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Information Systems
A Manager's Guide to Harnessing Technology

v9.0 John Gallaugher
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Preface

What's New in Version 9.0

While Information Systems: A Manager’s Guide to Harnessing Technology is updated each year, the goal is to strike a balance that keeps concepts current, fresh, and exciting. I also strive to keep statistics and figures accurate and up-to-date, all while minimizing adopters’ need to revise their class preparations by limiting larger changes only to important concepts, chapters, and cases. Nearly all chapters of this version received at least some refresh of examples and statistics. Many sections include new or refreshed exercise questions as well. Below is a list of some of the most significant changes, although there are many more incremental updates.

Chapter 1—Setting the Stage: Technology and the Modern Enterprise

  1. Discusses tech during the COVID-19 pandemic, including statistics on key industries that shattered records.

  2. Updated discussion on the rising concern regarding tech firm power, influence, and abuse, and the importance of an understanding of tech's complex role for both our citizens and managers. 

  3. More information added on big tech, power, antitrust, and ethics confronting modern managers.

  4. New Video—“How to Tame Tech Giants.” 

Chapter 2—Strategy and Technology: Concepts and Frameworks for Achieving Success

  1. New callout: "Tech and Strategy Lessons from the Tragedy of TiVo.”

  2. FreshDirect content has become its own chapter, Chapter 3, making it easier to assign as a mini-case.

  3. New discussion added on the existing data asset example related to industry commoditization and other assets.

  4. Updated information on the deep reliance of Apple and Google for distribution channels and profits.

  5. New Video—“How Apple and Google Formed One of Tech’s Most Powerful Partnerships.” This video illustrates the “coopetition” relationship between Apple and Google and challenges students to think about the antitrust issues facing both. This video is a great opportunity for a discussion on possible moves by each firm, as well as potential governmental responses.

Chapter 3—FreshDirect: A Tech-Heavy Online Grocer Succeeds Where Others Fail

  1. FreshDirect was acquired by Ahold. This is a significant demonstration of the power of a tech-centric model and straddling difficulties. Ahold, parent of Peapod, had closed Midwest operations just months prior to the acquisition.

  2. New Video—“How 3 Million Grocery Items Are Delivered to Homes Every Week.” This impressive video shows warehousing and operations in the firm's new Bronx hub.

  3. Discussion emphasizes the role of over-time data creation for tech advantage: function in model building + ML/AI improvement. Also includes a discussion on how firms can use third-party tech like Selligent in some profiling tasks without fear that others will match the strategy.

  4. Discusses how the FreshDirect model nurtures supplier relationships and seeks a win/win rather than a standard adversarial relationship.

  5. Looks at implementation failures of FreshDirect’s move to the Bronx, which was initially problem-plagued—the firm lost ~20 percent of market share and systems were cut over without adequate testing at scale. This provides valuable lessons on how to implement system rollout and respond to a crisis.

Chapter 4—Zara: Fast Fashion from Savvy Systems

  1. Note for those using Excel in this course: Several new video tutorials leverage Inditex/Zara and competitor data for teaching Excel. Videos can be accessed here: http://bit.ly/excel365-tutorials. Associated exercises can be accessed here: http://bit.ly/profg-excel. Through these videos and exercises, students learn basic concepts by comparing actual Inditex/H&M/Gap data across three worksheets. They'll also recreate charts shown in the chapter and, through watching a series of videos, students will build a POS that, while not Zara's in the Excel exercise, is a concept introduced in the Zara case in Section 4.2. 

  2. New section: “COVID-19 Response: Tech-Centric Operations + E-Commerce + Omnichannel in a Crisis.”

  3. A comparison of Zara and its rivals discusses the lower impact on Zara's model and why it turned out to be superior.

  4. New information has been added on the Inditex response to market changes, including closing less profitable stores and investing ~$3 billion in e-commerce and integrated digital business initiatives.

