Lecture 3 – Internal IS and Enterprise Systems Information Systems and Organisations

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Scope and Coverage

This topic will cover:

• Information systems internal to the organisation

• Enterprise wide systems

• Co-ordination roles of information systems

Information Systems and Organisations
Topic 3:
Internal IS and Enterprise Systems © NCC Education Limited

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Learning Objectives Contents

By the end of this topic students will be able to:

• Understand how value is added within an • Value chain and value system
organisation and how different types of IS • Internal applications and IS
contribute • Enterprise systems (ES) and Enterprise
• Understand the relevance of integrated enterprise Applications Integration (EAI)
information systems in modern organisations
• Relate internal and enterprise systems to different • Emphasis – Technology and Organisations
perspectives and approaches to IS implementation

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Functions and Departments Bureaucracy

“In a bureaucratic organizational structure, authority

• Specialisation leads to Departmentalisation
is generally centered at the top, and information
generally flows from the top down. This usually
• But why specialise? encourages a company culture focused on rules and
– Bureaucracy (an efficient way to organise and standards, where operational processes are rigidly
manage) controlled with best-practices methodologies and
– Value Creation (quality/consistency through close supervision.” (Ingram, 2016)
focus and standardisation of procedures For more detail, refer to ‘Topic 3 – Advantages
– Automating (for efficiency and consistency) disadvantages of Bureaucratic Organisations’ and
‘Topic 3 – Management Theory of Max Weber’

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Lecture 3 – Internal IS and Enterprise Systems Information Systems and Organisations

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Value Creation Value Chain (or Value System)

• Two types of business activities: Porter Millar model Difference between financial
Resource used and Income
• Primary Activities: (profit or transfer to reserves)

Activities
Secondary
Firm Infrastructure
– deliver the main products/services (marketing,
Human Resource Management
advertising, sales, logistics, etc.) Technology Development
– this is where the Value Creation occurs Procurement
• Secondary Activities (purchasing, HR OPERATIONS
Service

management, infrastructure, etc.) supplies manuf shipping

Marketing
and Sales
– support Primary Activities
– often good candidates for outsourcing Primary Activities

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Value Creation Management Applications

• Refers to integrating /managing resources

• Resources being: information, materials, labour, Monthly
Sales
Weekly/Monthly
Tactical
facilities, logistics, finance, procurement, etc
• Requires:
Credit
Control
Knowledge Daily/Hourly
– Supply chain planning/scheduling Operational
Financial
transactions

– Resource integration/management/optimisation Departments Finance HR Operations Sales ... e.t.c.

– Information integration & Cycle-time Customer Financial Personnel Stock Sales

Accounts Accounts
responsiveness Records Control Records

Source: Plengart, 2016 Sales Purchase

Ledger Ledger MRP Forecasting

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Applications - Linkages Linkage Problems

Financial Staff Changes Personnel
Accounts Records
Some linkages between • Accurate capture of transactions
Departmental Applications
Purchase Values
Purchase
Stock • Timing of work/information flows
Purchase Details Control
Ledger
• Lack of standards/protocols
Material Requisitions
Sales • Consistency of data and data processes
Values MRP Forecasts
• Tendency of ‘systems’ to multiply
•
Sales Sales
Ledger
Sales Details
Records Transcription
Outstanding
Balances • Human Error and fear of technology
Customer
Accounts
Customer Activity Forecasting • ... etc

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Lecture 3 – Internal IS and Enterprise Systems Information Systems and Organisations

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Linkage Required to Record and

Enterprise Systems
Coordinate Departmental Activity

• Data stored and entered ONCE

• Examples… • Linkages AUTOMATICALLY accomplished
• Efficient use of staff time (less staff to make manual
• Sales with Manufacturing and Stock Control errors such as transcription errors)
• Personnel with Finance • Less duplication of same processes
• Purchasing with Sales and Stock Control • Enterprise RELIES upon accuracy and timeliness
of information
• Supports efficient and effective business processes
and management

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ES Addresses these ES Depends Upon These…

• Accurate capture of transactions

• Better timing of process flows • Accurate capture of transactions
• Better and consistent definitions
• Consistency of data and less duplication • Established definitions/controls
• Tendency of ‘systems’ to multiply - can be a
hindrance • Effective integration of working practices and
• Transcription processing is more automatic processes within and between departments
• Human errors are eliminated

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MIS in Essence Problems

Transaction
Costs • Transaction data may be missing, inaccurate or
Transaction Recording Performance Monitoring inconsistent between departments and operational
units
• Difficulties with integration to produce measures
Customer Performance • Time delays
Information Margins &
Profitability • Definition of requirements
• Handling ad-hoc requests (e.g. to determine the
Enterprise Analysis
response to a change in business environment)
• ES aim to address all of these

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Lecture 3 – Internal IS and Enterprise Systems Information Systems and Organisations

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Coordinating the Value System Enterprise Systems - Metaphors

2. Interface between
primary and support
activities
• This lecture has taken a Mechanist/Structuralist
Information to assist perspective on organisations and ES
primary activities
Centralisaion of info.
• Internal and ES implementation is focused on
Is required optimising the performance and efficient
1. Interface and critical information flows between primary activities coordination of processes
Removing bottlenecks and delays
Ensuring accuracy /consistency of info. • In many organisations, ES implementation could
also benefit from different approaches taking into
3. Interface and information flows with customers and suppliers
account Organicist and Contextualist perspectives
Can be bottlenecks and delays
Accuracy/consistency is essential

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References

• Ingram, D. (2016) What Are the Advantages and Disadvantages of a Bureaucratic

Organization Structure? Available from
http://smallbusiness.chron.com/advantages-disadvantages-bureaucratic-
Topic 3 - Internal IS and Enterprise
organization-structure-2761.html (April, 2016) Systems
• Terry, L. (2011). The Management Theory of Max Weber. Available from
http://www.business.com/management/management-theory-of-max-weber/ (April,
2016) Any Questions?
• Plenhart, G (2016). Value Chain Management. Available from
http://www.referenceforbusiness.com/management/Tr-Z/Value-Chain-
Management.html (April, 2016)

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