Management Information Systems

Session-02

Business Processes and Type of

Information systems

Sanath Wickramasinghe USP

BCS (British), MSc. IT(Moratuwa Uni), PgD & MBA.HRM(CBO Uni),
Dip IT (USA Army), Dip Mgmt (USA Army),Dip Sys Analysis & Design,
MACS(AUS), MBCS(UK), MCS (SL)

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Business Processes and Type of Information systems

Learning Objectives
• What are business processes? How are they related to
information systems?

• How information systems related to different layers of an

organization

• How do systems serve the different management groups in a

business, and how do systems that link the enterprise improve
organizational performance?
• What is the role of the information systems function in a
business?
Business Processes and Type of Information systems

A System
• A group of interrelated components working together
toward a common goal by accepting inputs and
producing outputs in an organized transformation
process.
• Eg: a manufacturing system, system accepts raw
materials as inputs and produces finish goods as output.

Information System
• A set of interrelated components that collect, process,
store and distribute information to support decision
making and control in an organization.
Business Processes and Type of Information systems

Function of the Information

System
•Input
- Collect raw data from within the organization or from its
external environment.
•Process
- Convert this raw fact into a meaningful form.

•Output
- Transfers the processed information to the people who will use it or to
the activities for which it will be used.
• Control
- Evaluates & corrects the operations
Business Processes and Type of Information systems

Enterprise Social Networking Helps Innovate and Improve

Quality (1 of 2)
• Problem
– Hierarchical top-down processes
– Large geographically dispersed workforce
– Lack of collaboration and idea sharing
• Solutions
– Develop knowledge sharing strategy and goals
– Redesign knowledge and collaboration processes
– Change organizational culture
– Implémente collaboration software
Business Processes and Type of Information systems

Enterprise Social Networking Helps Innovate and Improve

Quality (2 of 2)

• Use of new technology to engage employees and enabled

knowledge gathering and sharing

• Demonstrates how outdated processes can affect knowledge

sharing and innovation

• Illustrates why organizations rely on information systems to

improve performance and remain competitive
Business Processes and Type of Information systems

Business Processes (1 of 2)
• Business processes
– Flows of material, information, knowledge
– Logically related set of tasks that define how specific
business tasks are performed
– May be tied to functional area or be cross-functional

• Businesses: Can be seen as collection of business processes

• Business processes may be assets or liabilities

Business Processes and Type of Information systems

Business Processes (2 of 2)

• Examples of functional business processes

– Manufacturing and production
• Assembling the product
– Sales and marketing
• Identifying customers
– Finance and accounting
• Creating financial statements
– Human resources
• Hiring employees
Business Processes and Type of Information systems

The Order Fulfillment Process

Business Processes and Type of Information systems

How Information Technology Improves

Business Processes
• Increasing efficiency of existing processes
– Automating steps that were manual

• Enabling entirely new processes

– Changing flow of information
– Replacing sequential steps with parallel steps
– Eliminating delays in decision making
– Supporting new business models
 Types of Information Systems
Systems for Different Management Groups
• Operations Support Systems
Transaction processing systems
TPS is an information system that capture, and process data generated
during the day-to-day transactions of an organization.

• Batch – transaction data accumulate over time,

processed periodically.

• Real-time – data processed immediately after a

transaction occurs.
Example: Deposits, Payments, orders or reservations

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 Management Information Systems

Transaction processing systems

A Payroll TPS
A TPS for payroll
processing captures
employee payment
transaction data (such
as a time card). System
outputs include online
and hard-copy reports
for management and
employee paychecks.

