information systems in the enterprise and business processes. figure 2.12 illustrates a...

AQU – Information Systems Fundamentals – Spring 2012

22..11© 2002 by Prentice Hall & 2012 Yacoub Sabatin

c h a p t e r

22222222INFORMATION INFORMATION

SYSTEMS IN THESYSTEMS IN THE

ENTERPRISEENTERPRISE


ReadingReading NotesNotes forfor ChapterChapter 22 inin thethe textbooktextbook 11//22

The chapter introduces six types of information systems. Figure 2.1 and table 2.1 give an overall picture of organizations and how different types of information systems serve them. Figure 2.2 depicts different types of information systems and how they relate to one another (Figure 2.9 as well).

Section 2.2 examines information systems from a functional view of an organization: Sales and marketing systems, manufacturing and production systems, finance and accounting systems, and human resources systems. Read this section carefully to develop an understanding of how information systems serve different functions of an organization.

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ReadingReading NotesNotes forfor ChapterChapter 22 inin thethe textbooktextbook 22//22

Read section 2.3 carefully to understand integration of functions and business processes. Figure 2.12 illustrates a cross-functional business process. Pay also attention to customer relationship management and enterprise systems that are current trends in business. Contrast Figure 2.15 and 2.16. Extended enterprises and industrial networks are also recent trends and would not be possible without the support of information technology.

*


LEARNING OBJECTIVESLEARNING OBJECTIVES

•• Analyze Roles of Analyze Roles of 6 6 Types of Types of

Information SystemsInformation Systems

•• Describe Types of Information SystemsDescribe Types of Information Systems

•• Analyze Relationships between Analyze Relationships between

Business ProcessesBusiness Processes

>>>>



LEARNING OBJECTIVESLEARNING OBJECTIVES

•• Explain How Systems & Networks Explain How Systems & Networks

Create New EfficienciesCreate New Efficiencies

•• Evaluate Benefits & Limitations of Evaluate Benefits & Limitations of

Systems & NetworksSystems & Networks

**


MANAGEMENT CHALLENGESMANAGEMENT CHALLENGES

•• Key System ApplicationsKey System Applications

•• Functional Perspective of SystemsFunctional Perspective of Systems

•• Integrating Functions & ProcessesIntegrating Functions & Processes

**



MANAGEMENT CHALLENGESMANAGEMENT CHALLENGES

1.1. INTEGRATION:INTEGRATION:

Different Systems Serve Variety of Functions, Different Systems Serve Variety of Functions,

Connecting Organizational Levels Difficult, Connecting Organizational Levels Difficult,

CostlyCostly

22. ENLARGING SCOPE OF MANAGEMENT THINKING: . ENLARGING SCOPE OF MANAGEMENT THINKING:

Huge System Investments, Long Development Time Huge System Investments, Long Development Time

must be guided by common objectives must be guided by common objectives

**


SoSo@@

•• Organizational HierarchyOrganizational Hierarchy

•• Organizational LevelsOrganizational Levels

•• Information SystemsInformation Systems

>>>>



TYPES OF INFORMATION SYSTEMSTYPES OF INFORMATION SYSTEMS

DATA WORKERSDATA WORKERS

KIND OF SYSTEM GROUPS SERVEDKIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR STRATEGIC LEVEL SENIOR

MANAGERSMANAGERS

MANAGEMENT LEVEL MIDDLE MANAGEMENT LEVEL MIDDLE

MANAGERSMANAGERS

OPERATIONAL OPERATIONAL OPERATIONAL OPERATIONAL

LEVEL MANAGERS LEVEL MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE & KNOWLEDGE LEVEL KNOWLEDGE &

SALES & MANUFACTURING FINANCE ACCOUNTING HUMANSALES & MANUFACTURING FINANCE ACCOUNTING HUMAN

RESOURCESRESOURCESMARKETING & PROD MARKETING & PROD


Four General Kinds of IS in Terms of Four General Kinds of IS in Terms of

Organizational LevelsOrganizational Levels

•• OperationalOperational--level systemslevel systems

– support operational managers by monitoring the day-to-day’s elementary activities and transactions of the organization. e.g. TPS.

