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Read Chapter 6 and listen to recorded lecture

Do American Express Case Study


Case Study 6-1: Enterprise Architecture at American Express


You have to read three case studies and answer the corresponding case study questions. This is for the Enterprise Architecture at American Express case study in Chapter 6.

· What are the key components of the architecture American Express has created?

· Why was it important to standardize so much of the architecture? What are the advantages and disadvantages of a standard EA for American Express?

· Describe how the new architecture supports the goals and strategy of American Express.

· What types of future payment products and services should be anticipated and prepared for by the EA group? What is your vision of how payments might work? If you were advising the CIO of American Express, what would you suggest his group prepare for?

Managing and Using Information Systems: A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders, and Dennis Galletta

© Copyright 2016 John Wiley & Sons, Inc.

Chapter 6 Architecture and Infrastructure


Mohawk Paper

What did Mohawk paper see as an opportunity?

What did they do?

What was the result?

© 2016 John Wiley & Sons, Inc.


Opportunity: Cloud, SOA, XML technology allowing them to make service the primary focus, collaborate with network of partners, incorporate flexibility into the process. Can shift quickly from outsourced to insourced for projects.

Results: 5 times the number of products sold to customers compared to before. Tripled earnings. More customers than before: now 100, previously 10-15 distributors. Automated transactions: saving $1 to $2 million


From Vision to Implementation

Architecture translates strategy into infrastructure

Home architect develops a blueprint of a proposed house—based on customer

Business architect develops a blueprint of a company’s proposed systems—based on strategy

This “blueprint” is used for translating business strategy into a plan for IS.

The IT infrastructure is everything that supports the flow and processing of information (hardware, software, data, and networks).

© 2016 John Wiley & Sons, Inc.



From abstract to concrete – building vs. IT


The Manager’s Role

Must understand what to expect from IT architecture and infrastructure.

Must clearly communicate business vision.

May need to modify the plans if IT cannot realistically support them.

Manager MUST be involved in the decision making process.

© 2016 John Wiley & Sons, Inc.



From Strategy to Architecture

Manager starts out with a strategy.

Strategy is used to develop more specific goals

Business requirements must be determined for each goal so the architect knows what IS must accomplish.

© 2016 John Wiley & Sons, Inc.




Strategy: Be a customer-oriented company

Goal: 30-day money back guarantee

Business Requirement: ability to track purchases

Business Requirement: ability to track problems

Goal: Answer email questions within 6 hours

Business Requirement: Ability to handle the volume

© 2016 John Wiley & Sons, Inc.


From Business Requirements to Architecture

© 2016 John Wiley & Sons, Inc.



The Example Continues

Business Requirement: Ability to track purchases

Architectural Requirement:

Database that can handle all details of more than a 30-day history

© 2016 John Wiley & Sons, Inc.


From Architecture to Infrastructure

Adds more detail to the architectural plan.

actual hardware, software, data, and networking

Components need coherent combination

© 2016 John Wiley & Sons, Inc.



From Architecture to Infrastructure

© 2016 John Wiley & Sons, Inc.



The Example Continues

Architectural Requirement: Database that can handle all details of more than a 30-day history

Functional Specification: be able to hold 150,000 customer records, 30 fields; be able to insert 200 records per hour

Hardware specification: 3 gigaherz Core 2 Duo Server

Hardware specification: half terabyte RAID level 3 hard drive array

Software specification: Apache operating system

Software specification: My SQL database

Data protocol: IP (internet protocol)

© 2016 John Wiley & Sons, Inc.


A Framework for the Translation

Considerations for moving from strategy to architecture to infrastructure:

Hardware – physical components

Software – programs

Network – software and hardware

Data – utmost concern: data quantity & format

What-who-where is a useful framework

© 2016 John Wiley & Sons, Inc.



Component What Who Where
Hardware What hardware does the organization have? Who manages it? Who uses it? Who owns it? Where is it located? Where is it used?
Software What software does the organization have? Who manages it? Who uses it? Who owns it? Where is it located? Where is it used?
Network What networking does the organization have? Who manages it? Who uses it? Who owns it? Where is it located? Where is it used?
Data What data does the organization have? Who manages it? Who uses it? Who owns it? Where is it located? Where is it used?

Information systems analysis framework.


Figure 6.3 Infrastructure and architecture analysis framework with sample questions.


