CH 02

AQU Information Systems Fundamentals Spring 2012
c h a p t e r
2
INFORMATION SYSTEMS IN THE ENTERPRISE
2.1
2002 by Prentice Hall & 2012 Yacoub Sabatin
Reading Notes for Chapter 2 in the textbook 1/2

The chapter introduces six types of information systems. Figure 2.1 and table 2.1 give an overall picture of organizations and how different types of information systems serve them. Figure 2.2 depicts different types of information systems and how they relate to one another (Figure 2.9 as well). Section 2.2 examines information systems from a functional view of an organization: Sales and marketing systems, manufacturing and production systems, finance and accounting systems, and human resources systems. Read this section carefully to develop an understanding of how information systems serve different functions of an organization. >>
2.2
Reading Notes for Chapter 2 in the textbook 2/2

Read section 2.3 carefully to understand integration of functions and business processes. Figure 2.12 illustrates a cross-functional business process. Pay also attention to customer relationship management and enterprise systems that are current trends in business. Contrast Figure 2.15 and 2.16. Extended enterprises and industrial networks are also recent trends and would not be possible without the support of information technology. *
2.3
LEARNING OBJECTIVES
Analyze Roles of 6 Types of Information Systems Describe Types of Information Systems Analyze Relationships between Business Processes >>
2.4
LEARNING OBJECTIVES
Explain How Systems & Networks Create New Efficiencies Evaluate Benefits & Limitations of Systems & Networks *
2.5
MANAGEMENT CHALLENGES
Key System Applications Functional Perspective of Systems Integrating Functions & Processes *
2.6
MANAGEMENT CHALLENGES
1. INTEGRATION: Different Systems Serve Variety of Functions,
Connecting Organizational Levels Difficult, Costly

2. ENLARGING SCOPE OF MANAGEMENT THINKING: Huge System Investments, Long Development Time must be guided by common objectives
2.7
So
Organizational Hierarchy Organizational Levels Information Systems >>
2.8
TYPES OF INFORMATION SYSTEMS

KIND OF SYSTEM
STRATEGIC LEVEL
GROUPS SERVED
SENIOR MANAGERS
MANAGEMENT LEVEL
MIDDLE MANAGERS
KNOWLEDGE LEVEL
KNOWLEDGE & DATA WORKERS
OPERATIONAL LEVEL
SALES & MANUFACTURING MARKETING & PROD FINANCE ACCOUNTING
OPERATIONAL MANAGERS
HUMAN RESOURCES
2.9
Four General Kinds of IS in Terms of Organizational Levels

Operational-level systems Operational support operational managers by monitoring the day-todays elementary activities and transactions of the organization. e.g. TPS. Knowledge-level systems Knowledge support knowledge and data workers in designing products, distributing information, and coping with paperwork in an organization. e.g. KWS, OAS Management-level systems Management support the monitoring, controlling, decision-making, and administrative activities of middle managers. e.g. MIS, DSS Strategic-level systems Strategic support long-range planning activities of senior management. e.g. ESS
2.10
MAJOR TYPES OF SYSTEMS

(with respect
to support provided)
EXECUTIVE SUPPORT SYSTEMS (ESS) DECISION SUPPORT SYSTEMS (DSS) MANAGEMENT INFORMATION SYSTEMS (MIS) KNOWLEDGE WORK SYSTEMS (KWS) OFFICE AUTOMATION SYSTEMS (OAS) TRANSACTION PROCESSING SYSTEMS (TPS) *
2.11
INTERRELATIONSHIPS AMONG SYSTEMS
ESS
MIS
DSS
KWS OAS
2.12
TPS
TYPICAL TPS APPLICATIONS 1. Sales & Marketing Systems
MAJOR FUNCTIONS OF SYSTEMS: Sales management, market research, promotion, pricing, new products MAJOR APPLICATION SYSTEMS: Sales order info system, market research system, pricing system >>
2.13
TYPICAL TPS APPLICATIONS

2. Manufacturing & Production Systems
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 2.14 >> 2002 by Prentice Hall & 2012 Yacoub Sabatin

3. Finance & Accounting Systems
MAJOR FUNCTIONS OF SYSTEMS: Budgeting, general ledger, billing, cost accounting MAJOR APPLICATION SYSTEMS: General ledger, accounts receivable, accounts payable, budgeting, funds management systems >>
2.15

4. Human Resources Systems
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, example: 2.16 >> 2002 by Prentice Hall & 2012 Yacoub Sabatin
A Symbolic Representation for a payroll TPS