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THE COMPONENTS OF A TRANSACTIONS PROCESSING
INFORMATION SYSTEM
Example Transaction processing systems

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Business Processes and Type of Information systems

Systems for Different Management Groups …

• Transaction processing systems

– Serve operational managers and staff
– Perform and record daily routine transactions necessary to
conduct business
• Examples: sales order entry, payroll, shipping
– Allow managers to monitor status of operations and
relations with external environment
– Serve predefined, structured goals and decision making
Business Processes and Type of Information systems

Systems for Different Management Groups …

• Management information systems
• Decision support systems
• Executive support/Information systems
• Systems for business intelligence
– Data and software tools for organizing and analyzing data
– Used to help managers and users make improved decisions
Type of Information systems

Management Information System (MIS)

MIS is an information system that generates accurate, timely
and organized information so that managers can make
decisions, solve problems, supervise are activities and track
progress.
Business Processes and Type of Information systems

Management Information System (MIS)

An
Internet
Organization’s
MIS

Manufacturing Drill down Report

Business
Transactions MIS Exception report

Database of Demand report

Transaction valid Accounting
Processing transactions MIS Key-indicator report
Systems
Scheduled report
Marketing Etc.
MIS
Business
Transactions Database of Human MIS is an integrated collection
external Resources of functional information
Data MIS systems, each supporting
particular functional areas.
Extranet
Business Processes and Type of Information systems

Management Information Systems

• Serve middle management

• Provide reports on firm’s current performance,
based on data from T P S
• Provide answers to routine questions with
predefined procedure for answering them
• Typically have little analytic capability
 Management Information Systems
Business Processes and Type of Information systems
Management Information System (MIS)
Management Information Systems – pre-specified reports &
displays to support decision-making.
– Combines computer science, management science,
operations research and practical orientation with
behavioral issues
•Four main actors
– Suppliers of hardware and software
– Business firms
– Managers and employees
– Firm’s environment (legal, social, cultural context)

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 Management Information Systems
Business Processes and Type of Information systems
Management Information System (MIS)
How Management Information Systems Obtain Their Data from the Organization’s TPS

In the system illustrated by this diagram, three TPS supply summarized transaction data to
the MIS reporting system at the end of the time period. Managers gain access to the
organizational data through the MIS, which provides them with the appropriate reports .

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 Management Information Systems
Business Processes and Type of Information systems

Sample MIS Report

This report, showing summarized annual sales data, was produced by the MIS in Figure 2-3.

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Business Processes and Type of Information systems

Management Information Systems (MIS)

MIS is a computer based system that serves the information needs of
an organization while making business decisions

The main objecdtive of MIS to analyze and structure the data

recorded in day-to-day business operations and convert this data into
meaningful information.

In modern organization, Generally, modern

MIS is used to maintain
information related to
customers as well as other
business functions, such
as human resources,
production, finance etc.
organizations use two
types of MIS: Customer
Relationship Management
(CRM) systems and
Enterprise Resource
Planning (ERP) systems.
Business Processes and Type of Information systems

Decision support Systems (DSS)

DSS is an information system designed to help the user reach a decision when a decision making situation
arises.
DSS user data from internal/External sources.
Internal Sources – Sales, manufacturing, inventory, or financial for an organizations database.
Extrenal sources – Interest rates, population trends, cost of new housing construction/raw material pricing.
Business Processes and Type of Information systems

Decision Support Systems

Decision Support Systems – provide interactive ad hoc support.

•Serve middle management

•Support nonroutine decision making

– Example: What is the impact on production schedule if
December sales doubled?

•May use external information as well T P S / M I S data

 Management Information Systems
Business Processes and Type of Information systems
Decision Support System

This DSS operates on a powerful PC. It is used daily by managers who must develop bids on shipping contracts .

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Business Processes and Type of Information systems

Executive Information Systems (EIS) or (ESS)

EIS is designed to support the information needs of executive managers.

Information in an EIS are presented in charts and tables that show trends,
ratios and other managerial statistics and is stored in data warehouses.

Executive Information Systems – critical information tailored

to the information needs of executives
Business Processes and Type of Information systems

Executive Support Systems

• Support senior management

• Address nonroutine decisions

– Requiring judgment, evaluation, and insight

• Incorporate data about external events (e.g., new tax laws or

competitors) as well as summarized information from internal
M I S and D S S

• Example: Digital dashboard with real-time view of firm’s

financial performance
Business Processes and Type of Information systems

Enterprise Applications

• Systems for linking the enterprise

• Span functional areas
• Execute business processes across the firm
• Include all levels of management
• Four major applications
– Enterprise systems
– Supply chain management systems
– Customer relationship management systems
– Knowledge management systems
Business Processes and Type of Information systems

