Chapter 2: Information Systems inthe Enterprise                                    1
Reading Notes for Chapter 2 in the textbook       The chapter introduces six types of information systems.Figure 2.1 and t...
Reading Notes for Chapter 2 in the textbook - Continued        Read section 2.3 carefully to understand integration offunc...
KINDS OF INFORMATION SYSTEMS   Organizational Hierarchy   Organizational Levels   Information Systems                  ...
KINDS OF INFORMATION SYSTEMS    KIND OF SYSTEM                             GROUPS SERVED          STRATEGIC LEVEL         ...
Four General Kinds of IS   Operational-level systems      support operational managers by monitoring       the day-to-da...
A Framework for IS      (with respect to support provided)•   Executive Support Systems (ESS)•   Management Information Sy...
Transaction Processing Systems (TPS)    Computerized system that performs and records    the daily routine transactions ne...
A Symbolic Representation for a payroll        TPSEm ploye e data (variou s de partm e n ts )            To ge n e ral le ...
Typical Applications of TPS                                                     TYPE OF TPS SYSTEM                Sales/  ...
Office Automation Systems (OAS) Computer system, such as word processing,electronic mail system, and scheduling system,tha...
Knowledge Work Systems (KWS) Information system that aids knowledge workers inthe creation and integration of new knowledg...
Decision Support Systems (DSS) Information system at the management level of anorganization that combines data and sophist...
Characteristics of Decision-Support   Systems1. DSS offer users flexibility, adaptability, and aquick response.2. DSS oper...
Management Information Systems                   (MIS)Information system at the management level of anorganization that se...
Characteristics of Management informationSystems 1. MIS support structured decisions at the   operational and management c...
Executive Support Systems (ESS) Information system at the strategic level of anorganization that address unstructured deci...
Model of a Typical Executive Support         System                                        E SS                           ...
Major Types of Information SystemsT YPE S O F SYST E M S                                                                  ...
Relationship between different IS                                     ESS           MIS                                   ...
Classification of IS        by Organizational Structure   Departmental Information Systems   Enterprise Information Syst...
Classification of IS      by Functional Area   The accounting information system   The finance information system   The...
Sales & Marketing Systems           Systems that help the firm identify customers            for the firm’s products or s...
Manufacturing and Production Systems            Systems that deal with the             planning, development, and product...
Finance and Accounting Systems             Systems that keep track of the firm’s              financial assets and fund f...
Human Resources Systems            Systems that maintain employee             records; Track employee skills, job        ...
Examples of Business ProcessesFunctional Area              Business ProcessManufacturing and production Assembling the pro...
The Order Fulfillment Process (F 2.12)                           Generate   Subm it        Sales                          ...
Customer Relationship Management                                Customer relationship management                         ...
Customer Relationship Management   Supply chain management Integration of    supplier, distributor, and customer logistic...
HOW INFORMATION SYSTEMS CANFACILITATE SUPPLY CHAINMANAGEMENT    Information systems can help participants in    the supply...
Enterprise Systems   Firm wide information systems that    integrate key business processes so    that information can fl...
Traditional View of Systems (F. 2.15)                                                          Busine ss Functions        ...
Enterprise Systems (F. 2.16)        Man u factu rin g                                                A ccou n tin g       ...
Benefits and Challenges ofEnterprise Systems    Benefits        Firm structure and organization: One Organization      ...
Extended Enterprises   Extended Enterprises: Networks linking    systems of multiple firms in an industry. Also    called...
Industrial Networks (F. 2.17)                              Horizon tal in du s trial n e tworkF irms               F ir m ...
