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Question 2: How do information systems support the major business functions: sales, marketing,manufacturing & production, finance and

human resources.Describe with some examples that your familiar with. An information system (IS) is an arrangement of people, data, processes, and information technology that interact to collect, process, store, and provide as output the information needed to support an organization.A management information system (MIS) is an information system that provides for management-oriented reporting based on transaction processing and operations of the organization. Information Systems is an academic/professional discipline bridging the business field and the well-defined computer science field that is evolving toward a new scientific area of study. An information systems discipline therefore is supported by the theoretical foundations of information and computations such that learned scholars have unique opportunities to explore the academics of various business models as well as related algorithmic processes within a computer science discipline. Typically, information systems or the more common legacy information systems include people, procedures, data, software, and hardware (by degree) that are used to gather and analyze digital information. Specifically computer-based information systems are complementary networks of hardware/software that people and organizations use to collect, filter, process, create, & distribute data (computing). Computer Information System(s) (CIS) is often a track within the computer science field studying computers and algorithmic processes, including their principles, their software & hardware designs, their applications, and their impact on society. Overall, an IS discipline emphasizes functionality over design.

As illustrated by the Venn Diagram on the right, the history of information systems coincides with the history of computer science that began long before the modern discipline of computer science emerged in the twentieth century. Regarding the circulation of information and ideas, numerous legacy information systems still exist today that are continuously updated to promote ethnographic approaches, to ensure data integrity, and to improve the social effectiveness & efficiency of the whole process. In general, information systems are focused upon processing information within organizations, especially within business enterprises, and sharing the benefits with modern society. Information technologies are a very important and malleable resource available to executives.[21] Many companies have created a position of Chief Information Officer (CIO) that sits on the executive board with the Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operating Officer (COO) and Chief Technical Officer (CTO).The CTO may also serve as CIO, and vice versa. The Chief Information Security Officer (CISO) focuses on information security management. There are various types of information systems, for example: transaction processing systems, office systems, decision support systems, knowledge management systems, database management systems, and office information systems. Critical to most information systems are information technologies, which are typically designed to enable humans to perform tasks for which the human brain is not well suited, such as: handling large amounts of information, performing complex calculations, and controlling many simultaneous processes.

The principal business functions in a business firm are: 1. Marketing and sales 2. Production 3. Accounting and finance 4. Human resources

Sales and marketing information systems help the firm identify customers for the organizations products and services, develop products and services to meet customers needs, promote the products and services, sell the products and services, and provide ongoing customer support. Specific sales and marketing information systems include order processing, pricing analysis, and sales trend forecasting. Manufacturing and production information systems provide information for planning, product development, production or service scheduling, and controlling the flow of products and services. Specific manufacturing and production information systems include machine control, production planning, and facilities location. Finance and accounting information systems track the organizations financial assets and fund flows. Financial and accounting systems include accounts receivable, budgeting, and profit planning. Human resources information systems maintain employee records; track employee skills, job performance, and training; and support planning for employee compensation, including pensions and benefits, legal and regulatory requirements, and career development. Systems include training and development, compensation analysis, and human resources planning. Outlines a general view of information systems supporting a company's operations and management. Emphasize that management support systems (MRS), decision support systems (DSS), and executive information systems (EIS), rest on the foundation of transaction processing systems (TPS) that support business operations. TPSs are the major source of data used by the higher-level systems to derive information. Professional support systems (PSS) and office information systems (OIS), which support individual and group knowledge work, are also a part of this foundation.

Marketing activities are directed toward planning, promoting, and selling goods and services to satisfy the needs of customers and the objectives of the organization. Marketing information systems support decision making regarding the marketing mix. These include: 1. Product 2. Price 3. Place 4. Promotion In order to support decision making on the marketing mix, a marketing information system draws on several sources of data and information. A marketing information system relies on external information to a far greater degree than other organizational information systems. It includes two subsystems designed for boundary spanning bringing into the firm data and information about the marketplace. The objective of marketing research is to collect data on the actual customers and the potential customers, known as prospects. The identification of the needs of the customer is a fundamental starting point for total quality management (TQM). Electronic commerce on the WEB makes it easy to compile statistics on actual buyer behavior. Marketing research software supports statistical analysis of data. It enables the firm to correlate buyer behaviour with very detailed geographic variables, demographic variables, and psychographic variables. Marketing (competitive) intelligence is responsible for the gathering and interpretation of data regarding the firm's competitors, and for the dissemination of the competitive information to the appropriate users. Most of the competitor information comes from corporate annual reports, media-tracking

services, and from reports purchased from external providers, including on-line database services. The Internet has become a major source of competitive intelligence. The marketing mix subsystems support decision making regarding product introduction, pricing, promotion (advertising and personal selling), and distribution. These decisions are integrated into the sales forecast and marketing plans against which the ongoing sales results are compared.Marketing mix subsystems include: 1. Product subsystem 2. Place subsystem 3. Promotion subsystem 4. Price subsystem 5. Sales forecasting The product subsystem helps to plan the introduction of new products. Continually bringing new products to market is vital in today's competitive environment of rapid change. The product subsystem should support balancing the degree of risk in the overall new-product portfolio, with more aggressive competitors assuming higher degrees of risk for a potentially higher payoff. Although decisions regarding the introduction of new products are unstructured, information systems support this process in several ways: 1. Professional support systems assist designers in their knowledge work 2. DSSs are used to evaluate proposed new products 3. With a DSS, a marketing manager can score the desirability of a new product. 4. Electronic meeting systems help bring the expertise of people dispersed in space and time to bear on the problem

