528 PART 4 • Planning, Acquiring, and Building Systems
Create and Load Data
This step of the construction phase involves making sure that all files and
databases are populated and ready to be used with the new information sys-
tem. Data for the initial loading of a new database may come from several
sources—the old files or database of the system being replaced, from files of
other systems used in the organization, or from data sources purchased from
an outside organization. In any case, it may be necessary to write at least one
new program to read the old data from these sources, reformat the data into a
format compatible with the database design of the new system, and then
merge these data sources together. Another program may be needed to edit
the merged data for accuracy and completeness and to add new entities, attri-
butes, and/or relationships. For example, if an organization is installing a new
customer relationship management program, a program might need to read
the old customer contact data and convert it to a format that the new system
can use. However, if the old customer contact data does not contain the same
data, such as a separate “bill to” and “ship to” address for existing customers,
this data may need to be added manually. The “bill to” address may be
used to calculate to which of the organization’s sales regions the customer
belongs for sales reporting and accounting purposes. For many projects, con-
siderable time and effort is expended in creating and loading a new database.
See Figure 12.14.
Data Reformat Reformatted Correction Manual
source 1 data from data 1 file corrections
source 1
Data
source 2 Reformat Reformatted Merge Merged data Edit and
data from data 2 correct data
Data source 2
source 3
Reformat Reformatted Edited and
data from data 3 corrected
source 3
data
Load and
update
database
Database
FIGURE 12.14
Database preparation tasks
Creating and loading a new database can take considerable resources.
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CHAPTER 12 • System Acquisition and Development 529
unit testing: Testing of individual Perform Unit Testing
components of code (subroutines, With the programs written and the database available, it is now possible for
modules, and programs) to verify that the developers to do initial testing of code components. This process is called
each unit performs as designed. unit testing, which involves testing individual components of code (subrou-
tines, modules, and programs) to verify that each unit performs as designed.
Unit testing is accomplished by developing test data that ideally will force an
individual component to execute all of its various functions and user features.
In addition, each program is tested with abnormal input to determine how it
will handle erroneous input. As testers find problems, they modify the pro-
grams to work correctly. A good set of unit tests can be saved and rerun each
time any code is changed to quickly detect any new defects.
Integration and Testing
Several types of testing must be conducted before a new or modified informa-
tion system is ready to be put into production. These tests are outlined next
and discussed in the following sections:
1. Integration testing
2. System testing
3. Volume testing
4. User acceptance testing
integration testing: Testing that Integration Testing
involves linking all of the individual
components together and testing them Integration testing involves linking individual components together and test-
as a group to uncover any defects in ing them as a group to uncover any defects in the interface between one com-
the interfaces between individual ponent and another (e.g., component 1 fails to pass a key parameter to
components. component 2). Even if unit testing is successful, developers cannot assume that
individual components can be combined into a working system. Unfortunately,
System testing: Testing the com- one component that functions incorrectly can affect another component and, if
plete, integrated system (hardware, these problems go undetected, they can cause serious trouble later.
software, databases, people, and pro-
cedures) to validate that the information System Testing
system meets all specified
requirements. System testing involves testing the complete, integrated system (hardware,
software, databases, people, and procedures) to validate that the information
volume testing: Testing to evaluate system meets all specified requirements. System testing is often done by inde-
the performance of the information pendent testers who were not involved in developing program code. They
system under varying yet realistic work attempt to make the system fail. They frequently employ testing called black
volume and operating conditions to box testing because it requires no specific knowledge of the application’s
determine the work load at which code and internal logic. In other words, the system tester is aware of what
system performance begins to degrade the software is supposed to do but is not aware of how it does it.
and to identify and eliminate any issues
that prevent the system from reaching Volume Testing
its required service-level performance.
Volume testing involves evaluating the performance of the information system
user acceptance testing (UAT): under varying yet realistic work volume and operating conditions (e.g., data-
Testing performed by trained system base size, number of concurrent users, number of transactions, and number of
users to verify that the system can queries). The goals of volume testing are to determine the work load at which
complete required tasks in a real-world systems performance begins to degrade and to identify and eliminate any issues
operating environment and perform that prevent the system from reaching its required system-level performance.
according to the system design
specifications. User Acceptance Testing
During user acceptance testing (UAT), trained users test the information sys-
tem to verify that it can complete required tasks in a real-world operating
environment and perform according to the system design specifications. UAT
is also known as beta testing, application testing, and end-user testing. Unlike
system testing, which ensures that the system itself works, UAT determines
whether the system meets its intended business needs.
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530 PART 4 • Planning, Acquiring, and Building Systems
user acceptance document: A UAT is a critical activity that must be completed successfully before newly
formal agreement that the organization developed software can be rolled out to the market. In the case of implement-
signs stating that a phase of the instal- ing a software package or software developed by an outside organization, the
lation or the complete system is customer performs user acceptance testing before accepting transfer of owner-
approved. ship. UAT involves the following steps:
user preparation: The process of 1. The UAT test team is selected from the set of likely users.
readying managers, decision makers, 2. The UAT test team is trained using the currently available training material.
employees, other users, and stake- 3. The overall UAT strategy and schedule is defined.
holders to accept and use the new 4. The UAT team designs test cases to exercise the functions and features of
system.
the information system.
5. The test cases are documented in a clear and simple step-by-step manner
to make the tests easy to execute.
6. The UAT team executes the defined test cases and documents the results
of each test.
7. The software development team reviews the test results and makes any
required changes to the code so it meets the design specifications.
8. The UAT team retests the information system until all defects have been
fixed or it is agreed that certain defects will not be fixed.
9. The UAT team indicates its acceptance or nonacceptance of the informa-
tion system. If accepted, the information system is ready to be fully
implemented.
10. The UAT team provides feedback on the user training material so it can
be updated and improved.
Prior to releasing a new software package or a major revision of an exist-
ing package, commercial software development organizations conduct alpha
and beta testing. Alpha testing is a limited internal acceptance test where
employees of the software development organization and a limited number of
other “friendlies” use the software and provide feedback. After fixing pro-
blems uncovered in alpha testing, the developer makes a beta test version of
the software available to potential users outside the organization. For exam-
ple, Microsoft might make a free beta test version of software available on
the Internet to increase the amount of feedback.
Most software manufacturers and third-party software developers have
a user acceptance document—a formal agreement the end user organiza-
tion signs stating that a phase of the installation or the complete system is
approved. This is a legal document that usually removes or reduces the IS
vendor’s liability for problems that occur after the user acceptance docu-
ment has been signed. Because this document is so important, many com-
panies get legal assistance before they sign it. Stakeholders can also be
involved in acceptance testing to make sure that their benefits are indeed
realized.
Table 12.9 summarizes five types of testing: unit testing, integration test-
ing, system testing, volume testing, and user acceptance testing.
Implementation
A number of steps are involved in system implementation. These are outlined
next and discussed in the following sections.
1. User preparation
2. Site preparation
3. Installation
4. Cutover
User Preparation
User preparation is the process of readying managers, decision makers,
employees, system users, and stakeholders to accept and use the new system.
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CHAPTER 12 • System Acquisition and Development 531
T A B L E 12.9 Tests conducted on an information system
Form of Test What Is Tested Purpose of Test Who Does It
Unit Software developers
Integration Test individual units of the Verify that each unit performs
system. as designed. Software developers or inde-
System pendent software testers, using
Test all of the individual units Uncover any defects between black box testing measures
Volume of the information system individual components of the Independent test team,
linked together. information system. separate from the software
development team
Test the complete, integrated Validate that the information
system (hardware, software, system meets all specified System development team and
databases, people, and requirements. members of the operations
procedures). organization
Determine the work load at
Evaluate the performance of which system performance Trained users of the system
the information system under begins to degrade and identify
realistic and varying work and eliminate any issues that
volume and operating prevent the system from
conditions. performing at the required
service level.
User Test the complete, integrated
acceptance system (hardware, software, Verify the information system
databases, people, and can complete required tasks in
procedures). a real-world operating envi-
ronment and do this according
to the system design
specifications.
Ideally, user preparation begins in the early stages of system investigation and
continues through implementation.
The major challenges to successful implementation of an information sys-
tem are often more behavioral than technical. Successfully introducing an
information system into an organization requires a mix of organizational
change skills and technical skills. Strong, effective leadership is required to
overcome the behavioral resistance to change and achieve a smooth and suc-
cessful system introduction.
The dynamics of how change is implemented can be viewed in terms of
the Lewin and Schein three-stage model for change: (1) ceasing old habits
and creating a climate that is receptive to change; (2) learning new work
methods, behaviors, and systems; and (3) reinforcing changes to make the
new process second nature, accepted, and part of the job.
Leavitt’s Diamond is a change model that proposes that every organiza-
tional system is made up of people, tasks, structure, and technology—any
change in one of these elements will necessitate a change in the other three ele-
ments. Thus, to successfully implement a new information system, appropriate
changes must be made to the people, structure, and tasks affected by the new
system. People must be convinced to take a positive attitude to the change and
be willing to exhibit new behaviors consistent with the change. Management
might need to modify the reward system to recognize those who exhibit the
desired new behaviors. Training in any required new skills is also necessary.
The technology acceptance model (TAM) specifies the factors that can
lead to better attitudes about the use of a new information system, along with
its higher acceptance and usage. Perceived usefulness and perceived ease of
use strongly influence whether someone will use an information system. Man-
agement can improve that perception by demonstrating that others have used
the system effectively and by providing user training and support.
The diffusion of innovation theory cautions that adoption of any innova-
tion does not happen all at once for all members of the targeted population;
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532 PART 4 • Planning, Acquiring, and Building Systems
site preparation: Preparation of the rather, it is a drawn-out process, with some people quicker to adopt the inno-
location of a new system. vation than others. Rogers’ diffusion of innovation theory defined five catego-
ries of adopters, each with different attitudes toward innovation. When
installation: The process of promoting an innovation to a target population, first understand the charac-
physically placing the computer teristics of the target population that will help or hinder adoption of the inno-
equipment on the site and making vation and then apply the appropriate strategy. This theory can be useful in
it operational. planning the roll-out of a new information system.
cutover: The process of switching Because user training is so important, some companies employ a variety
from an old information system to a of training approaches including in-house, software, video, Internet, among
replacement system. others. The material used to train the UAT team can serve as a starting point,
with changes based on feedback from the test team.
The eventual success of any system depends not only on how users work
with it, but how well the IS personnel within the organization can operate
and support it. The IS personnel should also attend training sessions similar
to those for the users, although their sessions can provide more technical
details. Effective training will help IS personnel use the new system to per-
form their jobs and support other users in the organization. IBM and many
other companies use online and simulated training programs to cut training
costs and improve effectiveness.
Site Preparation
A location for the hardware associated with the new system needs to be pre-
pared, a process called site preparation. For a small system, site preparation
can be as simple as rearranging the furniture in an office to make room for a
computer. The computer and associated hardware in a larger system might
require special wiring, air conditioning, or construction. A special floor, for
example, might have to be built and cables placed under it to connect the var-
ious computer components, and a new security system might be needed to
protect the equipment. The project team needs to consider the amount of site
preparation that may be necessary and build sufficient lead time into the
schedule to allow for it.
Today, most organizations place a priority on developing IS sites that are
energy efficient and secure. One company, for example, installed special secu-
rity kiosks that let company visitors log on and request a meeting with a com-
pany employee. The employee can see the visitor on his or her computer
screen and accept or reject the visitor. If the visitor is accepted, the kiosk
prints a visitor pass, which allows the person access to the building.
M&T Bank is the largest deposit holder in western New York, with head-
quarters in Buffalo. The bank invested around $60 million in data centers
over a three-year period to meet current business needs and strengthen its
backup systems in case of disasters.19
Installation
Installation is the process of physically placing the computer equipment on
the site and making it operational. Although normally the manufacturer is
responsible for installing computer equipment, someone from the organiza-
tion (usually the IS manager) should oversee the process, making sure that all
equipment specified in the contract is installed at the proper location. After
the system is installed, the manufacturer performs several tests to ensure that
the equipment is operating as it should.
Cutover
Cutover is the process of switching from an old information system to a
replacement system. Cutover is critical to the success of the organization; if
not done properly, the results can be disastrous.
Hershey’s, the largest chocolate manufacturer in North America, provides
a classic example of a failed system cutover. The company planned to
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CHAPTER 12 • System Acquisition and Development 533
direct conversion: A cutover strat- upgrade a mix of legacy information systems into an integrated environment
egy that involves stopping the old sys- of the latest software from leading vendors, including SAP for ERP functional-
tem and starting the new system on a ity, Manugistics for supply chain management, and Siebel for customer relation-
given date; also called plunge or direct ship management. The cutover was targeted for July, one of the company’s
cutover. busiest months, when it was shipping orders for Halloween and Christmas.
Unfortunately, Hershey’s was not well prepared, and the cutover was a fiasco.
As a result, Hershey was unable to process over $100 million worth of orders.
The resulting operational paralysis led to nearly a 20 percent drop in quarterly
profits and an 8 percent decline in share price.
Organizations can follow one of several cutover strategies. See Figure 12.15.
Direct conversion (also called plunge or direct cutover) involves stopping
the old system and starting the new system on a given date. Direct conver-
sion is a high-risk approach because of the potential for problems and errors
when the old system is shut off and the new system is turned on at the same
instant.
Cutover
Old system New system
Direct conversion
Cutover 1 Cutover 2 Cutover 3
Old system component 1
or group 1
Old system component 2 New system
or group 2
Old system component 3
or group 3
Phase-in approach (by component) or pilot start-up (by group)
Old system
FIGURE 12.15 New system
Parallel start-up
System cutover strategies
Cutover can be through direct
conversion, phase-in approach, pilot
start-up, or parallel start-up.
Shell is one of the largest corporations in the world, with recent annual
revenues exceeding $265 billion.20 One of Shell’s major business units is
called Downstream, an organization that converts crude oil into a range of
refined products, which are moved and marketed around the world for
domestic, industrial, and transport use. 21 The 37,000 workers in 36 countries
in the Downstream business rely on SAP-based software to complete their
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534 PART 4 • Planning, Acquiring, and Building Systems
phase-in approach: A cutover work, making it a mission-critical application. A few years ago, Shell decided
strategy that involves slowly replacing to upgrade to a new version of the Downstream software to access new func-
components of the old system with tions and support services. The planning and work involved in completing the
those of the new one; this process is world’s largest SAP upgrade culminated in a direct cutover 18 months after
repeated for each application until the that project started. Shell had many tasks to accomplish before the cutover,
new system is running every applica- including updating several databases, installing new application servers, repla-
tion and performing as expected; also cing hardware, and expanding storage capacity by 30 percent. Despite its
called a piecemeal approach. huge complexity and the high risk associated with such a major cutover, the
upgrade was a success.22
pilot start-up: A cutover strategy
that involves running the complete new Many organizations follow a phase-in approach, where components of
system for one group of users rather the new system are slowly phased in while components of the old one are
than for all users. slowly phased out. When everyone is confident that all components of the
new system are performing as expected, the old system is completely phased
parallel start-up: A cutover strategy out. This gradual replacement is repeated for each component until the new
that involves running both the old and system has fully replaced the old system. In some cases, the phase-in
new systems for a period of time and approach, also called a piecemeal approach, can take several months.
closely comparing the output of the new
system with the output of the old sys- Pilot start-up involves running the complete new system for one group
tem; any differences are reconciled. of users rather than for all users. For example, a manufacturing company
When users are comfortable that the with many retail outlets throughout the country could use the pilot start-up
new system is working correctly, the old approach and install a new inventory control system at one of its retail outlets.
system is eliminated. When the system runs without problems at the pilot location, the new inven-
tory control system can then be implemented at other outlets, one by one.
Parallel start-up involves running both the old and new systems for a
period of time. The performance and output of the new system are compared
closely with the performance and output of the old system, and any differ-
ences are reconciled. When users are comfortable that the new system is
working correctly, the old system is eliminated.
System Operation and Maintenance
The steps involved in system operation and maintenance are outlined next
and discussed in the following sections.
