Reading Notes for Chapter 2 in the textbook - Continued ... Management
Information Systems (MIS). • Decision Support ... Benefit systems Curriculum
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Chapter 2: Information Systems in the Enterprise
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Reading Notes for Chapter 2 in the textbook
The chapter introduces six types of information systems. Figure 2.1 and table 2.1 give an overall picture of organizations and how different types of information systems serve them. Figure 2.2 depicts different types of information systems and how they relate to one another (Figure 2.9 as well). Section 2.2 examines information systems from a functional view of an organization: Sales and marketing systems, manufacturing and production systems, finance and accounting systems, and human resources systems. Read this section carefully to develop an understanding of how information systems serve different functions of an organization. 2
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Reading Notes for Chapter 2 in the textbook - Continued Read section 2.3 carefully to understand integration of functions and business processes. Figure 2.12 illustrates a cross-functional business process. Pay also attention to customer relationship management and enterprise systems that are current trends in business. Contrast Figure 2.15 and 2.16. Extended enterprises and industrial networks are also recent trends and would not be possible without the support of information technology.
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KINDS OF INFORMATION SYSTEMS
Organizational Hierarchy
Organizational Levels
Information Systems
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KINDS OF INFORMATION SYSTEMS KIND OF SYSTEM STRATEGIC LEVEL
MANAGEMENT LEVEL
GROUPS SERVED SENIOR MANAGERS
MIDDLE MANAGERS
KNOWLEDGE LEVEL
KNOWLEDGE & DATA WORKERS
OPERATIONAL LEVEL SALES & MARKETING
OPERATIONAL MANAGERS MANUFACTURING FINANCE & ENGINEERING
ACCOUNTING HUMAN RESOURCES
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Four General Kinds of IS
Operational-level systems support operational managers by monitoring the day-to-day’s elementary activities and transactions of the organization. e.g. TPS. Knowledge-level systems support knowledge and data workers in designing products, distributing information, and coping with paperwork in an organization. e.g. KWS, OAS Management-level systems support the monitoring, controlling, decisionmaking, and administrative activities of middle managers. e.g. MIS, DSS Strategic-level systems support long-range planning activities of senior management. e.g. ESS 6
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A Framework for IS (with respect to support provided) Executive Support Systems (ESS) Management Information Systems (MIS) Decision Support Systems (DSS) Knowledge Work Systems (KWS) Office Automation Systems (OAS) Transaction Processing Systems (TPS)
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Transaction Processing Systems (TPS) Computerized system that performs and records the daily routine transactions necessary to conduct the business; these systems serve the operational level of the organization • • • • • •
TYPE: OperationalOperational-level INPUTS: transactions, events PROCESSING: updating OUTPUTS: detailed reports USERS: operations personnel, supervisors DECISIONDECISION-MAKING: highly structured
EXAMPLE: payroll, accounts payable
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A Symbolic Representation for a payroll TPS Employee data (various departments)
To general ledger: wages and salaries
Payroll System
Management Reports Government documents
Payroll master file
Employee checks On-line queries
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Typical Applications of TPS Sales/ marketing systems Major functions Sales management of system Market research Promotion Pricing New products Major Sales order application information system systems Market research system Pricing system
TYPE OF TPS SYSTEM Manufacturing! Finance/ Human Other types production accounting resources (e.g., university) systems systems systems Scheduling Budgeting Personnel recard Admissions Purchasing General ledger Benefits Grade records Shipping/receiving Billing Cornpensation Course records Engineering Cost accounting Labor relations Alumni Operations Training Materials resource General ledger Payroll Registration system planning systems Purchase order Accounts Employee records Student transcript control systems receivable/payable system Engineering Budgeting Benefit systems Curriculum class systems control systems Quality control Funds managementCareer path Alumni benefactor systems systems systems system 10
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Office Automation Systems (OAS) Computer system, such as word processing, electronic mail system, and scheduling system, that is designed to increase the productivity of data workers in the office. • TYPE: KnowledgeKnowledge-level • INPUTS: documents, schedules • PROCESSING: document management,
scheduling, communication • OUTPUTS: documents; schedules • USERS: clerical workers
EXAMPLE: document imaging system
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Knowledge Work Systems (KWS) Information system that aids knowledge workers in the creation and integration of new knowledge in the organization. •TYPE: KnowledgeKnowledge-level • INPUTS: design specifications • PROCESSING: modelling • OUTPUTS: designs, graphics • USERS: technical staff; professionals
EXAMPLE: Engineering workstations 12