5. Information derived from marketing intelligence and research is vital in evaluating new product ideas. The place subsystem assists the decision makers in making the product available to the customer at the right place at the right time. The place subsystem helps plan the distribution channels for the product and track their performance. The use of information technology has dramatically increased the availability of information on product movement in the distribution channel. Examples include: 1. Bar-coded Universal Product Code (UPC) 2. Point-of-sale (POS) scanning 3. Electronic data interchange (EDI) 4. Supports just-in-time product delivery and customized delivery The promotion subsystem is often the most elaborate in the marketing information system, since it supports both personal selling and advertising. Media selection packages assist in selecting a mix of avenues to persuade the potential purchaser, including direct mail, television, print media, and the electronic media such as the Internet and the WEB in particular. The effectiveness of the selected media mix is monitored and its composition is continually adjusted. Database marketing relies on the accumulation and use of extensive databases to segment potential customers and reach tem with personalized promotional information. The role of telemarketing, marketing over the telephone, has increased. Telemarketing calls are well supported by information technology. Sales management is thoroughly supported with information technology. Customer profitability analysis help identify high-profit and high-growth customers and target marketing efforts in order to retain and develop these accounts.Sales force automation, involves equipping salespeople with portable computers tied into the corporate information systems. This gives the salespeople instantaneous access to

information and frees them from the reporting paperwork. This increases selling time and the level of performance. Access to corporate databases is sometimes accompanied by access to corporate expertise, either by being able to contact the experts or by using expert systems that help specify the product meeting customer requirements.Pricing decisions find a degree of support from DSSs and access to databases that contain industry prices. These highly unstructured decisions are made in pursuit of the companys pricing objectives. General strategies range from profit maximization to forgoing a part of the profit in order to increase a market share. Information systems provide an opportunity to finely segment customer groups, and charge different prices depending on the combination of products and services provided, as well as the circumstances of the sale transaction. Based on the planned marketing mix and outstanding orders, sales are forecast and a full marketing plan is developed. Sale forecasting is an area where any quantitative methods employed must be tempered with human insight and experience. The actual sales will depend to a large degree on the dynamics of the environment.Qualitative techniques are generally used for environmental forecasting - an attempt to predict the social, economic, legal, and technological environment in which the company will try to realize its plans. Sales forecasting uses numerous techniques, which include: 1. Group decision making techniques are used to elicit broad expert opinion 2. Scenario analysis in which each scenario in this process is a plausible future environment 3. Extrapolation of trends and cycles through a time-series analysis.

Global competitive pressures of the information society have been highly pronounced in manufacturing and have radically changed it. The new marketplace calls for manufacturing that are: 1. Lean - highly efficient, using fewer input resources in production through better engineering and through production processes that rely on low inventories and result in less waste. 2. Agile - fit for time-based competition. Both the new product design and order fulfilment are drastically shortened. 3. Flexible - able to adjust the product to a customer's preferences rapidly and cost effectively. 4. Managed for quality - by measuring quality throughout the production process and following world standards, manufacturers treat quality as a necessity and not a high-price option. Information technology must play a vital role in the design and manufacturing processes. Manufacturing information systems are among the most difficult both to develop and to implement. TPSs are embedded in the production process or in other company processes. The data provided by the transaction processing systems are used by management support subsystems, which are tightly integrated and interdependent. Manufacturing information subsystems include: 1. Product design and engineering 2. Product scheduling 3. Quality control

4. Facilities planning, production costing, logistics and inventory subsystems Product design and engineering are widely supported today by computer-aided design (CAD) and computer-aided engineering (CAE) systems. CAD systems assist the designer with automatic calculations and display of surfaces while storing the design information in databases. The produced designs are subject to processing with CAE systems to ensure their quality, safety, manufacturability, and cost-effectiveness. CAD/CAE systems increasingly eliminate paperwork from the design process, while speeding up the process itself. As well, the combined techniques of CAD/CAE and rapid prototyping cut time to market.Production scheduling is the heart of the manufacturing information system. This complex subsystem has to ensure that an appropriate combination of human, machinery, and material resources will be provided at an appropriate time in order to manufacture the goods. Production scheduling and the ancillary processes are today frequently controlled with a manufacturing resource planning system as the main informational tool. This elaborate software converts the sales forecast for the plants products into a detailed production plan and further into a master schedule of production. Computer integrated manufacturing (CIM) is a strategy through which a manufacturer takes control of the entire manufacturing process. The process starts with CAD and CAE and continues on the factory floor where robots and numerically controlled machinery are installed - and thus computer-aided manufacturing (CAM) is implemented. A manufacturing system based on this concept can turn out very small batches of a particular product as cost-effectively as a traditional production line can turn out millions of identical products. A full-fledged CIM is extremely difficult to implement; indeed, many firms have failed in their attempts to do so.The quality control subsystem of a manufacturing information system relies on the data collected on the shop floor by the sensors embedded in the process control systems. Total quality management (TQM) is a management technique for continuously improving the performance of all members and units of a firm to ensure customer satisfaction. In particular, the principles of TQM state that quality comes from improving the design and manufacturing process, rather than Ainspecting out@ defective products. The foundation of quality is also understanding and reducing variation in the overall manufacturing process.

