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© 2007 by Prentice Hall© 2007 by Prentice Hall Management Information Systems, 10/e RManagement Information Systems, 10/e Raymond McLeod and George Schell aymond McLeod and George Schell

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Management Management Information Systems, Information Systems,

10/e10/eRaymond McLeod and George Raymond McLeod and George

Schell Schell

© 2007 by Prentice Hall© 2007 by Prentice Hall Management Information Systems, 10/e RManagement Information Systems, 10/e Raymond McLeod and George Schell aymond McLeod and George Schell

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Chapter 8Chapter 8

Information in ActionInformation in Action

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell

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Learning ObjectivesLearning Objectives

► Know that a firm’s ability to develop effective Know that a firm’s ability to develop effective information systems can be a key factor in its information systems can be a key factor in its success.success.

► Recognize that the transaction processing system Recognize that the transaction processing system processes describes the firm’s basic daily operations.processes describes the firm’s basic daily operations.

► Be familiar with the processes performed by a Be familiar with the processes performed by a transaction processing system for a distribution firm.transaction processing system for a distribution firm.

► Recognize that organizational information systems Recognize that organizational information systems have been developed for business areas & have been developed for business areas & organizational levels.organizational levels.

► Be familiar with architectures of marketing, human Be familiar with architectures of marketing, human resources, manufacturing, & financial information resources, manufacturing, & financial information systems.systems.


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Learning Objectives (Cont’d)Learning Objectives (Cont’d)

► Know the architecture of an executive information Know the architecture of an executive information system.system.

► Understand what customer relationship management is & Understand what customer relationship management is & why is requires a large computer storage capability.why is requires a large computer storage capability.

► Recognize how a data warehouse differs from a database.Recognize how a data warehouse differs from a database.► Understand the architecture of a data warehouse system.Understand the architecture of a data warehouse system.► Know how data are stored in a data warehouse data Know how data are stored in a data warehouse data

repository.repository.► Know how a user navigates through the data repository.Know how a user navigates through the data repository.► Know what on-line analytical processing (OLAP) is.Know what on-line analytical processing (OLAP) is.► Know the two basic ways to engage in data mining.Know the two basic ways to engage in data mining.


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Information as a Critical Success Information as a Critical Success FactorFactor

► Critical success factor (CSF)Critical success factor (CSF) was coined by was coined by Ronald Daniel to identify a few key activities Ronald Daniel to identify a few key activities that spell success or failure for any type of that spell success or failure for any type of organization.organization.

► Transaction processing system (TPS)Transaction processing system (TPS) is is the information system that gathers data the information system that gathers data describing the firm’s activities, transforms the describing the firm’s activities, transforms the data into information, & makes the data into information, & makes the information available to users both inside & information available to users both inside & outside the firm.outside the firm. 11stst business application to be installed on business application to be installed on

computers.computers.►Also Also electronic data processing (EDP)electronic data processing (EDP) system & system &

accounting information systemaccounting information system. .


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Figure 8.1 Model of a TPSFigure 8.1 Model of a TPS


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System OverviewSystem Overview

►Distribution systemDistribution system is a TPS used by is a TPS used by distribution firms.distribution firms.

►Distribution firms distribute products Distribution firms distribute products or services to their customers.or services to their customers.

►We will use data flow diagrams, or We will use data flow diagrams, or DFDs, to document the system.DFDs, to document the system.

►Figure 8.2 represents the highest level.Figure 8.2 represents the highest level.►Figure 8.3 identifies the three major Figure 8.3 identifies the three major

subsystems.subsystems.


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Figure 8.2 Context Diagram of Figure 8.2 Context Diagram of Distribution SystemDistribution System


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Figure 8.3 Figure 0 Diagram of Figure 8.3 Figure 0 Diagram of Distribution SystemDistribution System


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Major Subsystems of Major Subsystems of Distribution SystemDistribution System

► Systems that fill customer orders.Systems that fill customer orders. Order entry systemOrder entry system enters customer orders enters customer orders

into the system.into the system. Inventory systemInventory system maintains the inventory maintains the inventory

records.records. Billing systemBilling system prepares the customer invoices. prepares the customer invoices. Accounts receivable systemAccounts receivable system collects the collects the

money from the customers.money from the customers.► Systems that order replenishment stock.Systems that order replenishment stock.