•• KnowledgeKnowledge--level systemslevel systems

– support knowledge and data workers in designing products, distributing information, and coping with paperwork in an organization. e.g. KWS, OAS

•• ManagementManagement--level systemslevel systems

– support the monitoring, controlling, decision-making, and administrative activities of middle managers. e.g. MIS, DSS

•• StrategicStrategic--level systemslevel systems

– support long-range planning activities of senior management. e.g. ESS



MAJOR TYPES OF SYSTEMSMAJOR TYPES OF SYSTEMS((with respect to support provided)with respect to support provided)

•• EXECUTIVE SUPPORT SYSTEMSEXECUTIVE SUPPORT SYSTEMS (ESS)(ESS)

•• DECISION SUPPORT SYSTEMSDECISION SUPPORT SYSTEMS (DSS)(DSS)

•• MANAGEMENT INFORMATION SYSTEMSMANAGEMENT INFORMATION SYSTEMS (MIS)(MIS)

•• KNOWLEDGE WORK SYSTEMSKNOWLEDGE WORK SYSTEMS (KWS)(KWS)

•• OFFICE AUTOMATION SYSTEMSOFFICE AUTOMATION SYSTEMS (OAS)(OAS)

•• TRANSACTION PROCESSING TRANSACTION PROCESSING

SYSTEMSSYSTEMS (TPS)(TPS)

**


INTERRELATIONSHIPS AMONG SYSTEMSINTERRELATIONSHIPS AMONG SYSTEMS

ESS

TPSKWS

OAS

DSSMIS



TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONS

11. Sales & Marketing Systems. Sales & Marketing Systems

MAJOR FUNCTIONS OF SYSTEMS:MAJOR FUNCTIONS OF SYSTEMS:

•• Sales management, market research, Sales management, market research,

promotion, pricing, new productspromotion, pricing, new products

MAJOR APPLICATION SYSTEMS:MAJOR APPLICATION SYSTEMS:

•• Sales order info system, market Sales order info system, market

research system, pricing systemresearch system, pricing system

>>>>


TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONS22. Manufacturing & Production Systems. Manufacturing & Production Systems


•• Scheduling, purchasing, shipping, Scheduling, purchasing, shipping,

receiving, engineering, operationsreceiving, engineering, operations


•• Materials resource planning systems, Materials resource planning systems,

purchase order control systems, purchase order control systems,

engineering systems, quality control engineering systems, quality control

systemssystems

>>>>



TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONS33. Finance & Accounting Systems. Finance & Accounting Systems


•• Budgeting, general ledger, billing, Budgeting, general ledger, billing,

cost accountingcost accounting


•• General ledger, accounts receivable, General ledger, accounts receivable,

accounts payable, budgeting, funds accounts payable, budgeting, funds

management systemsmanagement systems

>>>>


TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONS44. Human Resources Systems. Human Resources Systems


•• Personnel records, benefits, Personnel records, benefits,

compensation, labor relations, compensation, labor relations,

trainingtraining


•• Payroll, employee records, benefit Payroll, employee records, benefit

systems, career path systems, systems, career path systems,

personnel training systems, personnel training systems, example:example:

>>>>



A Symbolic Representation for a payroll TPSA Symbolic Representation for a payroll TPS

Payroll SystemManagement

Reports

On-line

queries

Payroll

master

file

Employee data (various departments) To general ledger: wages and salaries

Government documents

Employee checks


TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONS

55. Other Types (e.g., University). Other Types (e.g., University)


•• Admissions, grade records, course Admissions, grade records, course

records, alumnirecords, alumni


•• Registration system, student Registration system, student

transcript system, curriculum class transcript system, curriculum class

control system, alumni benefactor control system, alumni benefactor

systemsystem

**



OFFICE AUTOMATION SYSTEMS OFFICE AUTOMATION SYSTEMS (OAS)(OAS)

