Christ University

MIDBS Unit 4
Information Systems for Business

MIDBS Unit 4
MIDBS Unit 4
Information Systems for Business
• Business Process Integration • Transaction Processing Systems
• Enterprise Business Applications • MIS
• Overviews of ERP • DSS
• Supply Chain Management System • Analytics and Business Intelligence
• CRM • Knowledge Management Systems
• International Information Systems Text: 3.5.1, 3.5.2, 3.6, 16.1-16.4

Text: 15.1, 15.3-15.5, 15.7 Text Case: Taj Hotels (16)

Text Case: Oxford, Kolkatta (15)
Case: Knowledge Sharing at REMA (HBS)

Prof: Shreekant Deshpande

August 2020

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MIDBS Unit 4
Information Systems for Business

MIDBS Unit 4
Information Systems for Business
• Business Process Integration
• Enterprise Business Applications
• Overviews of ERP
• Supply Chain Management System
• CRM
• International Information Systems

Text: 15.1, 15.3-15.5, 15.7

Text Case: Oxford, Kolkatta (15)

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Business Process Integration

• Business Process is a complex process due to

involvement of multiple external players
dispersed in the city/country/world.

• Interactions among people, different

departments and organizations

• Chain of small tasks/activities form complex

processes with varying cycle time ( few
seconds to days/months)- Services, products
projects

• Business processes are supported by

automating workflow and exchange of
information

• Process of connecting departments for enabling

exchange of information on continuous basis is
business process integration

Billing model:
• Coding • T&M
Example: Ordering on Amazon for a Book • Configuration • Fixed price
or for Vegetables • Customization • Hybrid
• Pay as you reap

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Enterprise Resource Planning Systems

• MRP systems – Materials Requirements planning: MRP Key modules

systems have different functional modules and are
interconnected , which integrate functions of inventory, parts
• Finance and Accounting Module
purchases, stores and production scheduling.
MRP I included major functionalities: master production scheduling,
bill of materials and inventory tracking
• Human Resource Management Module
MRP II ( Manufacturing Resource Planning) includes in addition:
machine capacity scheduling, demand forecasting, quality assurance, • Manufacturing and Operations Module
general accounting.
• Sales and Marketing Module
• ERP (Enterprise Resource planning) – integrates data and
operations from all functions in an organisation sales &
marketing, manufacturing, materials, finance and HR

• Industry sector wise systems

• Examples of ERP systems

– SAP, Oracle, Microsoft, Ramco, Epicor

– Open source ERPs - Adempiere, OpenBravo, Compiere

MRP=> MRP II => ERP

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Finance & Accounting Module Human Resource Management Module

• General Ledger accounting • Workforce process management

• Accounts Payable and receivables • Manager self-service

• Asset accounting • Enterprise compensation management

• Funds Monitoring
• E- Recruitment
• Governance and Risk
• Organizational Management
• Overhead cost controlling
• Organizational Learning
• Activity based costing

• Profitability Analysis
ERP Architecture:
• Business planning and Budgeting
• Front end: Presentation Layer
• Cash Management • Middle Layer : Application Layer
• Back end : Database
• Credit Management

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Manufacturing and
Operations Module Supply Chain Management
Systems
• Production planning and control

• Supply chain – system of organisations, people,

• Material management technology and information that enable materials
to be moved and processed to a form that an end
• Plant maintenance customer consumes
• Integrates suppliers and vendors to the host
organisation – process integration across
organisational boundaries
Sales and Marketing Module
• Just-in-Time (JIT) Manufacturing
– SCM systems are a natural fit to enable JIT
• Sales management: Order, invoicing..
• SCM system modules
• Marketing management: Campaigns, – Order Management
promotions
– Manufacturing Scheduling
• Distribution management: Logistics
– Demand Assessment
– Distribution management
– Transportation Management
BOM: Bill of Materials

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Supply chain partners

• Oracle
• SAP
• JDA
• Etc..