Chapter 5—Netflix in Two Acts: Sustaining Leadership in an Epic Shift from Atoms to Bits

  1. Updated information on firm growth, spending, content offerings and quality, subscribers, and competition.

  2. New Video—“Visit Netflix HQ and Hear from Netflix Co-CEOs as They Reflect on Growth through the Pandemic.” This visit takes the viewer inside of Netflix HQ during an interview with the firm's co-CEOs discussing growth, challenges, and the COVID-19 pandemic.

  3. “Atoms to Bits” subsection was updated to include information about the GameStop frenzy as being brought about by this principle, along with updated DVD-by-mail stats.

  4. Revised section is now titled “Disintermediation: Data, Digital Distribution, and Conflicted Stake-Holders,” and specifically highlights the challenge of channel conflict in disintermediation, including AT&T's pushback from artists and cinemas when it released 2021 titles direct-to-streaming via HBO Max.

  5. The discussion on data has been improved to introduce concepts of machine learning—used in the constant improvement of site personalization and to distinguish this from the pools of data available to support ad hoc decision-making—with the key term data warehouse being introduced.

  6. New Video—“Netflix Research—Analytics.” Students should find it interesting to hear members of the Netflix Analytics team discussing their work at the firm.

  7. Deeper examples on ML/AI processes and challenges help students understand how data is really used at Netflix to generate new ideas and insights.

  8. A new exercise has been added to challenge students to think more deeply about how AI is used at each state of the Netflix process and links to a video talk given by Netflix VP of Data Science & Analytics Caitlin Smallwood. VP Smallwood is not only one of the most respected analytics professionals in the world, she's also a motivating example for female students considering technical professions.

Chapter 6—Moore's Law and More: Fast, Cheap Computing, and What This Means for the Manager

  1. New callout: “AI and Machine Learning—Faster than Moore’s Law.” This content emphasizes that some areas of tech are advancing far faster than Moore’s Law. 

  2. Key information has been added on how changes in chip architecture are accelerating computing speed, lowering costs, and decreasing power at rates beyond Moore's Law advancements.

  3. An optional online project ($4 Raspberry Pi Pico) has been added: a link guides students that are new to electronics in building an online "smart" medicine cabinet for less than $20 in computing technology and parts.

  4. Statistics on IoT devices and mobile phone use have been refreshed.

  5. New Video—“The Hype Over Quantum Computers, Explained.” This video describing the current state of the technology and its limitations complements the updated discussion on quantum computing.

  6. The discussion on the state of supercomputing and information about Japan's new world champ have been updated.

  7. New Video—“Inside the COVID-19 High Performance Computing Consortium.” This video demonstrates how quickly Internet-connected supercomputers were used to create the COVID-19 High Performance Computing Consortium. Researchers detail the value of the scale of this computing in their work.

  8. The “Mickey’s Wearable: Disney’s MagicBand” section has been updated with the latest information, with a new emphasis on how the MagicBand pioneered innovations before smartphones had ubiquitous capabilities, and that similar services via an app were able to be rolled out in other parks, starting with Shanghai Disney.

Chapter 7—Disruptive Technologies: Understanding Giant Killers and Tactics to Avoid Extinction

  1. The “Intel—A Study of Disruption in Progress” has been expanded and updated to cover the advent of Apple's M1 processor, the largest supercomputer being ARM-based, and acquisitions announced by Nvidia and AMD, plus the failure of Intel in new markets such as wearables, underscore the firm's challenges.

  2. New callout: “Some Examples of Disruptive Innovation.” This illustrates some tech-fueled disruption examples by showing how they came to market with terrible performance but advanced to invade established markets.

  3. The discussion on disruptive firms being started by former employees now includes the timely example of Eric Yuan and Zoom.

  4. The “Intuit Pilots a Course through Disruption” case has been significantly updated beyond the shift to the cloud, to include Intuit's move to become a platform player that leverages AI. It's especially noteworthy that the firm did this during the COVID-19 pandemic, even as so many of its core customers—small businesses—were challenged by the resulting economic shock.

