1

Information Systems in the Enterprise

2

KINDS OF INFORMATION SYSTEMS

Organizational Hierarchy

Organizational Levels

Information Systems

3

KINDS OF INFORMATION SYSTEMS

SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN

KIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR MANAGERS

MANAGEMENT LEVEL MIDDLE MANAGERS

OPERATIONAL OPERATIONALLEVEL MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE &DATA WORKERS

RESOURCESMARKETING & ENGINEERING

4

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

5

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)

6

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

Computerized system that performs and records the Computerized system that performs and records the daily routine transactions necessary to conduct the daily routine transactions necessary to conduct the business; these systems serve the operational level of business; these systems serve the operational level of the organizationthe organization

• TYPE: Operational-levelTYPE: Operational-level• INPUTS: transactions, eventsINPUTS: transactions, events• PROCESSING: updatingPROCESSING: updating• OUTPUTS: detailed reportsOUTPUTS: detailed reports• USERS: operations personnel, supervisorsUSERS: operations personnel, supervisors• DECISION-MAKING: highly structuredDECISION-MAKING: highly structured

EXAMPLE:EXAMPLE: payroll, accounts payable payroll, accounts payable

7

A Symbolic Representation for a payroll TPS

P ayr o l l S ys t e mM a n a g e m e n t

R e po rt s

O n - lin equ e rie s

P ayr o l lm as t e r

fi l e

Em plo y e e da ta (v a rio u s de pa rtm e n ts ) To g e n e ra l le dg e r: wa g e s a n d s a la rie s

G o v e rn m e n t do cu m e n ts

Em plo y e e ch e ck s

8

Typical Applications of TPSTYPE OF TPS SYSTEM

Sales/ Manufacturing! Finance/ Human Other typesmarketing production accounting resources (e.g., university)systems systems systems systems

Major functions Sales management Scheduling Budgeting Personnel recard Admissionsof system Market research Purchasing General ledger Benefits Grade records

Promotion Shipping/receiving Billing Cornpensation Course recordsPricing Engineering Cost accounting Labor relations AlumniNew products Operations Training

Major 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 systemPricing system Engineering Budgeting Benefit systems Curriculum class

systems control systemsQuality control Funds managementCareer path Alumni benefactorsystems systems systems system

9

Office Automation Systems (OAS)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: Knowledge-levelTYPE: Knowledge-level• INPUTS: documents, schedulesINPUTS: documents, schedules• PROCESSING: document management, PROCESSING: document management, scheduling, communicationscheduling, communication• OUTPUTS: documents; schedulesOUTPUTS: documents; schedules• USERS: clerical workersUSERS: clerical workers

EXAMPLE:EXAMPLE: document imaging system document imaging system

10

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

Information system that aids knowledge workers in the creation and integration of new knowledge in the organization.

•TYPE: Knowledge-levelTYPE: Knowledge-level• INPUTS: design specifications INPUTS: design specifications • PROCESSING: modellingPROCESSING: modelling• OUTPUTS: designs, graphicsOUTPUTS: designs, graphics• USERS: technical staff; professionalsUSERS: technical staff; professionals

EXAMPLE:EXAMPLE: Engineering workstations Engineering workstations

11

Decision Support Systems (DSS)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: Management-levelTYPE: Management-level• INPUTS: low volume dataINPUTS: low volume data• PROCESSING: simulations, analysis PROCESSING: simulations, analysis • OUTPUTS: decision analysisOUTPUTS: decision analysis• USERS: professionals, staff managersUSERS: professionals, staff managers• DECISION-MAKING: semi-structuredDECISION-MAKING: semi-structured

EXAMPLE:EXAMPLE: sales region analysis sales region analysis

12

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.

13

Management Information SystemsManagement Information Systems(MIS)(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: Management-levelTYPE: Management-level• INPUTS: high volume dataINPUTS: high volume data• PROCESSING: simple models PROCESSING: simple models • OUTPUTS: summary reportsOUTPUTS: summary reports• USERS: middle managersUSERS: middle managers• DECISION-MAKING: structured to semi-structuredDECISION-MAKING: structured to semi-structuredEXAMPLEEXAMPLE: annual budgeting: annual budgeting

14

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 orientation.