1. Operation
2. Maintenance
3. Disposal
system operation: Involves the use Operation
of a new or modified system under all
kinds of operating conditions. System operation involves the use of a new or modified system under all
kinds of operating conditions. Getting the most out of a new or modified sys-
monitoring: The process of measur- tem during its operation is the most important aspect of system operations for
ing system performance by tracking the many organizations. To provide adequate user support, many companies
number of errors encountered, the establish a formal help desk for their employees and customers. A help desk
amount of memory required, the consists of computer systems, manuals, people with technical expertise, and
amount of processing or CPU time other resources needed to solve problems and give accurate answers to ques-
needed, and other performance tions. End users, who experience problems accessing or using an information
indicators. system, can access the help desk’s Web site or request support via a call or
text to the help desk.
Monitoring is the process of measuring system performance by tracking
the number of errors encountered, the amount of memory required, the
amount of processing or CPU time needed, and other performance indicators.
If a particular system is not performing as expected, it should be modified or
a new system should be developed or acquired.
System performance products can measure all components of an informa-
tion system, including hardware, software, database, and network systems.
Microsoft Visual Studio, for example, has features that allow system developers
to monitor and review how applications are running and performing, enabling
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CHAPTER 12 • System Acquisition and Development 535
system review: The process of developers to make changes if needed. IBM Tivoli OMEGAMON XE is a suite of
analyzing a system to make sure it is performance monitors designed for the analysis of IBM mainframe operating
operating as intended. systems—such as z/OS and z/VM—and various subsystems, such as CICS, DB2,
and IMS. Precise Software Solutions has system performance products that pro-
system maintenance: A stage of vide around-the-clock performance monitoring for ERP systems, Oracle database
system development that involves applications, and other programs.23 HP also offers a software tool called Business
changing and enhancing the system to Technology Optimization (BTO) to help companies analyze the performance of
make it more useful in achieving user their computer systems, diagnose potential problems, and take corrective action
and organizational goals. if needed. When properly used, system performance products can quickly and
efficiently locate actual or potential problems.
Allscripts is a $2.6 billion publicly traded company that provides practice
management, electronic healthcare records, and financial software to hun-
dreds of physician practices, hospitals, and other healthcare organizations. Its
customers typically have between 7 and 20 servers running Allscripts applica-
tions at all times, and keeping the software running without interruption is a
major challenge. To solve this problem, Allscripts has its customers install eG
performance monitoring software from Citrix to monitor the network, operat-
ing system, and applications on its servers. This enables Allscripts to quickly
identify and fix system and software problems before they affect users.24
System review is the process of analyzing a system to make sure it is
operating as intended. System review often compares the performance and
benefits of the system as it was designed with the actual performance
and benefits of the system in operation.
U.S. citizens were alarmed and dismayed when an audit of 731 Veterans
Affairs (VA) hospitals and clinics found that some 57,000 veterans nationwide
in need of medical care experienced wait times of 90 days or longer for their
first medical appointments. An additional 64,000 veterans were not even on
the VA electronic waiting list for doctor appointments that they had
requested. Shockingly, 13 percent of VA employees interviewed said they
were told to falsify records so that wait times would appear shorter.25 In a
separate audit of its information systems, the VA inspector reported that the
agency had continuing problems protecting its mission-critical systems. The
audit found that although the VA had made progress developing security poli-
cies and procedures, it still suffered from “significant deficiencies related to
access controls, configuration management controls, continuous monitoring
controls, and service continuity practices designed to protect mission-critical
systems.”26 It is not clear to what degree these system shortcomings contrib-
uted to the incorrect reporting of wait times.
Internal employees, external consultants, or both can perform a system
review. An organization’s billing application, for example, might be reviewed
for errors, inefficiencies, and opportunities to reduce operating costs. In addi-
tion, the billing application might be reviewed if corporations merge, if one or
more new managers require different information or reports, or if federal laws
on bill collecting and privacy change. This is an event-driven approach to
system review.
Maintenance
System maintenance is a stage of system development that involves chang-
ing and enhancing the system to make it more useful in achieving user and
organizational goals. Reasons for program maintenance include the following:
● Poor system performance, such as slow response time for frequent
transactions
● Changes in business processes
● Changes in the needs of system stakeholders, users, and managers
● Bugs or errors in the program
● Technical and hardware problems
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536 PART 4 • Planning, Acquiring, and Building Systems
slipstream upgrade: A minor ● Corporate mergers and acquisitions
system upgrade-typically a code ● Changes in government regulations
adjustment or minor bug fix; it usually ● Changes in the operating system or hardware on which the application
requires recompiling all the code, and in
so doing, it can create entirely new runs
bugs.
patch: A minor system change to Organizations can perform system maintenance in-house, or they can hire
correct a problem or make a small outside companies to perform maintenance for them. Many companies that
enhancement; it is usually an addition use information systems from Oracle or SAP, for example, hire those compa-
to an existing program. nies to maintain their systems. System maintenance is important for indivi-
duals, groups, and organizations. Individuals looking to system-maintenance
release: A significant program services, for example, can use the Internet, computer vendors, and indepen-
change that often requires changes in dent maintenance companies, including YourTechOnline.com (www.yourte
the documentation of the software. chonline.com), Geek Squad (www.geeksquad.com), and PC Pinpoint (www
.pcpinpoint.com). Organizations often have personnel dedicated to system
version: A major program change, maintenance. Software maintenance for purchased software can cost 20 per-
typically encompassing many new cent or more of the purchase price annually.
features.
The maintenance process can be especially difficult for older software.
A legacy system is an old system, which might have cost millions of dollars to
develop, patch, and modify over the years. The maintenance costs for legacy
systems can become quite expensive, and, at some point, it becomes more
cost effective to switch to new programs and applications than to repair and
maintain the legacy system.
Royal Bank of Scotland (RBS) and National Westminster Bank (NatWest)
are two of the United Kingdom’s largest and most established banks. How-
ever, some customers of these banks have experienced problems using ATMs
or debit cards due to problems with legacy banking systems. Some of the
banks’ systems are over 30 years old and were originally designed to handle
simple branch banking. Over the years, the banks have had to make changes
to support ATMs, online banking, and mobile banking as well as changes to
accommodate new regulatory requirements. Many of these changes were
implemented by different development teams using different programming
languages running on different computers and operating systems, making it
impossible for one person or team to fully comprehend the entire system.27
The two banks recently announced that they will be spending £1 billion
(approximately $1.7 billion USD) to improve their personal and small busi-
ness banking services to make it easier for customers on the move.28
Four generally accepted categories signify the amount of change involved
in maintenance. A slipstream upgrade is a minor system upgrade—typically
a code adjustment or minor bug fix. Many companies don’t announce to
users that a slipstream upgrade has been made; however, because a slip-
stream upgrade usually requires recompiling all the code, it can create entirely
new bugs. This maintenance practice explains why the same computers some-
times work differently with what is supposedly the same software. A patch is
a minor change to correct a problem or make a small enhancement. The fix is
usually patched into an existing program; that is, the programming code
representing the system enhancement is usually added to the existing code.
Many patches come from off-the-shelf software vendors. Although slipstream
upgrades and patches are minor changes, they can cause users and support
personnel big problems if the programs do not run as before. A new release
is a significant program change that often requires changes in the documenta-
tion of the software. Finally, a new version is a major program change, typi-
cally encompassing many new features. Figure 12.16 shows the relative
amount of change and effort required to test and implement these four cate-
gories of system maintenance.
Because of the amount of effort that can be spent on maintenance, many
organizations require a request for maintenance form to be completed and
approved before authorizing the modification of an information system. This
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CHAPTER 12 • System Acquisition and Development 537
Amount of Slipstream
change upgrade
to system
FIGURE 12.16 Patch Release Version
System-maintenance efforts Client effort to test and implement change
This chart shows the relative amount
of change and effort associated to
test and implement slipstream
upgrades, patches, releases, and
versions.
system disposal: A stage of system form is usually signed by a business manager who documents the need for the
development that involves those change and identifies the priority of the change relative to other work that has
activities that ensure the orderly disso- been requested. The IS group reviews the form and identifies the programs
lution of the system, including disposing that need to be changed, determines the programmer to assign to the project,
of all equipment in an environmentally estimates the expected completion date, and develops a technical description
friendly manner, closing out contracts, of the change. A cost/benefit analysis might be required if the change requires
and safely migrating information from substantial resources. The completed change request is then reviewed and pri-
the system to another system or oritized relative to the other change requests that have been made.
archiving it in accordance with
applicable records management Disposal
policies.
At some point, an existing information system may become obsolete, uneco-
nomical to operate and/or maintain, or unrepairable. Information systems
typically evolve to this stage in the life cycle because the system can no longer
be modified to keep up with changing user and business requirements, outdated
technology causes the system to run slowly or unreliably, or key vendors are no
longer able or willing to continue to provide necessary service or support.
System disposal is a stage of system development that involves those activ-
ities that ensure the orderly dissolution of the system, including disposing of all
equipment in an environmentally friendly manner, closing out contracts, and
safely migrating information from the system to another system or archiving it
in accordance with applicable records management policies. The steps involved
in system disposal are outlined and discussed in the following sections.
1. Communicate intent.
2. Terminate contracts.
3. Make backups of data.
4. Delete sensitive data.
5. Dispose of hardware.
Communicate Intent A memo communicating the intent to terminate the infor-
mation system should be distributed to all key stakeholders, months in
advance of the actual shutdown. This ensures that everyone is aware of the
shutdown and allows time for them to convert to the new system or process
replacing the terminated system. For example, the Microsoft Windows XP
operating system was released in 2001. Microsoft announced in September
2007 that it would end support of this popular operating system in April
2014. Despite the end-of-life announcement, an estimated 25 percent of con-
sumers and businesses including 75 percent of ATMs in the United States had
not converted to a replacement operating system by early 2014.29
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538 PART 4 • Planning, Acquiring, and Building Systems
Terminate Contracts The various vendors who provide hardware, software, or
services associated with the information system must be notified well in advance
to avoid any penalty fees associated with abrupt termination of a contract.
Make Backups of Data Prior to deleting files associated with the system,
backup copies of data must be made according to the organization’s records-
management policies.
Delete Sensitive Data Extreme care must be taken to remove customer,
employee, financial, and company-sensitive data from all computer hardware
and storage devices before disposing of it. Otherwise, an organization’s dis-
carded equipment could become a treasure trove to competitors or identity
thieves. When a file is deleted, the bits and pieces of the file physically stay
on a computer hard drive until they are overwritten, and they can be retrieved
with a data recovery program. To remove data from a hard drive perma-
nently, the hard drive needs to be wiped clean. The program used should
overwrite or wipe the hard drive several times. An alternative is to remove
the hard drive and physically destroy it.
Dispose of Hardware After backing up and then removing data from drives,
members of the project team can dispose of obsolete or damaged computer
hardware. Governments, environmental agencies, and leading hardware man-
ufacturers are attempting to reduce hazardous materials in electronic pro-
ducts; however, some hardware components still contain materials that are
toxic to the environment. Responsible disposal techniques should be used
regardless of whether the hardware is sold, given away, or discarded. Many
computer hardware manufacturers including Dell and HP have developed
programs to assist their customers in disposing of old equipment.
Now that we have discussed the waterfall system development process,
we turn our attention to discussion of the agile system development process.
Critical User Acceptance Testing for New Accounting System
Thinking
Exercise You are a member of the finance and accounting organization of a midsized
sporting goods retailer. You are knowledgeable of all facets of your firm’s current
accounting systems and have been working in accounts receivable for the past
three years. The firm is implementing a new cloud-based accounting system to han-
dle general ledger, accounts payable, accounts receivable, and payroll tasks. You
have been selected to plan and lead the user acceptance testing for the accounts
receivable portion of the system. This will be a full-time activity for you over the
next two-to-three months, and during that time, other employees will fill in to take
care of most of your day-to-day responsibilities.
Review Questions
1. Outline the tasks that must be accomplished to successfully complete user
acceptance testing.
2. Your normal work activities and responsibilities have not allowed you time to
become familiar with this project and the new system and its capabilities.
What actions would you take to get caught up quickly?
Critical Thinking Questions
1. How would you go about selecting and recruiting end users to participate in
the user acceptance testing? How would you determine how many end users
are needed for testing?
2. What do you think might be the biggest barriers to completion of the user
acceptance testing in a timely manner?
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CHAPTER 12 • System Acquisition and Development 539
Agile Development
agile development: An iterative Agile development is an iterative system development process that develops
system development process that the system in “sprint” increments lasting from two weeks to two months. Unlike
develops the system in "sprint" the waterfall system development process, agile development accepts the fact
increments lasting from two weeks to that system requirements are evolving and cannot be fully understood or defined
two months. at the start of the project. Agile development concentrates instead on maximizing
the team’s ability to deliver quickly and respond to emerging requirements—
scrum: An agile development hence the name agile. In an agile development project, the team stops and ree-
framework that emphasizes a team- valuates the system every two weeks to two months, giving it ample opportunity
based approach in order to keep the to identify and implement new or changed system requirements.30
development effort focused and moving
quickly. Scrum is an agile development framework that uses a team-based
approach in order to keep the development effort focused and moving quickly.
scrum master: The person who Scrum emphasizes individuals and interactions over processes and tools, work-
coordinates all the scrum activities of ing software over comprehensive documentation, customer collaboration over
a team. contract negotiation, and responding to change over following a plan.31
product owner: A person who A scrum master is the person who coordinates all scrum activities, and a
represents the project stakeholders and scrum team consists of a dozen or fewer people who perform all system
is responsible for communicating and development activities from investigation to testing so there is less personnel
aligning project priorities between the turnover than on the typical waterfall system development project. The scrum
stakeholders and development team. master does not fill the role of a traditional project manager and has no peo-
ple management responsibilities. Instead, the primary responsibility of the
scrum master is to anticipate and remove barriers to the project team produc-
ing its deliverables and meeting the project schedule.32
The product owner is a person who represents the project stakeholders
and is responsible for communicating and aligning project priorities between
the stakeholders and development team. The product owner holds the prod-
uct vision; he or she is responsible for describing what should be built and
why—but now how.33
Using the scrum method, the product owner works with the stakeholders
and team to create a prioritized list of project requirements called a product
backlog. Next, a sprint planning session is held, during which the team selects
the highest priority requirements from the top of the product backlog to cre-
ate the sprint backlog; they then decide how to implement those require-
ments. The team sets a certain amount of time—typically two to eight
weeks—to complete its work. During the sprint, each day at the same time,
the team meets briefly (15 minutes at most) to share information necessary
for coordination. At this meeting, team members describe what they com-
pleted the previous day and identify any obstacles that stand in their way of
completing the day’s activities. The sprint is complete when the team presents
a working system that incorporates the new requirements and that can be
used and evaluated. During the sprint review meeting, the team shares what
it learned from the current sprint iteration so that knowledge can be applied
in the next sprint iteration. See Figure 12.17. Along the way, the scrum master
keeps the team focused on its goals.34
Agile development requires cooperation and frequent face-to-face meet-
ings with all participants, including system developers and users, as they
modify, refine, and test the system’s capabilities and how it meets users’
needs. Organizations are using agile development to a greater extent today to
improve the results of system development, including global projects requir-
ing IS resources distributed in many locations. Agile is often better suited for
developing smaller information systems than larger ones. During an agile
project, the level of participation of stakeholders and users is much higher
than in other approaches. Table 12.10 lists advantages and disadvantages of
agile development.35
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540 PART 4 • Planning, Acquiring, and Building Systems
Daily scrum
meeting
Requirements Sprint Working Sprint
refinement planning system of review
meeting session requirements meeting
implemented
Prioritized list of Requirements 2–8 week
system requirements to implement sprint so far
during this iteration
(product backlog) (sprint backlog)
FIGURE 12.17
The Scrum agile software development process
The Scrum agile approach develops a system in sprint increments lasting from two weeks to two months.
T A B L E 12.10 Advantages and disadvantages of agile development
Advantages Disadvantages
For appropriate projects, this approach It is an intense process that can burn
puts an application into production out system developers and other
sooner than any other approach. project participants.
Documentation is produced as a
by-product of completing project tasks. This approach requires system analysts
and users to be skilled in agile system
Agile forces teamwork and lots of development tools and agile
interaction between users and techniques.
stakeholders.