All LevelsAll Levels

•• Toward A “Paperless” OfficeToward A “Paperless” Office

•• Redesign Of Work FlowRedesign Of Work Flow

•• Integrated SoftwareIntegrated Software

•• Ergonomic DesignErgonomic Design

•• Bright, Cheerful Work SpaceBright, Cheerful Work Space

Example: Presentation GraphicsExample: Presentation Graphics

**


Knowledge LevelKnowledge Level

•• Inputs: Design SpecsInputs: Design Specs

•• Processing: ModellingProcessing: Modelling

•• Outputs: Designs, GraphicsOutputs: Designs, Graphics

•• Users: Technical StaffUsers: Technical Staff

Example: Engineering Work StationExample: Engineering Work Station

**

KNOWLEDGE WORK SYSTEMS KNOWLEDGE WORK SYSTEMS (KWS)(KWS)



Management LevelManagement Level

•• Inputs: High Volume DataInputs: High Volume Data

•• Processing: Simple ModelsProcessing: Simple Models

•• Outputs: Summary ReportsOutputs: Summary Reports

•• Users: Middle Managers Users: Middle Managers

Example: Annual BudgetingExample: Annual Budgeting

>>>>

MANAGEMENT INFORMATION MANAGEMENT INFORMATION

SYSTEMS SYSTEMS (MIS)(MIS)


•• Structured & semiStructured & semi--structured structured

decisionsdecisions

•• Report control orientedReport control oriented

•• Past & present dataPast & present data

•• Internal orientationInternal orientation

•• Lengthy design processLengthy design process

>>>>

MANAGEMENT INFORMATION MANAGEMENT INFORMATION

SYSTEMS SYSTEMS (MIS)(MIS)



MISMIS

MIS FILESMIS FILES

SALES

DATA

UNIT

PRODUCT

COST

PRODUCT

CHANGE

DATA

EXPENSE

DATA

MISREPORTS

MANAGERSMANAGERS

TPS

Order Processing

System

Materials Resource

Planning System

General Ledger

System

ORDER FILE

PRODUCTION MASTER FILE

ACCOUNTING FILES

TPSTPS DATA FOR DATA FOR MISMIS APPLICATIONSAPPLICATIONS


Management LevelManagement Level

•• Inputs: Low Volume DataInputs: Low Volume Data

•• Processing: InteractiveProcessing: Interactive

•• Outputs: Decision AnalysisOutputs: Decision Analysis

•• Users: Professionals, StaffUsers: Professionals, Staff

Example: Contract Cost AnalysisExample: Contract Cost Analysis

>>>>

DECISION SUPPORT SYSTEMS DECISION SUPPORT SYSTEMS (DSS)(DSS)



1. DSS offer users flexibility, adaptability, and a quick response.

2. DSS operate with little or no assistance from professional programmers.

3. DSS provide support for decisions and problems whose solutions cannot be specified in advance.

4. DSS use sophisticated data analysis and modelling tools.

>>

CHARACTERISTICS of DECISION CHARACTERISTICS of DECISION

SUPPORT SYSTEMS SUPPORT SYSTEMS (DSS)(DSS)


Strategic LevelStrategic Level

•• Inputs: Aggregate DataInputs: Aggregate Data

•• Processing: InteractiveProcessing: Interactive

•• Outputs: ProjectionsOutputs: Projections

•• Users: Senior Managers Users: Senior Managers

Example: Example: 5 5 Year Operating PlanYear Operating Plan

>>>>

EXECUTIVE SUPPORT SYSTEMS EXECUTIVE SUPPORT SYSTEMS

(ESS)(ESS)



Model of a Typical Executive Model of a Typical Executive

Support SystemSupport System

Internal Data

TPS/MIS Data

Financial Data

Office Systems

Modeling/

analysis

External Data

Dow Jones

Gallup Poll

Standard &

Poor's

ESS

workstationESS

workstation

ESS

workstation

Menus

Graphics

Communications

Local processing

Menus

Graphics

Communications

Local processing

Menus

Graphics

Communications

Local processing

>>


•• Top level managementTop level management

•• Designed to the individualDesigned to the individual

•• Ties CEO to all levelsTies CEO to all levels

•• Very expensive to keep upVery expensive to keep up

•• Extensive support staffExtensive support staff

**

CHARACTERISTICS OFCHARACTERISTICS OF EXECUTIVE EXECUTIVE

SUPPORT SYSTEMS SUPPORT SYSTEMS (ESS)(ESS)