  5. New callout: “Potential Disruptive Technologies.” This content encourages students to think broadly about several potentially disruptive technologies, and the industrial as well as the societal impacts if they succeed.

  6. New Video—“A Virtual Visit to Spyce.” Students can learn about this robotic food-prep fast food firm and use this video as a jumping off point to consider the impact of various robotic technologies.

  7. New callout: “NFTs and the $69 Million JPEG.” This new callout includes a new video, “NFTs are Fueling a Boom in Digital Art—Here’s How They Work.” 

Chapter 8—Amazon: An Empire Stretching from Cardboard Box to Kindle to Cloud

  1. The introduction to this section has been revised to include a summary of the events of 2020, Amazon’s growth through COVID-19, and Bezos stepping down with Andy Jassy taking over. Includes new video—“Why Jeff Bezos Is Stepping Down.”

  2. A new longer and more comprehensive assignment has been added to the Questions and Exercises of Section 8.1 to invite the students to watch the Frontline documentary, Amazon Empire: The Rise and Reign of Jeff Bezos, which raises fascinating questions that should prime an excellent class discussion.

  3. The “Fulfillment Operations—Driving Selection, Customer Convenience, and Low Price” section has been extensively updated and contains the latest information on how Amazon fulfillment centers operate.

  4. New Video—“A Tour of an Amazon Fulfillment Center.” This video shows how products go from arrival to outbound shipping, highlighting the firm's use of robotics, and calling out various AWS service used along the way.

  5. Updated information has been added on the cash conversion cycle, Amazon’s ad spending, the Amazon Business retail division, and Prime and its shipping costs.

  6. New callout: “Can You Improve Worker Performance with Gamification?”  This callout introduces the concept of gamification, mentions its use in Amazon warehouses and other settings, and offers an additional video that further explores concepts and effective gamification design.

  7. Major updates were made to the information on Amazon’s growing logistics business, including new videos that cover the rise of Amazon’s fulfillment business and the new FAA-approved drone delivery service.

  8. New information on Amazon Go and Amazon Fresh has been added, and the conversation about Whole Foods has been streamlined. This includes a new video—“Amazon Fresh and the Dash Cart.”

  9. The section “Amazon’s Disruptive Consumer Hardware Businesses: Kindle, Fire, Alexa, and More” has been substantially refreshed.

  10. New callout: “Amazon: Game Powerhouse—from Cloud Gaming to Twitch.” This is a discussion of the rise of cloud gaming and assets that Amazon (and other players) bring to competition.

  11. Information on Twitch, the Echo, Alexa, and Amazon’s publishing business has been updated, and the concept of white labeling has been introduced.

  12. New callout: “Halo—How Much Tracking Is Too Much?” This looks at Amazon’s controversial Halo health and wellness tracker and includes a critical video review—“Amazon’s New Health Band Is the Most Invasive Tech We’ve Ever Tested”—which demonstrates the product and discusses the concerns around it. 

  13. New Video—“CNBC Recaps the Launch of Luna and Other Amazon Devices.” This video looks at Amazon products introduced in the firm’s Fall 2020 event.

  14. New Video—“Alexa for Hospitality.” This video demonstrates how Amazon Alexa is being used in the hospitality industry.

  15. Section 8.6, “Amazon and the Cloud: From Personal Storage to AWS,” has been substantially rewritten.

Chapter 9—Platforms, Network Effects, and Competing in a Winner-Take-All World

  1. New callout: “Roblox—a $30 Billion Giant Featuring Some Pint-Sized Platform Builders.” This case covers virality with low CAC (customer acquisition costs), creating a platform for third parties, and how the company grappled with issues related to a user base initially comprised mostly of kids thirteen and under. It also includes a new video—“How Roblox Became a $30 Billion Business.”

  2. The discussions on digital cash and payments and the current state of antitrust investigations have been updated.

  3. A new Section 9.6, “The Zoom Boom—Big Guys Can Be Beat,” has been added. This section covers the unexpected rise of Zoom during the COVID-19 pandemic, subsidization and virality, disruptive innovation, and more.