Agile requires a larger percentage of
stakeholders’ and users’ time than
other approaches.
extreme programming (XP): A Extreme programming (XP) is a form of agile software development
form of agile software development that that promotes incremental development of a system using short development
promotes incremental development of a cycles to improve productivity and to accommodate new customer require-
system using short development cycles ments. Other essentials of extreme programming include programming in
to improve productivity and to accom- pairs, performing extensive code review, unit testing of all code, putting off
modate new customer requirements. the programming of system features until they are actually needed, use of a
flat project management structure, simplicity and clarity in code, expecting
DevOps: The practice of blending the changes in system requirements as the project progresses and the desired
tasks performed by the development solution is better understood, and frequent communication with the customer
and IT operations groups to enable and among programmers. These qualities make extreme programming com-
faster and more reliable software patible with agile software development.36
releases.
DevOps is the practice of blending the tasks performed by the develop-
ment staff (who are typically responsible for design, coding, and testing) and
the IT operations groups (who typically handle operational deployment tasks,
such as server provisioning and job scheduling) to enable faster and more
reliable software releases.37 This approach is key to successful agile develop-
ment environments where organizations go live with new software releases
every two to four weeks. And in many organizations, DevOps is being used
as part of a continuous deployment strategy, in which releases are launched
daily—and in some cases, multiple times a day. Many industry experts view
DevOps as an outgrowth of the agile development movement, with an exten-
sion of agile development principles to include systems and operations rather
than just code.
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CHAPTER 12 • System Acquisition and Development 541
Under traditional software development approaches, the application
development team gathers business requirements, writes code, and tests
programs in an isolated development environment. The code is then
released to the IT operations group to deploy in the real-world operational
environment of end users. This involves gluing together all the components
of an application, including databases, messaging infrastructure, external
services, the passing and receiving of data to/from other systems, and
third-party dependencies.
DevOps principles reshape all the move-into-production activities so that
they become automated, collaborative, continuous, incremental, iterative, and
self-service. Responsive teams adopt DevOps practices of self-service configu-
ration, automated provisioning (using predefined procedures that are carried
out electronically without requiring human intervention), continuous build,
continuous integration, continuous delivery, automated release management,
and incremental testing, as shown in Figure 12.18.
Build
Automated Define
testing acceptance
criteria
FIGURE 12.18 Continuous Plan
monitoring Release
DevOps is part of a continuous
deployment strategy in which Deploy
releases can be launched
daily Operate
DevOps blends tasks performed by
development staff and IT operations
groups.
Source: Chris Haddad, “Overcome DevOps
Adoption Barriers to Accelerate Software
Delivery,” Tech Well Insights, May 8, 2015,
www.techwell.com/techwell-insights/2015
/05/overcome-devops-adoption-barriers-
accelerate-software-delivery.
Although DevOps can mean slightly different things depending on how it
is deployed at different companies, at its core, DevOps places a priority on
collaboration, with operations staff and development engineers participating
together, over the entire systems life cycle—from design and development
through testing and implementation.38
Starwood Hotels and Resorts Worldwide used the DevOps approach with
good success on a $150 million project aimed at redoing the company’s cen-
tral reservation system. As Starwood has continued to implement DevOps, it
has found the process has led to a more complete description of user require-
ments, a 66 percent reduction in time to deploy systems, and 20 percent
fewer errors in production.39
Table 12.11 compares the key features of the agile and waterfall system
development processes.
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542 PART 4 • Planning, Acquiring, and Building Systems
T A B L E 12.11 Comparison of approaches to system development
Characteristic Software Development Approach Waterfall
Description
Agile A sequential multistage process where work
Basic assumption on the next stage cannot begin until the
How requirements and An iterative process that develops the sys- results of the previous stage are reviewed
design are defined tem in sprint increments lasting 2–8 weeks; and approved or modified as necessary
Associated processes each increment focuses on implementing
the highest priority requirements that can All critical system requirements must be
be completed in the allotted time fully defined before any coding begins
Users interacting with system analysts and
System requirements cannot be fully system documentation and/or models
defined at start of project Structured system analysis and design
Users interacting with system analysts and
working software
Scrum
Critical Firm’s First Agile Project
Thinking
Exercise You were hired into a new company that was impressed with your two years of
experience as a scrum master on a variety of information systems projects. Your
new firm has a large in-house information system development staff that is trained
and experienced in the use of the waterfall software development process. You
have been assigned responsibility as a scrum master for a key project that will be
the firm’s first agile project. You have also been asked to train the project man-
ager, team, and newly appointed product owner in the agile process and their
associated roles and responsibilities.
Review Questions
1. As part of the team’s initial project kickoff meeting, you have been asked to
briefly summarize the differences between the waterfall and agile software
development process. What would you say?
2. Following your discussion, one of the team members asks, “so why are we
changing to a new software development process? We are all comfortable
with the way we do things now.” What do you say?
Critical Thinking Questions
1. There is likely to be some confusion over the role of project manager, scrum
master, and product owner. What can you do to avoid this potential problem?
2. What other potential problems can you anticipate as the team moves forward
with its first agile project? What can be done to avoid these potential issues?
Buying Off-the-Shelf Software
Today, most organizations purchase or rent the software they need rather
than make it—simply because it costs too much and takes too long to build a
quality information system. Organizations elect to build proprietary systems
only when its information system requirements are unique. This may be
because of the nature of the business or because the organization is attempt-
ing to build an information system that will provide it with a strategic compet-
itive advantage.
A software application can vary from an unmodified, commercial off-
the-shelf (COTS) software package at one extreme to a custom, written-
from-scratch program at the other extreme. Between those two extremes is a
range of options based on the degree of customization. A comparison of the
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CHAPTER 12 • System Acquisition and Development 543
two extreme approaches is shown in Table 12.12. One question that must be
answered during system analysis phase is: which solution approach is best
for this particular system? This decision is often called the make-or-buy
decision.
T A B L E 12.12 Comparison of developed and off-the-shelf software
Factor Develop (Make) Off-the-Shelf (Buy)
Cost The full cost to implement an off-the-shelf
The cost to build the system can be difficult to solution is also difficult to estimate accurately
Needs estimate accurately and is frequently higher but is likely to be less than a custom software
than off-the-shelf solution
Process Might not get exactly what you need
improvement Custom software is more likely to satisfy your
Quality needs Adoption of a package may simplify or
Tend to automate existing business processes streamline a poor existing business process
Speed even if they are poor Can assess the quality before buying
Staffing and support Quality can vary depending on the program-
ming team Can acquire it right now
Competitive Can take years to develop Requires paying the vendor for support
advantage Requires in-house skilled resources to build
and support a custom-built solution Other organizations can have the same
Can develop a competitive advantage with software and same advantage
good software
Package Evaluation Phase
As with system development, purchasing off-the-shelf software requires that
an organization go through several steps to ensure that it purchases the soft-
ware that best meets its needs and then implements it effectively. These steps
are part of the package evaluation phase of a project that comes after the sys-
tem analysis phase as shown in Figure 12.19. At this point in the project, the
scope of the system and critical business and user requirements should be
known. There should be a rough budget and schedule as well.
Package Evaluation Phase
1. Identify potential solutions.
2. Select top contenders.
3. Research top contenders.
4. Perform final evaluation of leading solutions.
5. Make selection.
6. Finalize contract.
request for information (RFI): Identify Potential Solutions
A document that outlines an organiza-
tion’s hardware or software needs and The project team should make a preliminary assessment of the software mar-
requests vendors to provide information ketplace to determine whether existing packages can meet the organization’s
about if and how they can meet those needs. The primary tool for doing this is the request for information (RFI),
needs and the time and resources a document that outlines an organization’s needs and requests vendors to
required. respond with information about if and how they can meet those needs and
the time and resources required. See Figure 12.20. The RFI outlines the scope
of the desired system and preliminary system requirements based on the
results so far of the system analysis. Importantly, the RFI should ask each ven-
dor to identify two or three customers who may be contacted as references.
The RFI is typically sent to several vendors who are thought to be capable of
providing the desired software.
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544 PART 4 • Planning, Acquiring, and Building Systems
Investigation
FIGURE 12.19 Systems
analysis
Software package
implementation process Package
evaluation
Software package implementation
eliminates several of the phases of Integration &
the waterfall approach. testing
Implementation
Request for Information
Table of Contents
DESCRIPTION OF DESIRED SYSTEM
PRELIMINARY SYSTEM REQUIREMENTS
INFORMATION REQUESTED
WHO TO CONTACT FOR FURTHER INFORMATION
DATE RESPONSE DESIRED
FIGURE 12.20
Recommended table of contents for a request for information
The RFI outlines the desired system and its requirements, identifying key pieces of data that the soft-
ware vendor must include in the proposal.
Select Top Contenders
The project team will review the information provided by the vendors in
response to the RFI and narrow their choice down to the most promising
alternatives for further evaluation. This may require a visit to a vendor’s place
of business to meet key managers and observe a demo of the vendor’s system.
This selection is made on the basis on how well the vendor’s software
appears to meet the organization’s needs, preliminary cost and timing esti-
mates, information gleaned from references, and how easy the vendor has
been to work with so far.
Research Top Contenders
A final evaluation begins with a detailed investigation of the contenders’ pro-
posals as well as in-depth discussions with two or three customers of each
contender to learn about their experience with the vendor and the software.
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CHAPTER 12 • System Acquisition and Development 545
performance evaluation test: An organization must carefully evaluate each vendor’s software package to
A comparison of vendor options con- see how well it supports the business processes that are within the scope of
ducted in a computing environment the project. Looking at each business process, the organization should deter-
(e.g., computing hardware, operating mine if the package supports the process fully and exactly as it needs to be
system software, database manage- performed. If not, must the software be modified to meet the organization’s
ment system) and with a workload (e.g., requirements, or must the organization modify its business process? If an
number of concurrent users, database organization decides it must modify the software to meet its business require-
size, and number of transactions) that ments, it must then determine who will do the necessary modifications, how
matches its intended operating long will they take, and how much will they cost.
conditions.
Often purchased software must integrate with other existing software
(e.g., a new accounts payable and accounts receivable software package must
integrate with the firm’s existing general ledger system). The amount of effort
required to modify the new software and existing software so that they work
well together must be determined and taken into account as a major factor in
selecting the final vendor and software.
For major software purchases, the contenders should be asked to make
a final presentation and to fully demonstrate their solution using a
performance evaluation test conducted in a computing environment (e.g.,
computing hardware, operating system software, database management system)
and with a workload (e.g., number of concurrent users, database size, and
number of transactions) that matches the intended operating conditions. Such a
test can help measure system performance attributes such as ease of use and
response time.
Make Selection
Selecting the best software package solution involves weighing the following
factors:
● How well the vendor’s solution matches the needs of the users and
business
● The amount of effort required to integrate the new software with existing
software
● Results of the performance evaluation test
● Relative costs (including any software modifications) and benefits
● The technical, economic, legal, operational, and schedule feasibility
● Input from legal and purchasing resources on the legal and financial
viability of the contender
● Feedback from customers on how well the software performs as well as
on the quality of the support provided by the vendor
Finalize Contract
Once a selection is made, a contract with the vendor must be negotiated and
finalized. Although the vendor may insist that everyone signs a standard con-
tract, every contract should be thoroughly reviewed by experienced members
of an organization’s legal and purchasing departments. Recognize that the
standard contract is written from the vendor’s perspective and protects its
interests, not yours. Request a copy of the vendor’s standard contract at the
start of the software package evaluation process and allow at least two
months for review and negotiation of a final contract.
Organizations that use the cloud-computing or software-as-a-service
approach need to take special precautions in signing contracts with the ser-
vice provider. The contract should clarify how the provider ensures data pri-
vacy, handles discovery if there is a lawsuit, resolves service-level problems,
and manages disaster recovery; it should also detail where the cloud-
computing servers and computers are located. Organizations should confirm
this information in discussions with other customers of the service provider
and by a visit to the service provider’s facilities.
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546 PART 4 • Planning, Acquiring, and Building Systems
A contract covering the modification of a software package should have
provisions for monitoring system modification quality and progress, owner-
ship and property rights of the new or modified system, contingency provi-
sions in case something doesn’t work as expected, and dispute resolution if
something goes wrong. Customizing the package actually changes the pack-
age into custom-made software, resulting in the potential loss of support from
the original vendor. This might necessitate third-party support, which should
be factored into the contract negotiations.
Integration and Testing
Several types of testing must be conducted before a software package is ready to
be put into production. This is particularly true if the software package has been
modified to meet the needs of the organization or the software package must inte-
grate with existing information systems (e.g., a new accounts payable system must
integrate with the organization’s existing general ledger system). The following
types of tests, already discussed earlier in the chapter, need to be completed.
1. Integration testing
2. System testing
3. Volume testing
4. User acceptance testing
Implementation
The organization cannot just count on the vendor to execute the implementa-
tion of the package—full and active participation by the project’s stakeholders
and end users is essential to success. Key implementation tasks include:
● Use data-flow diagrams to map current business processes and require-
ments to the software, and identify any gaps that must be filled by chang-
ing current processes or by modifying the software.
● Install the software and configure all of its capabilities and options to
meet the project requirements.
● Customize any aspects of the solution needed for the organization.
● Integrate existing software with the new software.
● Train end users.
● Test the software to ensure that it meets all processes and requirements.
● Convert historical data from the old software so that it can be used by the
new software.
● Roll out the new software to users in a live work environment.
● Provide for ongoing end-user support and training.
Critical Hospital Switches Electronic Health Record Software
Thinking
Exercise Midwest Regional Hospital (fictional) is a 500-bed general medical and surgical
facility with 25,000 admissions and 7,500 annual inpatient and 17,500 outpatient
surgeries annually. Its emergency room has 52,000 visits each year. It is a non-
profit hospital that treats both adult and child patients. Over 1,200 nurses, techni-
cians, doctors, and physicians practice at the hospital.
An electronic health record (EHR) is an electronic version of a patient’s medi-
cal history that is maintained by the provider over time and may include all of the
key administrative clinical data relevant to that person’s care, including demo-
graphics, progress notes, problems, medications, vital signs, past medical history,
immunizations, laboratory data, and radiology reports. The EHR automates access
to this information, and the more sophisticated versions of EHR software can also
produce an online “digital chart” that displays up-to-date patient information in
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Summary CHAPTER 12 • System Acquisition and Development 547
real time, complete with decision support tools for physicians and nurses. One of
the key features of an EHR is that health information can be created and managed
by authorized providers in a digital format capable of being shared with other
providers across more than one healthcare organization, including laboratories,
specialists, medical imaging facilities, pharmacies, emergency facilities, and school
and workplace clinics.
Midwest Hospital was an early pioneer in the adoption of EHR software,
implementing the technology in 2004. Unfortunately, the vendor that Midwest
selected has not been able to keep up with evolving regulatory requirements and
the changing needs of its healthcare clients. Its software is fast becoming obsolete,
and it is rumored that the firm will soon eliminate support of its software. You
have been hired as a consultant to lead a project to replace the original software
with software from one of the current leading EHR software providers—
Allscripts, Cerner Corporation, or Epic Systems Corporation.
Review Questions
1. Is there a need to conduct a preliminary software package evaluation? Why or
why not?
2. What tasks would you attempt to complete in your first two weeks as a project
leader?
Critical Thinking Questions
1. The hospital administrators have made it clear to you that the software vendor
must be chosen and the software installed as soon as possible. What measures
do you feel comfortable taking to accelerate the process without raising the
risk of choosing the wrong software or having a rough system start-up?
2. A safety-critical system is one whose failure or misuse may cause human
injury or death. Given that an EHR system can be considered to be such a sys-
tem, which tasks associated with software implementation deserve special
attention?
Principle:
Organizations can obtain software using one of two basic approaches: buy
or build.
Buying off-the-shelf software is less risky and leads to quicker deployment;
however, maintenance and support costs may become expensive with this
approach, and the software may not be an exact match to the needs and
work processes of the organization.
Building custom software can provide a better match to the current work
processes of the organization and provide a potential competitive advantage;
however, the cost can become extremely high, and it can take months or even
years to develop the software.