Purchasing systemPurchasing system issues purchase orders to issues purchase orders to suppliers for needed stock.suppliers for needed stock.

Receiving systemReceiving system receives the stock. receives the stock. Accounts payable systemAccounts payable system makes payments. makes payments.


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Figure 8.4 Figure 1 Diagram of Figure 8.4 Figure 1 Diagram of Systems that Fills Customers Systems that Fills Customers

OrdersOrders


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Figure 8.5 Figure 2 Diagram of Figure 8.5 Figure 2 Diagram of Systems that Order Systems that Order

Replenishment Stock Replenishment Stock


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Major Subsystems of Major Subsystems of Distribution System (Cont’d)Distribution System (Cont’d)

► Systems that perform general ledger processes.Systems that perform general ledger processes. General ledger systemGeneral ledger system is the accounting system is the accounting system

that combines data from other accounting systems that combines data from other accounting systems for the purpose of presenting a composite financial for the purpose of presenting a composite financial picture of the firm’s operations.picture of the firm’s operations.

General ledgerGeneral ledger is the file that contains the is the file that contains the combined accounting data.combined accounting data.

Updated general ledger systemUpdated general ledger system posts records posts records that describe various actions & transactions to the that describe various actions & transactions to the general ledger.general ledger.

Prepare management reports systemPrepare management reports system uses the uses the contents of the general ledger to prepare the balance contents of the general ledger to prepare the balance sheet, income statement, & other reports. sheet, income statement, & other reports.


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Figure 8.6 Figure 3 Diagram of Figure 8.6 Figure 3 Diagram of Systems that Perform General Systems that Perform General

Ledger ProcessesLedger Processes


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Organizational Information Organizational Information SystemsSystems

►Organizational information systemsOrganizational information systems are developed to meet the needs for are developed to meet the needs for information relating to those particular information relating to those particular parts of the organization.parts of the organization.

►Marketing information system Marketing information system (MKIS)(MKIS) provides information that relates provides information that relates to the firm’s marketing activities.to the firm’s marketing activities. Consists of a combination of input & output Consists of a combination of input & output

subsystems connected by a database.subsystems connected by a database.


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Figure 8.7 Model of MKISFigure 8.7 Model of MKIS


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MKISMKIS

► Output subsystemsOutput subsystems provide information about provide information about critical elements in marketing mix.critical elements in marketing mix.

► Marketing mixMarketing mix consists of 4 main ingredients that consists of 4 main ingredients that management manages in order to meet customers’ management manages in order to meet customers’ needs at a profit.needs at a profit. Product subsystemProduct subsystem provides information about the firm’s provides information about the firm’s

products.products. Place subsystemPlace subsystem provides information about the firm’s provides information about the firm’s

distribution network.distribution network. Promotion subsystemPromotion subsystem provides information about the provides information about the

firm’s advertising & personal selling activities.firm’s advertising & personal selling activities. Price subsystemPrice subsystem helps the manager make pricing helps the manager make pricing

decisions.decisions. Integrated-mix subsystemIntegrated-mix subsystem enables the manager to enables the manager to

develop strategies that consider the combined effects of develop strategies that consider the combined effects of the ingredients.the ingredients.


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MKIS (Cont’d)MKIS (Cont’d)

►DatabaseDatabase is populated with data from the is populated with data from the three MKIS input subsystems.three MKIS input subsystems.

► Input subsystemsInput subsystems Transaction processing systemTransaction processing system gathers data gathers data

from both internal & environmental sources & from both internal & environmental sources & enters the data into the database.enters the data into the database.

Marketing research subsystemMarketing research subsystem gathers gathers internal & environmental data by conducting internal & environmental data by conducting special studies.special studies.

Marketing intelligence subsystemMarketing intelligence subsystem gathers gathers environmental data that serves to keep environmental data that serves to keep management informed of activities of the firm’s management informed of activities of the firm’s competitors & customers & other elements that competitors & customers & other elements that can influence marketing operations.can influence marketing operations.


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Other Organizational Other Organizational Information SystemInformation System

►Human Resources information systemHuman Resources information system ((HRISHRIS) provides information to managers ) provides information to managers throughout the firm concerning the firm’s throughout the firm concerning the firm’s human resources.human resources.