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Decision Support Systems (DSS) Information system at the management level of an organization that combines data and sophisticated analytical models or data analysis tools to support semi-structured and unstructured decision making. •TYPE: ManagementManagement-level • INPUTS: low volume data • PROCESSING: simulations, analysis • OUTPUTS: decision analysis • USERS: professionals, staff managers • DECISIONDECISION-MAKING: semisemi-structured EXAMPLE: sales region analysis
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Characteristics of Decision-Support Systems 1. DSS offer users flexibility, adaptability, and a quick response. 2. DSS operate with little or no assistance from professional programmers. 3. DSS provide support for decisions and problems whose solutions cannot be specified in advance. 4. DSS use sophisticated data analysis and modelling tools. 14
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Management Information Systems (MIS) Information system at the management level of an organization that serves the functions of planning, controlling, and decision making by providing routine summary and exception reports. TYPE: ManagementManagement-level INPUTS: high volume data PROCESSING: simple models OUTPUTS: summary reports USERS: middle managers DECISIONDECISION-MAKING: structured to semisemi-structured EXAMPLE: EXAMPLE: annual budgeting • • • • • •
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Characteristics of Management information Systems 1. MIS support structured decisions at the operational and management control levels. However, they are also useful for planning purposes of senior management staff. 2. MIS are generally reporting and control oriented. They are designed to report on existing operations and therefore to help provide day-to-day control of operations. 3. MIS rely an existing corporate data-and data flows. 4. MIS have little analytical capability. 5. MIS generally aid in decision making using past and present data. 6. MIS are relatively inflexible. 7. MIS have an internal rather than an external 16 orientation.
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Executive Support Systems (ESS) Information system at the strategic level of an organization that address unstructured decision making through advanced graphics and communications. TYPE: Strategic level • INPUTS: aggregate data; internal and external • PROCESSING: interactive • OUTPUTS: projections • USERS: senior managers • DECISIONDECISION-MAKING: highly unstructured EXAMPLE: EXAMPLE: 5 year operating plan 17
Model of a Typical Executive Support System ESS workstation Menus Graphics Communications Local processing
ESS workstation
Menus Graphics Communications Local processing
Internal Data
External Data
TPS/MIS Data Financial Data Office Systems Modeling/ analysis
Dow Jones Gallup Poll Standard & Poor's
ESS workstation
Menus Graphics Communications Local processing 18
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Major Types of Information Systems TYPES OF SYSTEM S Strate g ic Le v e l Sys te ms 5-ye ar 5-ye ar 5-ye ar Profit ope rating budge t s ale s tre nd planning plan fore cas ting fore cas ting
ESS
M IS
Sale s manag e me nt
DSS
Sale s re g io n analys is
KWS
Engine e ring work s tations
OAS
Wo rd pro ce s s ing
Inve nto ry Control Productio n Sche duling
Orde r Track ing
M anage me nt-Le ve l Sys te ms Capital Annual Re location Inve s tme nt analys is analys is budg e ting Cos t analys is
Plant s che duling
Knowle dge -Le ve l Sys te ms Graphics work s tatio ns
M anage rial wo rk s tations
M anufacturing
Ele ctronic Cale ndars
Ope ratio nal Le ve l Sys te ms Se curitie s Payroll trading Acco unts payable
Orde r proce s s ing M ate rial mo ve me nt Cas h manage me nt co ntro l Sale s and mark e ting
Pricing/profitability Contract cos t analys is analys is
Docume nt Imaging
M achine control TPS
M anpo we r planning
Finance
Co mpe ns ation Training & de ve lopme nt
Accounts re ce iv able Employe e re cord k e e ping
Acco unting
Human Re s o urce s
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Relationship between different IS ESS
MIS
KWS/ OAS
DSS
TPS
TPS is a major producer of information for other systems
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Classification of IS by Organizational Structure
Departmental Information Systems Enterprise Information System Inter-organizational Systems
NYCE SABRE or APOLLO
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Classification of IS by Functional Area
The accounting information system The finance information system The manufacturing (operations, production) information system The marketing information system The human resources information system
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Sales & Marketing Systems
Systems that help the firm identify customers for the firm’s products or services, develop products and services to meet customer’s needs, promote products and services, sell the products and services, and provide ongoing customer support.
System Order processing Market analysis
Pricing analysis
EXAMPLES Description Enter, process, and track orders Identify customers and markets using data on demographics, markets, consumer behavior, and trends Determine prices for products and services
Organizational Level Operational Knowledge
Management
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Manufacturing and Production Systems
Systems that deal with the planning, development, and production of products and services and with controlling the flow of production.