Principle:
A system under development following the waterfall approach moves
from one phase to the next, with a management review at the end of
each phase.
The set of activities involved in building information systems to meet users’
needs is called system development.
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548 PART 4 • Planning, Acquiring, and Building Systems
The waterfall system development process cycle is a sequential, multistage
system development process in which work on the next stage cannot begin
until the results of the current stage are reviewed and approved or modified
as necessary. It is referred to as a waterfall process because progress is seen as
flowing steadily downward (like a waterfall) through the various phases of
development.
The phases of the waterfall system development process can vary from one
company to the next, but many organizations use an approach with six phases:
investigation, analysis, design, construction, integration and testing, and imple-
mentation. Once the system is built, organizations complete the additional
steps of operation and maintenance and disposition.
At the end of each phase, a review is conducted to ensure that all tasks
and deliverables associated with that phase were produced and that they are
of good quality. In addition, at the end of each phase, the overall project
scope, costs, schedule, and benefits associated with the project are reviewed
to ensure that the project is on track and worth completing. As a result, the
waterfall system development process allows for a high degree of manage-
ment control.
System investigation is the key initial phase in the development of a new or
modified business information system. The purpose of this phase is to gain a
clear understanding of the specifics of the problem to solve or the opportunity
to address.
Joint application development (JAD) is a structured meeting process that
can accelerate and improve the efficiency and effectiveness of not only the
investigation phase but also the analysis and design phases of a system devel-
opment project.
Functional decomposition is a technique used primarily during the investi-
gation phase to define the business processes included within the scope of the
system.
The technical, economic, legal, operational, and schedule feasibility are
assessed during the feasibility analysis.
After a project has completed the investigation phase and been approved
for further study, the next step is system analysis, which answers the question,
“What must the information system do to solve the problem or capitalize on the
opportunity?”
The overall emphasis of analysis is gathering data on the existing system,
determining the requirements for the new system, considering alternatives
within identified constraints, and investigating the feasibility of alternative
solutions.
Identifying, confirming, and prioritizing system requirements is perhaps
the single most critical step in the entire waterfall system development process
because failure to identify a requirement or an incorrect definition of a require-
ment may not be discovered until much later in the project, causing much
rework, additional costs, and delay in the systems effort.
A data-flow diagram (DFD) is a diagram used during both the analysis and
design phases to document the processes of the current system or to provide a
model of a proposed new system. A DFD shows not only the various processes
within the system but also where the data needed for each process comes from,
where the output of each process will be sent, and what data will be stored and
where.
The purpose of system design phase is to answer the question, “How will
the information system solve this problem?” The primary result of the system
design phase is a technical design that details system outputs, inputs, controls,
and user interfaces; specifies hardware, software, databases, telecommunica-
tions, personnel, and procedures; and shows how these components are
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
CHAPTER 12 • System Acquisition and Development 549
interrelated. In other words, system design creates a complete set of technical
specifications that can be used to construct the information system.
During the design phase, designers must develop specific system security
and controls for all aspects of the information system, including hardware, soft-
ware, database systems, telecommunications, and Internet operations.
System construction converts the system design into an operational system
by coding and testing software programs, creating and loading data into data-
bases, and performing initial program testing.
Several types of testing must be conducted before a new or modified infor-
mation system is ready to be put into production, including unit testing, inte-
gration testing, system testing, volume testing, and user acceptance testing.
System implementation includes the following activities: user preparation,
site preparation, installation, and cutover.
System operation involves using the new or modified system under all
kinds of operating conditions. Getting the most out of a new or modified
system during its operation is the most important aspect of system operations
for many organizations.
System maintenance involves changing and enhancing the system to make
it more useful in achieving user and organizational goals. There are many reasons
why system maintenance is required.
System disposal involves those activities that ensure the orderly dissolution
of the system, including disposing of all equipment in an environmentally
friendly manner, closing out contracts, and safely migrating information from
the system to another system or archiving it in accordance with applicable
records management policies.
Principle:
Agile development is an iterative system development process that develops
a system in “sprint” increments lasting from two weeks to two months.
Unlike the waterfall system development process, agile development
accepts the fact that system requirements are evolving and cannot be fully
understood or defined at the start of the project. Agile development concen-
trates instead on maximizing the team’s ability to deliver quickly and respond
to emerging requirements—hence the name agile.
Scrum is an agile development framework that uses a team-based approach
in order to keep the development effort focused and moving quickly. Scrum
emphasizes individuals and interactions over processes and tools, working soft-
ware over comprehensive documentation, customer collaboration over contract
negotiation, and responding to change over following a plan.
A scrum master is the person who coordinates all scrum activities, and a
scrum team consists of a dozen or fewer people who perform all system devel-
opment activities from investigation to testing.
The product owner is a person who represents the project stakeholders
and is responsible for communicating and aligning project priorities between
the stakeholders and development team. The product owner holds the product
vision; he or she is responsible for describing what should be built and why—
but now how.
Extreme programming (XP) is another agile software development
approach that promotes incremental development of a system using short
development cycles to improve productivity and to accommodate new cus-
tomer requirements.
DevOps is the practice of blending the tasks performed by the develop-
ment and IT operations groups to enable faster and more reliable software
releases. This approach is key to successful agile development.
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550 PART 4 • Planning, Acquiring, and Building Systems
Principle:
When buying off-the-shelf software, the effort required to modify the soft-
ware package as well as existing software so that they work well together
must be taken into account as a major factor in selecting the final vendor
and software.
Today, most organizations purchase or rent the software they need rather
than build it—simply because it costs too much or takes too long to build a
quality information system.
The analysis team should make a preliminary assessment of the software
marketplace to determine whether existing packages can meet the organiza-
tion’s needs. The primary tool for doing this is the request for information
(RFI), a document that outlines an organization’s hardware or software needs
and requests vendors to respond with information about if and how they can
meet those needs and the time and resources required.
A preliminary evaluation of software packages and vendors began dur-
ing system analysis when the two or three strongest contenders were identi-
fied. The final evaluation begins with a detailed investigation of the
contenders’ proposals as well as discussions with two or three customers
of each vendor.
Key Terms request for information (RFI)
schedule feasibility
agile development scrum
cold site scrum master
cutover site preparation
data-flow diagram (DFD) slipstream upgrade
DevOps system analysis
direct conversion system construction
disaster recovery plan system disposal
economic feasibility system testing
extreme programming (XP) system design
feasibility analysis system investigation
hot site system investigation report
installation system maintenance
integration testing system operation
joint application development ( JAD) system review
legal feasibility technical documentation
mission-critical processes technical feasibility
monitoring unit testing
operational feasibility user acceptance document
parallel start-up user acceptance testing (UAT)
Pareto principle (80–20 rule) user documentation
patch user preparation
performance evaluation test version
phase-in approach volume testing
pilot start-up waterfall system development process
product owner
release
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CHAPTER 12 • System Acquisition and Development 551
Chapter 12: Self-Assessment Test
Organizations can obtain software using one of determining the requirements of the new system,
two basic approaches: buy or build.
considering alternatives within identified con-
1. software is less risky and leads to straints, and investigating the feasibility of alter-
quicker deployment; however, maintenance and
support costs may become expensive. native solutions.
a. Custom
b. Enterprise a. investigation
c. Off-the-shelf
d. Personal productivity b. analysis
2. software can provide a better c. design
match to the current work processes of the orga-
nization and may provide a potential competitive d. construction
advantage; however, software development can
be extremely costly, and it can take months or 8. The primary tool for assessing the software mar-
even years to complete.
a. Custom ketplace to determine whether existing packages
b. Enterprise
c. Off-the-shelf can meet the organization’s needs is
d. Personal productivity
the .
A system under development following the water-
fall approach moves from one phase to the next, a. system investigation report
with a management review at the end of each
phase. b. request for quotation
c. RFI
d. system design report
9. The phase converts the system
design into an operational system by coding and
testing software programs, creating and loading
data into databases, and performing initial pro-
gram testing.
a. system analysis
b. system construction
c. system implementation
3. Many organizations use a waterfall approach with d. system testing and integration
six phases, including investigation, analysis, Agile development is an iterative system
development process that develops a system in
design, , integration and testing, “sprint” increments lasting from two weeks to two
months.
and implementation.
4. The waterfall approach allows for a high degree
of management control, but it does not allow for 10. is an agile development framework
user interaction with the system until the inte- that uses a team-based approach in order to keep
gration and testing phase, when the system is the development effort focused and moving
nearly complete. True or False? quickly.
5. The purpose of the system investigation phase is 11. In the scrum framework, the is a
to . person who represents the project stakeholders
a. define what the information system must do and is responsible for communicating and align-
to solve the problem or capitalize on the ing project priorities between stakeholders and
opportunity the development team.
b. gain a clear understanding of the specifics of a. project manager
the problem to solve or the opportunity to b. scrum master
address c. product owner
c. gather data on the existing system and d. project sponsor
determine the requirements for the new 12. is the practice of blending the tasks
system performed by the development and IT operations
d. identify, confirm, and prioritize system groups to enable faster and more reliable soft-
requirements ware releases.
6. is a diagram used to document the a. Scrum
processes of the current system or to provide a b. Extreme programming
model of a proposed new system. c. JAD
7. The overall emphasis of the phase d. DevOps
is on gathering data on the existing system,
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
552 PART 4 • Planning, Acquiring, and Building Systems phase when the two or three strongest conten-
ders are identified.
When buying off-the-shelf software, the effort a. system investigation
required to modify the software package as well b. system design
as existing software so that they work well together c. system analysis
must be taken into account as a major factor in d. feasibility analysis
selecting the final vendor and software.
13. A preliminary evaluation of software packages
and vendors begins during the
Chapter 12: Self-Assessment Test Answers
1. c 8. c
2. a 9. b
3. construction 10. Scrum
4. True 11. c
5. b 12. d
6. Data-flow diagram 13. c
7. b
Review Questions 8. Identify several areas for which system
security and control requirements need to
1. What are primary characteristics of the water- be defined.
fall system development process? What is the
rationale for using the term “waterfall” to 9. Identify and briefly describe six system perfor-
describe it? mance factors.
2. Identify and state the purpose of each of the six 10. What is a business continuity plan? What is a
phases of the waterfall system development disaster recovery plan?
process.
11. Identify and briefly describe four types of testing
3. Why do many organizations have a formal pro- that are conducted during the integration and
cess for requesting a system investigation? testing phase.
4. What are the four different kinds of feasibility 12. Define the terms slipstream upgrade, patch,
that must be assessed? Why is the feasibility of a release, and version as they relate to system
system reviewed during the investigation, analy- maintenance.
sis, and design phases?
13. What is the difference between the roles and
5. What is the difference between tangible and responsibilities of a scrum master and product
intangible benefits? Identify five tangible benefits owner?
that are frequently associated with an information
system. 14. What is extreme programming (XP)? What is its goal?
15. An organization has selected and is now imple-
6. What are the key elements of a system investiga-
tion report? menting a software package. Identify three key
factors that will determine the cost and time
7. What is the purpose of studying the existing sys- required for implementation.
tem during the analysis phase?
Discussion Questions 4. Outline the steps necessary to conduct an effec-
tive joint application development (JAD) session.
1. Provide two examples of opportunities or pro- Who should participate in such a session? What is
blems that are likely to trigger the need for an the role of the JAD facilitator?
information system project.
5. Once a project has successfully made it through
2. Thoroughly discuss the pros and cons of buying the system investigation phase, should it ever be
versus building software. cancelled? Why or why not?
3. What are the advantages and disadvantages of
following the waterfall system development
process?
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
CHAPTER 12 • System Acquisition and Development 553
6. You have been assigned to write a newspaper the probability of successful system
report on a major information system project implementation.
failure run by your school’s information system 10. Describe and discuss the pros and cons of three
organization. Where would you start, and who different system cutover strategies.
would you speak with? 11. What is the fundamental difference in approach
between waterfall and agile system development?
7. Why is it important for business managers to 12. How does DevOps support the agile system
have a basic understanding of the system devel- development process?
opment process? 13. Identify and briefly discuss four key tasks asso-
ciated with the successful implementation of a
8. Define the Pareto principle, and discuss how it software package.
applies to prioritizing system requirements.
9. Identify and describe how three different
change models that can be applied to improve
Problem-Solving Exercises spreadsheet or project management program to
identify and schedule the tasks that must be
1. You are acquiring a new information system for performed in order to choose the best software
The Fitness Center, a company with three fitness package and implement it.
centers in your metropolitan area, with a total of 2. The preliminary investigation of a software proj-
1,200 members and 20 to 30 full and part-time ect has been completed. Two different project
employees in each location. Through previous teams have estimated the costs associated with
research efforts, the director of marketing has the development and maintenance of a new sys-
determined that your clientele is interested in a tem. One team based their estimates on the
state-of-the-art software system to track all their assumption that the waterfall system develop-
fitness and health-related activities. Each piece ment process would be used for the project; the
of equipment in the gym will be modified to other team plans to follow the agile approach.
allow entry of the member’s ID number, record- A third option is to purchase off-the-shelf soft-
ing the date, time of day, weight used, and ware that provides nearly all the benefits of a
number of reps or workout length. Members and custom-built solution. Review the estimates
fitness consultants want to be able to log in to below, and choose the best approach for the
the system from any computer or mobile device project: waterfall development, agile develop-
and see displays of various reports (calories ment, or off-the-shelf software implementation.
burned, muscle groups worked, blood pressure, Provide a solid rational for your choice. Identify
distance run, steps taken, etc.) for a user- any assumptions you must make in reaching
specified time period. Use word-processing your decision.
software to identify at least six high-priority
requirements for such a system. Use a
Total effort months to complete the system Waterfall Agile Off-the-Shelf Software
Cost per effort month 45 38 6
Cost of software package $10k $10k $10k
Elapsed time until a partial working version is $350k
available (months) Not applicable 2 Not applicable
Elapsed time until all currently envisioned features
are available (months) 8 5 3
Annual savings generated by the complete system $180k $180k $160k
3. A new sales ordering system needs a relational diagram showing the relationships among
database that contains a customer table, a these entities. Next, design each of these tables
product inventory table, and an order table. showing the keys and attributes to be included
Use a word-processing, graphics, or spread- in each table. Include five sample records for
sheet program to draw an entity-relationship each table.
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554 PART 4 • Planning, Acquiring, and Building Systems registration system. Develop a list of the activities
that need to be completed to complete this task.
Team Activities Which activities are of most concern?
3. You and your team have been hired to perform
1. Your team has been hired to define the scope and a system investigation for a fast food restaurant
feasibility of a project to create a database of job that wants to implement new tools and
openings and descriptions for the companies processes to improve its customer service.
visiting your campus each term. Students would Currently, the restaurant has a poor reputation
be able to log on to the system and request an for not correctly filling customers’ orders and
appointment with each company’s recruiter. for taking too long to do it. Perform a functional
Recruiters would be granted access to each decomposition to define the scope and basic
student’s summary transcript (courses taken, but requirements of such a system. Brainstorm
no grades shown) and resume. Describe the tasks some ideas to improve the situation, and
your team would perform to complete the system choose one to pursue based on its technical,
investigation phase. Who else needs to be economic, legal, operational, and schedule
involved in the system investigation? Develop a feasibility.
data-flow diagram that defines the scope of this
system.
2. Your team has been selected to monitor the
disposal of your school’s 10-year-old student-
Web Exercises of these systems. If you were leading a
project team to select an EHR system for a
1. Do research on the Web to identify application large hospital, which one would you choose?
development tools that support the rapid devel- Why?
opment of high-quality apps for both iPhone and 3. Do research to determine the current level of
Android-based smartphones. Develop a spread- adoption of DevOps around the globe. Which
sheet that summarizes the features and pros and organizations seem to be leaders in DevOps?
cons of three of these tools. What initiatives are these companies taking that
makes them leaders?
2. Do research to identify the three leading elec-
tronic health record (EHR) systems. Go on
social media and find comments from the users
Career Exercises would one get started in such a career, and what
are starting salaries?
