2.2.11

CHAPTER 2. THE CHAPTER 2. THE STRATEGIC ROLE OF STRATEGIC ROLE OF

INFORMATION SYSTEMSINFORMATION SYSTEMS

2.2.22

LEARNING OBJECTIVESLEARNING OBJECTIVES• ANALYZE ROLES OF 6 TYPES OF ANALYZE ROLES OF 6 TYPES OF

INFORMATION SYSTEMSINFORMATION SYSTEMS• DESCRIBE TYPES OF INFORMATION DESCRIBE TYPES OF INFORMATION

SYSTEMSSYSTEMS• EXAMINE COMPETITIVE FORCES, EXAMINE COMPETITIVE FORCES,

VALUE CHAIN MODELSVALUE CHAIN MODELS**

2.2.33

LEARNING OBJECTIVESLEARNING OBJECTIVES• EXPLAIN DIFFICULTIES OF BUILDING, EXPLAIN DIFFICULTIES OF BUILDING,

SUSTAINING STRATEGIC INFORMATION SUSTAINING STRATEGIC INFORMATION SYSTEMSSYSTEMS

• DESCRIBE HOW INFORMATION SYSTEMS DESCRIBE HOW INFORMATION SYSTEMS SUPPORT LEVELS OF BUSINESS SUPPORT LEVELS OF BUSINESS STRATEGYSTRATEGY

**

2.2.44

MANAGEMENT CHALLENGESMANAGEMENT CHALLENGES• INTEGRATION:INTEGRATION:

– ENTERPRISE RESOURCE MANAGEMENT– CONNECTING ORGANIZATIONAL LEVELS

DIFFICULT, COSTLY• SUSTAIN COMPETITIVE ADVANTAGE:SUSTAIN COMPETITIVE ADVANTAGE:

– INFO SYSTEMS MUST BE FLEXIBLE TO ENSURE LONG-TERM PROFITS

**

2.2.55

TYPES OF INFORMATION SYSTEMSTYPES OF INFORMATION SYSTEMS

DATA WORKERSDATA WORKERS

KIND OF SYSTEM GROUPS SERVEDKIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR STRATEGIC LEVEL SENIOR MANAGERSMANAGERS

MANAGEMENT LEVEL MIDDLE MANAGEMENT LEVEL MIDDLE MANAGERSMANAGERS

OPERATIONAL OPERATIONAL OPERATIONAL LEVEL OPERATIONAL LEVEL MANAGERS MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE & KNOWLEDGE LEVEL KNOWLEDGE &

SALES & MANUFACTURING FINANCE ACCOUNTING HUMANSALES & MANUFACTURING FINANCE ACCOUNTING HUMAN RESOURCESRESOURCESMARKETINGMARKETING

2.2.66

MAJOR TYPES OF SYSTEMSMAJOR TYPES OF SYSTEMS

• EXECUTIVE SUPPORT SYSTEMS EXECUTIVE SUPPORT SYSTEMS (ESS)(ESS)• DECISION SUPPORT SYSTEMS DECISION SUPPORT SYSTEMS (DSS)(DSS)• MANAGEMENT INFORMATION SYSTEMS MANAGEMENT INFORMATION SYSTEMS (MIS)(MIS)• KNOWLEDGE WORK SYSTEMS KNOWLEDGE WORK SYSTEMS (KWS)(KWS)• OFFICE AUTOMATION SYSTEMS OFFICE AUTOMATION SYSTEMS (OAS)(OAS)• TRANSACTION PROCESSING SYSTEMS TRANSACTION PROCESSING SYSTEMS (TPS)(TPS)

**

2.2.77

TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONSSales & Marketing SystemsSales & Marketing Systems

MAJOR FUNCTIONS OF SYSTEMS:MAJOR FUNCTIONS OF SYSTEMS:• Sales Management; Market Research; Sales Management; Market Research;

Promotion; Pricing; New ProductsPromotion; Pricing; New ProductsMAJOR APPLICATION SYSTEMS:MAJOR APPLICATION SYSTEMS:• Sales Order Info System; Market Sales Order Info System; Market

Research System; Pricing SystemResearch System; Pricing System**

TPS

2.2.88

TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONSManufacturing & Production SystemsManufacturing & Production Systems