Take a look at Gartner’s

Magic Quadrant Report
for SCM 2020

SRM : Supplier Relationship Management

systems

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Gartner’s Report for Warehouse Management Systems

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Customer Relationship Management (CRM) Systems

• Automates processes of recording customer data, CRM Modules:

planning and recording sales calls, managing the sales  Sales force automation
force, order management, call centres, marketing and • Leads tracking
campaigns and e-commerce • Opportunity management
• Contact management
• Types of CRM  Marketing
• Campaigns management
– Analytical – provides analysis based on data • Web contents management
obtained from various repositories to make demand • Web tracking
forecasts, customer profiles, consumer behaviour  Customer service
prediction and competitor analysis • Call center
• Internal helpdesk
– Operational – supports execution like running • Web based self service
marketing campaigns, e-mail based publicity  Loyalty programs
• Discounts and schemes
• Freebies
• Special functions enabled – cross-selling, up-selling,
• Privilege cards
Bundling and Service support

• Customer Touch points (Banks) : ATM, e-banking channel, branch, Help desk, email

• 360 Degree View of Customers : Complete view of customer (his association with bank with all products and services

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Sales Funnel

Buying process is
drastically different
in different
contexts:
• B to C
• B to B
• C to C

BOOK: CRM at
the Speed of
Light
• Lead-Opportunity-Order (Approximate ratio: 100:40:10)
• CLV: Customer Life time Value ( Ex: Insurance, Cars, Loans, etc…)
by Paul
• Wallet share Greenberg

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Gartner’s 2020 Magic Quadrant for the CRM Customer Engagement Center

• Siebel, SalesForce, PeopleSoft (Oracle),

https://www.zendesk.com/blo
g/gartner-magic-quadrant-
crm/

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Challenges of Enterprise Systems

Managing the Implementation
Implementations

• High up-front costs • Change Management

• Excessive overrun of Budgets • Top Management support

• Belated return-on-investment • Controlling costs

• Outright inability to perform after • Restricting customization

implementation
• Project Management and Vendor
 Enterprise systems shut out innovative selection
ways in which employees change their
work practices to meet the demands of • Preparing work force for the
the market change- Training
 Daunting implementation
 Resistance to change
 Inflexibility of the system Higher % of customization hinders
application upgrade

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International Information Systems
• Multinational and Transnational firms
• Challenges for information systems
– Coordinate information across time
zones, currencies, language, time stamps
and legal requirements
– Shared processes with cross border legal
requirements
– Local culture, practices and local
customs
• MNC: have branches in other countries while
the home HQ controls all branches
• TNC: Manages operations in each country
with its HQ in that country
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Outsourcing and Off-shoring
• Outsourcing: Moving processes of a firm to
a partner or a vendor
– Reduces costs and uses expertise from
vendors who specialise in the task
• Off-shoring: Moving business processes to
another country
– Lower costs to create the same goods or
provide services
• Near shoring : Indian IT vendor having an
office/Team in Africa for a client in US
Captive centres:
• International systems enable outsourcing and
offshoring ( Target, GE, Shell, etc..)
• Text Case: Taj Hotels (16)
• Case: Knowledge Sharing at REMA (HBS)
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MIDBS Unit 4
Information Systems for Business

MIDBS Unit 4

• Transaction Processing Systems

• MIS
• DSS
• Analytics and Business Intelligence
• Knowledge Management Systems

Text: 3.5.1, 3.5.2, 3.6, 16.1-16.4

Text Case: Taj Hotels (16)

Case: Knowledge Sharing at REMA (HBS)