1. A new advertising and promotion-planning 3. Identify an information system frequently
system is being developed for a major manu- employed by people in a career field you are
facturer of consumer products. Management is interested in. Discuss how you might be involved
seeking candidates to serve as the product as a user in the development or acquisition of
owner on this key $2 million, nine-month proj- such a system for your future company. Identify
ect. Identify some characteristics and desired three things that you could do as a project par-
experience that the ideal candidate would ticipant that would greatly improve the likelihood
possess. of a successful project. Now, identify three things
that you could do (or fail to do) that could greatly
2. Perform research to learn what is required to diminish the probability of success of such a
have a successful career as a software developer project.
for smartphones. What sort of education and
experience is needed? What personal characteris-
tics would be helpful in such a career? How
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CHAPTER 12 • System Acquisition and Development 555
Case Studies
Case One developers and operations work together and understand
each other’s problems, the more the company can achieve,
Etsy Uses DevOps for Rapid Deployment has really taken hold.”
Looking for a unique gift—such as a personalized, hand- Like many companies, Etsy was attracted to DevOps as a
stamped fishing lure or maybe a vintage gold hairpin or even way to create a more responsive software development
a crocheted hat for your cat? If so, you might want to join the process—one that allows for continuous integration and
24 million active buyers who turn to the Web site Etsy as deployment. However, adopting DevOps practices has also
their source for handmade and vintage products—ranging encouraged a more collaborative approach to development—
from art and photography to clothing and jewelry to home a shift that has been both challenging and rewarding for the
décor and furniture. company. Notes Cowie, “The hardest part is getting the
business culture right…. You may have to deal with
Etsy was founded in 2005 in an apartment in Brooklyn, stakeholders at different levels who may not like this idea of
New York, by a small group of people who saw a need for an relinquishing some power or giving people access to systems
online exchange where crafters and artists could sell their they previously haven’t had.”
handmade and vintage goods along with art and craft
supplies. The company, which views itself as a global One of the big rewards for Etsy is that its developers are
community of creative entrepreneurs, shoppers, now able to push code to a production server up to 60 times
manufacturers, and suppliers, now has more than 800 a day. Often, the first release is to a limited audience of
employees and a peer-to-peer e-commerce site that generated employees or a small, randomly selected group of users. With
close to $2.4 billion in sales in 2015. Currently, the site has testing and feedback, the code can then be pushed to the
over 35 million items available for sale from 1.6 million active entire Etsy community. According to Rembetsy, “We started
sellers around the world. to understand that if developers felt the responsibility for
deploying code to the site they would also, by nature, take
Early on, Etsy placed a high priority on developing a responsibility for if the site was up or down, take into
sophisticated technology platform to support its business, consideration performance, and gain an understanding of the
with an engineering culture centered around a philosophy stress and fear of a deploy.”
that the company has dubbed “Code as Craft” (the
company even operates an engineering blog under that As Rembetsy notes, “Mistakes happen, we find them, fix
name). However, as with many startups, the development them, and move on. The important thing is to learn
of Etsy’s internal structures was not always carefully something from the process, and never make the mistake
planned. As a result, siloes and other barriers to again in the future.”
collaboration gradually developed across the company,
affecting its ability to keep its software development efforts Critical Thinking Questions
on the cutting edge.
1. It is perhaps not surprising that Etsy was an early
Despite those challenges, the company grew rapidly, adopter of DevOps. It is a relatively small company,
and as early as 2008, the company was deploying new with a start-up culture, and its move to DevOps was
releases to its site twice a week—a pace matched by few championed by company leaders. Do you think
other companies at the time. However, each of those deploying DevOps practices would be more difficult in
deployments typically took over four hours to complete, and a larger, more established organization? How might a
according to Michael Rembetsy, vice president of technical company begin to make the cultural changes needed to
operations at Etsy, “Deploys were very painful. We had a move to the more collaborative, rapid-deployment
traditional mindset: developers write the code and ops approach that DevOps offers?
deploys it.” That divide often resulted in faulty releases that
shut down the site for prolonged periods, causing real 2. At Etsy, new developers are expected to begin pushing
concern for the users around the world who relied on the site code to production on day one. That expectation is one
to make a living. way Etsy encourages it employees to embrace
change—and a certain degree of risk—instead of fear-
When Chad Dickerson, who had spent years as CTO at ing it. Would you feel comfortable working as a busi-
Yahoo!, joined Etsy as its new CTO, he quickly brought in a ness manager in a company that gives individual
new technical management team, which pushed the developers so much freedom and responsibility? What
company to adopt a more agile approach to software would be some of the advantages to a business man-
development in order to roll out improvements and updates ager of such a culture? What might be some of the
with greater ease and fewer disruptions. According to Jon disadvantages?
Cowie, an operations engineer at Etsy, “Bringing that group
in is what first planted the seed of DevOps and the move to a 3. What would be some of the criteria you would use to
continuous rate of delivery, and it’s all really grown from measure the success of a shift to DevOps practices
there. As the company has grown, this idea that the closer within a company?
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
556 PART 4 • Planning, Acquiring, and Building Systems
SOURCES: “About Etsy,” Etsy, www.etsy.com/about/?ref=ftr, April 28, its operations and interact with clients, senior Sasol
2016; Dix, John, “How Etsy Makes DevOps Work,” Network World, managers based in South Africa were traveling millions of
February 19, 2015, www.networkworld.com/article/2886672/software miles each year, which was not good for the managers,
/how-etsy-makes-devops-work.html; Donnelly, Caroline, “Case Study: the company’s budget, or the planet. As an alternative,
What the Enterprise Can Learn from Etsy’s DevOps Strategy,” Compu- BT installed telepresence suites across South Africa and
terWeekly, June 9, 2015, www.computerweekly.com/news/4500247782 in Houston, London, Calgary, and Hamburg. Sasol
/Case-study-What-the-enterprise-can-learn-from-Etsys-DevOps-strategy; achieved a 100 percent usage rate at each of these suites,
Heusser, Matthew, “Continuous Deployment Done in Unique Fashion at and BT secured a five-year contract to provide continued
Etsy.com,” CIO, March 12, 2012, www.cio.com/article/2397663/devel support.
oper/continuous-deployment-done-in-unique-fashion-at-etsy-com.html;
“What Is DevOps,” The Agile Admin, https://theagileadmin.com/what-is BT had one major concern about agile development:
-devops, accessed April 27, 2016. previously, the company had conducted 16 or 17 types of
tests before deploying a new system. Many feared that a
Case Two shorter life cycle meant compromising on quality
assurance. However, BT now continues testing with
British Telecom Spreading Agile Development customers after system setup and finds that testing the
across the Globe product with customer involvement has significant
advantages.
In 2005, British Telecom (BT) took a big risk: the company
dropped its use of the waterfall system development process “The main advantage I see is that you spend more time
and embraced agile development. Previously, BT had working on the right [system] features by talking to
outsourced the gathering of system requirements to a third customers all the time and working on it,” says Kerry
company, which would typically take three to nine months to Buckley, a software developer who worked on the initial
meet with customers and stakeholders and create a phone-traffic monitoring system. Moreover, software
requirements list. Next, the project would move back to BT engineers working at BT are excited about working on
where programmers often struggled to interpret the customer-facing live applications. As one engineer notes, “All
requirements and then develop and test the system within your work matters and will be released to the public.” Agile
18 months—although some projects needed more time. In development at BT has taken system developers out of their
late 2005, however, BT took only 90 days to roll out a new isolated bubble, inspiring them, and proving to the IT world
Web-based system for monitoring phone traffic. The new that agile development can work.
system allowed traffic managers to change switches and
other physical devices more quickly in order to handle shifts Critical Thinking Questions
in load along BT’s telecommunications network. The success
of this initial project reverberated throughout the IT world, 1. Are there certain personal characteristics one should
as BT became the first telecommunications giant to adopt look for in candidates who will participate in or lead
agile development—sometimes developing products in three agile system projects? If so, what are they, and why are
30-day iterative cycles. they important?
The new system development approach had other 2. How might the establishment of telepresence suites
advantages, too: programmers and customers support the use of the agile system development pro-
communicated closely and teams from different locations cess? What do you think are some of the capabilities of
around the world, initially the United Kingdom and India, such suites?
worked together to develop the system. To overcome
customer doubts, BT invited them to development “hot 3. How might extreme programming and DevOps provide
houses” to see how the agile development process further improvements in the BT system development
worked. Many customers became such ardent believers process?
that they adopted the agile approach themselves. In 2010,
BT used its new system development process to create SOURCES: Hoffman, Thomas, “BT: A Case Study in Agile Programming,”
the 21st Century Next Generation Access Network InfoWorld, March 11, 2008, www.infoworld.com/d/developer-world
process, which enjoyed an 80 percent return on its /bt-case-study-in-agile-programming-112?page=0,0; Grant, Ian, “BT
initial investment within its first year. Today, BT deploys Switches to Agile Techniques to Create New Products,” ComputerWeekly,
agile development to service its customers across the January 29, 2010, www.computerweekly.com/news/1280091969
globe. /BT-switches-to-agile-techniques-to-create-new-products; “About Sasol:
Overview,” Sasol, www.sasol.com/about-sasol/company-profile/over
In 2014, for example, BT applied the agile approach view; accessed July 8, 2014; “Turning a Far-Flung Organisation into a
to deploy telepresence solutions for the international Single Community,” BT, July 9, 2014, http://letstalk.globalservices.bt
energy and chemical producer Sasol, a company with .com/en; “Software Engineer, IVR at BT (British Telecom),” The
over 34,000 employees based in 37 countries. To oversee JobCrowd, April 23, 2014, www.thejobcrowd.com/employer/bt-british
-telecom/reviews/software-engineer-ivr-at-bt-british-telecom.
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
CHAPTER 12 • System Acquisition and Development 557
Notes
1. Schuman, Evan, “What Amazon Is Doing with Its Supply 15. “NeverFail Application Continuous Availability,”
Chain Could Devastate the Competition,” Computer- VirtualizationAdmin.com, www.virtualizationadmin
world, February 12, 2016, www.computerworld.com .com/software/High-Availability/Neverfail-for-VMware
/article/3032656/retail-it/amazons-supply-chain-move -VirtualCenter-.html, accessed June 16, 2014.
-could-prove-devastating.html
16. “CodeSmith Generator,” CodeSmith, www.codesmith
2. Boulton, Clint, “Custom Software Drives Vitamin World tools.com/product/generator, accessed July 1, 2014.
Stores Remodeling,” CIO, Feb 12, 2016, www.cio.com
/article/3033084/software/custom-software-drives 17. “The Arizona Supreme Court Creates the Ultimate
-vitamin-world-stores-remodeling.html. Outsource and Insource Simultaneously,” Visible, www
.visible.com/News/arizona.htm, accessed July 2, 2014.
3. Boulton, Clint, “Walgreens CIO Starts with the Customer
and Works Backward,” CIO, February 9, 2016, www.cio 18. Dr. Explain Web site, www.drexplain.com/what-do
.com/article/3031054/vertical-industries/walgreens-cio -users-say, accessed July 14, 2014.
-starts-with-the-customer-and-works-backward.html.
19. Kline, Allissa, “M&T to Invest $20M, Upgrade Data
4. Boyd, Aaron, “Energy IT Project Failing due to Mismanage- Center,” Buffalo Business First, March 10, 2014, www
ment, Poor Planning,” Federal Times, November 24, 2015, .bizjournals.com/buffalo/news/2014/03/10/m-t-to
www.federaltimes.com/story/government/it/management -invest-20m-in-data-center-upgrade.html.
/2015/11/24/eia-it-transformation/76307870/.
20. “Selected Financial Data,” Shell, http://reports.shell.com
5. “Joint Application Development,” Liquid Mercury /annual-report/2015/strategic-report/selected-financial
Solutions, http://liquidmercurysolutions.com/whatwedo -data.php, accessed April 26, 2016.
/spdev/Pages/Joint-Application-Development.aspx,
accessed February 21, 2016. 21. “Shell Businesses in the U.S.,” Shell, www.shell.us
/aboutshell/shell-businesses.html, accessed July 8, 2014.
6. “Utilizing a Self-Steering Robotic Tractor in the Devel-
opmental Phases of Rice,” Hitachi, www.hitachi.com.au 22. “A Record-Breaking Feat,” T-Systems, February 2013,
/documents/news/150114-Utilizing-a-Self-steering www.t-systems.com/umn/global-collaboration-from
-Robotic-Tractor-in-the-Developmental-Phases-of-Rice -a-private-cloud-shell-pulls-off-the-largest-sap-upgrade
.pdf, accessed February 21, 2016. -in-history-/1125808_2/blobBinary/Best-Practice_02
-2013_Shell_EN.pdf?ts_layoutId=1100966.
7. “Ministry of Defence ‘Wasted Millions on Failed
Computer System’,” Guardian, January 13, 2014, www 23. “Precise Application Performance Platform,” Precise,
.theguardian.com/uk-news/2014/jan/14/ministry-of www.precise.com, accessed July 14, 2014.
-defence-failed-computer-system.
24. “Allscripts,” eG Innovations, www.eginnovations.com
8. “LAPD Best Policing Practices through Early Interven- /news/Allscripts_Case_study_letter_12914.pdf, accessed
tion,” Sierra-Cedar, www.sierra-cedar.com/wp-content July 14, 2014.
/uploads/sites/12/2015/07/CSS-LAPD.pdf, accessed
February 22, 2016. 25. Wagner, Dennis, “VA Scandal Audit: 120,000 Veterans
Experience Long Waits for Care,” Azcentral, June 9,
9. “Interagency Guidelines Establishing Information Secu- 2014, www.azcentral.com/story/news/arizona
rity Standards,” Board of Governors of the Federal /investigations/2014/06/09/va-scandal-audit-veterans
Reserve System, www.federalreserve.gov/bankinforeg -delayed-care/10234881.
/interagencyguidelines.htm, accessed June 9, 2014.
26. Brewin, Bob, “VA Failed to Protect Critical Computer
10. Ward, Brian, “The Importance of Good Interface Systems, Audit Finds,” Nextgov (blog), May 29, 2014,
Design,” heehaw.digital (blog), February 27, 2013, www.nextgov.com/defense/whats-brewin/2014/05
http://blog.heehaw.co.uk/2013/02/the-importance-of /va-failed-protect-critical-computer-systems-audit-finds
-good-interface-design. /85429.
11. Shneiderman, Ben and Plaisant, Catherine, Designing 27. Osborne, Hilary, “Why Do Bank IT Systems Keep
the User Interface: Strategies for Effective Human- Failing?” Guardian, January 27, 2014, www.theguardian
Computer Interaction, 5.ed, 2009, Pearson: New York. .com/money/2014/jan/27/bank-it-systems-keep-failing-
lloyds-rbs-natwest.
12. Porter, Joshua, “Principles of User Interface Design,”
Bokardo (blog), http://bokardo.com/principles-of-user 28. “More than £1BN Committed to Improve Banking Ser-
-interface-design/, accessed July 3, 2014. vices,” RBS, June 27, 2014, www.rbs.com/news/2014/06
/more-than-p1bn-committed-to-improve-banking
13. “RecoverPoint,” EMC, www.emc.com/storage/recover -services.html.
point/recoverpoint.htm, accessed June 16, 2014.
29. “End of Windows XP Support Will Be Trouble for Busi-
14. “SteelEye LifeKeeper,” SteelEye Technology, Inc., www nesses and Consumers,” CBS Evening News, April 8,
.ha-cc.org/high_availability/components/application 2014, www.cbsnews.com/videos/end-of-windows-xp
_availability/cluster/high_availability_cluster/steeleye -support-will-be-trouble-for-businesses-consumers/.
_lifekeeper, accessed June 16, 2014.
30. “What Is Agile?” Agile Methodology, http://agile
methodology.org, accessed August 3, 2014.
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
558 PART 4 • Planning, Acquiring, and Building Systems
31. “Core Scrum: What is Scrum?,” ScrumAlliance, www -disadvantages-of-agile-software-development.html,
.scrumalliance.org/scrum/media/ScrumAllianceMedia accessed August 3, 2014.
/Files%20and%20PDFs/Learn%20About%20Scrum 36. “The Rules of Extreme Programming,” Extreme Pro-
/Core-Scrum.pdf, accessed April 26, 2016. gramming, www.extremeprogramming.org/rules.html,
accessed August 3, 2014.