Among the higher-level decision making supported by manufacturing information systems are facilities planning - locating the sites for manufacturing plants, deciding on their production capacities, and laying out the plant floors. Manufacturing management requires a cost control program, relying on the information systems. Among the informational outputs of the production costing subsystem are labor and equipment productivity reports, performance of plants as cost centers, and schedules for equipment maintenance and replacement.Managing the raw-materials, packaging, and the work in progress inventory is a responsibility of the manufacturing function. In some cases, inventory management is combined with the general logistics systems, which plan and control the arrival of purchased goods into the firm as well as shipments to the customers. The financial function of the enterprise consists in taking stock of the flows of money and other assets into and out of an organization, ensuring that its available resources are properly used and that the organization is financially fit. The components of the accounting system include: 1. Accounts receivable records 2. Accounts payable records 3. Payroll records 4. Inventory control records 5. General ledgers

Financial information systems rely on external sources, such as on-line databases and custom produced reports, particularly in the areas of financial forecasting and funds management. The essential functions that financial information systems perform include: 1. Financial forecasting and planning 2. Financial control 3. Funds management 4. Internal auditing Financial forecasting is the process of predicting the inflows of funds into the company and the outflows of funds from it for a long term into the future. Outflows of funds must be balanced over the long term with the inflows. With the globalization of business, the function of financial forecasting has become more complex, since the activities in multiple national markets have to be consolidated, taking into consideration the vagaries of multiple national currencies. Scenario analysis is frequently employed in order to prepare the firm for various contingencies.Financial forecasts are based on computerized models known as cash-flow models. They range from rather simple spreadsheet templates to sophisticated models developed for the given industry and customized for the firm or, in the case of large corporations to specify modeling of their financial operations. Financial forecasting serves to identify the need for funds and their sources. The primary tools of financial control are budgets. A budget specifies the resources committed to a plan for a given project or time period. Fixed budgets are independent of the level of activity of the unit for which the budget is drawn up. Flexible budgets commit resources depending on the level of activity. Spreadsheet programs are the main budgeting tools. Spreadsheets are the personal productivity tools in use today in budget preparation. In the systems-theoretic view, budgets serve as the standard against which managers can compare the actual results by using information systems. Performance reports are used to monitor budgets of various managerial levels.

A performance report states the actual financial results achieved by the unit and compares them with the planned results.Along with budgets and performance reports, financial control employs a number of financial ratios indicating the performance of the business unit. A widely employed financial ratio is return on investment (ROI). ROS shows how well a business unit uses its resources. Its value is obtained by dividing the earnings of the business unit by its total assets. Financial information systems help to manage the organization's liquid assets, such as cash or securities, for high yields with the lowest degree of loss risk. Some firms deploy computerized systems to manage their securities portfolios and automatically generate buy or sell orders. The audit function provides an independent appraisal of an organization's accounting, financial, and operational procedures and information. All large firms have internal auditors, answerable only to the audit committee of the board of directors. The staff of the chief financial officer of the company performs financial and operational audits. During a financial audit, an appraisal is made of the reliability and integrity of the company's financial information and of the means used to process it. An operational audit is an appraisal of how well management utilizes company resources and how well corporate plans are being carried out. A human resource information system (HRIS) supports the human resources function of an organization with information. The name of this function reflects the recognition that people who work in a firm are frequently its most valuable resources. The complexity of human resource management has grown immensely over recent years, primary due to the need to conform with new laws and regulations.

A HRIS has to ensure the appropriate degree of access to a great variety of internal stakeholders, including: 1. The employees of the Human Resources department in performance of their duties 2. All the employees of the firm wishing ti inspect their own records 3. All the employees of the firm seeking information regarding open positions or available benefit plans 4. Employees availing themselves of the computer-assisted training and evaluation opportunities 5. Managers throughout the firm in the process of evaluating their subordinates and making personnel decisions 6. Corporate executives involved in tactical and strategic planning and control At the heart of HRIS are its databases, which are in some cases integrated into a single human resource database. The record of each employee in a sophisticated employee database may contain 150 to 200 data items, including the personal data, educational history and skills, occupational background, and the history of occupied positions, salary, and performance in the firm. Richer multimedia databases are not assembled by some firms in order to facilitate fast formation of compatible teams of people with complementary skills. Other HRIS databases include: 1. Applicant databases 2. Position inventory 3. Skills inventory 4. Benefit databases 5. External databases

