Essentials of Management Information Systems, 6e

Chapter 2 Information Systems in the Enterprise

Information Systems in the Enterprise

2.1 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

Different Kinds of Systems

• Operational-level systems: Information systems that
monitor the elementary activities and transactions of the
organization.
– Available, current, and accurate.
• Management-level systems: Information systems that
support the monitoring, decision making, and
administrative activities of middle managers.
– Periodic review, and what-if analysis.
• Strategic-level systems: Information systems that support
the long-range planning activities of senior management.
– Matching external environment with internal capability.

2.2 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

Types of information systems

Figure 2-1
2.3 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

Four Major Types of Systems

1. Transaction Processing Systems (TPS)

2. Management Information Systems (MIS)

3. Decision-Support Systems (DSS)

4. Executive-Support Systems (ESS)

2.4 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

The four major types of information systems

Figure 2-2
2.5 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

Four Major Types of Systems

Transaction Processing Systems (TPS)

• Basic business systems that serve the organization’s

operational level
• Input: Transactions, events
• Processing: Sorting, listing, merging, updating
• Output: Detailed reports, lists, summaries
• Users: Operations personnel, supervisors

2.6 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

A symbolic representation for a payroll TPS

Figure 2-3
2.7 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

Four Major Types of Systems

Management Information Systems (MIS)

• Serve management level; provide reports and access to

company data
• Input: Summary transaction data, high-volume data,
simple models
• Processing: Routine reports, simple models, low-level
analysis
• Output: Summary and exception reports
• Users: Middle managers

2.8 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

How management information systems obtain their data

from the organization’s TPS

Figure 2-5
2.9 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

A sample report that might be produced by the MIS in Figure 2-5

Figure 2-6
2.10 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

Four Major Types of Systems

Decision-Support Systems (DSS)

• Serve management level with data analysis for making

decisions
• Input: Low-volume data or massive databases, analytic
models, and data analysis tools
• Processing: Interactive, simulations, analysis
• Output: Special reports, decision analyses, responses to
queries
• Users: Professionals, staff managers

2.11 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

Voyage-estimating decision-support system

Figure 2-7
2.12 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

Four Major Types of Systems

Executive Support Systems (ESS)

• Provide communications and computing environment

that serves the organization’s strategic level
• Input: External and internal aggregate data
• Processing: Graphics, simulations, interactive
• Output: Projections, responses to queries
• Users: Senior Managers

2.13 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

Model of a typical executive support system

Figure 2-8
2.14 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Major Types of Systems in Organizations

Interrelationships among systems

Figure 2-9
2.15 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Systems from a Functional Perspective

Major Business Functions

1. Sales and Marketing Systems

2. Manufacturing and Production Systems
3. Finance and Accounting Systems
4. Human Resource Systems

2.16 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Systems from a Functional Perspective

Sales and Marketing Systems

• Help identify customers

• Develop products and services
• Promote products and services
• Sell products and services
• Provide ongoing customer support

2.17 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Systems from a Functional Perspective

Table 2-2: Examples of Sales and Marketing Information Systems

System Description Organizational

Level
Order processing Enter, process, and Operational
track orders

Pricing analysis Determine prices for Management

products and
services
Sales trend Prepare 5-year sales Strategic
forecasting forecasts

2.18 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Systems from a Functional Perspective

Manufacturing and Production Systems

• Planning, development, production of products

and services
• Planning, development, maintenance of
production facilities
• Acquisition, storage, availability of materials
• Scheduling materials, facilities, labor
• Controlling the flow of production

2.19 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Systems from a Functional Perspective

Table 2-3: Examples of Manufacturing and Production Information Systems

System Description Organizational

Level
Machine control Control the actions Operational
of machines and
equipment
Production Decide when and Management
planning how many products
should be produced
Facilities Decide where to Strategic
location locate new facilities

2.20 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Systems from a Functional Perspective