32. “Learn About Scrum?” Scrum Alliance, www.scrumalliance 37. Greene, Daniel, “What Is DevOps,” TechCrunch, May 1,
.org/why-scrum, accessed April 26, 2016. 2015, http://techcrunch.com/2015/05/15/what-is-devops.
38. Barker, Colin, “What Is DevOps and Why Does It Mat-
33. “Core Scrum: What is Scrum?,” ScrumAlliance. ter?,” ZDNet, www.zdnet.com/article/what-is-devops
34. “Scrum Methodology,” My PM Expert, http://scrummethod -and-why-does-it-matter.
39. Gates, Robert, “Hotel Hits the Gas Pedal with Souped Up
ology.com/, accessed August 3, 2014. www.my-project DevOps Model,” TechTarget, March 7, 2016, http://
-management-expert.com/the-advantages-and-disadvan searchdatacenter.techtarget.com/news/4500278116
tages-of-agile-software-development.html, accessed August /Hotel-hits-the-gas-pedal-with-souped-up-DevOps-model.
3, 2014.
35. De Sousa, Susan, “The Advantages and Disadvantages of
Agile Development,” My PM Expert, www.my-project
-management-expert.com/the-advantages-and
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
5PART Information Systems
in Business and
Society
Chapter 13
Cybercrime and Information
System Security
Chapter 14
Ethical, Legal, and Social Issues of
Information Systems
phoenixman/Shutterstock.com
559
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13CHAPTER Cybercrime and Information
System Security
igor.stevanovic/Shutterstock.com
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Did YouKnow?
• A zero-day attack is one that takes place before the $500,000. Packages of zero-day exploits have been
sold to U.S. government contractors for $2.5 million a
security community and/or software developers become year.
aware of and fix a security vulnerability. While one
would hope that the discoverer of a zero-day vulnera- • The volume of global phishing attacks is alarming. It is
bility would immediately inform the original software
manufacturer so that a fix can be created for the estimated that about 156 million phishing emails are
problem, in some cases, this knowledge is sold on the sent each day, with 16 million of those successfully
black market to cyberterrorists, governments, or large evading email filters. Of those, roughly 50 percent
organizations that may then use it to launch their own (or 8 million) are opened, and 800,000 recipients per
cyberattacks. For example, information about one day click on malicious URL links contained in the
zero-day vulnerability in Apple’s iOS reportedly sold for emails.
Principles Learning Objectives
• Computer crime is a serious and rapidly growing • Explain why computer incidents are so prevalent.
area of concern requiring management attention.
• Identify and briefly describe the types of com-
• Organizations must take strong measures to puter exploits and their impact.
ensure secure, private, and reliable computing
experiences for their employees, customers, and • Describe the earmarks of a strong security
business partners. program.
• Identify specific measures used to prevent com-
puter crime.
• Outline actions that must be taken in the event of
a successful security intrusion.
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562 PART 5 • Information Systems in Business and Society
Why Learn about Cybercrime and Information
System Security?
The security of data and information systems used in business is of utmost importance. Confidential
business data and private customer and employee information must be safeguarded, and systems must
be protected against malicious acts of theft or disruption. Although the need for security is obvious, it
must often be balanced against other business needs. Business managers, IS professionals, and IS
users all face a number of complex trade-offs regarding IS security, such as the following: How much
effort and money should be spent to safeguard against computer crime? (In other words, how safe is
safe enough?) What should be done if recommended computer security safeguards make conducting
business more difficult for customers and employees, resulting in lost sales and increased costs? If a
firm is a victim of a computer crime, should it pursue prosecution of the criminals at all costs, maintain
a low profile to avoid the negative publicity, inform affected customers, or take some other action?
As you read this chapter, consider the following:
• What key trade-offs and ethical issues are associated with the safeguarding of data and information
systems?
• What are the key elements of a multilayer process for managing security vulnerabilities based on the
concept of reasonable assurance?
The Threat Landscape
The number of cybercrimes being committed against individuals, organiza-
tions, and governments continues to increase, and the destructive impact of
these crimes is also intensifying. The brands, reputation, and earnings of
many organizations around the world have been negatively impacted by such
crimes. As a result, organizations are putting in place a range of countermea-
sures to combat cybercrime. For instance, the worldwide financial services
industry spent $27.4 billion on IT security and fraud prevention in 2015.1
And a recent survey of more than 10,000 IT professionals around the world
revealed the following:2
● 58 percent of global companies have an overall security strategy.
● 54 percent have a CISO (chief information security officer) in charge of
security.
● 53 percent have employee security-awareness and training programs.
● 52 percent have security standards for third parties.
● 49 percent conduct threat assessments.
● 48 percent actively monitor and analyze security intelligence.
In spite of all these countermeasures, however, the number of computer
security incidents surged from 2014 to 2015 in the following industries: public
sector organizations; entertainment, media and communications; technology
and telecommunications companies; pharmaceuticals and life sciences; and
power and utilities organizations.3
Why Computer Incidents Are So Prevalent
Increasing computing complexity, higher computer user expectations,
expanding and changing systems, an increase in the prevalence of bring your
own device (BYOD) policies, a growing reliance on software with known vul-
nerabilities, and the increasing sophistication of those who would do harm
have caused a dramatic increase in the number, variety, and severity of secu-
rity incidents are increasing dramatically.
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CHAPTER 13 • Cybercrime and Information System Security 563
bring your own device (BYOD): Increasing Complexity Increases Vulnerability
A business policy that permits, and in
some cases encourages, employees to The computing environment has become enormously complex. Cloud com-
use their own mobile devices (smart- puting, networks, computers, mobile devices, virtualization, operating systems
phones, tablets, or laptops) to access applications, Web sites, switches, routers, and gateways are interconnected
company computing resources and and driven by hundreds of millions of lines of code. This environment con-
applications, including email, corporate tinues to increase in complexity every day. The number of possible entry
databases, the corporate intranet, and points to a network expands continually as more devices are added, increas-
the Internet. ing the possibility of security breaches.
exploit: An attack on an information Higher Computer User Expectations
system that takes advantage of a
particular system vulnerability. Today, time means money, and the faster computer users can solve a prob-
lem, the sooner they can be productive. As a result, computer help desks are
under intense pressure to respond very quickly to users’ questions. Under
duress, help desk personnel sometimes forget to verify users’ identities or to
check whether they are authorized to perform a requested action. In addition,
even though most have been warned against doing so, some computer users
share their login ID and password with other coworkers who have forgotten
their own passwords. This can enable workers to gain access to information
systems and data for which they are not authorized.
Expanding and Changing Systems Introduce New Risks
Business has moved from an era of stand-alone computers, in which critical
data was stored on an isolated mainframe computer in a locked room, to an
era in which personal computers and mobile devices connect to networks
with millions of other computers, all capable of sharing information. Busi-
nesses have moved quickly into e-commerce, mobile computing, collaborative
work groups, global business, and interorganizational information systems.
Information technology has become ubiquitous and is a necessary tool for
organizations to achieve their goals. However, it is increasingly difficult for IT
organizations to keep up with the pace of technological change, successfully
perform an ongoing assessment of new security risks, and implement
approaches for dealing with them.
Increased Prevalence of Bring Your Own Device Policies
Bring your own device (BYOD) is a business policy that permits, and in
some cases encourages, employees to use their own mobile devices (smart-
phones, tablets, or laptops) to access company computing resources and
applications, including email, corporate databases, the corporate intranet, and
the Internet. Proponents of BYOD say it improves employee productivity by
allowing workers to use devices with which they are already familiar—while
also helping to create an image of a company as a flexible and progressive
employer. Most companies have found they cannot entirely prevent employ-
ees from using their own devices to perform work functions. However, this
practice raises many potential security issues as it is highly likely that such
devices are also used for nonwork activity (browsing Web sites, blogging,
shopping, visiting social networks, etc.) that exposes them to malware much
more frequently than a device used strictly for business purposes. That mal-
ware may then be spread throughout the company. In addition, BYOD makes
it extremely difficult for IT organizations to adequately safeguard additional
portable devices with various operating systems and a myriad of applications.
Growing Reliance on Commercial Software with
Known Vulnerabilities
In computing, an exploit is an attack on an information system that takes
advantage of a particular system vulnerability. Often this attack is due to poor
system design or implementation. Once the vulnerability is discovered, software
developers create and issue a “fix,” or patch, to eliminate the problem. Users of
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
564 PART 5 • Information Systems in Business and Society
the system or application are responsible for obtaining and installing the patch,
which they can usually download from the Web. (These fixes are in addition to
other maintenance and project work that software developers perform.)
Any delay in installing a patch exposes the user to a potential security
breach. The need to install a fix to prevent a hacker from taking advantage of
a known system vulnerability can create a time-management dilemma for sys-
tem support personnel trying to balance a busy work schedule. Should they
install a patch that, if left uninstalled, could lead to a security breach, or should
they complete assigned project work so that the anticipated project savings and
benefits from the project can begin to accrue on schedule? According to Secu-
nia, a provider of vulnerability intelligence and management tools, the number
of new software vulnerabilities identified in 2014 jumped 18 percent from the
previous year to 15,435—an average of 42 per day—as shown in Table 13.1.4,5
T A B L E 13.1 Total number of new software vulnerabilities identified
annually
Year Number of Software Vulnerabilities Identified
2007 7,540
2008 8,369
2009 7,716
2010 9,747
2011 9,307
2012 9,875
2013 13,075
2014 15,435
zero-day attack: An attack that Clearly, it can be difficult to keep up with all the required patches to fix these
takes place before the security vulnerabilities. Of special concern is a zero-day attack, which is an attack that
community and/or software developers takes place before the security community and/or software developers become
become aware of and fix a security aware of and fix a security vulnerability. While one would hope that the
vulnerability. discoverer of a zero-day vulnerability would immediately inform the original
software manufacturer so that a fix can be created for the problem, in some cases,
this knowledge is sold on the black market to cyberterrorists, governments, or
large organizations that may then use it to launch their own cyberattacks. For
example, information about one zero-day vulnerability in Apple’s iOS reportedly
sold for $500,000.6 On the other hand, the U.S. government has also chosen to
keep information about vulnerabilities secret in cases in which government
security experts have determined that the hole has “a clear national security or law
enforcement” use. Packages of zero-day exploits have been sold to U.S. govern-
ment contractors for $2.5 million a year.7
A serious zero-day vulnerability was discovered in Apple’s OS X El Capitan
operating system, enabling hackers to circumvent the company’s System Integrity
Protection (SIP), which is designed to prevent malicious code from modifying
protected files and stealing sensitive data. The infection is difficult to detect, and
even if users do discover it, it is impossible for them to remove the infection,
since SIP would work against them, preventing users from reaching or altering
the malware-laced system file. Apple patched the vulnerability in updates for El
Capitan 10.11.4 and iOS 9.3 that were released on March 21, 2016.8
U.S. companies increasingly rely on commercial software with known vul-
nerabilities. Even when vulnerabilities are exposed, many corporate IT organi-
zations prefer to use already installed software as is rather than implement
security fixes that will either make the software harder to use or eliminate
“nice-to-have” features that will help sell the software to end users.
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CHAPTER 13 • Cybercrime and Information System Security 565
Increasing Sophistication of Those Who Would Do Harm
Previously, the stereotype of a computer troublemaker was that of an intro-
verted “geek” working on his own and motivated by the desire to gain some
degree of notoriety. This individual was armed with specialized, but limited,
knowledge of computers and networks and used rudimentary tools, perhaps
downloaded from the Internet, to execute his exploits. While such individuals
still exist, it is not this stereotyped individual who is the biggest threat to IT
security. Today’s computer menace is much better organized and may be part
of an organized group (e.g., Anonymous, Chaos Computer Club, Lizard
Squad, TeslaTeam) that has an agenda and targets specific organizations and
Web sites. Some of these groups have ample resources, including money and
sophisticated tools to support their efforts. Today’s computer attacker has
greater depth of knowledge and expertise in getting around computer and
network security safeguards. Table 13.2 summarizes the types of perpetrators
of computer mischief, crime, and damage.
T A B L E 13.2 Classifying perpetrators of computer crime
Type of Description
Perpetrator
Black hat hacker Someone who violates computer or Internet security maliciously or for illegal personal gain (in
contrast to a white hat hacker who is someone who has been hired by an organization to test
Cracker the security of its information systems)
Malicious insider
An individual who causes problems, steals data, and corrupts systems
Industrial spy An employee or contractor who attempts to gain financially and/or disrupt a company’s infor-
Cybercriminal mation systems and business operations
Hacktivist
Cyberterrorist An individual who captures trade secrets and attempts to gain an unfair competitive advantage
Someone who attacks a computer system or network for financial gain
An individual who hacks computers or Web sites in an attempt to promote a political ideology
Someone who attempts to destroy the infrastructure components of governments, financial
institutions, and other corporations, utilities, and emergency response units
ransomware: Malware that stops Types of Exploits
you from using your computer or
accessing your data until you meet There are numerous types of computer attacks, with new varieties being
certain demands such as paying a invented all the time. This section discusses some of the more common
ransom or sending photos to the attacks, including ransomware, viruses, worms, Trojan horses, blended threat,
attacker. spam, distributed denial-of-service, rootkits, advanced persistent threat, phish-
ing, spear-phishing, smishing and vishing, identity theft, cyberespionage, and
cyberterrorism.
While we usually think of such exploits being aimed at computers, smart-
phones continue to become more computer capable. Increasingly, smart-
phone users store an array of personal identity information on their devices,
including credit card numbers and bank account numbers. Smartphones are
used to surf the Web and transact business electronically. The more people
use their smartphones for these purposes, the more attractive these devices
become as targets for cyberthieves. One form of smartphone malware runs
up charges on users’ accounts by automatically sending messages to numbers
that charge fees upon receipt of a message.
Ransomware
Ransomware is malware that stops you from using your computer or acces-
sing your data until you meet certain demands such as paying a ransom or
sending photos to the attacker. Computers become infected when users open
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
566 PART 5 • Information Systems in Business and Society
virus: A piece of programming code, an email attachment containing the malware or are lured to a compromised
usually disguised as something else, Web site by a deceptive email or pop-up window. Ransomware can also be
that causes a computer to behave in an spread through removable USB drives or Yahoo Messenger, with the payload
unexpected and usually undesirable disguised as an image.
manner.
Hollywood Presbyterian Medical Center was forced to shut down its com-
worm: A harmful program that resides puter network after hackers encrypted some of its data in February, 2016. Ini-
in the active memory of the computer tially, the hospital refused to pay the ransom, and hospital employees were
and duplicates itself. forced to resort to paper, pencil, phones, and fax machines to carry out many
of their tasks, including accessing patient data. The hospital sought help from
Trojan horse: A seemingly harmless the FBI, the Los Angeles Police Department, and cybersecurity consultants,
program in which malicious code is but it was never able to access to the data. After a week, the hospital paid the
hidden. ransom of $12,000. By February 15, access to the data was fully restored and
there was no evidence that any patient or employee data had been accessed.9
Viruses
Computer virus has become an umbrella term for many types of malicious
code. Technically, a virus is a piece of programming code, usually disguised
as something else, that causes a computer to behave in an unexpected and
usually undesirable manner. For example, the virus may be programmed to
display a certain message on the computer’s display screen, delete or modify
a certain document, or reformat the hard drive. Almost all viruses are attached
to a file, so that only when the infected file is opened, the virus executes.
A virus is spread to other machines when a computer user shares an infected
file or sends an email with a virus-infected attachment. In other words, viruses
spread by the action of the “infected” computer user.
Macro viruses have become a common and easily created form of virus.
Attackers use an application macro language (such as Visual Basic or
VBScript) to create programs that infect documents and templates. After an
infected document is opened, the virus is executed and infects the user’s
application templates. Macros can insert unwanted words, numbers, or
phrases into documents or alter command functions. After a macro virus
infects a user’s application, it can embed itself in all future documents created
with the application. The “WM97/Resume.A” virus is a Word macro virus
spread via an email message with the subject line “Resume - Janet Simons.” If
the email recipient clicks on the attachment, the virus deletes all data in the
user’s computer or mobile device.
