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Lecture 2

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Page 1: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Lecture 2

Page 2: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

1. Organizational Level 2. Business Functions /Interests/Speciality 3. Supported Business Process(s)

Information Systems serve differentmanagement levels and major business

functions

Classification of Information Systems

Page 3: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Types of Information Systems

Categories of Information System

Page 4: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

• Support Operational ManagersSupport Operational Managers

• Keep track of elementary activities and transactions of the Keep track of elementary activities and transactions of the

organization organization

• E.g. Sales receipts, cash deposits, payroll, daily log maintenance, E.g. Sales receipts, cash deposits, payroll, daily log maintenance,

the flow of materials in a factory and query management in a the flow of materials in a factory and query management in a

service firm etc. service firm etc.

Operational Level Systems

Page 5: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

• Support Middle ManagersSupport Middle Managers

• Monitoring, controlling, decision-making, and administrative Monitoring, controlling, decision-making, and administrative

activitiesactivities

• Provide periodic reports rather than instant information on Provide periodic reports rather than instant information on

operations operations

• Attrition Reporting System, Planned Vs. Actual Reports etc.Attrition Reporting System, Planned Vs. Actual Reports etc.

Knowledge/Management Level Systems

Page 6: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

• Support Senior Management Support Senior Management

• Help tackling and addressing strategic issues and long term Help tackling and addressing strategic issues and long term

trends related to the firm and external environment.trends related to the firm and external environment.

• The principle concern is matching changes in the external The principle concern is matching changes in the external

environment with the existing organizational capability.environment with the existing organizational capability.

• E.g. Employment level and capacity planning for next 3-5 years, E.g. Employment level and capacity planning for next 3-5 years,

long term industry cost trends, product and services focus for the long term industry cost trends, product and services focus for the

next 5 years etc.next 5 years etc.

Strategic Level Systems

Page 7: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Major Types of Systems

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

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

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

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

• Office Systems Office Systems

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

Major Types of Systems

Page 8: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Major Types of Systems

Page 9: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

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

• Basic business systems that serve the operational levelBasic business systems that serve the operational level

• A computerized system that performs and records the daily routine A computerized system that performs and records the daily routine transactions necessary to the conduct of the businesstransactions necessary to the conduct of the business

• E.g. Employee record keeping, sales order entry etc.E.g. Employee record keeping, sales order entry etc.

• Central to business – TPS failure for few hours can lead to a firms Central to business – TPS failure for few hours can lead to a firms demise – Airlines without computerized demise – Airlines without computerized

• Reservation systems??Reservation systems??

Major Types of Systems

Page 10: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Payroll TPS

Major Types of Systems

Page 11: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Types of TPS Systems

Major Types of Systems

Page 12: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Knowledge Work Systems (KWS):

Knowledge levelInputs: Design specsProcessing: ModelingOutputs: Designs, graphicsUsers: Technical staff and professionals

Example: Engineering work station

Major Types of Systems

Page 13: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Management Information System (MIS):

Serve the management level of the organizationProvides managers with summaries and reports

on the company’s basic operations on regular schedule

Internal orientation not environmental/externalGenerally not flexible and have little analytical

capabilityUse simple routines (E.g. summaries and

comparisons) as apposed to sophisticated mathematical models /statistical techniques.

Major Types of Systems

Page 14: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Management Information System (MIS):

Management levelInputs: High volume dataProcessing: Simple modelsOutputs: Summary reportsUsers: Middle managers

Example: Annual budgeting

Major Types of Systems

Page 15: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Management Information System (MIS)

Major Types of Systems

Page 16: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Decision Support System (DSS):

Serve the management level of the organizationHelp managers make decisions that are unique,

rapidly changing and not easily specified in advance.

Address problems where the procedure for arriving at a solution may not be fully defined in advance.

Use both internal and external sources of information

Also referred to business intelligence More analytical power, interactive and user friendly

Major Types of Systems

Page 17: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Decision Support System (DSS):

Management levelInputs: Low volume dataProcessing: InteractiveOutputs: Decision analysisUsers: Professionals, staff

Example: Contract cost analysis

Major Types of Systems

Page 18: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Decision Support System (DSS)

Major Types of Systems

Page 19: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Decision Support System (DSS)

Major Types of Systems

Page 20: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Executive Support System (ESS):

Used by Senior/Strategic Management They address non-routine decisions requiring

judgments, evaluation and insight as there is no agreed-on procedure for arriving at a solution

Incorporate data about external events and draw summarized information from internal MIS, DSS.