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Ch2 unit 3 & 4

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Ch2 unit 3 & 4

  1. 1. Chapter 2: Information Systems inthe Enterprise 1
  2. 2. 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 organizationsand how different types of information systems serve them.Figure 2.2 depicts different types of information systems and howthey relate to one another (Figure 2.9 as well). Section 2.2 examines information systems from a functionalview of an organization: Sales and marketingsystems, manufacturing and production systems, finance andaccounting systems, and human resources systems. Read thissection carefully to develop an understanding of how informationsystems serve different functions of an organization. 2
  3. 3. Reading Notes for Chapter 2 in the textbook - Continued Read section 2.3 carefully to understand integration offunctions and business processes. Figure 2.12 illustrates across-functional business process. Pay also attention tocustomer relationship management and enterprise systemsthat are current trends in business. Contrast Figure 2.15 and2.16. Extended enterprises and industrial networks are alsorecent trends and would not be possible without the supportof information technology. 3
  4. 4. KINDS OF INFORMATION SYSTEMS Organizational Hierarchy Organizational Levels Information Systems 4
  5. 5. KINDS OF INFORMATION SYSTEMS KIND OF SYSTEM GROUPS SERVED STRATEGIC LEVEL SENIOR MANAGERS MANAGEMENT LEVEL MIDDLE MANAGERS KNOWLEDGE LEVEL KNOWLEDGE & DATA WORKERSOPERATIONAL OPERATIONALLEVEL MANAGERS SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN MARKETING & ENGINEERING RESOURCES 5
  6. 6. 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, decision- making, 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
  7. 7. 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) 7
  8. 8. 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: Operational-level• INPUTS: transactions, events• PROCESSING: updating• OUTPUTS: detailed reports• USERS: operations personnel, supervisors• DECISION-MAKING: highly structuredEXAMPLE: payroll, accounts payable 8
  9. 9. A Symbolic Representation for a payroll TPSEm ploye e data (variou s de partm e n ts ) To ge n e ral le dge r: wage s an d s alarie s Man age m e n t P ayr o l l Sys te m R e ports Gove rn m e n t docu m e n ts P ayr o l l m as te r Em ploye e ch e ck s fi l e O n -lin e qu e rie s 9
  10. 10. Typical Applications of TPS TYPE OF TPS SYSTEM Sales/ Manufacturing! Finance/ Human Other types marketing production accounting resources (e.g., university) systems systems systems systemsMajor functions Sales management Scheduling Budgeting Personnel recard Admissionsof system Market research Purchasing General ledger Benefits Grade records Promotion Shipping/receiving Billing Cornpensation Course records Pricing Engineering Cost accounting Labor relations Alumni New products Operations TrainingMajor Sales order Materials resource General ledger Payroll Registration systemapplication information system planning systemssystems Market research Purchase order Accounts Employee records Student transcript system control systems receivable/payable system Pricing system Engineering Budgeting Benefit systems Curriculum class systems control systems Quality control Funds managementCareer path Alumni benefactor systems systems systems system 10
  11. 11. Office Automation Systems (OAS) Computer system, such as word processing,electronic mail system, and scheduling system,that is designed to increase the productivity ofdata workers in the office.• TYPE: Knowledge-level• INPUTS: documents, schedules• PROCESSING: document management, scheduling, communication• OUTPUTS: documents; schedules• USERS: clerical workersEXAMPLE: document imaging system 11
  12. 12. Knowledge Work Systems (KWS) Information system that aids knowledge workers inthe creation and integration of new knowledge inthe organization.•TYPE: Knowledge-level• INPUTS: design specifications• PROCESSING: modelling• OUTPUTS: designs, graphics• USERS: technical staff; professionalsEXAMPLE: Engineering workstations 12
  13. 13. Decision Support Systems (DSS) Information system at the management level of anorganization that combines data and sophisticatedanalytical models or data analysis tools to supportsemi-structured and unstructured decision making.•TYPE: Management-level• INPUTS: low volume data• PROCESSING: simulations, analysis• OUTPUTS: decision analysis• USERS: professionals, staff managers• DECISION-MAKING: semi-structuredEXAMPLE: sales region analysis 13
