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8/1/12
Internal & External Information Flows
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Internal Information Flows
Horizontal flows of information used primarily at the operations level to capture transaction and operations data Vertical flows of information
downward flows instructions, quotas, and budgets upward flows aggregated transaction and operations data
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Information Requirements
Each user group has unique information requirements. The higher the level of the organization, the greater the need for more aggregated information and less need for detail.
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Information in Business
Information is a business resource that:
needs to be appropriately managed is vital to the survival of contemporary businesses
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What is a System?
A group of interrelated multiple components or subsystems that serve a common purpose System or subsystem?
A system is called a subsystem when it is viewed as a component of a larger system.
A subsystem is considered a system when it is the focus of attention. 8/1/12
System Decomposition
System Decomposition versus System Interdependency
the process of dividing the system into smaller subsystem parts distinct parts are not self-contained they are reliant upon the functioning of the other parts of the system
System Interdependency

all distinct parts must be functioning or 8/1/12 the system will fail
What is an Information System?

An information system is the set of formal procedures by which data are collected, processed into information, and distributed to users.
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Transactions

A transaction is a business event. Financial transactions
economic events that affect the assets and equities of the organization e.g., purchase of an airline ticket all other events processed by the organizations information system e.g., an airline reservation no
Nonfinancial transactions
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Transactions
F i n a n N c o i n a f l i n T a 8/1/12 r n
Information System
User Decision Making I n f o r m a
AIS versus MIS
Accounting Information Systems (AIS) process
financial transactions; e.g., sale of goods and nonfinancial transactions that directly affect the processing of financial transactions; e.g., addition of newly approved vendors
Management Information Systems (MIS) process
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nonfinancial transactions that are not normally processed by traditional AIS; e.g., tracking customer complaints
AIS versus MIS?
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Chapter
INFORMATION SYSTEMS IN THE ENTERPRISE
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Essentials of Management Information Systems

Chapter 2 Information Systems in the Enterprise KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Types of Information Systems
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Figure 2-1

Major Types of Systems
Executive Support Systems (ESS) Decision Support Systems (DSS) Management Information Systems (MIS) Knowledge Work Systems (KWS) Office Automation Systems (OAS) Transaction Processing Systems (TPS)
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Chapter 2 Information Systems in the Enterprise TYPES OF INFORMATION SYSTEMS
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Figure 2-2

Transaction Processing Systems (TPS):

Basic business systems that serve the operational level A computerized system that performs and records the daily routine transactions necessary to the conduct of the business
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Types of TPS Systems
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Figure 2-4

Knowledge Work Systems (KWS): Knowledge level Inputs: Design specs Processing: Modeling Outputs: Designs, graphics Users: Technical staff Example: Engineering work station 8/1/12

Management Information System (MIS): Management level Inputs: High volume data Processing: Simple models Outputs: Summary reports Users: Middle managers Example: Annual budgeting 8/1/12

Management Information System (MIS)
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Figure 2-5

Management Information System (MIS)
Structured and semi-structured decisions Report control oriented Past and present data Internal orientation Lengthy design process
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Decision Support System (DSS): Management level Inputs: Low volume data Processing: Interactive Outputs: Decision analysis Users: Professionals, staff Example: Contract cost analysis 8/1/12

Decision Support System (DSS)
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Figure 2-6

Decision Support System (DSS)
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Figure 2-7

Executive Support System (ESS): Strategic level

Inputs: Aggregate data Processing: Interactive Outputs: Projections Users: Senior managers
Example: 5-year operating plan 8/1/12

Executive Support System (ESS)
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Figure 2-8

Executive support system (ESS)
Top level management Designed to the individual Ties CEO to all levels Very expensive to keep up Extensive support staff
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Chapter 2 Information Systems in the Enterprise INTERRELATIONSHIPS AMONG SYSTEMS
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Figure 2-9

Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Sales and 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
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Sales and Marketing Systems