Worms
Unlike a computer virus, which requires users to spread infected files to other
users, a worm is a harmful program that resides in the active memory of the
computer and duplicates itself. Worms differ from viruses in that they can
propagate without human intervention, often sending copies of themselves to
other computers by email. A worm is capable of replicating itself on your
computer so that it can potentially send out thousands of copies of itself to
everyone in your email address book, for example.
The negative impact of a worm attack on an organization’s computers can
be considerable—lost data and programs, lost productivity due to workers
being unable to use their computers, additional lost productivity as workers
attempt to recover data and programs, and lots of effort for IT workers to
clean up the mess and restore everything to as close to normal as possible.
The cost to repair the damage done by each of the Code Red, SirCam, and
Melissa worms was estimated to exceed $1 billion, with that of the Conficker,
Storm, and ILOVEYOU worms totaling well over $5 billion.10,11
Trojan Horses
A Trojan horse is a seemingly harmless program in which malicious code is
hidden. A victim on the receiving end of a Trojan horse is usually tricked into
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CHAPTER 13 • Cybercrime and Information System Security 567
logic bomb: A form of Trojan horse opening it because it appears to be useful software from a legitimate source,
malware that executes when it is such as an update for software the user currently has installed on his or her
triggered by a specific event. computer. The program’s harmful payload might be designed to enable the
hacker to destroy hard drives, corrupt files, control the computer remotely,
blended threat: A sophisticated launch attacks against other computers, steal passwords or spy on users by
threat that combines the features of a recording keystrokes and transmitting them to a server operated by a third
virus, worm, Trojan horse, and other party. A Trojan horse often creates a “backdoor” on a computer that enables
malicious code into a single payload. an attacker to gain future access to the system and compromise confidential
or private information.
spam: The use of email systems to
send unsolicited email to large numbers A Trojan horse can be delivered via an email attachment, downloaded to a
of people. user’s computers when he or she visits a Web site, or contracted via a remov-
able media device, such as a DVD or USB memory stick. Once an unsuspect-
ing user executes the program that hosts the Trojan horse, the malicious
payload is automatically launched as well—with no telltale signs. Common
host programs include screen savers, greeting card systems, and games.
Department of Homeland Security (DHS) officials say they have evidence
that harmful Trojan horse malware has been planted in the software that runs
much of the U.S. critical infrastructure, including oil and gas pipelines, power
transmission grids, water distribution and filtration systems, and even nuclear
power generation plants. DHS believes that the malware was planted by the
Russians as early as 2011 as a deterrent to a U.S. cyberattack on Russia. The Tro-
jan horse would allow nonauthorized users to control or shut down key compo-
nents of U.S. infrastructure remotely from their computer or mobile device.12
Another type of Trojan horse is a logic bomb, which executes when it is
triggered by a specific event. For example, logic bombs can be triggered by a
change in a particular file, by typing a specific series of keystrokes, or at a spe-
cific time or date. Malware attacks employing logic bombs compromised some
32,000 Windows, Unix, and Linux systems at half a dozen South Korean organi-
zations, including three major television broadcasters and two large banks. A
component of the attack was “wiper” malware triggered by a logic bomb set to
begin overwriting a computer’s master boot record at a preset time and day.13
Blended Threat
A blended threat is a sophisticated threat that combines the features of a
virus, worm, Trojan horse, and other malicious code into a single payload. A
blended threat attack might use server and Internet vulnerabilities to initiate
and then transmit and spread an attack on an organization’s computing
devices, using multiple modes to transport itself, including email, IRC (Inter-
net Relay Chat), and file-sharing networks. Rather than launching a narrowly
focused attack on specific EXE files, a blended threat might attack multiple
EXE files, HTML files, and registry keys simultaneously.
Spam
Email spam is the use of email systems to send unsolicited email to large num-
bers of people. Most spam is a form of low-cost commercial advertising, some-
times for questionable products such as pornography, phony get-rich-quick
schemes, and worthless stock. Spam is also an extremely inexpensive method
of marketing used by many legitimate organizations. For example, a company
might send email to a broad cross section of potential customers to announce
the release of a new product in an attempt to increase initial sales. However,
spam is also used to deliver harmful worms and other malware.
The cost of creating an email campaign for a product or service is several
hundred to a few thousand dollars, compared to tens of thousands of dollars
for direct-mail campaigns. In addition, email campaigns might take only a
couple of weeks (or less) to develop, compared with three months or more
for direct-mail campaigns, and the turnaround time for feedback averages 48
hours for email as opposed to weeks for direct mail. However, the benefits of
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
568 PART 5 • Information Systems in Business and Society
Controlling the Assault of spam to companies may be largely offset by the public’s generally negative
Non-Solicited Pornography reaction to receiving unsolicited ads.
and Marketing (CAN-SPAM) Act:
An act that states that it is legal to Spam forces unwanted and often objectionable material into email boxes,
spam, provided the messages meet a detracts from the ability of recipients to communicate effectively due to full mail-
few basic requirements. boxes and relevant emails being hidden among many unsolicited messages, and
costs Internet users and service providers millions of dollars annually. It takes
CAPTCHA (Completely users time to scan and delete spam email, a cost that can add up if they pay for
Automated Public Turing Test Internet connection charges on an hourly basis (such as at an Internet café). It
to Tell Computers and Humans also costs money for Internet service providers (ISPs) and online services to
Apart): Software that generates and transmit spam, which is reflected in the rates charged to all subscribers.
grades tests that humans can pass all
but the most sophisticated computer There is an even more sinister side to spam—often it is used to entice
programs cannot. unsuspecting recipients to take actions that will result in malware being
downloaded to their computer. Symantec, a provider of security, storage, and
systems management solutions, began noticing multiple instances of short-
duration, high-volume spam attacks targeting millions of users. The messages
instructed recipients to click on a link to a URL, which, if done, resulted in
the Trojan “Infostealer.Dyranges (Dyre)” being downloaded to their computer.
This Trojan is known to steal financial information.14
The Controlling the Assault of Non-Solicited Pornography and Mar-
keting (CAN-SPAM) Act states that it is legal to spam, provided the messages
meet a few basic requirements—spammers cannot disguise their identity by
using a false return address, the email must include a label specifying that it
is an ad or a solicitation, and the email must include a way for recipients to
indicate that they do not want future mass mailings. Despite CAN-SPAM and
other measures, the percentage of spam in email messages averaged 57 per-
cent in one week in January, 2015, according to Trustwave, an organization
that helps businesses protect data and reduce security risk.15
Many companies—including Google, Microsoft, and Yahoo!—offer free
email services. Spammers often seek to use email accounts from such major,
free, and reputable Web-based email service providers, as their spam can be
sent at no charge and is less likely to be blocked. Spammers can defeat the reg-
istration process of the free email services by launching a coordinated bot attack
that can sign up for thousands of email accounts. These accounts are then used
by the spammers to send thousands of untraceable email messages for free.
A partial solution to this problem is the use of CAPTCHA to ensure that
only humans obtain free accounts. CAPTCHA (Completely Automated Pub-
lic Turing Test to Tell Computers and Humans Apart) software generates
and grades tests that humans can pass and all but the most sophisticated com-
puter programs cannot. For example, humans can read the distorted text in
Figure 13.1, but simple computer programs cannot.
FIGURE 13.1 Courtesy of Carnegie Mellon University
Example of CAPTCHA
CAPTCHA is used to distinguish
humans from automated bots.
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CHAPTER 13 • Cybercrime and Information System Security 569
distributed denial-of-service Distributed Denial-of-Service Attacks
(DDoS) attack: An attack in which a
malicious hacker takes over computers A distributed denial-of-service (DDoS) attack is one in which a malicious
via the Internet and causes them to hacker takes over computers via the Internet and causes them to flood a target
flood a target site with demands for site with demands for data and other small tasks. A distributed denial-
data and other small tasks. of-service attack does not involve infiltration of the targeted system. Instead, it
keeps the target so busy responding to a stream of automated requests that
legitimate users cannot get in—the Internet equivalent of dialing a telephone
number repeatedly so that all other callers hear a busy signal (see Figure 13.2).
The targeted machine essentially holds the line open while waiting for a reply
that never comes; eventually, the requests exhaust all resources of the target.
Computer A Request Server
Computer B Response Waiting for reply from A
Computer C Waiting for reply from B
Computer D Request Waiting for reply from C
Computer E Response Waiting for reply from D
Waiting for reply from E
Request
Response
Request
Response
Request
Response
FIGURE 13.2
Distributed denial-of-service attack
A DDoS attack floods a target site with demands for data and other small tasks.
botnet: A term used to describe a The software to initiate a denial-of-service attack is simple to use, and
large group of computers, that are many DDoS tools are readily available at a variety of hacker sites. In a DDoS
controlled from one or more remote attack, a tiny program is downloaded surreptitiously from the attacker’s com-
locations by hackers, without the puter to dozens, hundreds, or even thousands of computers all over the
knowledge or consent of their owners. world. The term botnet is used to describe a large group of such computers,
which are controlled from one or more remote locations by hackers, without
zombie: A computer that has been the knowledge or consent of their owners. The collective processing capacity
taken over by a hacker to be used as of some botnets exceeds that of the world’s most powerful supercomputers.
part of a botnet. Based on a command by the attacker or at a preset time, the botnet compu-
ters (called zombies) go into action, each sending a simple request for access
to the target site again and again—dozens of times per second. The target
computers become so overwhelmed by requests for service that legitimate
users are unable to get through to the target computer.
Software company Arbor Networks follows DDoS attacks closely and
believes that such attacks are getting more sophisticated and are targeting an
increasing number of organizations. The company estimates that over 200 of
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570 PART 5 • Information Systems in Business and Society
rootkit: A set of programs that the reported attacks in 2015 generated 100 gigabits per second (Gbps) of traf-
enables its user to gain administrator- fic, with the largest attack generating traffic at a rate of 500 Gbps—enough to
level access to a computer without the disrupt the entire network of an Internet service provider.16
end user’s consent or knowledge.
Botnets are also frequently used to distribute spam and malicious code.
advanced persistent threat The Grum botnet was first detected in 2008 and operated until 2012 when it
(APT): A network attack in which an was brought down by cybercrime fighters. Grum infected several hundred
intruder gains access to a network and thousand computers around the world. It generated prodigious amounts of
stays there—undetected—with the spam advertising cheap pharmaceutical products. At its peak, Grum is esti-
intention of stealing data over a long mated to have been responsible for 35 percent of the world’s spam.17
period of time.
Rootkit
A rootkit is a set of programs that enables its user to gain administrator-level
access to a computer without the end user’s consent or knowledge. Once
installed, the attacker can gain full control of the system and even obscure the
presence of the rootkit from legitimate system administrators. Attackers can use
the rootkit to execute files, access logs, monitor user activity, and change the
computer’s configuration. Rootkits are one part of a type of blended threat that
consists of a dropper, a loader, and a rootkit. The dropper code gets the rootkit
installation started and can be activated by clicking on a link to a malicious
Web site in an email or opening an infected PDF file. The dropper launches
the loader program and then deletes itself. The loader loads the rootkit into
memory; at that point, the computer has been compromised. Rootkits are
designed so cleverly that it is difficult even to discover if they are installed on a
computer. The fundamental problem with trying to detect a rootkit is that the
operating system currently running cannot be trusted to provide valid test
results. The following are some symptoms of rootkit infections:
● The computer locks up or fails to respond to input from the keyboard
or mouse.
● The screen saver changes without any action on the part of the user.
● The taskbar disappears.
● Network activities function extremely slowly.
When it is determined that a computer has been infected with a rootkit,
there is little to do but reformat the disk; reinstall the operating system and
all applications; and reconfigure the user’s settings, such as mapped drives.
This can take hours, and the user may be left with a basic working machine,
but all locally held data and settings may be lost.
The “2012 rootkit virus” is a nasty piece of malware that deletes informa-
tion from a computer and makes it impossible to run some applications, such
as Microsoft Word. The longer the rootkit is present, the more damage it
causes. The virus asks users to install what appears to be a legitimate update
to their antivirus software or some other application. By the time the user
sees the prompt to install the software, it is too late, the computer has already
been infected by the rootkit.18
Advanced Persistent Threat
An advanced persistent threat (APT) is a network attack in which an
intruder gains access to a network and stays there—undetected—with the
intention of stealing data over a long period of time. Attackers in an APT
must continuously rewrite code and employ sophisticated evasion techniques
to avoid discovery. APT attacks target organizations with high-value informa-
tion, such as banks and financial institutions, government agencies, and insur-
ance companies with the goal of stealing data rather than disrupting
services.19 An APT attack advances through the following five phases:
1. Reconnaissance—The intruder begins by conducting reconnaissance on
the network to gain useful information about the target (security software
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CHAPTER 13 • Cybercrime and Information System Security 571
phishing: The act of fraudulently installed, computing resources connected to the network, number
using email to try to get the recipient to of users).
reveal personal data. 2. Incursion—The attacker next gains incursion to the network at a low level
to avoid setting off any alarms or suspicion. Some form of spear-fishing
may be employed in this phase. Once incursion to the target has been
gained, the attacker establishes a back door, or a means of accessing a
computer program that bypasses security mechanisms.
3. Discovery—The intruder now begins a discovery process to gather valid
user credentials (especially administrative ones) and move laterally across
the network, installing more back doors. These back doors enable the
attacker to install bogus utilities for distributing malware that remains
hidden in plain sight.
4. Capture—The attacker is now ready to access unprotected or compro-
mised systems and capture information over a long period of time.
5. Export—Captured data is then exported back to the attacker’s home base
for analysis and/or used to commit fraud and other crimes.20
Although APT attacks are difficult to identify, the theft of data can never
be completely invisible. Detecting anomalies in outbound data is perhaps the
best way for an administrator to discover that the network has been the target
of an APT attack.
The hacker group Carbanak is thought to have stolen over $1 billion from
banks in China, Russia, the Ukraine, and the United States. The group’s modus
operandi includes use of an APT that initially hooks its victims using spear-
fishing emails imitating legitimate banking communications. The gang performs
a reconnaissance phase to gather data about system administrators and uses
this information to navigate through various bank systems, including ATMs,
financial accounts, and money processing services. Once access to these sys-
tems is gained, the hackers steal money by transferring funds to accounts in
China and the United States. They have even programmed ATM machines to
dispense money at specific times for collection by money mules.21
Phishing
Phishing is the act of fraudulently using email to try to get the recipient to
reveal personal data. In a phishing scam, con artists send legitimate-looking
emails urging the recipient to take action to avoid a negative consequence or
to receive a reward. The requested action may involve clicking on a link to a
Web site or opening an email attachment. These emails, such as the one
shown in Figure 13.3, lead consumers to counterfeit Web sites designed to
trick them into divulging personal data or to download malware onto their
computers.
The volume of global phishing attacks is alarming. It is estimated that
about 156 million phishing emails are sent each day, with 16 million of those
successfully evading email filters. Of those, roughly 50 percent (or 8 million)
are opened, and 800,000 recipients per day click on malicious URL links con-
tained in the emails.22
Savvy users often become suspicious and refuse to enter data into the
fake Web sites; however, sometimes just accessing the Web site can trigger
an automatic and unnoticeable download of malicious software to a com-
puter. Indeed, the percentage of malicious URLs in unsolicited emails surged
to an average of 10 per cent in 2014.23 As one might guess, financial institu-
tions such as Bank of America, Citibank, Chase, MasterCard, Visa, and Wells
Fargo are among the Web sites that phishers spoof most frequently.
The University of Connecticut was recently hit by two phishing attacks
over a period on five weeks. The first phishing attack appeared to come from
Support—University Information Technology Services. The subject line was
“email quota,” and the message informed recipients that their email quota
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572 PART 5 • Information Systems in Business and Society
FIGURE 13.3
Example of phishing email
Phishing attacks attempt to get the
recipient to reveal personal data.
spear-phishing: A variation of had been exceeded and asked them to click on a link to revalidate their email
phishing in which the phisher sends account.24 The second phishing attack had the subject line “UCONN.EDU
fraudulent emails to a certain organi- ACCOUNT LOCK WARNING.” The message indicated that the recipient’s
zation’s employees. email account was being used to send bulk email by spammers, and it asked
recipients to click on a link to change their password.25 Victims who clicked
smishing: Another variation of on either link were asked to enter their user logon id and password, and if
phishing that involves the use of Short they did so, they provided the necessary information to compromise their
Message Service (SMS) texting. email account.