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Types of Information Systems
TPS – Transaction Processing System
• Transaction processing systems record all transactions
as they happen, storing transaction data and preserving
a digital record of the functioning of the enterprise.
• They are designed to respond quickly to the user, in a
step wise manner, through carefully designed interfaces
that guide users through various transactions.
• Designed to respond to many users and are LIVE.
• Enable day-to-day activities in an organization.
OLTP- Online Transaction processing system- Ticket booking in
Railways, Gas cylinder refill booking, etc..
OLAP: Online Analytical processing system (MIS,DSS,ESS)
IS generally have both (OLTP & OLAP) functionality: ex: Talley,
SAP, Siebel CRM, etc..
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MIS- Management Information System
• MIS uses data generated/saved by Transaction
processing systems, by aggregating data into reports
to be used by the management, to sense and monitor
the business/organisation.
• Real-time monitoring involves presenting data as
soon as it is created. Trading in Shares (prices
tracked real time, Patients health).
• Batch mode monitoring aggregates data over a
period of time, allowing drilling down to details.
Batch mode data provides more data for better
analysis.
• Specific reports are tailored for specific decisions
and hence the need for MIS to be designed to meet
the specific requirements of managers Ex: payment
outstanding report, Ageing analysis report.
• MIS can contain data of external entity also like
competitors data , Govt. tax raes, etc..
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MIS at different levels

Needs of managers at different levels are different.

Some need real time data while others need
aggregated data for future planning.

• Executives at the highest level require

aggregated data – Executive Support Systems
(ESS) provide visual tools, such as reports
which use graphs, charts and diagrams.

• Ex: Status of all projects, sales forecast Vs

industry forecast, Country wise students in a
college

• Managers who report to Executives use

Decision Support Systems which use scientific
models of decision making on available data DSS is a MIS used by managers for making
• Employees use Transaction systems to run the decisions based on available data using specific
day to day activities models.

• Knowledge workers/ IT professionals like ESS is a MIS used by top level executives
designers, analysts develop and use
sophisticated models to analyse transaction
data and data related to the industry and
economy for decision making by managers

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Decision Making with MIS
Tactical Decisions (TPS)
• Tactical decisions are those that have short-term
impact and are taken by workers and operators
to perform their activities
• Examples: Quality check-pass or fail, penalty for
late payment of EMI, Nurse attending to patient
makes micro decisions (alerting doctor), prioritize
treatments to patient and recording the actions
Strategic decisions (ESS)
• Strategic decisions are decisions taken by top-
level executives that have long-term impact
on the very manner in which the organisation
does its work
• They are related to the vision and mission of
the organisation
Examples: M&A, Plant location, Export decision,
starting new trains and developing infrastructure etc
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Operational Decisions/ Middle level (MIS, DSS)
• Decisions that have a medium-term scope and are
made by managers are Operational decisions
• These are based on aggregate data and are often
supported by decision support systems
• Control and planning are important activities
involving operational decisions. Increase discounts
if sales are low.
• Use mathematical models for taking decisions
Examples: Pricing Model (Price= Cost+ 20% Profit),
Budgets, forecast, Inventory management (EOQ Model),
Effort estimation, Travelling sales man problem
Short term and Long term durations are industry specific
• Tactical: Hours/days
• Operational: Weeks/Months/Quarters
• Strategic: Quarters/Years
Is ST/LT same for IT and Steel industry ???
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MIS and DSS

• DSS are used by organisations, both by • MIS present organizational data in a

individuals and groups, to help make decisions summary manner that enables both a
regarding day-to-day operations or about long- bird's eye view and a penetrating view.
term plans and strategies.
• DSS assist a manager in making decisions; but • They are used at regular intervals.
cannot replace the manager.
• Decisions are structured in nature, with the • They have a fixed format and output and
number of variables to be decided known
are largely used by higher management.
clearly.
• Pre-existing models are used to arrive at
possible scenarios of interest. Ex: Time series
analysis for forecasting.
• DSS are designed to help managers with
their decisions and are meant for specific
decisions.
• What-If model is already programmed, used
by manager to take a decision

• MIS: Weekly Sales report, Daily Over time report, Customer complaints, Attendance report

• DSS : Discounts, Inventory model, stock investment, Pricing

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ESS Examples

• Drill-Down
• Roll-Up
• Alerts
• Mobile apps
• RAG Color
codes in dash
board

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Types of IS

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Decision Making: Intelligence-Design-Choice Model