The information subsystems of HRIS reflect the flow of human resources through the firm, from planning and recruitment to termination. A sophisticated HRIS includes the following subsystems: 1. Human resource planning 2. Recruiting and workforce management 3. Compensation and benefits 4. Government reporting and labour relations support To identify the human resources necessary to accomplish the long-term objectives of a firm, we need to project the skills, knowledge, and experience of the future employees. Based on the long-term resource plan, a recruitment plan is developed. The plan lists the currently unfilled positions and those expected to become vacant due to turnover.The life-cycle transitions of the firm's workforce - hiring, promotion and transfer, and termination - have to be supported with the appropriate information system components. principal external stakeholders have an abiding interest in the human resource policies of organizations. These are: 1. Various levels of government 2. Labor unions Functional information systems rarely stand alone. This reflects the fact that the functions they support should, as much as possible, connect with each other seamlessly in order to serve the firms customers. Customers expect timely order delivery, often on a just-in-time schedule; quality inspection to their own standards; flexible credit terms; post-delivery service; and often, participation in the product design process. Information technology provides vital support for integrating internal business processes, cutting across functional lines, and for integrating operations with the firm's business partners, its customers and suppliers.

Examples: Many companies use their own Business Information Model (BIM) to define the major business functions of their companies.In order to define a model, they devide their business functions into 2 main group. Primary functions are needed to develop and deliver products or services. Support functions are needed to perform in order to support primary functions.

Introduction to Management Information Systems


Summary
1. Explain why information systems are so essential in business today. Information systems are a foundation for conducting business today. In many industries, survival and even existence is difficult without extensive use of information technology. Information systems have become essential for helping organizations operate in a global economy. Organizations are trying to become more competitive and efficient by transforming themselves into digital firms where nearly all core business processes and relationships with customers, suppliers, and employees are digitally enabled. Businesses today use information systems to achieve six major objectives: operational excellence; new products, services, and business models; customer/supplier intimacy; improved decision making; competitive advantage; and day-to-day survival. 2. Define an information systems from both a technical and a business perspective. From a technical perspective, an information system collects, stores, and disseminates information from an organizations environment and internal operations to support organizational functions and decision making, communication, coordination, control, analysis, and visualization. Information systems transform raw data into useful information through three basic activities: input, processing, and output. From a business perspective, an information system provides a solution to a problem or challenge facing a firm and provides real economic value to the business. 3. Identify and describe the three dimensions of information systems. An information system represents a combination of management, organization, and

technology elements. The management dimension of information systems involves leadership, strategy, and management behavior. The technology dimensions consist of computer hardware, software, data management technology, and networking/telecommunications technology (including the Internet). The organization dimension of information systems involves the organizations hierarchy, functional specialties, business processes, culture, and political interest groups.

Review Questions

1. List and describe six reasons why information systems are so important for business today.Six reasons why information systems are so important for business today include: Operational excellence New products, services, and business models Customer and supplier intimacy Improved decision making Competitive advantage Survival Information systems are the foundation for conducting business today. In many industries, survival and even existence without extensive use of IT is inconceivable, and IT plays a critical role in increasing productivity. Although information technology has become more of a commodity, when coupled with complementary changes in organization and management, it can provide the foundation for new products, services, and ways of conducting business that provide firms with a strategic advantage. 2. What is an information system? What activities does it perform? The textbook defines an information system as a set of interrelated components that work together to collect, process, store, and disseminate information to support decision making, coordination, control, analysis, and visualization in an organization. In addition to supporting decision making, coordination, and control, information

systems may also help managers and workers analyze problems, visualize complex subjects, and create new products. 3. What is the difference between data and information? Data are streams of raw facts representing events occurring in organizations or the physical environment before they have been organized and arranged into a form that people can understand and use. Information is data that have been shaped into a form that is meaningful and useful to human beings. 4. What is information systems literacy? How does it differ from computer literacy? Information literacy is more concerned with creating information useful to an organization and its employees, whereas computer literacy addresses the simple use of computers. As technology uses spread beyond traditional computers, information literacy enables employees and organizations to gain an edge over their competition 5. List and describe the organizational, management, and technology dimensions of information systems. Organization: The organization dimension of information systems involves issues such as the organizations hierarchy, functional specialties, business processes, culture, and political interest groups. Management: The management dimension of information systems involves issues such as training, job attitudes, and management behavior. Technology: The technology dimension consists of computer hardware, software, data management technology, and networking/telecommunications technology.

Chapter 2
Key Terms

The following alphabetical list identifies the key terms discussed in this chapter.