  4. New Video—“How Zoom Beat Skype and Won Against the Competition.” This video emphasizes Yuan’s success, especially as an immigrant who barely spoke English, rising to become a billionaire and offering one of the most critical tech firms that helped address the COVID-19 crisis.

Chapter 10—Social Media, Peer Production, and Leveraging the Crowd

  1. All statistics and examples have been updated, and there is a new discussion on the dark side of social networks.

  2. New Video—“‘The Social Dilemma’ Unveils Psychological Manipulation Used By Social Networks.”

  3. New callout: “Emily Weiss: From Blog to Billion Dollar Valuation.”

Chapter 12—Facebook: Platforms, Privacy, and Big Business from the Social Graph

  1. Coverage of concerns, regulation, and investigation of Facebook has been updated, including the firm's role in disinformation, conspiracy threading, use by U.S. Capitol rioters, and a row with Australia that caused it to block all news links from being shared within that nation's borders. Two new videos have been added: “Is Facebook Too Powerful?” and “Facebook’s COO Sheryl Sandberg Opens Up About the Antitrust Case for the First Time.”

  2. A new subsection, “Facebook Tries a Mobile App Platform—Apple Says ‘No!’” illustrates how difficult it can be to try to create a new platform when another firm is the platform gatekeeper.

  3. New examples have been added, the discussion of content adjacency has been updated to include information on the 2020 boycott of Facebook by one hundred large and thousands of small advertisers, and a discussion of ads appearing near Capitol Hill riot coverage was added. Two new videos have been added: “What to Know about the Facebook Advertising Boycott” and “How Apple and Facebook Became Rivals.”

Chapter 13—Rent the Runway: Entrepreneurs Expanding an Industry by Blending Tech with Fashion

  1. A new Section 13.7 “Surviving and Thriving Post Pandemic” discussing how Rent the Runway faced an existential crisis during the COVID-19 pandemic has been added, along with the steps they took to endure. This includes the following video: “Rent the Runway CEO Jennifer Hyman on How the Company Pivoted during the Pandemic.”

Chapter 16—Data and Competitive Advantage: Databases, Analytics, AI, and Machine Learning

  1. New information has been added on post-COVID-19 pressure on sports teams and how new dynamic pricing efforts are recasting season tickets and fan monitoring for maximum revenue.

  2. A new exercise has been added that suggests that students use the excellent free, online, interactive SQL learning tool at W3Schools to quickly gain some SQL knowledge. 

  3. New callout: “Industry Exemplar: The Starbucks Rewards Program + Starbucks App.” This covers the app and how it affects sales, data collection, TPS-style ordering, and personalization.

  4. New data has been added on AI and ML used at Boston's Beth Israel Deaconess Medical Center related to operating room availability, scheduling, and predicting and proactively scheduling outreach to likely no-shows.

  5. Section 16.5 has been substantially rewritten to highlight differences between data warehouses, data marts, and data lakes, including coverage of OLAP. A new video has been added: “Data Lake vs. Warehouse vs. Mart. What’s the Difference?”

  6. New Video—“What Is Snowflake?” This video shows the Snowflake tool in action and how managers take data from CSV and third-party sources to use for analysis.

  7. A new diagram showing the relationship between Operational IS and IS for Data Analytics is included.

  8. A callout has been renamed “Public Sector Reporting Tools in Action: Fighting Crime and Fighting Waste. But at What Cost?” and has been refreshed to include concerns around facial recognition technology.

  9. New Video—“Spotify: Making Data Dance with Analytics.” In this video a Spotify Visual Analytics Engineer discusses analytics roles and how their own role is actually quite design-focused. 

  10. The “L.L. Bean: Data Master” callout has been refreshed with new data and updated discussion on technologies and strategies.

  11. New callout: “An AI That’s Too Dangerous to Release?” This covers GPT-3, the promise, peril, and laughable use of general purpose machine learning.

