues at Boston College, especially to my department chair, Jim Gips, and dean, Andy Boynton, for their unwavering support of the project; to Rob Fichman and Jerry Kane for helping shape the social media section; to Sam Ransbotham for guiding me through the minefield of information security; and to Mary Cronin, Peter Olivieri, and Jack Spang for suggestions and encouragement. Thanks also to the many alumni, parents, and friends of Boston College who have so generously invited me to bring my students to visit with and learn from them.