MAJOR FUNCTIONS OF SYSTEMS:MAJOR FUNCTIONS OF SYSTEMS:• Scheduling; Purchasing; Shipping / Scheduling; Purchasing; Shipping /

Receiving; Engineering; OperationsReceiving; Engineering; OperationsMAJOR APPLICATION SYSTEMSMAJOR APPLICATION SYSTEMS::• Materials Resource Planning Systems; Materials Resource Planning Systems;

Purchase Order Control Systems; Purchase Order Control Systems; Engineering Systems; Quality Control Engineering Systems; Quality Control SystemsSystems

**

TPS

2.2.99

TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONSFinance & Accounting SystemsFinance & Accounting Systems

MAJOR FUNCTIONS OF SYSTEMS:MAJOR FUNCTIONS OF SYSTEMS:• Budgeting; General Ledger; Billing: Budgeting; General Ledger; Billing:

Cost AccountingCost AccountingMAJOR APPLICATION SYSTEMS:MAJOR APPLICATION SYSTEMS:• General Ledger; Accounts Receivable / General Ledger; Accounts Receivable /

Payable; Budgeting; Funds Payable; Budgeting; Funds Management SystemsManagement Systems

**TPS

2.2.1010

TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONSHuman Resources SystemsHuman Resources Systems

MAJOR FUNCTIONS OF SYSTEMS:MAJOR FUNCTIONS OF SYSTEMS:• Personnel Records; Benefits; Personnel Records; Benefits;

Compensation; Labor Relations; TrainingCompensation; Labor Relations; TrainingMAJOR APPLICATION SYSTEMS:MAJOR APPLICATION SYSTEMS:• Payroll; Employee Records; Benefit Payroll; Employee Records; Benefit

Systems; Career Path Systems; Systems; Career Path Systems; Personnel Training SystemsPersonnel Training Systems

**

TPS

2.2.1111

TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONSOther Types (e.g., University)Other Types (e.g., University)

MAJOR FUNCTIONS OF SYSTEMS:MAJOR FUNCTIONS OF SYSTEMS:• Admissions; Grade Records; Course Admissions; Grade Records; Course

Records; AlumniRecords; AlumniMAJOR APPLICATION SYSTEMS:MAJOR APPLICATION SYSTEMS:• Registration System; Student Transcript Registration System; Student Transcript

System; Curriculum Class Control System; Curriculum Class Control System; Alumni Benefactor SystemSystem; Alumni Benefactor System

**TPS

2.2.1212

KNOWLEDGE LEVELKNOWLEDGE LEVEL• INPUTS:INPUTS: DESIGN SPECS DESIGN SPECS• PROCESSING:PROCESSING: MODELLING MODELLING• OUTPUTS:OUTPUTS: DESIGNS, GRAPHICS DESIGNS, GRAPHICS• USERS:USERS: TECHNICAL STAFF TECHNICAL STAFF

EXAMPLE: ENGINEERING WORK EXAMPLE: ENGINEERING WORK STATION STATION

KNOWLEDGE WORK SYSTEMS KNOWLEDGE WORK SYSTEMS (KWS)(KWS)

2.2.1313

OFFICE AUTOMATION SYSTEMS OFFICE AUTOMATION SYSTEMS (OAS)(OAS)

• TOWARD A “PAPERLESS” OFFICETOWARD A “PAPERLESS” OFFICE• REDESIGN OF WORK FLOWREDESIGN OF WORK FLOW• INTEGRATED SOFTWAREINTEGRATED SOFTWARE• ERGONOMIC DESIGNERGONOMIC DESIGN• BRIGHT, CHEERFULBRIGHT, CHEERFUL

WORK SPACEWORK SPACE

EXAMPLE: PRESENTATION GRAPHICSEXAMPLE: PRESENTATION GRAPHICS

2.2.1414

MANAGEMENT LEVELMANAGEMENT LEVEL• INPUTS:INPUTS: HIGH VOLUME DATA HIGH VOLUME DATA• PROCESSING: SIMPLE MODELSPROCESSING: SIMPLE MODELS• OUTPUTS:OUTPUTS: SUMMARY REPORTS SUMMARY REPORTS• USERS:USERS: MIDDLE MANAGERS MIDDLE MANAGERS

EXAMPLE: ANNUAL BUDGETINGEXAMPLE: ANNUAL BUDGETING

MANAGEMENT INFORMATION MANAGEMENT INFORMATION SYSTEMS SYSTEMS (MIS)(MIS)