• The three stages of problem-

solving - Intelligence, Design
and Choice put forth by Herbert
Simon applies to decision-
making
• Bounded Rationality – the idea
that humans can consider only a
certain number of criteria and a
restricted number of options to
make decisions.
• Intelligence: Collect information
to define problem or an
opportunity
• Design: develop alternative
solutions based on required
criteria to be met
• Choice: make a selection based
on CBA

Apply three step process for :Analyzing a quality problem

Opportunity and Problem situation

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Types of Decisions Components of a DSS

• Structured decision - A situation in which the • The Database – stores, manages, retrieves
criteria, the data needed for the problem and the and presents data; relies on organizational
method by which to make a decision are known. databases
DSS are used in such cases.
• Relationship between dependent and independent • The Model Base – The mathematical or
variables can be established and extrapolated to other domain-specific model, specific to
estimate the results the DSS
• Unstructured decision – A situation in which there • The User Interface – allows access to
are no clear criteria by which to make a decision,
database and feed data into the model
and no visibility on what data to use. Some form or
structure is imposed on it, to arrive at the criteria for
base for analysis, factors, weightage;
decision-making. guides model selection
– Ex: Covid-19 situation- Lockdown, Metro
services?
– Elections: which media is best
– A large class of problems are semi-
structured; where few unknown parameters
have to be determined by studying the
domain.
– DSS are used with certain assumptions

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Analytics and Business Intelligence

• Analytics – Techniques by which complex models are

History of DSS applied to large collections of data available within
• DSS tools / Model-driven DSS – support for
organizations to solve problems and seek insights.
'what-if' analysis
(Ex: Market Basket Analytics)
• Spread sheets and pivot tables
• Data mining (data pattern, knowledge
• Descriptive analytics: Historical insights/ information
discovery), analytics and business intelligence
– Financial metrics (What happened)
• Group Decision Support systems (GSS)-
Group collaboration, idea generation, brain
• Diagnostic analytics (Why it happened) Machine
storming, voting breakdown, Illness)
• Executive Support Systems (ESS) –
dashboards • Predictive Analytics -Techniques that use past data o
predict future trends and scenarios( Mobile churn,
loan shift)
Analytics and Business Intelligence
• Prescriptive Analytics(Books recommendation)
Business Intelligence Techniques
• Real-time Analytics – Using modeling techniques to
– Neural Networks monitor activities within the organization, using
– Decision Trees transaction data ( ATM, Fraud detection)
– Clustering
• Ex: IPL Cricket score analysis,
– Data Visualization

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Neural Networks
• A mathematical model of the brain that is used to
assist with solving problems of classification and
prediction.
• Input nodes-Computation-Output node
• Used in two types of analytics problems –
Classification and Prediction
• Classification – Techniques by which data on objects
and transactions are categorised into groups( Loan:
Approval or Denial)
• Prediction – Techniques by which historical data are
used to forecast future data ( Share price, Forex rates)
Clustering
• Techniques by which natural groupings and
aggregations are revealed in data – helps identify
patterns in data.
Ex: Customer segments based on age, education, income
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Decision Tree
• A technique by which a hierarchy of
classifications is created; only for classification
problems.
• Identifies the most important parameter for a
decision
• Can be very simple or complex.
• Easier construction than neural networks
• Decision trees can handle text data too, unlike
neural networks
Data Visualization
• Techniques by which data properties are displayed
graphically – some commonly used graphs for static
data are scatter plots, various charts, histograms, box
, bubble graphs, Heat maps
• Dynamic data visualisation through Dashboards
• Outliers – Data points, not part of the main data set,
that need special attention
• Dynamic data visualisation – dramatization for
emphasis
Exercise: Watch the below mentioned video and identify
data elements, information, bubble graph, Heat maps.
• 200 years history in 4 minutes
https://www.youtube.com/watch?v=jbkSRLYSojo
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Decision Tree

Decision Tree – Loan Approval

Travel to Mumbai from

Bangalore

• Air
• Road
 Bus
 Train
 Car
Conditions/Constraints:
Cost, Time, Convenience

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Knowledge Management (KM)