Employee data (various departments) To general ledger: wages and salaries
Payroll System
Management Reports Government documents
Payroll master file
Employee checks On-line queries
2.17
TYPICAL TPS APPLICATIONS 5. Other Types (e.g., University)
MAJOR FUNCTIONS OF SYSTEMS: Admissions, grade records, course records, alumni MAJOR APPLICATION SYSTEMS: Registration system, student transcript system, curriculum class control system, alumni benefactor system 2.18 * 2002 by Prentice Hall & 2012 Yacoub Sabatin
OFFICE AUTOMATION SYSTEMS (OAS) All Levels Toward A Paperless Office Redesign Of Work Flow Integrated Software Ergonomic Design Bright, Cheerful Work Space Example: Presentation Graphics *
2.19
KNOWLEDGE WORK SYSTEMS (KWS) Knowledge Level Inputs: Design Specs Processing: Modelling Outputs: Designs, Graphics Users: Technical Staff Example: Engineering Work Station *
2.20
MANAGEMENT INFORMATION SYSTEMS (MIS) Management Level Inputs: High Volume Data Processing: Simple Models Outputs: Summary Reports Users: Middle Managers Example: Annual Budgeting >>
2.21
MANAGEMENT INFORMATION SYSTEMS (MIS) Structured & semi-structured semidecisions Report control oriented Past & present data Internal orientation Lengthy design process >>
2.22
TPS DATA FOR MIS APPLICATIONS

TPS
Order Processing System ORDER FILE Materials Resource Planning System PRODUCTION MASTER FILE General Ledger System ACCOUNTING FILES UNIT PRODUCT COST PRODUCT CHANGE DATA EXPENSE DATA MIS FILES MANAGERS SALES DATA
MIS
MIS
REPORTS
2.23
DECISION SUPPORT SYSTEMS (DSS) Management Level Inputs: Low Volume Data Processing: Interactive Outputs: Decision Analysis Users: Professionals, Staff Example: Contract Cost Analysis >>
2.24
CHARACTERISTICS of DECISION SUPPORT SYSTEMS (DSS)

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. >>
2.25
EXECUTIVE SUPPORT SYSTEMS (ESS) Strategic Level Inputs: Aggregate Data Processing: Interactive Outputs: Projections Users: Senior Managers Example: 5 Year Operating Plan >>
2.26
Model of a Typical Executive Support System

ESS workstation
Menus Graphics Communications Local processing
ESS workstation
Internal Data TPS/MIS Data Financial Data Office Systems Modeling/ analysis
External Data Dow Jones Gallup Poll Standard & Poor's
ESS workstation
2.27
>>
CHARACTERISTICS OF EXECUTIVE SUPPORT SYSTEMS (ESS)
Top level management Designed to the individual Ties CEO to all levels Very expensive to keep up Extensive support staff *
2.28
Summary
TYPES OF SYSTEM S ESS Strate gic Le ve l Sys te ms Profit 5-ye ar 5-ye ar 5-ye ar ope rating budge t s ale s tre nd planning plan fore cas ting fore cas ting M anpowe r planning
M IS DSS
Sale s manage me nt Sale s re gion analys is
Inve ntory Control Production Sche duling
M anage me nt-Le ve l Sys te ms Capital Re location Annual Inve s tme nt analys is analys is budge ting Cos t analys is Pricing/profitability Contract cos t analys is analys is
KWS OAS
Engine e ring work s tations Word proce s s ing
Knowle dge -Le ve l Sys te ms Graphics work s tations Docume nt Imaging
M anage rial work s tations Ele ctronic Cale ndars
M achine control TPS Orde r Track ing Plant s che duling
Ope rational Le ve l Sys te ms Se curitie s Payroll trading Accounts payable
Compe ns ation Training & de ve lopme nt
Orde r proce s s ing M ate rial move me nt Cas h manage me nt control Sale s and mark e ting M anufacturing Finance
Accounts re ce ivable Employe e re cord k e e ping
Accounting
2.29
Human Re s ource s
INTERRELATIONSHIPS AMONG SYSTEMS
ESS
MIS
DSS
KWS OAS
2.30
TPS
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

1. Sales & Marketing Systems 2. Manufacturing & Production Systems 3. Finance & Accounting Systems 4. Human Resources Systems **
2.31
1. SALES & MARKETING INFORMATION SYSTEM

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
2.32
2. MANUFACTURING & PRODUCTION INFORMATION SYSTEM

SYSTEM MACHINE CONTROL DESCRIPTION CONTROL ACTIONS OF EQUIPMENT ORGANIZATIONAL LEVEL OPERATIONAL
COMPUTER-AIDED-DESIGN DESIGN NEW PRODUCTS
KNOWLEDGE
PRODUCTION PLANNING
DECIDE NUMBER, SCHEDULE OF PRODUCTS MANAGEMENT
FACILITIES LOCATION
DECIDE WHERE TO LOCATE FACILITIES
STRATEGIC
2.33
3. FINANCE & ACCOUNTING INFORMATION SYSTEM