15

Executive Support Systems (ESS)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 levelTYPE: Strategic level• INPUTS: aggregate data; internal and externalINPUTS: aggregate data; internal and external• PROCESSING: interactivePROCESSING: interactive• OUTPUTS: projectionsOUTPUTS: projections• USERS: senior managersUSERS: senior managers• DECISION-MAKING: highly unstructured DECISION-MAKING: highly unstructured

EXAMPLEEXAMPLE: 5 year operating plan: 5 year operating plan

16

Model of a Typical Executive Support System

In t e r n a l D at a

TP S /M IS D at aF i n an c i a l D at aO ffi c e S ys t e m sM o d e l i n g /an a l ys i s

E xt e r n a l D at a

D o w J o n e sG al l u p P o l lS t an d ar d &P o o r 's

E S Sw o r k s t a t i o n

E S Sw o r k s t a t i o n

E S Sw o r k s t a t i o n

M e n u sG ra ph icsC o m m u n ica t io n sL o ca l pro ce s s in g

M e n u sG ra ph icsC o m m u n ica t io n sL o ca l pro ce s s in g

M e n u sG ra ph icsC o m m u n ica t io n sL o ca l pro ce s s in g

17

Major Types of Information Systems

S tra te g ic L e v e l S y s te m s5 -y e a r

s a le s t re n dfo re c a s t in g

5 -y e a ro p e ra t in g

p la n

5 -y e a rb u d g e t

fo re c a s t in g

P ro fitp la n n in g

M a n p o w e rp la n n in g

M a n a g e m e n t -L e v e l S y s te m sS a le sm a n a g e m e n t

S a le s re g io na n a ly s is

I n v e n to ryC o n tro l

P ro d u c t io nS c h e d u lin g

A n n u a lb u d g e t in g

C o s ta n a ly s is

C a p ita lI n v e s tm e n t a n a ly s is

P ric in g /p ro fita b ilitya n a ly s is

R e lo c a t io na n a ly s is

C o n tra c t c o s ta n a ly s is

K n o w le d g e -L e v e l S y s te m sE n g in e e rin gw o rk s ta t io n s

W o rdp ro c e s s in g

G ra p h ic sw o rk s ta t io n s

D o c u m e n tI m a g in g

M a n a g e ria lw o rk s ta t io n s

E le c tro n icC a le n d a rs

O p e ra t io n a l L e v e l S y s te m s

O rd e r T ra c k in g

O rd e r p ro c e s s in g

M a c h in e c o n tro l

P la n t s c h e d u lin g

M a te ria l m o v e m e n tc o n tro l

S e c u rit ie st ra d in g

C a s hm a n a g e m e n t

P a y ro ll

A c c o u n ts p a y a b le

A c c o u n ts re c e iv a b le

C o m p e n s a t io n

T ra in in g & d e v e lo p m e n t

E m p lo y e e re c o rd k e e p in g

T Y P E S O F S Y S T E M S

E S S

M I S

D S S

K W S

O A S

T P S

S a le s a n dm a rk e t in g

M a n u fa c tu rin g F in a n c e A c c o u n t in g H u m a nR e s o u rc e s

18

Relationship between different IS

ESS

MIS DSS

TPSKWS/OAS

TPS is a major producer of information for other systems

19

Classification of ISby Organizational Structure

Departmental Information Systems Enterprise Information System Inter-organizational Systems

NYCE SABRE or APOLLO

20

Classification of ISby 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

21

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.EXAMPLES

System Description Organizational LevelOrder processing Enter, process, and track orders OperationalMarket analysis Identify customers and markets using Knowledge

data on demographics, markets,consumer behavior, and trends

Pricing analysis Determine prices for products Managementand services

22

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

23

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 firm's portfolio of investments KnowledgeBudgeting Prepare short-term budgets ManagementProfit planning Plan long-term profits Strategic

24

Human Resources Systems Systems that maintain employee

records; Track employee skills, job performance, and training; And support planning for employee compensation and career development.