Common IT Architecture Configurations

Centralized architecture – All purchases, support, and management from data center

Decentralized architecture – uses multiple servers perhaps in different locations

Service-Oriented architecture – uses small chunks of functionality to build applications quickly.

Example: e-commerce shopping cart

Software-Defined architecture – instantly reconfigures under load or surplus

© 2016 John Wiley & Sons, Inc.


Software-Defined Architecture

Birdbath example: Thanks to the Oprah Winfrey show, sales went from 10 per month to 80,000.

Increased sales seen as an attack with static system

Adaptive system warns other parts of sales fluctuations, preventing lost sales

Famous Coffee Shop example:

WiFi shares lines with production systems; problems in one can be shunted to another

Also, coffee bean automatic reordering; spot market purchasing

High potential for decreasing costs

© 2016 John Wiley & Sons, Inc.


New Technologies

Peer to peer architecture: Allows networked computers to share resources without a central server

Wireless (mobile) infrastructure: allows communication without laying wires

Web-based architecture: places information on web servers connected to the Internet

Cloud-based architecture: places both data and processing methods on servers on the Internet, accessible anywhere

Capacity-on-demand: enables firms to make available more processing capacity or storage when needed

© 2016 John Wiley & Sons, Inc.


Architectural Principles

Fundamental beliefs about how the architecture should function

© 2016 John Wiley & Sons, Inc.


Enterprise Architecture (EA)

The “blueprint” for all IS and interrelationships in the firm

Four key elements:

Core business processes

Shared data

Linking and automation technologies

Customer groups

One example is TOGAF (The Open Group Architecture Foundation)

Methodology and set of resources for developing an EA

Specifications are public

Business and IT leaders develop EA together

© 2016 John Wiley & Sons, Inc.


Virtualization and Cloud Computing

Cloud computing refers to:

Resources that are available “on the Internet”

No software for the organization to develop or install (only web browser)

No data for the organization to store (it stays somewhere in the Internet “cloud”)

The provider keeps and safeguards programs and data

This is “infrastructure as a service” (IaaS)

Also available is SaaS (Software as a service)

And there is also PaaS (Platform as a service)

Utility Computing: Pay only for what you use (like power, lights)

Source: Computerworld Aug 4, 2008

© 2016 John Wiley & Sons, Inc.


Examples of Systems Provided in the “Cloud?”

Just some examples

Word processing; spreadsheeting; email (Google Docs: $50 per user annually)

Buying/selling Financial services (Salesforce.com)

Email (Gmail, Hotmail)

Social networking (Facebook)

Business networking (LinkedIn)

Music (iTunes)

Storage (Amazon’s Simple Storage Service—S3)

A server (Amazon’s Elastic Compute Cloud—EC2)

Source: Computerworld Aug 4, 2008 and CRN website

© 2016 John Wiley & Sons, Inc.


Assessing Strategic Timeframe

Varies from industry to industry

Level of commitment to fixed resources

Maturity of the industry


Barriers to entry

Also varies from firm to firm

Management’s reliance on IT

Rate of advances affecting the IT management counts on

© 2016 John Wiley & Sons, Inc.


Assessing Adaptability

Guidelines for planning adaptable IT architecture and infrastructure

Plan for applications and systems that are independent and loosely coupled

Set clear boundaries between infrastructure components

When designing a network architecture, provide access to all users when it makes sense to do so

© 2016 John Wiley & Sons, Inc.


Assessing Scalability

Scalability refers to how well a component can adapt to increased or decreased demand

Needs are determined by:

Projections of growth

How architecture must support growth

What happens if growth is much higher than projected

What happens if there is no growth

© 2016 John Wiley & Sons, Inc.


Other Assessments

Standardization – Common, shared standards are easy to plug in

Maintainability – Can the infrastructure be maintained?

Security – Decentralized architecture is more difficult to secure

© 2016 John Wiley & Sons, Inc.


Assessing Financial Issues

Quantify expected return on investment

Can be difficult to quantify


Quantify costs

Determine life cycles of components

Quantify benefits

Quantify risks

Consider ongoing dollar costs and benefits

© 2016 John Wiley & Sons, Inc.



Managing and Using Information Systems: A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders, and Dennis Galletta

© Copyright 2016 John Wiley & Sons, Inc.