DESCRIPTION
SYSTEM
ORGANIZATIONAL LEVEL OPERATIONAL
ORDER PROCESSING ENTER, PROCESS, TRACK ORDERS
MARKET ANALYSIS
IDENTIFY CUSTOMERS & MARKETS KNOWLEDGE
PRICING ANALYSIS
DETERMINE PRICES
MANAGEMENT
SALES TRENDS
PREPARE 5-YEAR FORECASTS
STRATEGIC
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Manufacturing and Production Systems
Scheduling, purchasing, shipping, receiving, engineering, operations
Materials resource planning systems, purchase order control systems, engineering systems, quality control systems
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Manufacturing and Production Systems
SYSTEM MACHINE CONTROL
DESCRIPTION CONTROL ACTIONS OF EQUIPMENT
COMPUTER-AIDED-DESIGN DESIGN NEW PRODUCTS
KNOWLEDGE
PRODUCTION PLANNING
DECIDE NUMBER, SCHEDULE OF PRODUCTS
MANAGEMENT
FACILITIES LOCATION
DECIDE WHERE TO LOCATE FACILITIES
STRATEGIC
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Overview of Inventory Systems
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Figure 2-10

Financing and Accounting Systems
Budgeting, general ledger, billing, cost accounting
General ledger, accounts receivable, accounts payable, budgeting, funds management systems
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Financing and Accounting Systems

SYSTEM DESCRIPTION
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
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Human Resource Systems
Personnel records, benefits, compensation, labor relations, training
Payroll, employee records, benefit systems, career path systems, personnel training systems
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Human Resource Systems
SYSTEM TRAINING & DEVELOPMENT
DESCRIPTION TRACK TRAINING, SKILLS, APPRAISALS
CAREER PATHING
DESIGN EMPLOYEE CAREER PATHS
KNOWLEDGE
COMPENSATION ANALYSIS
MONITOR WAGES, SALARIES, BENEFITS
MANAGEMENT
HUMAN RESOURCES PLANNING PLAN LONG-TERM LABOR FORCE NEEDS
STRATEGIC
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Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Business Processes and Information Systems
Business processes
Manner in which work is organized, coordinated, and focused to produce a valuable product or service
Concrete work flows of material, information, and knowledgesets of activities

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Unique ways to coordinate work, information, and knowledge
Ways in which management chooses to coordinate work
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Information systems help organizations
Achieve great efficiencies by automating parts of processes Rethink and streamline processes
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Examples of Business Processes
Manufacturing and production:
Assembling product, checking quality, producing bills of materials
Sales and marketing: Identifying

customers, creating customer awareness, selling
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Examples of Business Processes
Finance and accounting: Paying
creditors, creating financial statements, managing cash accounts
Human Resources: Hiring employees,

evaluating performance, enrolling employees in benefits plans
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The Order Fulfillment Process
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Figure 2-12

Customer Relationship Management (CRM)
Manages all ways used by firms to deal with existing and potential new customers Business and Technology discipline Uses information system to coordinate entire business processes of a firm 8/1/12

Provides end-to-end customer care Provides a unified view of customer across the company Consolidates customer data from multiple sources and provides analytical tools for answering questions
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Figure 2-13

Supply Chain Management (SCM)
Close linkage and coordination of activities involved in buying, making, and moving a product Integrates supplier, manufacturer, distributor, and customer logistics time Reduces time, redundant effort, and inventory costs
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Supply Chain
Network of organizations and business processes Helps in procurement of materials, transformation of raw materials into intermediate and finished products
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Helps in distribution of the finished products to customers Includes reverse logistics - returned items flow in the reverse direction from the buyer back to the seller
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Supply Chain Management
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Figure 214

How Information Systems Facilitate Supply Chain Management
Decide when, what to produce, store, move Rapidly communicate orders Communicate orders, track order status Check inventory availability, monitor levels Track shipments Plan production based on actual demand Rapidly communicate product design 8/1/12 change

Limitations:
Inefficiencies can waste as much as 25% of companys operating costs Bullwhip Effect: Information about the demand for the product gets distorted as it passes from one entity to next
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Supply chain planning system:
Enables firm to generate forecasts for a product and to develop sourcing and a manufacturing plan for the product
Supply chain execution system:
Manages flow of products through distribution centers and warehouses