►Manufacturing information systemManufacturing information system provides information to managers provides information to managers throughout the firm concerning the firm’s throughout the firm concerning the firm’s manufacturing operations. manufacturing operations.

► Financial information systemFinancial information system provides provides information to managers throughout the firm information to managers throughout the firm concerning the firm’s financial activities. concerning the firm’s financial activities.


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Figure 8.8 Model of HRISFigure 8.8 Model of HRIS


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Figure 8.9 Model of Figure 8.9 Model of Manufacturing Information Manufacturing Information

SystemSystem


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Figure 8.10 Model of Financial Figure 8.10 Model of Financial Information SystemInformation System


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Executive Information Executive Information SystemSystem

► Executive information system (EIS)Executive information system (EIS) is a is a system that provides information to upper-system that provides information to upper-level managers on the overall performance level managers on the overall performance of the firm; also called of the firm; also called Executive support Executive support system (ESS)system (ESS)..

►Drill-down capabilityDrill-down capability allows for executives allows for executives to bring up a summary display & then to bring up a summary display & then successively display lower levels of detail successively display lower levels of detail until executives are satisfied that they have until executives are satisfied that they have obtained as much detail as is necessary.obtained as much detail as is necessary.


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Figure 8.11 An EIS ModelFigure 8.11 An EIS Model


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Figure 8.12 Drill-down Figure 8.12 Drill-down TechniqueTechnique


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Customer Relationship Customer Relationship ManagementManagement

► Customer relationship managementCustomer relationship management ((CRMCRM) is the management of the relationships ) is the management of the relationships between the firm & its customers so that both between the firm & its customers so that both the firm & its customers receive maximum the firm & its customers receive maximum value from the relationship.value from the relationship.

► CRM systemCRM system accumulates customer data accumulates customer data over a long term – 5 years, 10 years, or more - over a long term – 5 years, 10 years, or more - & uses that data to produce information for & uses that data to produce information for users.users. Uses a data warehouse.Uses a data warehouse.


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Data WarehousingData Warehousing

►Data warehouseData warehouse describes data storage describes data storage that has the following characteristics:that has the following characteristics: Storage capacity is very large.Storage capacity is very large. Data are accumulated by adding new records, as Data are accumulated by adding new records, as

opposed to being kept current by updating opposed to being kept current by updating existing records with new information.existing records with new information.

Date are easily retrievable.Date are easily retrievable. Date are used solely for decision making, not for Date are used solely for decision making, not for

use in the firm’s daily operations.use in the firm’s daily operations.►Data martData mart is a database that contains data is a database that contains data

describing only a segment of the firm’s describing only a segment of the firm’s operations.operations.


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Data Warehousing SystemData Warehousing System

►Data warehousingData warehousing is the creation & is the creation & use of a data warehouse or data mart.use of a data warehouse or data mart.

►Primary data sourcesPrimary data sources are TPS & data are TPS & data obtained from other sources, both obtained from other sources, both internal & environmental; any data internal & environmental; any data identified as having potential value in identified as having potential value in decision making.decision making.

►Staging areaStaging area is where the data is where the data undergoes extraction, transformation, undergoes extraction, transformation, & loading (abbrev. as & loading (abbrev. as ETLETL process) process)


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Data Warehousing System Data Warehousing System (Cont’d)(Cont’d)

► ExtractionExtraction process combines data from the process combines data from the various sources.various sources.

► TransformationTransformation process cleans the data, puts it process cleans the data, puts it into standardized format, & prepares summaries.into standardized format, & prepares summaries. Data stored in both detail & summary form.Data stored in both detail & summary form.

► LoadingLoading process involves the entry of the data process involves the entry of the data into the data warehouse repository.into the data warehouse repository.

►MetadataMetadata ““Data about data”.Data about data”. Data that describes the data in the data repository.Data that describes the data in the data repository. Tracks data as it flows through the data warehouse Tracks data as it flows through the data warehouse

system.system.


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Figure 8.13 Model of Data Figure 8.13 Model of Data Warehousing SystemWarehousing System


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Storing Data in the Warehouse Storing Data in the Warehouse Data RepositoryData Repository

►Dimension tablesDimension tables store the identifying & store the identifying & descriptive data.descriptive data. DimensionDimension provides the basis for viewing the provides the basis for viewing the

data from data from various perspectivesvarious perspectives or or dimensionsdimensions..

