information systems in the organization

2.1Copyright © 2005 Pearson Education Canada Inc.

Management Information Systems,Management Information Systems, Second Canadian Edition Second Canadian Edition

Chapter 2: Information Systems in the OrganizationChapter 2: Information Systems in the Organization

INFORMATION INFORMATION

SYSTEMS IN THESYSTEMS IN THE

ORGANIZATIONORGANIZATION




• What are the major types of systems in a What are the major types of systems in a business? What roles do they play?business? What roles do they play?

• Why should managers pay attention to Why should managers pay attention to business processes? Why do firms need business processes? Why do firms need to integrate their business processes? to integrate their business processes?

• What are the benefits and challenges of What are the benefits and challenges of using enterprise systems?using enterprise systems?

continued

OBJECTIVES




• What are the benefits of using systems to What are the benefits of using systems to support supply chain management and support supply chain management and collaborative commerce?collaborative commerce?

• What are the benefits of using What are the benefits of using information systems for customer information systems for customer relationship management and knowledge relationship management and knowledge management?management?

OBJECTIVES (continued)



Chapter 2: Information Systems in the OrganizationChapter 2: Information Systems in the OrganizationFAST-TRACK FASHIONS AT ZARA




1.1. Integration:Integration: Different systems serve variety Different systems serve variety of functions, connecting organizational of functions, connecting organizational levels difficult, costlylevels difficult, costly

2.2. Enlarging Scope of Management Enlarging Scope of Management Thinking:Thinking: Huge system investments, long Huge system investments, long development time must be guided by development time must be guided by common objectivescommon objectives

MANAGEMENT CHALLENGES



Chapter 2: Information Systems in the OrganizationChapter 2: Information Systems in the Organization2.1 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS




Different Kinds of Systems

• Operational-Level SystemsOperational-Level Systems

– Monitor the elementary activities and

transactions of the organization

• Knowledge-Level SystemsKnowledge-Level Systems

– Support knowledge and data workers

continued

2.1 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS




Different Kinds of Systems (continued)

• Management-Level SystemsManagement-Level Systems

– Support the monitoring, control,

decision-making, and administrative

activities of middle managers

• Strategic-Level SystemsStrategic-Level Systems

– Support the long-range planning of

senior management





Six Major Types of Systems

• Transaction Processing Systems (TPS)Transaction Processing Systems (TPS)

• Knowledge Work Systems (KWS)Knowledge Work Systems (KWS)

• Office Systems Office Systems

• Management Information Systems (MIS)Management Information Systems (MIS)

• Decision Support Systems (DSS)Decision Support Systems (DSS)

• Executive Support Systems (ESS)Executive Support Systems (ESS)





Transaction Processing Systems (TPS):Transaction Processing Systems (TPS):

• Computerized systems that perform and Computerized systems that perform and record the daily routine transactions record the daily routine transactions necessary to conduct businessnecessary to conduct business

• Serve the operational levelServe the operational level






Knowledge Work Systems (KWS):Knowledge Work Systems (KWS):• Information systems that aid knowledge Information systems that aid knowledge

workers in the creation and integration of workers in the creation and integration of new knowledge in the organizationnew knowledge in the organization

Office Systems:Office Systems:• Computer systems, such as word Computer systems, such as word

processing, e-mail, and scheduling systems processing, e-mail, and scheduling systems that are designed to increase the that are designed to increase the productivity of data workers in the officeproductivity of data workers in the office






Knowledge Work Systems (KWS):Knowledge Work Systems (KWS):

Knowledge LevelKnowledge Level• Inputs:Inputs: Design specsDesign specs• Processing:Processing: ModelingModeling• Outputs:Outputs: Designs, graphicsDesigns, graphics• Users:Users: Technical staff and professionalsTechnical staff and professionals

Example: Engineering work stationExample: Engineering work station






Management Information System (MIS):Management Information System (MIS):

Management LevelManagement Level• Inputs:Inputs: High-volume data High-volume data

• ProcessingProcessing:: Simple models Simple models

• Outputs:Outputs: Summary reports Summary reports

• Users:Users: Middle managers Middle managers

Example: Annual budgetingExample: Annual budgeting






Management Information System:Management Information System:• Structured and semi-structured decisionsStructured and semi-structured decisions