SummarySummary

Strategic Leve l Systems

5-yearsale s trend

forecasting

5-yearoperating

plan

5-yearbudge t

forecasting

Profitplanning

Manpowerplanning

Management-Leve l SystemsSale s

management

Sale s region

analys is

Inventory

Control

Production

Scheduling

Annual

budge ting

Cost

analys is

Capital

Investment analys is

Pricing/profitability

analys is

Re location

analys is

Contract cost

analys is

Knowledge -Leve l Systems

Engineering

workstations

Word

process ing

Graphics

workstations

Document

Imaging

Managerial

workstations

Electronic

Calendars

Operational Leve l Systems

Order Tracking

Order process ing

Machine control

Plant scheduling

Material movementcontrol

Securitie strading

Cashmanagement

Payroll

Accounts payable

Accounts rece ivable

Compensation

Training & deve lopment

Employee record keeping

TYPES OF SYSTEMS

ESS

MIS

DSS

KWS

OAS

TPS

Sale s andmarke ting

Manufacturing Finance Accounting HumanResources


INTERRELATIONSHIPS AMONG SYSTEMSINTERRELATIONSHIPS AMONG SYSTEMS

ESS

TPSKWS

OAS

DSSMIS



SYSTEMS FROM A FUNCTIONAL SYSTEMS FROM A FUNCTIONAL

PERSPECTIVEPERSPECTIVE

1.1. Sales & Marketing SystemsSales & Marketing Systems

2.2. Manufacturing & Production Manufacturing & Production

SystemsSystems

3.3. Finance & Accounting SystemsFinance & Accounting Systems

4.4. Human Resources SystemsHuman Resources Systems

****


11. SALES & MARKETING . SALES & MARKETING

INFORMATION SYSTEMINFORMATION SYSTEM

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

ORDER PROCESSING ENTER, PROCESS, TRACK ORDERS OPERATIONAL

MARKET ANALYSIS IDENTIFY CUSTOMERS & MARKETS KNOWLEDGE

PRICING ANALYSIS DETERMINE PRICES MANAGEMENT

SALES TRENDS PREPARE 5-YEAR FORECASTS STRATEGIC



22. MANUFACTURING & PRODUCTION . MANUFACTURING & PRODUCTION



MACHINE CONTROL CONTROL ACTIONS OF EQUIPMENT OPERATIONAL

COMPUTER-AIDED-DESIGN DESIGN NEW PRODUCTS KNOWLEDGE

PRODUCTION PLANNING DECIDE NUMBER, SCHEDULE OF PRODUCTS MANAGEMENT

FACILITIES LOCATION DECIDE WHERE TO LOCATE FACILITIES STRATEGIC


33. FINANCE & ACCOUNTING . FINANCE & ACCOUNTING



ACCOUNTS RECEIVABLE TRACK MONEY OWED TO FIRM OPERATIONAL

PORTFOLIO ANALYSIS DESIGN FIRM'S INVESTMENTS KNOWLEDGE

BUDGETING PREPARE SHORT TERM BUDGETS MANAGEMENT

PROFIT PLANNING PLAN LONG-TERM PROFITS STRATEGIC



44. HUMAN RESOURCES. HUMAN RESOURCES



TRAINING & DEVELOPMENT TRACK TRAINING, SKILLS, APPRAISALS OPERATIONAL

CAREER PATHING DESIGN EMPLOYEE CAREER PATHS KNOWLEDGE

COMPENSATION ANALYSIS MONITOR WAGES, SALARIES, BENEFITS MANAGEMENT

HUMAN RESOURCES PLANNING PLAN LONG-TERM LABOR FORCE NEEDS STRATEGIC

**


RecallRecallMAJOR BUSINESS FUNCTIONSMAJOR BUSINESS FUNCTIONS

•• SALES & MARKETINGSALES & MARKETING

•• MANUFACTURINGMANUFACTURING

•• FINANCEFINANCE

•• ACCOUNTINGACCOUNTING

•• HUMAN RESOURCESHUMAN RESOURCES

>>>>



EXAMPLES OF BUSINESS EXAMPLES OF BUSINESS

PROCESSES (FUNCTIONS) PROCESSES (FUNCTIONS) 11//22

•• SALES & MARKETING:SALES & MARKETING:

Identifying customers, creating Identifying customers, creating

customer awareness, sellingcustomer awareness, selling

•• MANUFACTURING & PRODUCTION:MANUFACTURING & PRODUCTION:

Assembling product, checking Assembling product, checking

quality, producing bills of materialsquality, producing bills of materials

>>>>


EXAMPLES OF BUSINESS EXAMPLES OF BUSINESS

PROCESSES (FUNCTIONS) PROCESSES (FUNCTIONS) 22//22

•• FINANCE & ACCOUNTING:FINANCE & ACCOUNTING:

Paying creditors, creating financial Paying creditors, creating financial

statements, managing cash accountsstatements, managing cash accounts

•• HUMAN RESOURCES:HUMAN RESOURCES:

Hiring employees, evaluating Hiring employees, evaluating

performance, enrolling employees in performance, enrolling employees in

benefits plansbenefits plans

Ex. >>Ex. >>



The Order Fulfillment Process (F The Order Fulfillment Process (F 22..1212))

Sales

Accounting

Manufacturing

& P roduct ion

Generate

Order

Submit

Order

Check

Credit

Approve

Credit

Generate

Invoice

Assemble

Product

Ship

Product


Customer Relationship ManagementCustomer Relationship Management

• Business and technology discipline to

coordinate the business processes for

dealing with customers.

Sales

T elephone sales

W eb sales

Field sales

Ret ail sales

Market ing

Campaign data

Cont ent

Dat a analysis

Customer Service

Call cent er dat a

W eb self service dat a

Field serv ice dat a

W ireless dat a

Unified view of customers

Consistent message to customers

End-to-end customer care

Long-term customer relationships

Identification of best customers

*



SHIPPINGSHIPPING INVENTORYINVENTORY

PLANNING & PLANNING &

FORECASTINGFORECASTING

ORDER ORDER

PROCESSINGPROCESSING

PRODUCTIONPRODUCTION

PROCUREMENTPROCUREMENT

ACCOUNTINGACCOUNTING

SUPPLIERSSUPPLIERSCUSTOMERSCUSTOMERS

LOGISTICS LOGISTICS

SERVICESSERVICESDISTRIBUTORSDISTRIBUTORS

INTRANETINTRANETINTRANET

SUPPLYSUPPLY--CHAIN MANAGEMENTCHAIN MANAGEMENT

(SCM)(SCM)

>>>>


•• IntegrationIntegration ofof supplier,supplier, distributor,distributor, andand

customercustomer logisticslogistics requirementsrequirements intointo oneone

cohesivecohesive processprocess..

•• NetworkNetwork ofof facilitiesfacilities forfor procuringprocuring materials,materials,

transformingtransforming rawraw materialsmaterials intointo finishedfinished

products,'products,' andand distributingdistributing finishedfinished produceproduce

toto customerscustomers..