Spear-phishing is a variation of phishing in which the phisher sends
fraudulent emails to a certain organization’s employees. It is known as spear-
phishing because the attack is much more precise and narrow, like the tip of
a spear. The phony emails are designed to look like they came from high-
level executives within the organization. Employees are directed to a fake
Web site and then asked to enter personal information, such as name, Social
Security number, and network passwords. Botnets have become the primary
means for distributing phishing scams.
In early 2016, more than three dozen large and small organizations were
victimized by spear-phishing attacks that were designed to obtain data from
employee tax records. Many of these attacks spoofed the email address of the
CEO, CFO, or someone else of authority within the organization, prompting
many employees to comply with the request.26
Smishing and Vishing
Smishing is another variation of phishing that involves the use of texting. In
a smishing scam, people receive a legitimate-looking text message telling
them to call a specific phone number or log on to a Web site. This is often
done under the guise that there is a problem with their bank account or credit
card that requires immediate attention. However, the phone number or Web
site is phony and is used to trick unsuspecting victims into providing personal
information such as a bank account number, personal identification number,
or credit card number, which can then be used to steal money from victims’
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CHAPTER 13 • Cybercrime and Information System Security 573
vishing: Similar to smishing except bank accounts, charge purchases on their credit cards, or open new accounts.
that the victims receive a voice mail In some cases, if victims log on to a Web site, malicious software is down-
message telling them to call a phone loaded onto their smartphones, providing criminals with access to information
number or access a Web site. stored on the phones. The number of smishing scams typically increases
around the holidays as more people use their smartphones to make online
purchases.
Vishing is similar to smishing except that the victims receive a voice mail
message telling them to call a phone number or access a Web site. One recent
vishing campaign captured the payment card information of an estimated 250
Americans per day. In the attack, users were sent a message that their ATM
card had been deactivated. The users were prompted to call a phone number
to reactivate the card by entering their card number and their PIN—data that,
of course, is recorded and then used by the criminals to withdraw money
from the accounts.27
Financial institutions, credit card companies, and other organizations
whose customers may be targeted by criminals in this manner should be on
the alert for phishing, smishing, and vishing scams. They must be prepared
to act quickly and decisively, without alarming their customers if such a scam
is detected. Recommended action steps for institutions and organizations
include the following:
● Companies should educate their customers about the dangers of phishing,
smishing, and vishing through letters, recorded messages for those calling
into the company’s call center, and articles on the company’s Web site.
● Call center service employees should be trained to detect customer
complaints that indicate a scam is being perpetrated. They should attempt
to capture key pieces of information, such as the callback number the
customer was directed to use, details of the phone message or text
message, and the type of information requested.
● Customers should be notified immediately if a scam occurs. This can be
done via a recorded message for customers phoning the call center,
working with local media to place a news article in papers serving the
area of the attack, placing a banner on the institution’s Web page, and
even displaying posters in bank drive-through and lobby areas.
● If it is determined that the calls are originating from within the United
States, companies should report the scam to the Federal Bureau of
Investigation (FBI).
● Institutions can also try to notify the telecommunications carrier for the
particular numbers to request that they shut down the phone numbers
victims are requested to call.28
identity theft: The theft of personal Identity Theft
information, which is then used without
the owner’s permission, often to Identity theft is the theft of personal information, which is then used without
commit fraud or other crimes. the owner’s permission. Often, stolen personal identification information,
such as a person’s name, Social Security number, or credit card number, is
data breach: The unintended used to commit fraud or other crimes. Thieves may use a consumer’s credit
release of sensitive data or the access card number to charge items to that person’s account, use identification infor-
of sensitive data by unauthorized mation to apply for a new credit card or a loan in a consumer’s name, or use
individuals. a consumer’s name and Social Security number to receive government
benefits. Thieves also often sell personal identification information on the
black market.29
A data breach is the unintended release of sensitive data or the access of
sensitive data by unauthorized individuals, often resulting in identify theft.
Table 13.3 lists the five largest U.S. data breaches, all of which involved per-
sonal identification information.30
Some 37 million customer records of Ashley Madison (a Web site for mar-
ried people seeking other married people with whom to have affairs) were
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574 PART 5 • Information Systems in Business and Society
T A B L E 13.3 Five largest data breaches in the United States
Organization Year Number of Records Compromised Data Stolen
2008 130 million
Heartland Payment Credit and debit card data
Systems 2013 110 million
Target 2011 102 million Credit and debit card data
Sony Online Entertain- Login credentials, names, addresses,
ment Systems 2015 80 million phone numbers, email addresses
Anthem Names, addresses, dates of birth,
Social Security numbers, health
National Archives and 2008 76 million insurance ID numbers
Records Administration Names and contact information,
Social Security numbers
cyberespionage: The deployment compromised in an attack in 2015. Names and addresses were posted pub-
of malware that secretly steals data in licly, resulting in several lawsuits against the company for failing to safeguard
the computer systems of organizations, the personal information of the plaintiffs.31
such as government agencies, military
contractors, political organizations, and To reduce the potential for online credit card fraud, most e-commerce
manufacturing firms. Web sites use some form of encryption technology to protect information as
it comes in from the consumer. Some sites also verify the address submitted
online against the one the issuing bank has on file, although the merchant
may inadvertently throw out legitimate orders as a result—for example, a con-
sumer might place a legitimate order but request shipment to a different
address because it is a gift. Another security technique is to ask for a card ver-
ification value (CVV), the three-digit number above the signature panel on the
back of a credit card. This technique makes it impossible to make purchases
with a credit card number stolen online. An additional security option is
transaction-risk scoring software, which keeps track of a customer’s historical
shopping patterns and notes deviations from the norm. For example, say that
you have never been to a casino and your credit card information is being
used at Caesar’s Palace at 2 am. The transaction-risk score would go up dra-
matically, so much so that the transaction would likely be declined.
Cyberespionage
Cyberespionage involves the deployment of malware that secretly steals data
in the computer systems of organizations, such as government agencies, mili-
tary contractors, political organizations, and manufacturing firms. The type of
data most frequently targeted includes data that can provide an unfair com-
petitive advantage to the perpetrator. This data is typically not public knowl-
edge and may even be protected via patent, copyright, or trade secret. High-
value data includes the following:
● Sales, marketing, and new product development plans, schedules, and
budgets
● Details about product designs and innovative processes
● Employee personal information
● Customer and client data
● Sensitive information about partners and partner agreements
Tensions have long simmered between the China and the United States
over alleged cyberattacks. United States experts claim cyberespionage has
helped China to accelerate the research and development process and cut
years off the time for that country to acquire new technology in a variety of
industries. Alleged targets have included aluminum and steel producers, a
company that designs nuclear power plants, a solar panel manufacturer, and
an aircraft manufacturer. Meanwhile, China’s Foreign Ministry portrays the
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CHAPTER 13 • Cybercrime and Information System Security 575
cyberterrorism: The intimidation of United States as a hypocrite that engages in cyberespionage by conducting
government or civilian population by cybertheft, wiretapping, and surveillance activities against Chinese govern-
using information technology to disable ment departments, companies, and universities. After years of discussion and
critical national infrastructure (e.g., behind the scenes efforts, President Obama and Chinese President Xi
energy, transportation, financial, law announced in 2015 that the two nations had agreed to initial norms of cyber-
enforcement, emergency response) to activities with the two nations pledging each will avoid conducting cybertheft
achieve political, religious, or ideologi- of intellectual property for commercial gain. It remains to be seen how much
cal goals. of an impact this agreement will have.32,33
Department of Homeland Cyberterrorism
Security (DHS): A large federal
agency with more than 240,000 Cyberterrorism is the intimidation of government or civilian population by
employees and a budget of almost $65 using information technology to disable critical national infrastructure (e.g.,
billion whose goal is to provide for a energy, transportation, financial, law enforcement, emergency response) to
“safer, more secure America, which is achieve political, religious, or ideological goals. Cyberterrorism is an increas-
resilient against terrorism and other ing concern for countries and organizations around the globe. Indeed in a
potential threats.” statement released by the White House in early 2015, President Obama said,
“Cyberthreats pose one the gravest national security dangers that the United
U.S. Computer Emergency States faces.”34
Readiness Team (US-CERT): A
partnership between the Department of The Department of Homeland Security (DHS) is a large federal agency
Homeland Security and the public and with more than 240,000 employees and a budget of almost $65 billion whose
private sectors; established to provide goal is to provide for a “safer, more secure America, which is resilient against
timely handling of security incidents as terrorism and other potential threats.” The agency was formed in 2002 when
well as conducting improved analysis of 22 different federal departments and agencies were combined into a unified,
such incidents. integrated cabinet agency.35 The agency’s Office of Cybersecurity and Com-
munications resides within the National Protection and Programs Directorate
and is responsible for enhancing the security, resilience, and reliability of U.S.
cyber and communications infrastructure. It works to prevent or minimize dis-
ruptions to critical information infrastructure in order to protect the public,
the economy, and government services.36 The Department of Homeland Secu-
rity Web site (www.dhs.gov) provides a link that enables users to report cyber
incidents. Incident reports go to the US-CERT Incident Reporting System,
which assists analysts at the U.S. Computer Emergency Readiness Team
(US-CERT) (a partnership between the Department of Homeland Security and
the public and private sectors) in providing timely handling of security
incidents as well as in conducting improved analysis of such incidents.37
Established in 2003 to protect the nation’s Internet infrastructure against
cyberattacks, US-CERT serves as a clearinghouse for information on new
viruses, worms, and other computer security topics.
Cyberterrorists try on a daily basis to gain unauthorized access to a num-
ber of important and sensitive sites, such as the computers at the British,
French, Israeli, and U.S. foreign intelligence agencies; North American Aero-
space Defense Command (NORAD); and numerous government ministries
and private companies around the world. In particular, companies in the oil
and gas industry are seen as high-value targets. Some cyberterrorists are inter-
ested in taking control over the flow of oil and natural gas in computer-
controlled refineries and the movement of oil through pipelines. This could
result in devastating consequences—with oil and gas being cut off from freez-
ing populations in the dead of winter or skyrocketing prices at the gasoline
pumps.
In late 2015, Cyberterrorists attacked the two electric utility companies in
western Ukraine, causing a three-hour power outage affecting some 80,000
customers. Not only did the hackers cut the power, they also froze the data
displayed on the screens of plant operators so they could not view the chang-
ing plant conditions; thus, fooling the operators into believing power was still
flowing. To prolong the outage, the attackers also launched a telephone
denial-of-service attack against the utility’s call center to prevent customers
from reporting the outage—the center’s phone system was flooded with
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576 PART 5 • Information Systems in Business and Society
bogus calls to prevent legitimate callers from getting through. Once operators
became aware of the outage, the attackers activated KillDisk malware that
rendered infected servers and systems unusable. The operators’ machines
were completely destroyed by the malware.38
Federal Laws for Prosecuting Computer Attacks
Over the years, several laws have been enacted to help prosecute those
responsible for computer-related crime; these are summarized in Table 13.4.
For example, Section 814 of the USA Patriot Act defines cyberterrorism as any
hacking attempts designed to gain unauthorized access to a protected com-
puter, which, if successful, would cause a person an aggregate loss greater
than $5,000; adversely affect someone’s medical examination, diagnosis, or
treatment; cause a person to be injured; cause a threat to public health or
safety; or cause damage to a governmental computer that is used as a tool to
administer justice, national defense, or national security.39 Those convicted of
cyberterrorism are subject to a prison term of 5 to 20 years. (The $5,000
threshold is quite easy to exceed, and, as a result, many young people who
have been involved in what they consider to be minor computer pranks have
found themselves meeting the criteria to be tried as cyberterrorists.)
T A B L E 13.4 Federal laws that address computer crime
Federal Law Subject Area
Computer Fraud and Abuse Act (U.S. Code Title 18,
Section 1030) Addresses fraud and related activities in association with
computers, including the following:
Fraud and Related Activity in Connection with Access ● Accessing a computer without authorization or
Devices Statute (U.S. Code Title 18, Section 1029)
Identity Theft and Assumption Deterrence Act (U.S. Code exceeding authorized access
Title 18, Section 1028) ● Transmitting a program, code, or command that causes
Stored Wire and Electronic Communications and Transac- harm to a computer
tional Records Access Statutes (U.S. Code Title 18, Chapter ● Trafficking of computer passwords
121) ● Threatening to cause damage to a protected computer
USA Patriot Act
Covers false claims regarding unauthorized use of credit
cards
Makes identity theft a federal crime, with penalties of up to
15 years’ of imprisonment and a maximum fine of
$250,000
Focuses on unlawful access to stored communications to
obtain, alter, or prevent authorized access to a wire or
electronic communication while it is in electronic storage
Defines cyberterrorism and associated penalties
Critical Hiring a Black Hat Hacker
Thinking
Exercise You are a member of the Human Resources Department of a software manufac-
turer that has several products and annual revenue in excess of $500 million.
You’re on the phone with the manager of software development who has made a
request to hire a notorious black hat hacker to probe your company’s software
products in an attempt to identify any vulnerabilities. The reasoning is that if any-
one can find a vulnerability in your software, she can. This will give your firm a
head start on developing patches to fix the problems before anyone can exploit
them. You feel uneasy about hiring people with criminal records and connections
to unsavory members of the hacker/cracker community and are unsure if you
should approve the hire.
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CHAPTER 13 • Cybercrime and Information System Security 577
Review Questions
1. What is the difference between a black hat hacker and a white hat hacker?
2. What potential harm could this hacker do to your software products?
Critical Thinking Questions
1. Provide three good reasons to hire this individual. Provide three good reasons
not to hire this individual.
2. How would you respond to this request? Why?
Now that we have discussed various types of computer exploits, the people
who perpetrate these exploits, and the laws under which they can be prose-
cuted, we will discuss how organizations can take steps to implement a trust-
worthy computing environment to defend against such attacks.
Implementing Secure, Private, Reliable Computing
Organizations worldwide are increasingly demanding methods of computing
that deliver secure, private, and reliable computing experiences based on
sound business practices. Software and hardware manufacturers, consultants,
and system designers and developers all understand that this is a priority for
their customers.
A strong security program begins by assessing threats to the organiza-
tion’s computers and network, identifying actions that address the most seri-
ous vulnerabilities, and educating end users about the risks involved and the
actions they must take to prevent a security incident. An organization’s IS
security group must lead the effort to prevent security breaches by imple-
menting security policies and procedures, as well as effectively employing
available hardware and software tools. However, no security system is perfect,
so systems and procedures must be monitored to detect a possible intrusion.
If an intrusion occurs, there must be a clear reaction plan that addresses noti-
fication, evidence protection, activity log maintenance, containment, eradica-
tion, and recovery.
risk assessment: The process of Risk Assessment
assessing security-related risks to an
organization’s computers and networks Risk assessment is the process of assessing security-related risks to an orga-
from both internal and external threats. nization’s computers and networks from both internal and external threats.
Such threats can prevent an organization from meeting its key business objec-
tives. The goal of risk assessment is to identify which investments of time and
resources will best protect the organization from its most likely and serious
threats. In the context of an IS risk assessment, an asset is any hardware, soft-
ware, information system, network, or database that is used by the organiza-
tion to achieve its business objectives. A loss event is any occurrence that has
a negative impact on an asset, such as a computer contracting a virus or a
Web site undergoing a distributed denial-of-service attack. The steps in a gen-
eral security risk assessment process are as follows:
● Step 1. Identify the set of IS assets about which the organization is most
concerned. Priority is typically given to those assets that support the
organization’s mission and the meeting of its primary business goals.
● Step 2. Identify the loss events or the risks or threats that could occur,
such as a distributed denial-of-service attack or insider fraud.
● Step 3. Assess the frequency of events or the likelihood of each potential
threat; some threats, such as insider fraud, are more likely to occur than
others.
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Principles of Information Systems 13th Edition 2018
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Principles of Information Systems 13th Edition 2018
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