ExamplesSystem Description Organizational Level

Training and development Track employae training, skills, Operationaland performance appraisals

Career 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

25

Examples of Business Processes

Functional Area Business ProcessManufacturing and production Assembling the product

Checking for qualityProducing bills of materials

Sales and marketing Identifying customersMaking customers aware of the productSelling the product

Finance and accounting paying creditorsCreating financial statementsManaging cash accounts

Human resources Hiring employeesEvaluating employees' job performanceEnrolling employees in benefits plans

26

The Order Fulfillment Process (F 2.12)

S ales

Ac c ounting

M a n u f a c t u r in g& P r o d u c t io n

G enerateO rder

S ubm itO rder

Chec kCredit

ApproveCredit

G enerateInvoic e

As s em bleP roduc t

S hipP roduc t

27

Customer Relationship Management

Customer relationship management Business and technology discipline to coordinate alt of the business processes for dealing with customers.Sa le s

T e le p h o n e s a le s W e b s a le s F ie ld s a le s R e t a i l s a le s

M a r k e t in g C a m p a ig n d a t a C o n t e n t D a t a a n a ly s i s

C u s t o m e r Se r v ic e C a l l c e n t e r d a t a W e b s e l f s e r v ic e d a t a F ie ld s e r v ic e d a t a W ir e le s s d a t a

Unif ied v iew of c us tom ersCons is ten t m es s age to c us tom ersEnd-to-end c us tom er c areLong-term c us tom er relations hipsIdentif ic ation of bes t c us tom ers

28

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.

S upplier M anufac turer D is tr ibutorRetailO utlet

Cus tom er

Capac ity , inventory level, delivery s c hedule, paym ent term s

O rders , return reques ts , repair and s erv ic e reques ts , paym ents

29

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 design Provide product specifications Share information about defect rates and returns

30

Enterprise Systems

Firm wide information systems that integrate key business processes so that information can flow freely between different parts of the firm.

31

Traditional View of Systems (F. 2.15)

M a n u fa ctu rin g A cco u n t in g Fin a n ceM a rk e t in g a n d

S a le sH u m a n

R e s o u rce s

M a n u fa ctu rin gS y s te m s

A cco u n t in gS y s te m s

Fin a n ceS y s te m s

M a rk e t in g a n dS a le s S y s te m s

HumanRes ources

S ys tems

B u s in e s sPro ce s s e s

B u s in e s sPro ce s s e s

B u s in e s sPro ce s s e s

B u s in e s sPro ce s s e s

B u s in e s sPro ce s s e s

B u s in e s s Fu n ct io n s

I n fo rm a t io n S y s te m s

OrganizationalBoundaries

OrganizationalBoundaries

V e n do rs C u s to m e rs

32

Enterprise Systems (F. 2.16)

B u s in e s s Pro ce s sB u s in e s s Pro ce s sB u s in e s s Pro ce s s

En te rpris e -wide bu s in e s spro ce s s e s

M a n u fa ctu rin g A cco u n t in g

H u m a nR e s o u rce s

S a le s a n dM a rk e t in g

Fin a n ce

En te rpris e S y s te m

V e n do rs C u s to m e rs

Org

aniz

atio

nal

Bou

nda

ries

Org

aniz

atio

nal

Bou

nda

ries

33

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

Customer-driven Business Processes Challenges

Daunting Implementation High Up-front Costs and Future Benefits Inflexibility

34

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.

35

Industrial Networks (F. 2.17)

F ir m1

F i r m4

F i r m3

F i r m2

F i r m1

S u p p l ier1

S u p p l ier3

S u p p l ier2

Indus tr ial N etw orks

H o rizo n ta l in du s tria l n e two rk

V e rt ica l in du s tria l n e two rk

F irm value c hains and enterpr is e s ys tem s

F irm sin a s in g lein d u s t ry

F irm s inc om plem entarybus ines s

Indus tryvaluec hain