► Fact tablesFact tables are separate tables containing are separate tables containing the quantitative measures of an entity.the quantitative measures of an entity. Combined with dimension table data, various Combined with dimension table data, various

analyses can be prepared.analyses can be prepared. Users can request information that involves any Users can request information that involves any

combination of the dimensions & facts.combination of the dimensions & facts.


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Figure 8.14 Simple Dimension Figure 8.14 Simple Dimension TableTable


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Figure 8.15 Sample Fact Figure 8.15 Sample Fact TableTable


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Storing Data … (Cont’d)Storing Data … (Cont’d)

► Information packageInformation package identifies all of the identifies all of the dimensions that will be used in analyzing a dimensions that will be used in analyzing a particular activity.particular activity.

► Star schemaStar schema - for each dimension, a key - for each dimension, a key identifies the dimension & provides the link to identifies the dimension & provides the link to the information package which results in a the information package which results in a structure that is similar to the pattern of a structure that is similar to the pattern of a star.star. The warehouse data repository contains multiple The warehouse data repository contains multiple

star schemas, one for each type of activity to be star schemas, one for each type of activity to be analyzed.analyzed.


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Figure 8.16 Information Package Figure 8.16 Information Package FormatFormat


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Figure 8.17 Sample Information Figure 8.17 Sample Information PackagePackage


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Figure 8.18 Star Schema Figure 8.18 Star Schema FormatFormat


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Figure 8.19 A Sample Star Figure 8.19 A Sample Star SchemaSchema


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Information DeliveryInformation Delivery


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Figure 8.20 Navigating the Figure 8.20 Navigating the Warehouse Data RepositoryWarehouse Data Repository


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Figure 8.21 Drilling Across Figure 8.21 Drilling Across Hierarchies Produces Multiple Hierarchies Produces Multiple

ViewsViews


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OLAPOLAP► On-line analytical processingOn-line analytical processing ( (OLAPOLAP) enables the ) enables the

user to communicate with the data warehouse either user to communicate with the data warehouse either through a GUI or a Web interface & quickly produce through a GUI or a Web interface & quickly produce information in a variety of forms, including graphics.information in a variety of forms, including graphics.

► Relational OLAPRelational OLAP ( (ROLAPROLAP) uses a standard relational ) uses a standard relational database management system.database management system. ROLAP data exists in detailed form.ROLAP data exists in detailed form. Analyses must be performed to produce summaries.Analyses must be performed to produce summaries. Constrained to a limited number of dimensions.Constrained to a limited number of dimensions.

► Multidimensional OLAPMultidimensional OLAP ( (MOLAPMOLAP) uses a special ) uses a special multidimensional database management system.multidimensional database management system. MOLAP data are preprocessed to produce summaries at the MOLAP data are preprocessed to produce summaries at the

various levels of detail & arranged by the various dimensions.various levels of detail & arranged by the various dimensions. Faster summary ability, can use many dimensions – 10 or Faster summary ability, can use many dimensions – 10 or

more.more.


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Figure 8.22 ROLAP & MOLAP Figure 8.22 ROLAP & MOLAP ArchitecturesArchitectures


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Figure 8.23 Example Report Figure 8.23 Example Report Produced with ROLAPProduced with ROLAP


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Figure 8.24 Example Report Figure 8.24 Example Report Produced with MOLAPProduced with MOLAP


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Data MiningData Mining

►Data miningData mining is the process of finding is the process of finding relationships in data that are unknown to the relationships in data that are unknown to the user.user.

►Hypothesis verificationHypothesis verification begins with the begins with the user’s hypothesis of how data are related.user’s hypothesis of how data are related. Retrieval process guided entirely by user.Retrieval process guided entirely by user. Selected information can be no better than user’s Selected information can be no better than user’s

understanding of the data.understanding of the data. Traditional way to query a database.Traditional way to query a database.

► Knowledge discoveryKnowledge discovery is when the data is when the data warehousing system analyzes the warehouse warehousing system analyzes the warehouse data repository, looking for groups with data repository, looking for groups with common characteristics.common characteristics.

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