Owner’s Vision

Architect’s Plans

Builder’s Implementation




Information Technology



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Wiley Binder Version WILEY

Managing and Using Information Systems


Sixth Edition

Keri E. Pearlson KP Partners

Carol S. Saunders W.A. Franke College of Business Northern Arizona University Dr. Theo and Friedl Schoeller Research Center for Business and Society

Dennis F. Galletta Katz Graduate School of Business University of Pittsburgh. Pittsburgh. PA





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To Yale & Hana

To Rusty, Russell, Janel & Kristin

To Carole, Christy, Lauren, Matt, Gracie, and Jacob



Information technology and business are becoming inextricably interwoven. I don't think anybody can talk meaningfully about one without the talking about the other.

Bill Gates Microsoft 1

I'm not hiring MBA students for the technology you learn while in school, but for your ability to learn about, use and subsequently manage new technologies when you get out.

Give me a fish and I eat for a day; teach me to fish and I eat for a lifetime.

IT Executive Federal Express2


Managers do not have the luxury of abdicating participation in decisions regarding information systems (IS). Managers who choose to do so risk limiting their future business options. IS are at the heart of virtually every business interaction, process, and decision, especially when the vast penetration of the Web over the last 20 years is considered. Mobile and social technologies have brought IS to an entirely new level within firms and between ,.J individuals in their personal lives. Managers who let someone else make decisions about their IS are letting someone else make decisions about the very foundation of their business. This is a textbook about managing and using information written for current and future managers as a way to introduce the broader implications of the impact of IS.

The goal of this book is to assist managers in becoming knowledgeable participants in IS decisions. Becoming a knowledgeable participant means learning the basics and feeling comfortable enough to ask questions. It does not mean having all the answers or having a deep understanding of all the technologies out in the world today. No text will provide managers everything they need to know to make important IS decisions. Some texts instruct on the basic technical background of IS. Others discuss applications and their life cycles. Some take a comprehensive view of the management information systems (MIS) field and offer readers snapshots of current systems along with chapters describing how those technologies are designed, used, and integrated into business life.

This book takes a different approach. It is intended to provide the reader a foundation of basic concepts relevant to using and managing information. This text is not intended to provide a comprehensive treatment on any one aspect of MIS, for certainly each aspect is itself a topic of many books. This text is not intended to provide readers enough technological knowledge to make them MIS experts. It is not intended to be a source of discussion of any particular technology. This text is written to help managers begin to form a point of view of how IS will help or hinder their organizations and create opportunities for them.

The idea for this text grew out of discussions with colleagues in the MIS area. Many faculties use a series of case studies, trade and popular press readings, and Web sites to teach their MIS courses. Others simply rely on one of the classic texts, which include dozens of pages of diagrams, frameworks, and technologies. The initial idea for this text emerged from a core MIS course taught at the business school at the University of Texas at Austin. That course was considered an "appetizer" course-a brief introduction into the world of MIS for MBA students. The course had two main topics: using information and managing information. At the time, there was no text like this

1 Bill Gates, [email protected] the Speed of Thought. New York: Warner Books, Inc. 1999. ' Source: Private conversation with one of the authors. ""1111

Preface • one; hence, students had to purchase thick reading packets made up of articles and case studies to provide them the basic concepts. The course was structured to provide general MBA students enough knowledge of the MIS field so that they could recognize opportunities to use the rapidly changing technologies available to them. The course was an appetizer to the menu of specialty courses, each of which went much more deeply into the various topics. But completion of the appetizer course meant that students were able to feel comfortable listening to, contributing to, and ultimately participating in IS decisions.

Today, many students are digital natives-people who have grown up using information technologies (IT) all of their lives. That means that students come to their courses with significantly more knowledge about things such as tablets, apps, personal computers, smartphones, texting, the Web, social networking, file downloading, online purchasing, and social media than their counterparts in school just a few years ago. This is a significant trend that is projected to continue; students will be increasingly knowledgeable the personal use of technologies. That knowledge has begun to change the corporate environment. Today's digital natives expect to find in corporations IS that provide at least the functionality they have at home. At the same time, these users expect to be able to work in ways that take advantage of the technologies they have grown to depend on for social interaction, collaboration, and innovation. We believe that the basic foundation is still needed for managing and using IS, but we understand that the assumptions and knowledge base of today's students is significantly different.