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL OPERATIONAL
ACCOUNTS RECEIVABLE TRACK MONEY OWED TO FIRM
PORTFOLIO ANALYSIS
DESIGN FIRM'S INVESTMENTS
KNOWLEDGE
BUDGETING
PREPARE SHORT TERM BUDGETS MANAGEMENT
PROFIT PLANNING
PLAN LONG-TERM PROFITS
STRATEGIC
2.34
4. HUMAN RESOURCES INFORMATION SYSTEM

SYSTEM TRAINING & DEVELOPMENT DESCRIPTION TRACK TRAINING, SKILLS, APPRAISALS ORGANIZATIONAL LEVEL 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
*
2.35
Recall
MAJOR BUSINESS FUNCTIONS
SALES & MARKETING MANUFACTURING FINANCE ACCOUNTING HUMAN RESOURCES >>
2.36
EXAMPLES OF BUSINESS PROCESSES (FUNCTIONS) 1/2 SALES & MARKETING: Identifying customers, creating customer awareness, selling MANUFACTURING & PRODUCTION: Assembling product, checking quality, producing bills of materials >>
2.37
EXAMPLES OF BUSINESS PROCESSES (FUNCTIONS) 2/2 FINANCE & ACCOUNTING: Paying creditors, creating financial statements, managing cash accounts HUMAN RESOURCES: Hiring employees, evaluating performance, enrolling employees in benefits plans Ex. >>
2.38
The Order Fulfillment Process (F 2.12) 12)

Generate Order Submit Order
Sales
Accounting
Check Credit
Approve Credit
Generate Invoice
Manufact uring & P roduct ion
Assemble Product
Ship Product
2.39
Customer Relationship Management

Business and technology discipline to coordinate the business processes for dealing with customers.
Sales T elephone sales W eb sales Field sales Ret ail sales Market ing Cam paign data Cont ent Dat a analysis Cust om er Service Call cent er dat a W eb self service dat a Field service dat a W ireless dat a
Unified view of customers Consistent message to customers End-to-end customer care Long-term customer relationships Identification of best customers
2.40
*
SUPPLYSUPPLY-CHAIN MANAGEMENT (SCM)

CUSTOMERS
ORDER PROCESSING PLANNING & FORECASTING
SUPPLIERS
PROCUREMENT ACCOUNTING
INTRANET
PRODUCTION
LOGISTICS SERVICES
SHIPPING
INVENTORY
DISTRIBUTORS
2.41
>>
Supply Chain Management

Integration of supplier, distributor, and customer logistics requirements into one cohesive process. process. Network of facilities for procuring materials, transforming raw materials into finished products,' and distributing finished produce to customers. customers.
Capacity, inventory level, delivery schedule, payment terms Supplier Manufacturer Distributor Retail Outlet Customer
Orders, return requests, repair and service requests, payments
2.42
HOW INFORMATION SYSTEMS FACILITATES SUPPLY CHAIN MANAGEMENT

DECIDE WHEN, WHAT TO PRODUCE, STORE, MOVE RAPIDLY COMMUNICATE ORDERS TRACK ORDER STATUS CHECK INVENTORY AVAILABILITY, MONITOR LEVELS TRACK SHIPMENTS PLAN PRODUCTION BASED ON ACTUAL DEMAND RAPIDLY COMMUNICATE PRODUCT DESIGN CHANGES PROVIDE PRODUCT SPECIFICATIONS SHARE INFORMATION ABOUT DEFECT RATES, RETURNS...
2.43
TRADITIONAL VIEW OF SYSTEMS

WITHIN THE BUSINESS: There are functions, each having its uses of information systems to do own business processes OUTSIDE THE ORGANIZATIONS BOUNDARIES: There are customers and vendors
FUNCTIONS TEND TO WORK IN ISOLATION
i. e. >>
2.44
TRADITIONAL VIEW OF SYSTEMS

Business Functions Manufacturing Business Processes Manufacturing Systems Accounting Business Processes Accounting Systems Finance Business Processes Finance Systems Marketing and Sales Business Processes Marketing and Sales Systems Human Resources Business Processes
Human Resources Systems
Vendors
2.45
Enterprise systems can integrate the key business processes of an entire firm into a single software system that allows info to flow seamlessly throughout the org. These systems may include transactions with customers and vendors.
2.46
Organizational Boundaries
Organizational Boundaries
Information Systems
Customers
In some organizations today, separate systems built over along period of time to support discrete business processes (no real integration) These systems rarely include transactions with customers and vendors. BUT >>
ENTERPRISE SYSTEM
Manufacturing
Accounting
Business Processes Vendors EnterpriseEnterprise-wide Business Processes
Customers
Human Resources Sales & Marketing
Finance
BENEFITS OF ENTERPRISE SYSTEMS