  14. 14. Characteristics of Decision-Support Systems1. DSS offer users flexibility, adaptability, and aquick response.2. DSS operate with little or no assistance fromprofessional programmers.3. DSS provide support for decisions and problemswhose solutions cannot be specified in advance.4. DSS use sophisticated data analysis andmodelling tools. 14
  15. 15. Management Information Systems (MIS)Information system at the management level of anorganization that serves the functions of planning,controlling, and decision making by providing routinesummary and exception reports.•TYPE: Management-level•INPUTS: high volume data•PROCESSING: simple models•OUTPUTS: summary reports•USERS: middle managers•DECISION-MAKING: structured to semi-structuredEXAMPLE: annual budgeting 15
  16. 16. Characteristics of Management informationSystems 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
  17. 17. Executive Support Systems (ESS) Information system at the strategic level of anorganization that address unstructured decisionmaking through advanced graphics andcommunications. TYPE: Strategic level• INPUTS: aggregate data; internal and external• PROCESSING: interactive• OUTPUTS: projections• USERS: senior managers• DECISION-MAKING: highly unstructuredEXAMPLE: 5 year operating plan 17
  18. 18. Model of a Typical Executive Support System E SS w o r k s t at i o n Me n u s Graph ics C om m u n ication s Local proce s s in gE SS In t e r n al D at a E xt e r n al D at a E SSw o r k s t at i o n TP S /M IS D at a D o w J o ne s w o r k s t at i o n F i n an c i al D at a G al l u p P o l l O ffi c e S ys t e m s S t an d ar d & M o de l i ng / P o o r s Me n u s an al ys i s Me n u s Graph ics Graph ics C om m u n ication s C om m u n ication s Local proce s s in g Local proce s s in g 18
  19. 19. Major Types of Information SystemsT YPE S O F SYST E M S S t ra t e g ic L e v e l S y s t e m s E SS 5 -ye ar 5 -ye ar 5 -ye ar P ro fit M anpo w e r o p e ra t in g budg e t s a le s t re n d p la n n in g p la n n in g p la n fo re c a s t in g fo re c a s t in g M an ag e m e n t-L e v e l S ys te m s S a le s I n v e n t o ry A nnual C a p it a l R e lo c a t io n M IS m anag e m e nt C o n t ro l b u d g e t in g I n v e s t m e n t a n a ly s is a n a ly s is P ric in g /p ro fit a b ilit y C o n t ra c t c o s t D SS S a le s re g io n P ro d u c t io n Cost a n a ly s is a n a ly s is a n a ly s is S c h e d u lin g a n a ly s is K n o w le d g e - L e v e l S y s t e m s KWS E n g in e e rin g G ra p h ic s M a n a g e ria l w o rk s t a t io n s w o rk s t a t io n s w o rk s t a t io n s OAS W o rd D o cum e nt E le c t ro n ic p ro c e s s in g I m a g in g C a le n d a rs O p e ra t io n a l L e v e l S y s t e m s M a c h in e c o n t ro l S e c u rit ie s P a y ro ll C o m p e n s a t io nTPS t ra d in g O rd e r T ra c k in g P la n t s c h e d u lin g A c c o u n t s p a y a b le T ra in in g & d e v e lo p m e n t O rd e r p ro c e s s in g M a t e ria l m o v e m e n t C a s h A c c o u n t s re c e iv a b le E m p lo y e e re c o rd k e e p in g c o n t ro l m anag e m e nt S a le s a n d m a rk e t in g M a n u fa c t u rin g F in a n c e A c c o u n t in g H um an R e s o u rc e s 19
  20. 20. Relationship between different IS ESS MIS DSS KWS/ TPS OASTPS is a major producer of information for other systems 20
  21. 21. Classification of IS by Organizational Structure Departmental Information Systems Enterprise Information System Inter-organizational Systems  NYCE  SABRE or APOLLO 21
  22. 22. 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 22
  23. 23. 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. EXAMPLESSystem Description Organizational LevelOrder processing Enter, process, and track orders OperationalMarket analysis Identify customers and markets using Knowledge data on demographics, markets, consumer behavior, and trendsPricing analysis Determine prices for products Management and services 23
  24. 24. Manufacturing and Production Systems  Systems that deal with the planning, development, and production of products and services and with controlling the flow of production. ExamplesSystem Description Organizational LevelMachine control Control the actions of machines Operational and equipmentComputer-aided design (CAD) Design new products using Knowledge the computerProduction planning Decide when and how many Management products should be producedFacilities location Decide where to locate new Strategic production facilities 24