  12. New Video—“Deepfake Videos Are Becoming Easier to Make but Dangerously Difficult to Identify.”

  13. The “Used for Good and Evil” subsection now includes a use of standard tech that has ruined lives.

  14. Several new exercises are suggested, including those that have students explore online video and other material related to AI and technology ethics, and one that asks them to assume the role of an IS leader crafting corporate policy.

Chapter 17—Advertising Technologies: Balancing Personalization with Privacy as Technology and Regulation Evolve

  1. This is a new chapter that covers online advertising, web tracking and cookies, app tracking, privacy challenges, geotargeting, smart TVs, legislative developments, standards and best practices, privacy laws, and much more.

  2. New callout: “Well-Intentioned? That Doesn’t Mean Risky Mistakes Won’t Occur.” This content illustrates the problems that can occur even if well-intentioned firms have technology failures or suffer vulnerabilities by internal bad actors or hackers.

  3. New Videos—Several videos are embedded in this chapter, including “How Ads Follow You Around the Internet,” “Google Is Phasing Out Cookies,” “Developers vs. App Store: Apple’s Fights, Explained,” “How Your Mobile Phone Tracks Your Location,” “Your Smart TV Is Spying on Everything You Watch,” “Data Privacy Laws,” and “How Apple’s New App Privacy ‘Nutrition Labels’ Might Be Misleading You.” 

Chapter 20—Google in Three Parts: Search, Online Advertising, and an Alphabet of Opportunity

  1. The creation of a new Chapter 17 on “Advertising Technologies” allowed for this chapter to be significantly streamlined and focused on Google Search, its various businesses, and the technology and strategic issues that underpin them.

  2. New Video—“How Big Is Google?” This video covers all of Alphabet, including many updates through early 2021.

  3. The “What’s It Take to Run This Thing?” callout has been updated with new key points, including advances in Google Tensor ML chips, enhanced system security, and innovations in water-based cooling.

  4. New Video—“How Google Search Works (in 5 minutes).”

  5. New Video—“Google Data Center 360° Tour.” This video allows you to drag around the screen for varied views while the video plays, or you can view the video in the Google Cardboard VR experience that can be played through a smartphone.

  6. Coverage on how Google Ad Rank is determined has been added. A new video, “Google Ads Tutorials: How the Search Ad Auction Works,” covers this topic with professionally produced graphics.

  7. New Video—“Google Ads Tutorials: Intro to Display.” This video shows students what the technology looks like to set up and run a digital marketing campaign using Google.

  8. Information on product failures has been updated, including a new section on the sketchy outlook for Stadia cloud gaming. More information has been added on the recent performance of Google Cloud unit.

New Definitions

Several terms were updated or introduced and linked as keywords in the text, including: ad networks, browser fingerprinting, change management, codec, cookies, data visualization, data warehouse, deepfakes, ETL (Extract, Transform, Load), expert systems, first-party cookies, genetic algorithms, graphical query tools, neural networks, Python, query tools, R, self-supervised, semi-supervised, shallowfakes, supervised, third-party cookies, and tracking pixels.

Supplements

Information Systems: A Manager's Guide to Harnessing Technology v9.0 is accompanied by a robust supplements program that augments and enriches both the teaching and student learning experiences. Faculty should contact their FlatWorld sales representative or FlatWorld support at support@flatworld.com for more information or to obtain access to the supplements upon adoption.

Instructor’s Manual

The instructor’s manual (IM) includes Learning Objectives and an outline for each chapter. The IM also features possible responses to the questions and exercises in each section of the text, video discussion questions, and additional activities and resources, all of which encourage students to engage more deeply with the course material. 

PowerPoint Slides

PowerPoint lecture slides provide a concise but thorough outline for each chapter and include relevant tables, figures, and images from the text to enliven lectures and stimulate class discussions. These PowerPoint slides also include a list of Learning Objectives by chapter. Instructors can use the slides as composed to support lectures or customize and build upon them to suit their particular teaching needs.