Supplier Manufacturer DistributorRetail

OutletCustomer

Capacity, inventory level, delivery schedule, payment terms

Orders, return requests, repair and service requests, payments

Supply Chain ManagementSupply Chain Management



HOW INFORMATION SYSTEMS HOW INFORMATION SYSTEMS

FACILITATES SUPPLY CHAIN FACILITATES SUPPLY CHAIN

MANAGEMENTMANAGEMENTDECIDE WHEN, WHAT TO PRODUCE, STORE, MOVE@DECIDE WHEN, WHAT TO PRODUCE, STORE, MOVE@

RAPIDLY COMMUNICATE ORDERS@RAPIDLY COMMUNICATE ORDERS@

TRACK ORDER STATUS@TRACK ORDER STATUS@

CHECK INVENTORY AVAILABILITY, MONITOR LEVELS@CHECK INVENTORY AVAILABILITY, MONITOR LEVELS@

TRACK SHIPMENTS@TRACK SHIPMENTS@

PLAN PRODUCTION BASED ON ACTUAL DEMAND@PLAN PRODUCTION BASED ON ACTUAL DEMAND@

RAPIDLY COMMUNICATE PRODUCT DESIGN CHANGES@RAPIDLY COMMUNICATE PRODUCT DESIGN CHANGES@

PROVIDE PRODUCT SPECIFICATIONS@PROVIDE PRODUCT SPECIFICATIONS@

SHARE INFORMATION ABOUT DEFECT RATES, RETURNS...SHARE INFORMATION ABOUT DEFECT RATES, RETURNS...


TRADITIONALTRADITIONAL

VIEW OF SYSTEMSVIEW OF SYSTEMS

•• WITHIN THE BUSINESS:WITHIN THE BUSINESS:

There are functions, each having its uses of There are functions, each having its uses of

information systems to do own business information systems to do own business

processesprocesses

•• OUTSIDE THE ORGANIZATION’S OUTSIDE THE ORGANIZATION’S

BOUNDARIES:BOUNDARIES:

There are customers and vendorsThere are customers and vendors

FUNCTIONS TEND TO WORK IN ISOLATIONFUNCTIONS TEND TO WORK IN ISOLATION

i. e.i. e. >>>>



TRADITIONALTRADITIONAL

VIEW OF SYSTEMSVIEW OF SYSTEMS

Manufacturing Accounting FinanceMarketing and

Sales

Human

Resources

Manufacturing

Systems

Accounting

Systems

Finance

Systems

Marketing and

Sales Systems

Human

Resources

Systems

Business

Processes

Business

Processes

Business

Processes

Business

Processes

Business

Processes

Business Functions

Information Systems

Organizational

Boundaries

Organizational

Boundaries

Vendors Customers

In some organizations today, separate systems built over along period of

time to support discrete business processes (no real integration)

These systems rarely include transactions with customers and vendors.

BUT >>


ENTERPRISE SYSTEMENTERPRISE SYSTEM

Sales &

Marketing

Accounting

Finance

Manufacturing

Human

Resources

Business ProcessesBusiness Processes

EnterpriseEnterprise--widewide Business Business

ProcessesProcesses

Vendors Customers

Enterprise systems can integrate the key business processes of an entire firm

into a single software system that allows info to flow seamlessly throughout the

org. These systems may include transactions with customers and vendors.



BENEFITS OF ENTERPRISE BENEFITS OF ENTERPRISE

SYSTEMSSYSTEMS

•• FIRM STRUCTURE & ORGANIZATION:FIRM STRUCTURE & ORGANIZATION:One organizationOne organization

•• MANAGEMENT:MANAGEMENT:

Firmwide knowledgeFirmwide knowledge--based management based management processesprocesses

•• TECHNOLOGY:TECHNOLOGY: Unified platformUnified platform

•• BUSINESS:BUSINESS:

More efficient operations & customerMore efficient operations & customer--driven business processesdriven business processes

**


CHALLENGES OF ENTERPRISE CHALLENGES OF ENTERPRISE

SYSTEMSSYSTEMS

•• Daunting ImplementationDaunting Implementation

•• High Up Front Costs & Future BenefitsHigh Up Front Costs & Future Benefits

•• InflexibilityInflexibility

•• Hard To Realize Strategic ValueHard To Realize Strategic Value

**



Extended EnterprisesExtended Enterprises

• Extended Enterprises:

Networks linking systems of multiple firms in an industry. Also called extended enterprises.

• Example:

INDUSTRIAL NETWORKSlink firms into industry-wide system– Vertical industrial networks:

Networks for integrating the operations of a firmwith its suppliers.

– Horizontal industrial networks:

Networks for linking firms across an entire industry including competitors.


c h a p t e r

22222222INFORMATION INFORMATION

SYSTEMS IN THESYSTEMS IN THE

ENTERPRISEENTERPRISE

information systems in the enterprise and business processes. figure 2.12 illustrates a...

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