2.2.1515

• STRUCTURED & SEMI-STRUCTURED & SEMI-STRUCTURED DECISIONSSTRUCTURED DECISIONS

• REPORT CONTROL ORIENTEDREPORT CONTROL ORIENTED• PAST & PRESENT DATAPAST & PRESENT DATA• INTERNAL ORIENTATIONINTERNAL ORIENTATION• LENGTHY DESIGN PROCESSLENGTHY DESIGN PROCESS

**

MANAGEMENT INFORMATION MANAGEMENT INFORMATION SYSTEMS SYSTEMS (MIS)(MIS)

2.2.1616

MISMIS

MIS FILESMIS FILES

SALES DATA

UNIT PRODUCT COST

PRODUCT CHANGE DATA

EXPENSE DATA

MIS REPORTS

MANAGERSMANAGERS

TPSOrder Processing

System

Materials Resource

Planning System

General Ledger

System

ORDER FILE

PRODUCTION MASTER FILE

ACCOUNTING FILES

TPS DATA FOR MIS APPLICATIONSTPS DATA FOR MIS APPLICATIONS

2.2.1717

MANAGEMENT LEVELMANAGEMENT LEVEL• INPUTS:INPUTS: LOW VOLUME DATA LOW VOLUME DATA• PROCESSING:PROCESSING: INTERACTIVE INTERACTIVE• OUTPUTS:OUTPUTS: DECISION ANALYSIS DECISION ANALYSIS• USERS:USERS: PROFESSIONALS, STAFF PROFESSIONALS, STAFF

EXAMPLE: CONTRACT COST ANALYSISEXAMPLE: CONTRACT COST ANALYSIS

DECISION SUPPORT SYSTEMS (DSS)DECISION SUPPORT SYSTEMS (DSS)

2.2.1818

• FLEXIBLE, ADAPTABLE, QUICKFLEXIBLE, ADAPTABLE, QUICK• USER CONTROLS INPUTS/OUTPUTSUSER CONTROLS INPUTS/OUTPUTS• NO PROFESSIONAL PROGRAMMINGNO PROFESSIONAL PROGRAMMING• SUPPORTS DECISION PROCESSSUPPORTS DECISION PROCESS• SOPHISTICATED MODELING TOOLSSOPHISTICATED MODELING TOOLS

**

DECISION SUPPORT SYSTEMS DECISION SUPPORT SYSTEMS (DSS)(DSS)

2.2.1919

STRATEGIC LEVELSTRATEGIC LEVEL• INPUTS: AGGREGATE DATAINPUTS: AGGREGATE DATA• PROCESSING:PROCESSING: INTERACTIVE INTERACTIVE• OUTPUTS:OUTPUTS: PROJECTIONS PROJECTIONS• USERS:USERS: SENIOR MANAGERS SENIOR MANAGERS

EXAMPLE: 5 YEAR OPERATING PLANEXAMPLE: 5 YEAR OPERATING PLAN

EXECUTIVE SUPPORT SYSTEMS EXECUTIVE SUPPORT SYSTEMS (ESS)(ESS)

2.2.2020

• TOP LEVEL MANAGEMENTTOP LEVEL MANAGEMENT• DESIGNED TO THE INDIVIDUALDESIGNED TO THE INDIVIDUAL• TIES CEO TO ALL LEVELSTIES CEO TO ALL LEVELS• VERY EXPENSIVE TO KEEP UPVERY EXPENSIVE TO KEEP UP• EXTENSIVE SUPPORT STAFFEXTENSIVE SUPPORT STAFF

**

EXECUTIVE SUPPORT SYSTEMS EXECUTIVE SUPPORT SYSTEMS (ESS)(ESS)