General computing/communications capacity applied to an array of problems not just specific problems

E.g. What are competitors going? New acquisitions? etc

Major Types of Systems

Page 21: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Executive Support System (ESS):

Strategic levelInputs: Aggregate dataProcessing: InteractiveOutputs: ProjectionsUsers: Senior managers

Example: 5-year operating plan

Major Types of Systems

Page 22: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Executive Support System (ESS)

The Information Technology

Page 23: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Top level management

Designed to the individual

Ties CEO to all levels

Very expensive to keep up

Extensive support staff

Executive support system (ESS)

The Information Technology

Page 24: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

The Interrelationships

Page 25: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

ORDER PROCESSING ENTER, PROCESS, TRACK ORDERS OPERATIONAL

MARKET ANALYSIS IDENTIFY CUSTOMERS & MARKETS KNOWLEDGE

PRICING ANALYSIS DETERMINE PRICES MANAGEMENT

SALES TRENDS PREPARE 5-YEAR FORECASTS STRATEGIC

Sales and Marketing Systems

Systems Functional Perspective

Page 26: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Major functions of systems:Scheduling, purchasing, shipping,

receiving, engineering, operations

Major application systems:Materials resource planning

systems, purchase order control systems, engineering systems, quality control systems

Manufacturing and Production Systems

Systems Functional Perspective

Page 27: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

MACHINE CONTROL CONTROL ACTIONS OF EQUIPMENT OPERATIONAL

COMPUTER-AIDED-DESIGN DESIGN NEW PRODUCTS KNOWLEDGE

PRODUCTION PLANNING DECIDE NUMBER, SCHEDULE OF PRODUCTS MANAGEMENT

FACILITIES LOCATION DECIDE WHERE TO LOCATE FACILITIES STRATEGIC

Manufacturing and Production Systems

Systems Functional Perspective

Page 28: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Major functions of systems:Budgeting, general ledger, billing,

cost accounting

Major application systems:General ledger, accounts

receivable, accounts payable, budgeting, funds management systems

Financing and Accounting Systems

Systems Functional Perspective

Page 29: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

ACCOUNTS RECEIVABLE TRACK MONEY OWED TO FIRM OPERATIONAL

PORTFOLIO ANALYSIS DESIGN FIRM'S INVESTMENTS KNOWLEDGE

BUDGETING PREPARE SHORT TERM BUDGETS MANAGEMENT

PROFIT PLANNING PLAN LONG-TERM PROFITS STRATEGIC

Financing and Accounting Systems

Systems Functional Perspective

Page 30: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Major functions of systems:Personnel records, benefits,

compensation, labor relations, training

Major application systems:Payroll, employee records, benefit

systems, career path systems, personnel training systems

Human Resource Systems

Systems Functional Perspective

Page 31: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

TRAINING & DEVELOPMENT TRACK TRAINING, SKILLS, APPRAISALS OPERATIONAL

CAREER PATHING DESIGN EMPLOYEE CAREER PATHS KNOWLEDGE

COMPENSATION ANALYSIS MONITOR WAGES, SALARIES, BENEFITS MANAGEMENT

HUMAN RESOURCES PLANNING PLAN LONG-TERM LABOR FORCE NEEDS STRATEGIC

Human Resource Systems

Systems Functional Perspective

Page 32: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Business processes

Sets of logically related activities for accomplishing a specific business result.

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

Concrete work flows of material, information, and knowledge—sets of activities

Business Processes and Information Systems

Enterprise Applications

Page 33: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Unique ways to coordinate work, information, and knowledge

Ways in which management chooses to coordinate work

Business Processes and Information Systems

Enterprise Applications

Page 34: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Business Processes and Information Systems

Information systems help organizations

Achieve great efficiencies by automating parts of processes

Rethink and streamline processes

Enterprise Applications

Page 35: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Manufacturing and production: Assembling product, checking quality, producing bills of materials

Sales and marketing: Identifying customers, creating customer awareness, selling

Examples of Business Processes

Enterprise Applications

Page 36: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Finance and accounting: Paying creditors, creating financial statements, managing cash accounts

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

Examples of Business Processes

Enterprise Applications

Page 37: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Cross-Functional Business Processes

Transcend boundary between sales, marketing, manufacturing, and research and development

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

Example: Order Fulfillment Process

Business Processes and Information Systems

Enterprise Applications

Page 38: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

The Order Fulfillment Process

Enterprise Applications

Page 39: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Enterprise ApplicationsEnterprise systemsSupply chain management systemsCustomer relationship management

systemsKnowledge management systems

Enterprise Applications

Page 40: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

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

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

Functions tend to work in isolation

Traditional View of the Systems

Enterprise Applications

Page 41: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Traditional View of the Systems

Enterprise Applications

Page 42: Lecture 2. 1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management

Enterprise Systems

Enterprise Applications