Chief information officer (CIO) senior manager in charge of the information systems function in the firm. Customer relationship management (CRM) systems business and technology discipline that uses information systems to coordinate all of the business processes surrounding the firms interactions with its customers in sales, marketing, and service. Decision-support systems (DSS) information systems at the organizations management level that combine data and sophisticated analytical models or data analysis tools to support semistructured and unstructured decision making. Electronic business (e-business) the use of the Internet and digital technology to execute all the business processes in the enterprise. Includes ecommerce as well as processes for the internal management of the firm and for coordination with suppliers and other business partners. Electronic commerce (e-commerce) the process of buying and selling goods and services electronically, involving transactions using the Internet, networks, and other digital technologies. End users representative of departments outside the information systems group for whom applications are developed. Enterprise applications a system that can coordinate activities, decisions, and knowledge across many different functions, levels, and business management systems, and knowledge management systems. Enterprise systems integrated enterprise-wide information systems that coordinate key internal processes of the firm. Executive supportDefine and describe business processes and their relationship to information systems. A business process is a logically related set of activities that define how specific business tasks are performed, and a business can be viewed as a collection of business processes. Business processes are concrete workflows of material, information, and

knowledge. They also represent unique ways in which organizations coordinate work, information, and knowledge, and the ways in which management chooses to coordinate work. Managers need to pay attention to business processes because they determine how well the organization can execute its business, and thus be a potential source of strategic success or failure. Although each of the major business functions has its own set of business processes, many other business processes are crossfunctional, such as order fulfillment. Information systems can help organizations achieve greater efficiencies by automating parts of these processes or by helping organizations redesign and streamline them. Firms can become more flexible and efficient by coordinating their business processes closely, and, in some cases, integrating these processes so they are focused on efficient management of resources and customer service. 2. Describe the information systems supporting the major business functions: sales and marketing, manufacturing and production, finance and accounting, and human resources. At each level of the organization, information systems support the major functional areas of the business. Sales and marketing systems help the firm identify customers for the firms products or services, develop products and services to meet customers needs, promote the products and services, sell the products and services, and provide ongoing customer support. Manufacturing and production systems deal with the planning, development, and production of products or services, and control the flow of production. Finance and accounting systems keep track of the firms financial assets and fund flows. Human resources systems maintain employee records; track employee skills, job performance, and training; and support planning for employee compensation and career development.

3. Evaluate the role played by systems serving the various levels of management in a business and their relationship to each other. There are four major types of information systems in contemporary organizations serving operational, middle, and senior management. Systems serving operational management are transaction processing systems (TPS), such as payroll or order processing, that track the flow of the daily routine transactions necessary to conduct business. MIS and DSS provide middle management with reports and access to the organizations current performance and historical records. Most MIS reports condense information from TPS and are not highly analytical. DSS support management decisions when these decisions are unique, rapidly changing, and not specified easily in advance. They have more advanced analytical models and data analysis capabilities than MIS and often draw on information from external as well as internal sources. ESS support senior management by providing data of greatest importance to senior management decision makers, often in the form of graphs and charts delivered via portals. They have limited analytical capabilities but can draw on sophisticated graphics software and many sources of internal and external information. 4. Explain how enterprise applications and intranets promote business process integration and improve organizational performance. Enterprise applications, such as enterprise systems, supply chain management systems, customer relationship management systems, and knowledge management systems are designed to support organization-wide process coordination and integration so that the organization can operate efficiently. They span multiple functions and business processes and may be tied to the business processes of other organizations. Enterprise systems integrate the key internal business processes of a

firm into a single software system so that information can flow throughout the organization, improve coordination, efficiency, and decision making. Supply chain management systems help the firm manage its relationship with suppliers to optimize the planning, sourcing, manufacturing, and delivery of products and services. Customer relationship management uses information systems to coordinate all of the business processes surrounding the firms interactions with its customers to optimize firm revenue and customer satisfaction. Knowledge management systems enable firms to optimize the creation, sharing, and distribution of knowledge to improve business processes and management decisions. Intranets and extranets use Internet technology and standards to assemble information from various systems and present it to the user in a Web page format. Extranets make portions of private corporate intranets available to outsiders.

Review Questions

1. What are business processes? What role do they play in organizations? How are they enhanced by information systems? A business process is a logically related set of activitiesthat define how specific business tasks are performed. Business processes are the ways in which organizations coordinate and organize work activities, information, and knowledge to produce their valuable products or services. Business processes for the manufacturing and production area include product assembling, quality checking, and producing bills of materials. For the sales and marketing area, business processes include identifying customers, making customers aware of the product, and selling the product. For finance and accounting, business processes includes paying creditors, creating financial statements, and managing cash accounts. For human resources, business processes include hiring employees,

evaluating job performance of employees, and enrolling employees in benefits plans. 2. List and describe the information systems serving each of the major functional areas of a business. Sales and marketing information systems help the firm identify customers for the organizations products and services, develop products and services to meet customers needs, promote the products and services, sell the products and services, and provide ongoing customer support. Specific sales and marketing information systems include order processing, pricing analysis, and sales trend forecasting. Manufacturing and production information systems provide information for planning, product development, production or service scheduling, and controlling the flow of products and services. Specific manufacturing and production information systems include machine control, production planning, and facilities location. Finance and accounting information systems track the organizations financial assets and fund flows. Financial and accounting systems include accounts receivable, budgeting, and profit planning. Human resources information systems maintain employee records; track employee skills, job performance, and training; and support planning for employee compensation, including pensions and benefits, legal and regulatory requirements, and career development. Systems include training and development, compensation analysis, and human resources planning. 3. What are the characteristics of transaction processing systems? What role do they play in a business? Transaction processing systems (TPS) are computerized systems that perform and record the daily routine transactions necessary to conduct the business; they serve the organizations operational level. The principal purpose of systems at this level is to