FIRM STRUCTURE & ORGANIZATION: One organization MANAGEMENT: Firmwide knowledge-based management knowledgeprocesses TECHNOLOGY: Unified platform BUSINESS: More efficient operations & customercustomerdriven business processes *
2.47
CHALLENGES OF ENTERPRISE SYSTEMS

Daunting Implementation High Up Front Costs & Future Benefits Inflexibility Hard To Realize Strategic Value *
2.48
Extended Enterprises
Extended Enterprises: Networks linking systems of multiple firms in an industry. Also called extended enterprises. Example: INDUSTRIAL NETWORKS link firms into industry-wide system
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 including competitors.
2.49
c h a p t e r
2
INFORMATION SYSTEMS IN THE ENTERPRISE
2.50

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AQU Information Systems Fundamentals Spring 2012

Reading Notes for Chapter 2 in the textbook 1/2

2002 by Prentice Hall & 2012 Yacoub Sabatin

AQU Information Systems Fundamentals Spring 2012

Reading Notes for Chapter 2 in the textbook 2/2

2002 by Prentice Hall & 2012 Yacoub Sabatin

2002 by Prentice Hall & 2012 Yacoub Sabatin

AQU Information Systems Fundamentals Spring 2012

2002 by Prentice Hall & 2012 Yacoub Sabatin

2002 by Prentice Hall & 2012 Yacoub Sabatin

AQU Information Systems Fundamentals Spring 2012

Connecting Organizational Levels Difficult, Costly

2002 by Prentice Hall & 2012 Yacoub Sabatin

AQU Information Systems Fundamentals Spring 2012

TYPES OF INFORMATION SYSTEMS

KNOWLEDGE & DATA WORKERS

2002 by Prentice Hall & 2012 Yacoub Sabatin

Four General Kinds of IS in Terms of Organizational Levels

AQU Information Systems Fundamentals Spring 2012

MAJOR TYPES OF SYSTEMS

2002 by Prentice Hall & 2012 Yacoub Sabatin

INTERRELATIONSHIPS AMONG SYSTEMS

AQU Information Systems Fundamentals Spring 2012

TYPICAL TPS APPLICATIONS 1. Sales & Marketing Systems

TYPICAL TPS APPLICATIONS

AQU Information Systems Fundamentals Spring 2012

TYPICAL TPS APPLICATIONS

TYPICAL TPS APPLICATIONS

AQU Information Systems Fundamentals Spring 2012

A Symbolic Representation for a payroll TPS

Management Reports Government documents

Payroll master file

Employee checks On-line queries

2002 by Prentice Hall & 2012 Yacoub Sabatin

TYPICAL TPS APPLICATIONS 5. Other Types (e.g., University)

AQU Information Systems Fundamentals Spring 2012

AQU Information Systems Fundamentals Spring 2012

AQU Information Systems Fundamentals Spring 2012

TPS DATA FOR MIS APPLICATIONS

2002 by Prentice Hall & 2012 Yacoub Sabatin

AQU Information Systems Fundamentals Spring 2012

CHARACTERISTICS of DECISION SUPPORT SYSTEMS (DSS)

AQU Information Systems Fundamentals Spring 2012

Model of a Typical Executive Support System

External Data Dow Jones Gallup Poll Standard & Poor's

Menus Graphics Communications Local processing

Menus Graphics Communications Local processing

2002 by Prentice Hall & 2012 Yacoub Sabatin

CHARACTERISTICS OF EXECUTIVE SUPPORT SYSTEMS (ESS)

AQU Information Systems Fundamentals Spring 2012

Sale s manage me nt Sale s re gion analys is

Inve ntory Control Production Sche duling

Engine e ring work s tations Word proce s s ing

Knowle dge -Le ve l Sys te ms Graphics work s tations Docume nt Imaging

M anage rial work s tations Ele ctronic Cale ndars

M achine control TPS Orde r Track ing Plant s che duling

Ope rational Le ve l Sys te ms Se curitie s Payroll trading Accounts payable

Compe ns ation Training & de ve lopme nt

Accounts re ce ivable Employe e re cord k e e ping

2002 by Prentice Hall & 2012 Yacoub Sabatin

INTERRELATIONSHIPS AMONG SYSTEMS

AQU Information Systems Fundamentals Spring 2012