KM refers to an approach to make best use of KM is a collaboration tool on intranet and

cumulative knowledge available in the organization. is used for internal purposes to assist with bringing
KM is a process of identifying. creating, capturing, businesses together including secure document
sharing, using and managing the knowledge and management, collaboration opportunities.
information of an organization.
Main purpose is to reuse the insights and experiences Knowledge Management is important because it
of their employees and the codified experiences that boosts the efficiency of an organization's decision-
are stored in their data and information repositories. making ability. In making sure that all employees
Also called Enterprise Content Management systems have access to the overall expertise held among the
(ECM) employees in an organization, a smarter workforce is
Knowledge is categorised as - built who are able to make quick, informed
• Declarative knowledge (invariants/ facts) decisions that benefit the company.
• Procedural knowledge
• Explicit knowledge Ex: Reusing case studies in Proposals, BP and LL
• Tacit knowledge from projects, Check lists, Document templates,
• Expert knowledge training material
• Casual knowledge Ex: MS Share point, Open Text/Documentum,
• Contextual knowledge

Manufacturing company: New materials, New machining KM: Codifying knowledge for finding required information
methods, Rejection % quickly using FAQs. Customer feedback codes as satisfied
Hospital: Surgery methods, new developments in medicine and dissatisfied

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Knowledge Management (KM)

Knowledge Life Cycle: Value of knowledge

Knowledge Life Cycle: Value of knowledge
• Knowledge creation – The step of
identifying, capturing explicit (encoding)
knowledge or recording the experience of an
employee (knowledge).
• Knowledge development – The step of
validating and verifying that knowledge can
be reused and is accurate and from an
authentic source
• Knowledge use – Applying the stored
knowledge in situations where it is required
Knowledge has life cycle
• Knowledge creation • Knowledge degradation – The process
• Knowledge Development (verify) where knowledge looses its relevance,
• Use gradually od suddenly becomes less useful
• Reuse
• Degradation(Sharp/graceful) in a given context.
• The de-gradation can be graceful, when it
Ex: Instructions for using Manual typewriters, pagers, slowly becomes less useful, or it may
Tax rules,
degrade suddenly.

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Organizations have to start identifying their Challenges to Knowledge Management –

Knowledge needs to utilize KM
Internal Knowledge : Internal machining processes,
Quality bench marks, Materials and specifications, R
& D findings, etc..
contradiction in knowledge sharing by an
employee – whether to share or hold knowledge
If his expert knowledge is shared, his
IMPORTANCE is lost.

Elaborate process is required to collect, verify,

External Knowledge : Market information, store the knowledge and make it available for
Competitor’s details, Government regulations, Tax others.
rules, Export documentation, etc..

• Hierarchic Approach – Top management team

decides the knowledge required to run the
business and they will put a system to manage
KM.

• Market Approach – Demand and supply driven.

Top management establishes a system for KM
and provides a Technology platform and defines
the process for KM.
• Experts in domain will add to KM. Employees
can request for information and experienced
employees can respond.

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Technologies for Knowledge Management

Expert Systems Content Management Systems

• Simulate an expert by capturing all rules to make a
decision.
• Domain specific systems: Systems that capture,
encode human experience/knowledge and reasoning
in a set of rules, pertaining to a domain, which can be
applied to solve problems in the same domain.
• An expert in the domain is essential to build an
expert system
Ex: Medical expert (Mycin) in Stanford University,
Loan evaluation, Drilling of oil well, etc.
• Ex: DENDRAL- Molecular structure
• Used to stores a large number of files (any type of
document, pictures, audio, etc…) and to retrieve across the
organization
• Consists of a file a database with a front end to access the
system
• Accessible by both insiders and outsiders
• Banks using to store property documents

• Colleges/University use to store students certificates,

Mind Maps grades, books etc.. Called Learning management system
• A mind map is a diagram used to visually
• Wx: Dell EMC, M Files, Open Text
organize information and share.
• A mind map shows hierarchical arrangement of
information and shows relationships among
pieces of the whole.
• Diagrams are depicted by a central node around
which related ideas, concepts, themes, objects,
files are arranged
Ex: XMind

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Mind Map

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