answer routine questions and to track the flow of transactions through the organization. At the operational level, tasks, resources, and goals are predefined and highly structured. Managers need TPS to monitor the status of internal operations and the firms relations with the external environment. TPS are also major producers of information for the other types of systems. Transaction processing systems are often so central to a business that TPS failure for a few hours can lead to a firms demise and perhaps that of other firms linked to it. Examples of transaction processing systems for a university include a registration system, student transcript system, curriculum class control systems, and an alumni benefactor system. 4. What are the characteristics of MIS? How do MIS differ from TPS? From DSS? Middle management needs systems to help with monitoring, controlling, decisionmaking, and administrative activities. MIS provide middle managers with reports on the organizations current performance. This information is used to monitor and control the business and predict future performance. MIS summarize and report the companys basic operations using data supplied by TPSs. The basic transaction data from TPS are compressed and usually presented in reports that are produced on a regular schedule. MIS serve managers primarily interested in weekly, monthly, and yearly results, although some MIS enable managers to drill down to see daily or hourly data if required. MIS generally provide answers to routine questions that have been specified in advance and have a predefined procedure for answering them.

MIS systems generally are not flexible and have little analytical capability. Most MIS use simple routines, such as summaries and comparisons, as opposed to sophisticated mathematical models or statistical techniques. Examples include sales and profit per customer and per region, relocation summary and analysis, inventory control, capital investment analysis, and even a report on students who were here in the autumn but did not to return in the spring. MIS differs from TPS in that MIS deals with summarized and compressed data from the TPS and sometimes analysis of that summarized data. While MIS have an internal orientation, DSS will often use data from external sources, as well as data from TPS and MIS. DSS supports right now analysis rather than the long-term structured analysis of MIS. MIS are generally not flexible and provide little analytical capabilities. In contrast, DSS are designed for analytical purposes and are flexible. What are the characteristics of DSS? How do they differ from those of ESS? Decision-support systems (DSS) support nonroutine decision making for middle managers. DSS provide sophisticated analytical models and data analysis tools to support semistructured and unstructured decision-making activities. DSS use data from TPS, MIS, and external sources, provide more analytical power than other systems, combine data, and are interactive. DSS focus on problems that are unique and rapidly changing, for which the procedure for arriving at a solution may not be fully predefined in advance. DSS use a variety of models to analyze data, or they condense large amounts of data in a form in which decision makers can analyze them. Typically, they provide the ability to do what if analysis. DSS use data from TPS, MIS, and external sources, provide more analytical power than other systems, combine data, and are interactive.

DSS are designed so that users can work with them directly; these systems explicitly include user-friendly software. Executive support systems help senior managers address strategic issues and longterm trends, both in the firm and in the external environment. ESS address nonroutine decisions requiring judgment, evaluation, and insight because there is no agreed-on procedure for arriving at a solution. ESS provide a generalized computing and communications capacity that can be applied to a changing array of problems. ESS are designed to incorporate data about external events, such as new tax laws or competitors, but they also draw summarized information from information from internal MIS and DSS. DSS filter, compress, and track critical data, displaying the data of greatest importance to senior managers. ESS may be less analytical than DSS with less use of models such as linear programming or forecasting. However, they often rely on external data and rely heavily on graphics. 6. Describe Why are organizations trying to integrate their business processes? What are the four key enterprise applications? An organization operates in an ever-increasing competitive and global environment. Operating in a global environment requires an organization to focus on the efficient execution of its processes, customer service, and speed to market. To accomplish these goals, the organization must exchange valuable information across different functions, levels, and business units. By integrating its processes, the organization can more efficiently exchange information among its functional areas, business units, suppliers, and customers. The four key enterprise applications are: enterprise systems supply chain management systems

customer relationship management systems knowledge management systems 8. What are enterprise systems? How do they benefit businesses? Enterprise systems integrate the key business processes of an organization into a single central data repository. Data from various functional areas are maintained centrally where they can be accessed and used by other functions and cross-functional processes. This makes it possible for information that was previously fragmented in different systems to be shared across the firm and for different parts of the business to work more closely together. This changes the work flow of an organization. Allows information to seamlessly flow throughout the organization, improving coordination, efficiency, and decision making. Speeds the communication of information throughout the company, making it easier for businesses to coordinate their daily operations. Gives companies the flexibility to respond rapidly to customer requests while producing and stocking inventory only with what is needed to fulfill existing orders. Enables increased accuracy and on-time shipments, minimizes costs, and increases customer satisfaction that adds to the firms profitability. Provides much valuable information for improving management decision making. Corporate headquarters has access to up-to-the-minute data on sales, inventory, and production and uses this information to create more accurate sales and production forecasts. Provides company-wide information to help managers analyze overall product profitability or cost structures. 9. What is supply chain management? How do they benefit businesses? Supply chain management systems help businesses manage relationships with their