Table 2-4: Examples of Finance and Accounting Information Systems

System Description Organizational

Level
Accounts Track money owed Operational
receivable the firm

Budgeting Prepare short-term Management

budgets

Profit planning Plan long-term Strategic

profits

2.21 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Systems from a Functional Perspective

Table 2-5: Examples of Human Resources Information Systems

System Description Organizational

Level
Training and Track employee Operational
development training, skills, and
performance
Compensation Monitor wages, Management
analysis salaries, benefits

Human Plan long-term labor Strategic

resources force needs
planning
2.22 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Systems from a Functional Perspective

Window on Management

Employees Serve Themselves Online

• What are the management benefits of employee
self-service systems for human resources and
benefits administration?
• How do these systems provide value for
businesses?
• What management, organization, and technology
issues should be addressed when installing self-
service human resources and benefits systems?

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 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Enterprise application architecture

Figure 2-13
2.24 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Traditional view of systems

Figure 2-14
2.25 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Enterprise Systems

• Enterprise resource planning (ERP)

• Provides single information system for
organization-wide coordination and integration
of key business processes
• Models and automates many business processes

2.26 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Enterprise systems

Figure 2-15
2.27 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Supply Chain Management and Collaborative Commerce

• Supply Chain Management Systems (SCM): Automate

flow of information between firm and suppliers to
optimize production and delivery

• Supply Chain Management: Close linkage of activities

involved in buying, making, moving a product

• Supply Chain: Network of organizations and business

processes for production and distribution of products

2.28 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

A supply chain

Figure 2-16
2.29 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Supply Chain Management and Collaborative Commerce

Information Systems Can Help Supply Chain Participants:

• Decide when and what to produce, store, and move
• Rapidly communicate orders
• Track status of orders
• Check and monitor inventory
• Reduce inventory, transportation, warehousing costs
• Track shipments
• Plan production based on actual customer demand
• Rapidly communicate changes in product design

2.30 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Supply Chain Management and Collaborative Commerce

Collaborative Commerce
• Uses digital technologies to enable multiple
organizations to collaboratively design, develop,
build, move, manage, and market products

• Increases efficiencies in reducing product design life

cycles, minimizing excess inventory, forecasting
demand, and keeping partners and customers
informed

2.31 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Collaborative Commerce’s support to Supply Chain Management

• Collaborative planning, forecasting,

and replenishment (CPFR)
Collaboration between partners to formulate
demand forecasts, develop production plans,
coordinate shipping, warehousing, stocking
• Private industrial networks
Web-enabled networks for coordinating
transorganizational business processes

2.32 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Collaborative commerce

Figure 2-17
2.33 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Window on Technology

Diageo plc Collaborates in Real-Time

• What are the business benefits of using CPFR?

• How does Diageo’s system for CPFR provide

value for the company and for its suppliers and
distributors?

2.34 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Customer Relationship Management (CRM)

• Manages ways used to deal with existing and

potential customers

• Both a business and technology discipline

• Uses information systems to coordinate all

customer interaction processes in sales,
marketing, and service.

2.35 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Customer Relationship Management (CRM)

Customer Relationship Management Systems

• Track all customer interactions

• Analyze data to optimize revenue,
profitability, customer satisfaction,
customer retention

2.36 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Customer Relationship Management (CRM)

Figure 2-18
2.37 © 2005 by Prentice Hall
 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Knowledge Management Systems in the Enterprise

Knowledge Management Systems (KMS)

• Collect relevant knowledge and
experience in firm to support business
processes and management decisions
• Manage and distribute documents and
other digital knowledge objects

2.38 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

Enterprise Applications

Knowledge Management Systems in the Enterprise

Role of Knowledge Management Systems

• Acquire knowledge
• Store knowledge
• Distribute knowledge
• Apply knowledge

2.39 © 2005 by Prentice Hall

 Essentials of Management Information Systems, 6e
Chapter 2 Information Systems in the Enterprise

International Information Systems

Forms of Global Business Organization

Four Main Ways of Organizing

Businesses Internationally
• Domestic exporter
• Multinational
• Franchiser
• Transnational

2.40 © 2005 by Prentice Hall