Test Item File

The Test Item File (TIF) includes more than fifty questions per chapter in true/false, multiple-choice, fill-in-the-blank, and short answer formats. All answers are provided, including possible responses to the short answer questions. The items have been written specifically to reinforce the major topics covered in each chapter and to align with FlatWorld Homework and in-text quiz items. The Test Item File questions are also available in pre-formatted form for easy export into popular learning management systems such as Canvas or Blackboard.

Test Generator—Powered by Cognero

FlatWorld is pleased to provide a computer-generated test program powered by leading assessment provider Cognero to assist instructors with selecting, randomizing, formatting, loading online, or printing exams. Please contact your local FlatWorld representative or FlatWorld support (support@flatworld.com) for more information or to request the program.

FlatWorld Homework

Accompanying FlatWorld Homework for this text is provided in an easy-to-use interface. Multiple choice, fill-in-the-blank, matching, scenario-based, and other question types are available for use and are all auto-gradable. Students who utilize the homework questions should see their performance improve on examinations that are given using the Test Item File questions provided to adopters via Word documents or LMS packages.

Online Quizzes

Quiz questions for student self-evaluation are available by section and by chapter in the online version of this text. Students can use the quizzes to test themselves on their comprehension as they move through the different sections of the text or once they have completed a chapter.

Letter from the Author

Thanks for using this book. I very much hope that you enjoy it!

I find the space where business and technology meet to be tremendously exciting. The information systems (IS) course should be the most exciting class within any university. No discipline is having a greater impact on restructuring work, disrupting industries, and creating opportunity. And none more prominently features young people as leaders and visionaries. But far too often, students resist rather than embrace the study of tech.

My university has had great success restructuring the way we teach our IS core courses, and much of the material used in this approach has made it into this book. The results we’ve seen include a four-fold increase in IS enrollments in four years, stellar student ratings for the IS core courses, a jump in student placement, an increase in the number of employers recruiting on campus for tech-focused jobs, and the launch of several student-initiated startups.

Material in this book is used at both the graduate and undergraduate levels. I think it’s a mistake to classify books as focused on just grad or undergrad students. After all, we’d expect our students at all levels to be able to leverage articles in the Wall Street Journal or Bloomberg Businessweek. Why can’t our textbooks be equally useful?

You’ll also find this work to be written in an unconventional style for a textbook, but hey, why be boring? Let’s face it, Fortune and Wired wouldn’t survive if forced to publish the dry, encyclopedic prose used by most textbooks. Many students and faculty have written kind words about the tone and writing style used in this book, and it’s been incredibly rewarding to hear from students who claim they have actually looked forward to assigned readings and have even read ahead or explored unassigned chapters. I hope that you find this book to be engaging, as well.

The mix of chapters and cases is also meant to provide a holistic view of how technology and business interrelate. Don’t look for an “international” chapter, an “ethics” chapter, a “mobile” chapter, or a “systems development and deployment” chapter. Instead, you’ll see these topics woven throughout many of our cases and within chapter examples. This is how professionals encounter these topics “in the wild,” so we ought to study them not in isolation but as integrated parts of real-world examples. Examples are consumer-focused and Internet-heavy for approachability, but the topics themselves are applicable far beyond the context presented.

Also note that many chapters are meant to be covered across multiple classes. For example, the chapter about Google is in three parts, the one about Netflix is in two, and the one on strategy and technology likely covers more than one lecture as well. Faculty should feel free to pick and choose topics most relevant to their classes, but many will also benefit from the breadth of coverage provided throughout the book. I’d prefer our students to be armed with a comprehensive understanding of topics rather than merely a cursory overview of one siloed area.

There’s a lot that’s different about this approach, but a lot that’s worked exceptionally well, too. I hope that you find the material to be as useful as we have. I also look forward to continually improving this work, and I encourage you to share your ideas with me via Twitter (@gallaugher) or the Web (http://www.gallaugher.com). And if you find the material useful, do let others know, as well. I remain extremely grateful for your interest and support!

Best wishes!

Professor John Gallaugher

Carroll School of Management

Boston College