suppliers. Objective of SCM: get the right amount of products from the companies source to their point of consumption with the least amount of time and with the lowest cost. SCM provide information to help suppliers, purchasing firms, distributors, and logistics companies share information about orders, production, inventory levels, and delivery of products and services so that they can source, produce, and deliver goods and services efficiently. SCM helps organizations achieve great efficiencies by automating parts of these processes or by helping organizations rethink and streamline these processes. SCM is important to a business because through its efficiency it can coordinate, schedule, and control the delivery of products and services to customers. Business benefits include: (Table 26) Decide when and what to produce, store, and move Rapidly communicate orders Track the status of orders Check inventory availability and monitor inventory levels Reduce inventory, transportation, and warehousing costs Track shipments Plan production based on actual customer demand Rapidly communicate changes in product design 10. What are customer relationship management systems? How do they benefit businesses? Customer relationship management is a business and technology discipline to coordinate all of the business processes for helping firms manage their relationships with existing and potential customers. With the growth of the Web, potential customers can easily comparison shop for retail and wholesale goods and even raw materials, so better treatment of customers has become very important. Business benefits include: CRM systems provide information to coordinate all the business processes that deal with customers in sales, marketing, and service to optimize

revenue, customer satisfaction, and customer retention. This information helps firms identify, attract, and retain the most profitable customers; provide better service to existing customers; and increase sales. Good CRM systems consolidate customer data from multiple sources and provide analytical tools for answering questions such as: What is the value of a particular customer to the firm over his/her lifetime? CRM tools integrate the firms customerrelated processes and consolidate customer information from multiple communication channels, so that the firm can put one coherent face to the customer. Detailed and accurate knowledge of customers and their preferences helps firms increase the effectiveness of their marketing campaigns and provide higherquality customer service and support. 11. What is the role of knowledge management systems in the enterprise? Knowledge management systems enable organizations to better manage processes for capturing and applying knowledge and expertise. These systems collect all relevant knowledge and experience in the firm, and make it available wherever and whenever it is needed to improve business processes and management decisions. They also link the firm to external sources of knowledge. KMS support processes for acquiring, storing, distributing, and applying knowledge, as well as processes for creating new knowledge and integrating it into the organization. KMS include enterprise-wide systems for managing and distributing documents, graphics, and other digital knowledge objects; systems for creating corporate knowledge directories of employees with special areas of expertise; office systems for distributing knowledge and information; and knowledge work systems to facilitate knowledge creation.

KMS use intelligent techniques that codify knowledge and experience for use by other members of the organization and tools for knowledge discovery that recognize patterns and important relationships in large pools of data. KMS make collected knowledge and experience available when and where it is needed, and provide links to external sources of knowledge. Organizational processes include creating knowledge, discovering and codifying knowledge, sharing knowledge, and distributing knowledge. 12. Describe how the information systems function supports a business. What roles are played by programmers, systems analysts, information systems managers, and the chief information officer (CIO)? The information systems departments is the formal organizational unit responsible for information technology services. The information systems department is responsible for maintaining the hardware, software, data storage, and networks that comprise the firms IT infrastructure. The information systems department consists of specialists, such as programmers, systems analysts, project leaders, and information systems managers. Programmers are highly trained technical specialists who write the software instructions for computers. Systems analysts constitute the principal liaisons between the information systems groups and the rest of the organization. The systems analysts job is to translate business problems and requirements into information requirements and systems. Information systems managers are leaders of teams of programmers and analysts, project managers, physical facility managers, telecommunications mangers, or database specialists. Chief information officer (CIO) is a senior manager who oversees the use of information technology in the firm. 13. Describe alternative ways of organizing the information systems function in a

business. Why are organizations trying to integrate their business processes? What are the four key enterprise applications? An organization operates in an ever-increasing competitive and global environment. Operating in a global environment requires an organization to focus on the efficient execution of its processes, customer service, and speed to market. To accomplish these goals, the organization must exchange valuable information across different functions, levels, and business units. By integrating its processes, the organization can more efficiently exchange information among its functional areas, business units, suppliers, and customers. The four key enterprise applications are: enterprise systems supply chain management systems customer relationship management systems knowledge management systems 8. What are enterprise systems? How do they benefit businesses? Enterprise systems integrate the key business processes of an organization into a single central data repository. Data from various functional areas are maintained centrally where they can be accessed and used by other functions and cross-functional processes. This makes it possible for information that was previously fragmented in different systems to be shared across the firm and for different parts of the business to work more closely together. This changes the work flow of an organization. Allows information to seamlessly flow throughout the organization, improving coordination, efficiency, and decision making. Speeds the communication of information throughout the company, making it easier for businesses to coordinate their daily operations. Gives companies the flexibility to respond rapidly to customer requests while producing and stocking inventory only with what is needed to fulfill existing