• Report control orientedReport control oriented

• Past and present dataPast and present data

• Internal orientationInternal orientation

• Lengthy design processLengthy design process






Decision Support System (DSS):Decision Support System (DSS): combines data and analytical models or data analysis tools to support semi-structured and unstructured decision-making

Management levelManagement level• Inputs:Inputs: Low-volume data Low-volume data

• Processing: Processing: InteractiveInteractive

• Outputs:Outputs: Decision analysis Decision analysis

• Users:Users: Professionals, staff Professionals, staff

Example: Contract cost analysisExample: Contract cost analysis






Executive Support System (ESS):Executive Support System (ESS):

Strategic levelStrategic level• Inputs:Inputs: Aggregate data 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 SystemsExecutive Support Systems• 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






Relationship of Systems to One Another



Chapter 2: Information Systems in the OrganizationChapter 2: Information Systems in the Organization2.2 ENTERPRISE APPLICATIONS

Enterprise ApplicationsEnterprise Applications• Systems that can coordinate activities, Systems that can coordinate activities,

decisions, and knowledge across many decisions, and knowledge across many different functions, levels and business different functions, levels and business unitsunits

• Includes enterprise systems, supply chain Includes enterprise systems, supply chain management systems, customer management systems, customer relationship management systems and relationship management systems and knowledge management systemsknowledge management systems




Business Processes Business Processes

• Manner in which work is organized, Manner in which work is organized, coordinated, and focused to produce a coordinated, and focused to produce a valuable product or servicevaluable product or service

• Concrete work flows of material, Concrete work flows of material, information, and knowledge—sets of information, and knowledge—sets of activitiesactivities

Integrating Functions and Business Processes

2.2 ENTERPRISE APPLICATIONS




• Manufacturing and Production:Manufacturing and Production: Assembling product, checking quality, Assembling product, checking quality, producing bills of materialsproducing bills of materials

• Sales and Marketing:Sales and Marketing: Identifying Identifying customers, creating customer awareness, customers, creating customer awareness, sellingselling

Examples of Business Processes

ENTERPRISE APPLICATIONS




• Finance and Accounting:Finance and Accounting: Paying Paying creditors, creating financial statements, creditors, creating financial statements, managing cash accountsmanaging cash accounts

• Human Resources:Human Resources: Hiring employees, Hiring employees, evaluating performance, enrolling evaluating performance, enrolling employees in employees in benefits plansbenefits plans

Examples of Business Processes

ENTERPRISE APPLICATIONS




Cross-Functional Business ProcessesCross-Functional Business Processes

• Transcend boundary between sales, Transcend boundary between sales, marketing, manufacturing, and research and marketing, manufacturing, and research and developmentdevelopment

• Group employees from different functional Group employees from different functional specialties to complete a piece of workspecialties to complete a piece of work

Example: Order Fulfillment ProcessExample: Order Fulfillment Process






Enterprise Systems Enterprise Systems

• Provide a technology platform where Provide a technology platform where organizations can integrate and coordinate organizations can integrate and coordinate major business processesmajor business processes

• Also known as Enterprise Resource Also known as Enterprise Resource Planning Systems (ERP)Planning Systems (ERP)

Enterprise Systems





Traditional View of SystemsTraditional View of Systems

• Within the business: Within the business: There are functions, There are functions, each having its uses of information systemseach having its uses of information systems

• Outside the organization’s boundaries:Outside the organization’s boundaries: There There are customers and vendorsare customers and vendors

Functions tend to work in isolationFunctions tend to work in isolation


Enterprise Systems




Enterprise Systems





Benefits and Challenges of Enterprise Systems


BenefitsBenefits

• Firm structure Firm structure – Integrated corporationIntegrated corporation

• ManagementManagement– Firm-wide knowledge-based management Firm-wide knowledge-based management

processesprocesses• Technology:Technology:

– Unified platformUnified platform

• Business:Business: – More efficient operations and customer-More efficient operations and customer-

driven business processesdriven business processes




Benefits and Challenges of Enterprise Systems


ChallengesChallenges1.1. Difficult & costly to buildDifficult & costly to build2.2. Complex technologyComplex technology3.3. Need to rework business processesNeed to rework business processes4.4. Centralized organizational coordination Centralized organizational coordination

and decision making may not be and decision making may not be suitable for all organizationssuitable for all organizations

