Managing Information Systems

Information Systems in Organisations

Part 2
Sections 2.3 and 11.1

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 Objectives
• To understand relationships between IS and
business processes
• To understand the business value of IS

2
 Topics
• Business processes and IS
– Relationship between business processes and IS
– Customer Relationship Management (CRM)
– Supply Chain Management (SCM)
• Business value of IS
– Overview of assessing business value

3
 Business Processes
• What are business processes?

4
Examples of Business Processes
• Sales and marketing
– Identifying customers, selling the product
• Manufacturing and production
– Assembling products, checking for quality
• Finance and accounting
– Paying creditors, creating financial statements
• Human resources
– Hiring employees, appraising employees
5
 IS and Business Processes
• Single or multiple IS can support one
business process:
– Can be more efficient if done correctly
– Can reduce costs
• Selecting business processes to automate
requires significant analysis
• Business Process Re-engineering (BPR)

6
 Customer Relationship
Management (CRM)
• Coordination of all business processes for
dealing with customers
• Customers are long-term assets:
– Not exploitable sources of income
– Good relationship with customers brings better
and longer-term income
• Examples:
– Siebel, GoldMine, Avaya

7
 Supply Chain Management
(SCM)
• Coordination of all business processes for buying,
making and moving products
• Integration of supplier and distributor into a single
process
– Can reduce time and effort and inventory costs
– Products on demand: suppliers can send products direct
to customers
• Examples:
– SAP, CSC, PeopleSoft
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 Enterprise Systems (ES)
• Organisation-wide IS that integrate key business
processes to facilitate information flow
• Also known as Enterprise Resource Planning
(ERP) systems
• Integration of the six types of IS
– Improves availability of information and removes
duplication and associated errors
– Can improve efficiency and reduce cost
• Examples:
– SAP
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 Examples of ES
• CRM and SCM are a step towards ES
• Demonstrates how multiple business
processes can be served by a suite of
integrated IS
• Includes external organisational links
through Industrial Networks

10
 Business Value of IS
• What is the business value of IS?

11
 Realising Value
• Assessment of IS for implementation
– Financial and non-financial models
– Tangible and intangible benefits
• Benefits may go direct to customer
– Reduce costs lead to reduced prices for
competitiveness
• Benefits may not be realised if poorly
implemented
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 Example Costs
• What example costs can you think of?

13
 Example Costs
• Hardware
• Software
• Services
• Personnel

14
 Example Tangible Benefits
• What example tangible benefits can you
think of?

15
 Example Tangible Benefits
• Increased productivity
• Low operating costs
• Reduced work force
• Lower computer expenses
• Lower supplier costs
• Lower clerical/professional costs
• Reduced growth of expenses
• Reduced facility costs
16
 Example Intangible Benefits
• What example intangible benefits can you
think of?

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 Example Intangible Benefits
• Improved asset use; resource control; planning
• Increased flexibility
• More timely information
• Increased learning
• Attain legal requirements
• Enhanced employee goodwill, job satisfaction,
decision making, operations
• Higher customer satisfaction
• Better corporate image
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 Summary
• Looked at the relationships between IS and
business processes
– Examples of IS used for business processes
with CRM, SCM and ES
• Looked at the business value of IS
– Examples of costs and benefits of IS

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