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Collaborative Commerce
Uses digital technologies to enable multiple organizations to collaboratively design, develop, build, move, and manage products Increases efficiencies in reducing product design life cycles, minimizing excess inventory, forecasting demand, and keeping partners and customers informed
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Collaborative Commerce
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Figure 215

Industrial Networks
Private Industrial Networks
Web-enabled networks Link systems of multiple firms in an industry Coordinate transorganizational business processes
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Traditional View of the Systems
Within the business: There are
functions, each having its uses of information systems
Outside the organizations boundaries: There are customers and

vendors
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Functions tend to work in isolation

Traditional View of the Systems
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Figure 2-16

Enterprise Systems
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Figure 2-17

Benefits of Enterprise Systems
Firm structure and organization:

One organization
Management: Firm-wide knowledgebased management processes
Technology: Unified platform Business: More efficient operations
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and customer-driven business processes

Challenges of Enterprise Systems
Difficult to build: Require fundamental

changes in the way the business operates
Technology: Require complex pieces of

software and large investments of time, money, and expertise
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Centralized organizational coordination and decision making:

Not the best way for the firms to

Chapter 2 Information Systems in the Enterprise INTERNATIONAL INFORMATION SYSTEMS
Forms of Global Business Organization
Four main ways of organizing businesses internationally: Domestic Exporter: Heavy centralization
of corporate activities in the home country of origin
control out of a central home base, production, sales and marketing operations 8/1/12 decentralized
Multinational: Financial management and

Forms of Global Business Organization
Franchiser: Product created, designed,
financed, and produced in the home country, relies on foreign personnel for production, marketing and human resources
Transnational: No national headquarters;
value-added activities managed from a global perspective, no reference to national borders, sources of supply and demand and local competitive advantage optimized
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Global System Configuration
Four types of system configuration:
Centralized Systems Duplicated Systems Decentralized Systems Networked Systems
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Internal & External Information Flows

Internal Information Flows

Information is a business resource that:

needs to be appropriately managed is vital to the survival of contemporary businesses

A system is called a subsystem when it is viewed as a component of a larger system.

A subsystem is considered a system when it is the focus of attention. 8/1/12

System Decomposition versus System Interdependency

What is an Information System?

A transaction is a business event. Financial transactions

User Decision Making I n f o r m a

AIS versus MIS

Accounting Information Systems (AIS) process

Management Information Systems (MIS) process

AIS versus MIS?

INFORMATION SYSTEMS IN THE ENTERPRISE

Essentials of Management Information Systems

Types of Information Systems

Essentials of Management Information Systems

Major Types of Systems

Essentials of Management Information Systems

Essentials of Management Information Systems

Transaction Processing Systems (TPS):

Essentials of Management Information Systems

Types of TPS Systems

Essentials of Management Information Systems

Essentials of Management Information Systems

Essentials of Management Information Systems

Management Information System (MIS)

Essentials of Management Information Systems

Management Information System (MIS)

Essentials of Management Information Systems

Essentials of Management Information Systems

Decision Support System (DSS)

Essentials of Management Information Systems

Decision Support System (DSS)

Essentials of Management Information Systems

Executive Support System (ESS): Strategic level

Example: 5-year operating plan 8/1/12

Essentials of Management Information Systems

Executive Support System (ESS)

Essentials of Management Information Systems

Executive support system (ESS)

Essentials of Management Information Systems

Essentials of Management Information Systems

Sales and 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

Essentials of Management Information Systems

Sales and Marketing Systems

ORGANIZATIONAL LEVEL OPERATIONAL

ORDER PROCESSING ENTER, PROCESS, TRACK ORDERS

IDENTIFY CUSTOMERS & MARKETS KNOWLEDGE

PREPARE 5-YEAR FORECASTS

Essentials of Management Information Systems

Manufacturing and Production Systems

Major functions of systems:

Scheduling, purchasing, shipping, receiving, engineering, operations

Major application systems:

Essentials of Management Information Systems