Also different today is the vast amount of information amassed by firms, sometimes called the "big data" prob- lem. Organizations have figured out that there is an enormous amount of data around their processes, their interac- tions with customers, their products, and their suppliers. These organizations also recognize that with the increase in communities and social interactions on the Web, there is additional pressure to collect and analyze vast amounts of unstructured information contained in these conversations to identify trends, needs, and projections. We believe that today's managers face an increasing amount of pressure to understand what is being said by those inside and outside their corporations and to join those conversations reasonably and responsibly. That is significantly different from just a few years ago.

This book includes an introduction, 13 chapters of text and mini cases, and a set of case studies, supplemental readings, and teaching support on a community hub at http://pearlsonandsaunders.com. The Hub provides faculty members who adopt the text additional resources organized by chapter, including recent news items with teaching suggestions, videos with usage suggestions, blog posts and discussions from the community, class activities, addi- tional cases, cartoons, and more. Supplemental materials, including longer cases from all over the globe, can be found on the Web. Please visit http://www.wiley.com/college/pearlson or the Hub for more information.

The introduction to this text defends the argument presented in this preface that managers must be knowledge- able participants in making IS decisions. The first few chapters build a basic framework of relationships among business strategy, IS strategy, and organizational strategy and explore the links among them. The strategy chapters are followed by ones on work design and business processes that discuss the use of IS. General managers also need some foundation on how IT is managed if they are to successfully discuss their next business needs with IT pro- fessionals who can help them. Therefore, the remaining chapters describe the basics of information architecture and infrastructure, IT security, the business of IT, the governance of the IS organization, IS sourcing, project management, business analytics, and relevant ethical issues.

Given the acceleration of security breaches, readers will find a new chapter on IS security in this sixth edition of the text. Also, the material on analytics and "big data" has been extensively updated to reflect the growing impor- tance of the topic. Further, the chapter on work design has been reorganized and extensively revised. Each of the other chapters has been revised with newer concepts added, discussions of more current topics fleshed out, and old, outdated topics removed or at least their discussion shortened.

Similar to the fifth edition, every chapter begins with a navigation "box" to help the reader understand the flow and key topics of the chapter. Further, most chapters continue to have a Social Business Lens or a Geographic Lens feature. The Social Business Lens feature reflects on an issue related to the chapter's main topic but is enabled by or fundamental to using social technologies in the enterprise. The Geographic Lens feature offers a single idea about a global issue related to the chapter's main topic.

No text in the field of MIS is completely current. The process of writing the text coupled with the publication process makes a book somewhat out-of-date prior to delivery to its audience. With that in mind, this text is written

• Preface to summarize the "timeless" elements of using and managing information. Although this text is complete in and of itself, learning is enhanced by combining the chapters with the most current readings and cases. Faculty are encouraged to read the news items on the faculty Hub before each class in case one might be relevant to the topic of the day. Students are encouraged to search the Web for examples related to topics and current events and bring them into the discussions of the issues at hand. The format of each chapter begins with a navigational guide, a short case study, and the basic language for a set of important management issues. These are followed by a set of managerial concerns related to the topic. The chapter concludes with a summary, key terms, a set of discussion questions, and case studies.

Who should read this book? General managers interested in participating in IS decisions will find this a good reference resource for the language and concepts of IS. Managers in the IS field will find the book a good resource for beginning to understand the general manager's view of how IS affect business decisions. And IS students will be able to use the book's readings and concepts as the beginning in their journey to become informed and success- ful businesspeople.

The information revolution is here. Where do you fit in?

Keri E. Pearlson, Carol S. Saunders, and Dennis F. Galletta


Books of this nature are written only with the support of many individuals. We would like to personally thank several individuals who helped with this text. Although we've made every attempt to include everyone who helped make this book a reality, there is always the possibility of unintentionally leaving some out. We apologize in advance if that is the case here.

Thank you goes to Dr. William Turner of LeftFour, in Austin, Texas, for help with the infrastructure and architecture concepts and to Alan Shimel, Editor-in-Chief at DevOps.com for initial ideas for the new security chapter.

We also want to acknowledge and thank pbwiki.com. Without its incredible and free wiki, we would have been relegated to e-mailing drafts of chapters back and forth, or saving countless files in an external drop box without any opportunity to include explanations or status messages. For this edition, as with earlier editions, we wanted to use Web 2.