  25. 25. Finance and Accounting Systems  Systems that keep track of the firm’s financial assets and fund flows. Examples System Description Organizational LevelAccounts receivable Track money owed the firm OperationalPortfolio analysis Design the firms portfolio of investments KnowledgeBudgeting Prepare short-term budgets ManagementProfit planning Plan long-term profits Strategic 25
  26. 26. 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 System Description Organizational LevelTraining and development Track employae training, skills, Operational and performance appraisalsCareer pathing Design career paths for employees KnowledgeCompensation analysis Monitor the range and distribution Management ofemployee wages, salaries, and bene6csHuman resources planning Plan the long-term labor force needs Strategic of the organization 26
  27. 27. Examples of Business ProcessesFunctional Area Business ProcessManufacturing and production Assembling the product Checking for quality Producing bills of materialsSales and marketing Identifying customers Making customers aware of the product Selling the productFinance and accounting paying creditors Creating financial statements Managing cash accountsHuman resources Hiring employees Evaluating employees job performance Enrolling employees in benefits plans 27
  28. 28. The Order Fulfillment Process (F 2.12) Generate Subm it Sales Order Order Ac c ounting Chec k Approve Generate Credit Credit Invoic e M a n uf a c t ur in g As s em ble Ship & P r o duc t io n Produc t Produc t 28
  29. 29. Customer Relationship Management  Customer relationship management Business and technology discipline to coordinate alt of the business processes Sa le s T e le p h o n e sa le s for dealing with customers. W e b sa le s F ie ld sa le s R e t a il sa le s Unified view of c ustom ersM a r k e t in g Consistent m essage to c ustom ers C a m p a ign da t a Co n t en t End-to-end c ustom er c are D a t a a n a ly sis Long-term c ustom er relationships C ust o m e r Se r v ic e Identific ation of best c ustom ers C a ll c e n t e r da t a W e b se lf se r v ic e da t a F ie ld se r v ic e da t a W ir e le ss da t a 29
  30. 30. 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. Capac ity, inventory level, delivery sc hedule, paym ent term s Retail Supplier Manufac turer Distributor Custom er Outlet Orders, return requests, repair and servic e requests, paym ents 30
  31. 31. HOW INFORMATION SYSTEMS CANFACILITATE SUPPLY CHAINMANAGEMENT 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 design 31
  32. 32. Enterprise Systems Firm wide information systems that integrate key business processes so that information can flow freely between different parts of the firm. 32
  33. 33. Traditional View of Systems (F. 2.15) Busine ss Functions Mark e ting and Hum an Manufacturing Accounting Finance Sale s Re source s O rg a n iza t io n a l O rg a n iza t io n a l B o u n da rie s B o u n da rie s Busine ss Busine ss Busine ss Busine ss Busine ss Proce sse s Proce sse s Proce sse s Proce sse s Proce sse s Human Manufacturing Accounting Finance Mark e ting and Res ources Syste m s Syste m s Syste m s Sale s Syste m s S ys temsVe ndors Inform ation Syste m s Custom e rs 33
  34. 34. Enterprise Systems (F. 2.16) Man u factu rin g A ccou n tin g En te rpris e S ys te m O rgan ization al O rgan ization al Bu s in e s s Proce s s Bou n darie s Bou n darie s Bu s in e s s Proce s s V e n dors Bu s in e s s Proce s s C u s tom e rs En te rpris e -wide bu s in e s s proce s s e s Hu m an S ale s an d Fin an ceR e s ou rce s Mark e tin g 34
  35. 35. Benefits and Challenges ofEnterprise Systems  Benefits  Firm structure and organization: One Organization  Management: Firm wide Knowledge-based Management Processes  Technology: Unified Platform  Business: More Efficient Operations and Customer- driven Business Processes  Challenges  Daunting Implementation  High Up-front Costs and Future Benefits  Inflexibility 35
  36. 36. 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. 36
  37. 37. Industrial Networks (F. 2.17) Horizon tal in du s trial n e tworkF irms F ir m F ir m F ir m F ir min a s in g le 1 2 3 4in d u s t ry Firm value c hains and enterprise systems Industry value Industrial Netw orks c hain Firms in F ir m S upplie S upplie S upplie c omplementary r r r 1 1 2 3 business V e rtical in du s trial n e twork 37

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