2.2.2121

INTERRELATIONSHIPS AMONG SYSTEMSINTERRELATIONSHIPS AMONG SYSTEMS

ESS

TPSKWS

OAS

DSSMIS

2.2.2222

SYSTEMS FROM A SYSTEMS FROM A FUNCTIONAL PERSPECTIVEFUNCTIONAL PERSPECTIVE

• SALES & MARKETING SYSTEMSSALES & MARKETING SYSTEMS• MANUFACTURING & PRODUCTION MANUFACTURING & PRODUCTION

SYSTEMSSYSTEMS• FINANCE & ACCOUNTING SYSTEMSFINANCE & ACCOUNTING SYSTEMS• HUMAN RESOURCES SYSTEMSHUMAN RESOURCES SYSTEMS

**

2.2.2323

STRATEGIC ROLE OF INFORMATION STRATEGIC ROLE OF INFORMATION SYSTEMSSYSTEMS

STRATEGIC INFO SYSTEM:STRATEGIC INFO SYSTEM:CAN CHANGE GOALS, OPERATIONSCAN CHANGE GOALS, OPERATIONS

PRODUCTS, SERVICESPRODUCTS, SERVICESENVIRONMENTENVIRONMENT

TO GAIN COMPETITIVE ADVANTAGETO GAIN COMPETITIVE ADVANTAGE

2.2.2424

COMPETITIVE FORCES MODELCOMPETITIVE FORCES MODEL

THE FIRM TRADITIONAL COMPETITION

NEW MARKET ENTRANTS

SUPPLIERS CUSTOMERS

SUBSTITUTE PRODUCTS & SERVICES

2.2.2525

• PRODUCT DIFFERENTIATIONPRODUCT DIFFERENTIATION• FOCUSED DIFFERENTIATIONFOCUSED DIFFERENTIATION• DATAMININGDATAMINING• LINKING CUSTOMERS & SUPPLIERSLINKING CUSTOMERS & SUPPLIERS• BECOMING LOW COST PRODUCERBECOMING LOW COST PRODUCER

**

COUNTERING COUNTERING COMPETITIVE FORCESCOMPETITIVE FORCES

2.2.2626

VALUE CHAIN MODELVALUE CHAIN MODELHIGHLIGHTS PRIMARY & SUPPORT HIGHLIGHTS PRIMARY & SUPPORT

ACTIVITIES THAT ADD VALUE TO ACTIVITIES THAT ADD VALUE TO PRODUCTS, SERVICESPRODUCTS, SERVICES

• PRIMARY:PRIMARY: DIRECTLY RELATED TO DIRECTLY RELATED TO PRODUCTION, DISTRIBUTIONPRODUCTION, DISTRIBUTION

• SUPPORT:SUPPORT: INFRASTRUCTURE, HUMAN INFRASTRUCTURE, HUMAN RESOURCES, TECHNOLOGY, RESOURCES, TECHNOLOGY, PROCUREMENT PROCUREMENT

**

2.2.2727

IMPLICATIONS FOR MANAGERS IMPLICATIONS FOR MANAGERS & ORGANIZATIONS& ORGANIZATIONS

• STRATEGIC ALLIANCES, STRATEGIC ALLIANCES, INFORMATION PARTNERSHIPSINFORMATION PARTNERSHIPS

• INDUSTRY LEVEL STRATEGIC INDUSTRY LEVEL STRATEGIC SYSTEMSSYSTEMS

• MANAGING STRATEGIC TRANSITIONSMANAGING STRATEGIC TRANSITIONS• IMPACT OF THE INTERNETIMPACT OF THE INTERNET

**

2.2.2828

INFORMATION SYSTEMS & INFORMATION SYSTEMS & QUALITYQUALITY

• QUALITY: Conformance to specifications, QUALITY: Conformance to specifications, customer satisfactioncustomer satisfaction

• SIMPLIFY PRODUCT, PROCESSSIMPLIFY PRODUCT, PROCESS• BENCHMARKINGBENCHMARKING• CUSTOMER DEMAND AS GUIDECUSTOMER DEMAND AS GUIDE• REDUCE CYCLE TIMEREDUCE CYCLE TIME• IMPROVE QUALITY & PRECISIONIMPROVE QUALITY & PRECISION

**

2.2.2929

Connect to the INTERNETConnect to the INTERNET

Laudon/Laudon Web site: http://www.prenhall.com/laudon

Additional Internet Resources related to this chapter:http://tools.org/EI/ICEIMThttp://www.brint.comhttp://www.datawarehousing.comhttp://www.erpassist.comhttp://www.sap.comhttp://www.mysap.com

© 2001 Laudon & Laudon, Essentials of Management Information Systems 4/e

2.2.3030

CHAPTER 2. THE CHAPTER 2. THE STRATEGIC ROLE OF STRATEGIC ROLE OF

INFORMATION SYSTEMSINFORMATION SYSTEMS