5.5. Difficult to attain strategic Difficult to attain strategic differentiationdifferentiation




Supply Chain Management (SCM)Supply Chain Management (SCM)• Close linkage and coordination of Close linkage and coordination of

activities involved in buying, making, and activities involved in buying, making, and moving a productmoving a product

• Integrates supplier, manufacturer, Integrates supplier, manufacturer, distributor, and customer logistics time distributor, and customer logistics time

• Reduces time, redundant effort, and Reduces time, redundant effort, and inventory costsinventory costs

Supply Chain Management and Collaborative Commerce





Supply ChainSupply Chain• Network of organizations and business Network of organizations and business

processes processes • Helps in procurement of materials, Helps in procurement of materials,

transformation of raw materials into transformation of raw materials into intermediate and finished products, and intermediate and finished products, and distributing final products to customersdistributing final products to customers

Reverse LogisticsReverse Logistics• The return of items from buyers to sellers in The return of items from buyers to sellers in

a supply chaina supply chain






Limitations:Limitations:

• Inefficiencies can waste as much as 25% Inefficiencies can waste as much as 25% of a company’s operating costsof a company’s operating costs

• Bullwhip Effect: Information about the Bullwhip Effect: Information about the demand for the product gets distorted as demand for the product gets distorted as it passes from one entity to nextit passes from one entity to next







• Supply Chain Planning System:Supply Chain Planning System: Enables Enables firm to generate forecasts for a product and firm to generate forecasts for a product and to develop sourcing and a manufacturing to develop sourcing and a manufacturing plan for the productplan for the product

• Supply Chain Execution System:Supply Chain Execution System: Manages flow of products through Manages flow of products through distribution centers and warehousesdistribution centers and warehouses




• Uses digital technologies to enable Uses digital technologies to enable multiple organizations to collaboratively multiple organizations to collaboratively design, develop, build, move, and manage design, develop, build, move, and manage products products

• Increases efficiencies in reducing product Increases efficiencies in reducing product design life cycles, minimizing excess design life cycles, minimizing excess inventory, forecasting demand, and inventory, forecasting demand, and keeping partners and customers informedkeeping partners and customers informed

Collaborative Commerce





• Collaborative Planning, Forecasting, Collaborative Planning, Forecasting, and Replenishment (CPFR)and Replenishment (CPFR)– Collaboration of firms with their Collaboration of firms with their

suppliers and buyers to: suppliers and buyers to: • Formulate demand forecasts• Develop production plans • Coordinate shipping, warehousing and

stocking activities






Private Industrial NetworksPrivate Industrial Networks

• Web-enabled networks Web-enabled networks

• Link systems of multiple firms in an Link systems of multiple firms in an industry industry

• Coordinate transorganizational business Coordinate transorganizational business processesprocesses

Industrial Networks for Interorganizational Business Processes





Customer Relationship Management (CRM)


• Manages all ways used by firms to deal with Manages all ways used by firms to deal with existing and potential new customersexisting and potential new customers

• Uses information system to integrate all Uses information system to integrate all business processes surrounding a firm’s business processes surrounding a firm’s interactions with its customers in sales, interactions with its customers in sales, marketing, and servicemarketing, and service






• Provides end-to-end customer careProvides end-to-end customer care

• Provides a unified view of customer Provides a unified view of customer across the companyacross the company

• Consolidates customer data from multiple Consolidates customer data from multiple sources and provides analytical tools for sources and provides analytical tools for answering questionsanswering questions




Knowledge Management SystemsKnowledge Management Systems

• Creating knowledgeCreating knowledge

• Discovering and codifying Discovering and codifying knowledgeknowledge

• Sharing knowledgeSharing knowledge

• Distributing knowledgeDistributing knowledge


Knowledge Management Systems in the Enterprise




Knowledge Management Systems in the Enterprise




INFORMATION INFORMATION

SYSTEMS IN THESYSTEMS IN THE

ORGANIZATIONORGANIZATION

information systems in the organization

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