Examples Description Control the actions of machines and equipment Computer-aided design (CAD) Design new products using the computer Production planning Decide when and how many products should be produced Facilities location Decide where to locate new production facilities System Machine control
Organizational Level Operational Knowledge Management Strategic
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Finance and Accounting Systems
Systems that keep track of the firm’s financial assets and fund flows.
System Accounts receivable Portfolio analysis Budgeting Profit planning
Examples Description Track money owed the firm Design the firm's portfolio of investments Prepare short-term budgets Plan long-term profits
Organizational Level Operational Knowledge Management Strategic
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Human Resources Systems
Systems that maintain employee records; Track employee skills, job performance, and training; And support planning for employee compensation and career development.
Examples Description Track employae training, skills, and performance appraisals Career pathing Design career paths for employees Compensation analysis Monitor the range and distribution ofemployee wages, salaries, and bene6cs Human resources planning Plan the long-term labor force needs of the organization System Training and development
Organizational Level Operational Knowledge Management Strategic
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Examples of Business Processes Functional Area Business Process Manufacturing and production Assembling the product Checking for quality Producing bills of materials Sales and marketing Identifying customers Making customers aware of the product Selling the product Finance and accounting paying creditors Creating financial statements Managing cash accounts Human resources Hiring employees Evaluating employees' job performance Enrolling employees in benefits plans
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The Order Fulfillment Process (F 2.12)
Sales
Accounting
M anufact uring & P roduct ion
Generate Order
Submit Order
Check Credit
Approve Credit
Assemble Product
Generate Invoice
Ship Product
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Customer Relationship Management
Sales T elephone sales W eb sales Field sales Ret ail sales
Customer relationship management Business and technology discipline to coordinate alt of the business processes for dealing with customers. Unified view of customers Consistent message to customers End-to-end customer care Long-term customer relationships Identification of best customers
M arket ing Cam paign dat a Cont ent Dat a analysis Cust om er Service Call cent er dat a W eb self service dat a Field service dat a W ireless dat a
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Customer Relationship Management
Supply chain management Integration of supplier, distributor, and customer logistics requirements into one cohesive process. Supply chain Network of facilities for procuring materials, transforming raw materials into finished products,' and distributing finished produce to customers. Capacity, inventory level, delivery schedule, payment terms Supplier
Manufacturer
Distributor
Retail Outlet
Customer
Orders, return requests, repair and service requests, payments 30
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HOW INFORMATION SYSTEMS CAN FACILITATE SUPPLY CHAIN MANAGEMENT
Information systems can help participants in the supply chain: Decide when and what to produce, store, and move Rapidly communicate orders Track the status of orders Check inventory availability and monitor inventory levels Track shipments Plan production based on actual customer demand Rapidly communicate changes in product design31
Enterprise Systems
Firm wide information systems that integrate key business processes so that information can flow freely between different parts of the firm.
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Traditional View of Systems (F. 2.15) Business Functions Accounting
Finance
Marketing and Sales
Human Resources
Business Processes
Business Processes
Business Processes
Business Processes
Business Processes
Manufacturing Systems
Accounting Systems
Finance Systems
Marketing and Sales Systems
Human Resources Systems
Information Systems
Vendors
O rga n ization a l B ou n darie s
O rga n ization a l B ou n darie s
Manufacturing
Customers
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Enterprise Systems (F. 2.16)
Manufacturing
Accounting
Human Resources
Business Process Business Process Business Process Enterprise-wide business processes
Sales and Marketing
Organizational Boundaries
Vendors
Organizational Boundaries
Enterprise System
Customers
Finance 34
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Benefits and Challenges of Enterprise Systems
Benefits
Firm structure and organization: One Organization Management: Firm wide Knowledge-based Management Processes Technology: Unified Platform Business: More Efficient Operations and Customerdriven Business Processes
Challenges
Daunting Implementation High Up-front Costs and Future Benefits Inflexibility 35
Extended Enterprises
Extended Enterprises: Networks linking systems of multiple firms in an industry. Also called extended enterprises. Vertical industrial networks Networks for integrating the operations of a firm with its suppliers. Horizontal industrial networks Networks for linking firms across an entire industry.
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Industrial Networks (F. 2.17) Horizontal industrial network Firms in a single industry
Firm 1
Firm 2
Firm 3
Firm 4
Firm value chains and enterprise systems Industrial Networks
Firms in complementary business
Firm 1
Supplie r 1
Supplie r 2
Industry value chain
Supplie r 3
Vertical industrial network
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