Enterprise Application Architecture

Business Processes and Type of Information systems

Enterprise Systems

• Also called enterprise resource planning (E R P) systems

• Integrate data from key business processes into single
system.
• Speed communication of information throughout firm.
• Enable greater flexibility in responding to customer
requests, greater accuracy in order fulfillment.
• Enable managers to assemble overall view of operations.
Business Processes and Type of Information systems

ERP Systems

 ERP is an information system that intergrates an organization’s core business

functions, such as production, distribution, human resource, finance, sales etc. It
produces a common database for all these business functions of an organization.
 An ERP system, in fact, serves all information capture, analysis, storage and
decision-making needs of an organization.
Business Processes and Type of Information systems

Supply Chain Management (S C M) Systems

• Manage relationships with suppliers, purchasing firms,

distributors, and logistics companies.
• Manage shared information about orders, production,
inventory levels, and so on.
• Goal is to move correct amount of product from source to
point of consumption as quickly as possible and at lowest cost
• Type of interorganizational system: Automating flow of
information across organizational boundaries
Business Processes and Type of Information systems

Customer Relationship Management (C R M)

Systems
• Help manage relationship with customers.
• Coordinate business processes that deal with customers in
sales, marketing, and customer service
• Goals:
– Optimize revenue
– Improve customer satisfaction
– Increase customer retention
– Identify and retain most profitable customers
– Increase sales
Business Processes and Type of Information systems

CRM System

It is important for
Help in determining these organizations
mutually satisfying
to build rapport
goals between the
with its customers,
organization and its
identify their needs
customers.
and expectations,
and fulfil them.
Provides information
related to the existing
and potential
customers of an
organization.
 Management Information Systems

Types of Information Systems

• Customer relationship management systems:

– Provide information to coordinate all of the
business processes that deal with customers in
sales, marketing, and service to optimize
revenue, customer satisfaction, and customer
retention
– Integrate firm’s customer-related processes and
consolidate customer information from multiple
communication channels

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Business Processes and Type of Information systems

In modern organization, a CRM system helps in:

Find, attract, and win
new customers

Promote sales by Identify customer

using the requirements and make
plans for fulfilling them
collected data
Uses of CRM

Provide quick Retain existing customers

response to the by building good
relationships with them
target audience

Convey useful information

about products to
customers regularly
 Management Information Systems
Business Processes and Type of Information systems

Types of Information Systems

• Knowledge management systems (KMS)

– Support processes for acquiring, creating,
storing, distributing, applying, integrating
knowledge
• How to create, produce, distribute products
and services
– Collect internal knowledge and experience within
firm and make it available to employees
– Link to external sources of knowledge

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Business Processes and Type of Information systems

Knowledge Management Systems (K M S)

• Manage processes for capturing and applying

knowledge and expertise
• Collect relevant knowledge and make it available
wherever needed in the enterprise to improve
business processes and management decisions.
• Link firm to external sources of knowledge
Business Processes and Type of Information systems

Intranets and Extranets

• Technology platforms that increase integration and expedite
the flow of information
• Intranets:
– Internal networks based on Internet standards
– Often are private access area in company’s Web site
• Extranets:
– Company Web sites accessible only to authorized vendors
and suppliers
– Facilitate collaboration
 Management Information Systems
Business Processes and Type of Information systems

Types of Information Systems

• Business intelligence
– Class of software applications
– Analyze current and historical data to find
patterns and trends and aid decision-making
– Used in systems that support middle and
senior management
• Data-driven DSS
• Executive support systems (ESS)

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 Management Information Systems
Business Processes and Type of Information systems

Types of Information Systems

• Relationship of systems to one another

– TPS: Major source of data for other systems
– ESS: Recipient of data from lower-level
systems
– Data may be exchanged between systems
– In reality, most businesses’ systems are
only loosely integrated (but they are
getting better!)
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Business Processes and Type of Information systems

Expert Systems (ES)

ES is an information system that captures and stores the knowledge of human

experts and then imitates human reasoning and decision making processes for
those who have less expertise.
Example: Artificial Intelligence (AI) the application of human intelligence to
computers. (Speech recognition )
Management Information Systems

End of the Session 2

43 © Prentice Hall 2011