orders. Enables increased accuracy and on-time shipments, minimizes costs, and increases customer satisfaction that adds to the firms profitability. Provides much valuable information for improving management decision making. Corporate headquarters has access to up-to-the-minute data on sales, inventory, and production and uses this information to create more accurate sales and production forecasts. Provides company-wide information to help managers analyze overall product profitability or cost structures. 9. What is supply chain management? How do they benefit businesses? Supply chain management systems help businesses manage relationships with their suppliers. Objective of SCM: get the right amount of products from the companies source to their point of consumption with the least amount of time and with the lowest cost. SCM provide information to help suppliers, purchasing firms, distributors, and logistics companies share information about orders, production, inventory levels, and delivery of products and services so that they can source, produce, and deliver goods and services efficiently. SCM helps organizations achieve great efficiencies by automating parts of these processes or by helping organizations rethink and streamline these processes. SCM is important to a business because through its efficiency it can coordinate, schedule, and control the delivery of products and services to customers. Business benefits include: (Table 26) Decide when and what to produce, store, and move Rapidly communicate orders Track the status of orders Check inventory availability and monitor inventory levels Reduce inventory, transportation, and warehousing costs Track shipments Plan production based on actual customer demand

Rapidly communicate changes in product design 10. What are customer relationship management systems? How do they benefit businesses? Customer relationship management is a business and technology discipline to coordinate all of the business processes for helping firms manage their relationships with existing and potential customers. With the growth of the Web, potential customers can easily comparison shop for retail and wholesale goods and even raw materials, so better treatment of customers has become very important. Business benefits include: CRM systems provide information to coordinate all the business processes that deal with customers in sales, marketing, and service to optimize revenue, customer satisfaction, and customer retention. This information helps firms identify, attract, and retain the most profitable customers; provide better service to existing customers; and increase sales. Good CRM systems consolidate customer data from multiple sources and provide analytical tools for answering questions such as: What is the value of a particular customer to the firm over his/her lifetime? CRM tools integrate the firms customerrelated processes and consolidate customer information from multiple communication channels, so that the firm can put one coherent face to the customer. Detailed and accurate knowledge of customers and their preferences helps firms increase the effectiveness of their marketing campaigns and provide higherquality customer service and support. 11. What is the role of knowledge management systems in the enterprise? Knowledge management systems enable organizations to better manage processes for capturing and applying knowledge and expertise. These systems collect all relevant knowledge and experience in the firm, and make it available wherever and whenever

it is needed to improve business processes and management decisions. They also link the firm to external sources of knowledge. KMS support processes for acquiring, storing, distributing, and applying knowledge, as well as processes for creating new knowledge and integrating it into the organization. KMS include enterprise-wide systems for managing and distributing documents, graphics, and other digital knowledge objects; systems for creating corporate knowledge directories of employees with special areas of expertise; office systems for distributing knowledge and information; and knowledge work systems to facilitate knowledge creation. KMS use intelligent techniques that codify knowledge and experience for use by other members of the organization and tools for knowledge discovery that recognize patterns and important relationships in large pools of data. KMS make collected knowledge and experience available when and where it is needed, and provide links to external sources of knowledge. Organizational processes include creating knowledge, discovering and codifying knowledge, sharing knowledge, and distributing knowledge. 12. Describe how the information systems function supports a business. What roles are played by programmers, systems analysts, information systems managers, and the chief information officer (CIO)? The information systems departments is the formal organizational unit responsible for information technology services. The information systems department is responsible for maintaining the hardware, software, data storage, and networks that comprise the firms IT infrastructure. The information systems department consists of specialists, such as programmers, systems analysts, project leaders, and information systems managers.

Programmers are highly trained technical specialists who write the software instructions for computers. Systems analysts constitute the principal liaisons between the information systems groups and the rest of the organization. The systems analysts job is to translate business problems and requirements into information requirements and systems. Information systems managers are leaders of teams of programmers and analysts, project managers, physical facility managers, telecommunications mangers, or database specialists. Chief information officer (CIO) is a senior manager who oversees the use of information technology in the firm. 13. Describe alternative ways of organizing the information systems function in a business. There are alternative ways of organizing the IT function within a firm. A very small company will not have a formal information systems group. Large companies will have a separate information systems department, which may be organized along several different lines, depending on the nature and interests of the firm. Decentralized arrangement where each functional area of the business has its own information systems department, overseen by a corporate CIO. The information systems function may be run as a separate department similar to the other functional departments. Very large firms with multiple divisions and product lines may choose to have an information systems department for each division reporting to a highlevel central information systems group and CIO. There are alternative ways of organizing the IT function within a firm. A very small company will not have a formal information systems group. Large companies will have a separate information systems department, which

may be organized along several different lines, depending on the nature and interests of the firm. Decentralized arrangement where each functional area of the business has its own information systems department, overseen by a corporate CIO. The information systems function may be run as a separate department similar to the other functional departments. Very large firms with multiple divisions and product lines may choose to have an information systems department for each division reporting to a highlevel central information systems group and CIO.