2.

1
2006 by Prentice Hall
2 Chapter
Information
Systems in the
Enterprise
2.2
2006 by Prentice Hall
OBJECTIVES
Evaluate the role played by the major types of
systems in a business and their relationship to
each other

Describe the information systems supporting the
major business functions: sales and marketing,
manufacturing and production, finance and
accounting, and human resources

Management Information Systems
Chapter 2 Information Systems in the Enterprise
2.3
2006 by Prentice Hall
Analyze the relationship between organizations,
information systems, and business processes

Explain how enterprise applications promote
business process integration and improve
organizational performance

Assess the challenges posed by information
systems in the enterprise and management
solutions


Management Information Systems
Chapter 2 Information Systems in the Enterprise
OBJECTIVES (continued)
2.4
2006 by Prentice Hall
Challenge: monthly changes in fashions; Mango has
731 stores in 72 countries
Solutions. Inventory replenishment system tracks all
sales and matches stores with inventory.
Design teams meet weekly to adjust to trends.
Distribution system allocates bar-coded items to
specific stores based on store/product mix.
Reduces time to market, increases agility
Increases accuracy of decision making

Management Information Systems
Chapter 2 Information Systems in the Enterprise
Mango Case: Fast Fashion, Hot Systems
2.5
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Types of Information Systems
Figure 2-1
2.6
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Different Kinds of Systems
1. Operational-level systems: support operational managers,
keeping track of the elementary activities and
transactions

2. Management-level systems: serve the monitoring,
controlling, decision-making, and administrative activities

3. Strategic-level systems: help senior management tackle
and address strategic issues

Three main categories of information systems serve
different organizational levels:
2.7
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Major Types of Systems
Transaction Processing Systems (TPS)

Management Information Systems (MIS)

Decision-Support Systems (DSS)

Executive Support Systems (ESS)


2.8
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
The Four Major Types of Information Systems
Figure 2-2
2.9
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Transaction Processing Systems (TPS)
Basic business systems that serve the
operational level

A computerized system that performs and
records the daily routine transactions necessary
to the conduct of the business
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2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
A Symbolic Representation for a Payroll TPS
Figure 2-3
2.11
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Typical Applications of TPS
Figure 2-4
2.12
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Management Information Systems (MIS)
Management level

Inputs: High volume transaction level data

Processing: Simple models

Outputs: Summary reports

Users: Middle managers

Example: Annual budgeting
2.13
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Management Information Systems (MIS) (continued)

Figure 2-5
2.14
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Management Information Systems (MIS) (continued)

Figure 2-6
A sample MIS report
2.15
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Decision-Support Systems (DSS)
Management level

Inputs: Transaction level data

Processing: Interactive

Outputs: Decision analysis

Users: Professionals, staff

Example: Contract cost analysis
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2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Decision-Support Systems (DSS) (Continued)
Voyage-estimating decision-support system
Figure 2-7
2.17
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
EXECUTIVE SUPPORT SYSTEMS (ESS):

Inputs: Aggregate data

Processing: Interactive

Outputs: Projections

Users: Senior managers

Example: 5 year operating plan
2.18
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Model of a Typical Executive Support System
Figure 2-8
2.19
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued)

Top Level Management

Designed to the individual senior manager

Ties CEO to all levels

Very expensive to keep up

Extensive support staff
2.20
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Relationship of Systems to One Another
Interrelationships among systems
Figure 2-9
2.21
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Relationship of Systems to One Another
In contemporary digital firms, the different types of
systems are closely linked to one another. This is
the ideal. In traditional firms these systems tend to
be isolated from one another, and information does
not flow seamlessly from one end of the organization
to the other. Efficiency and business value tend to
suffer greatly in these traditional firms
2.22
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Sales and Marketing Systems
Major functions of systems:
Sales management, market research, promotion,
pricing, new products

Major application systems:
Sales order info system, market research system,
pricing system
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2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Sales and Marketing Systems



SYSTEM

DESCRIPTION

ORGANIZATIONAL
LEVEL







Order
processing

Enter, process, and track orders

Operational







Pricing analysis

Determine prices for products and
services

Management







Sales trend
forecasting

Prepare 5-year sales forecasts

Strategic

Table 2-2
2.24
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Manufacturing and Production Systems
Major functions of systems:
Scheduling, purchasing, shipping, receiving,
engineering, operations

Major application systems:
Materials resource planning systems, purchase
order control systems, engineering systems,
quality control systems
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2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE


SYSTEM

DESCRIPTION

ORGANIZATIONAL
LEVEL







Machine
control

Control the actions of machines and
equipment

Operational







Production
planning

Decide when and how many products
should be produced

Management







Facilities
location

Decide where to locate new production
facilities

Strategic

Manufacturing and Production Systems
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2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Overview of an Inventory System
Figure 2-10
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
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2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Financing and Accounting Systems
Major functions of systems:
Budgeting, general ledger, billing, cost
accounting

Major application systems:
General ledger, accounts receivable, accounts
payable, budgeting, funds management systems
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2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Financing & Accounting Systems (Continued)


SYSTEM

DESCRIPTION

ORGANIZATION-
AL LEVEL







Accounts
receivable

Tracks money owed the firm

Operational







Budgeting

Prepares short-term budgets

Management







Profit
planning

Plans long-term profits

Strategic

Table 2-4
2.29
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Human Resource Systems
Major functions of systems:
Personnel records, benefits, compensation, labor
relations, training

Major application systems:
Payroll, employee records, benefit systems,
career path systems, personnel training systems
2.30
2006 by Prentice Hall


Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Human Resource Systems (Continued)
SYSTEM

DESCRIPTION

ORGANIZATIONAL
LEVEL







Training and
development

Tracks employee training, skills,
and performance appraisals

Operational

Compensation
analysis

Monitors the range and distribution
of employee wages, salaries, and
benefits

Management

Human resources
planning

Plans the long-term labor force
needs of the organization


Strategic













Table 2-5
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2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Human Resource Systems (Continued) An Employee Recordkeeping System
Figure 2-11
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
2.32
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Business Processes and Information Systems
Business processes:
Manner in which work is organized, coordinated,
and focused to produce a valuable product or
service

Concrete work flows of material, information, and
knowledgesets of activities

Unique ways to coordinate work, information, and
knowledge

Ways in which management chooses to
coordinate work



INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
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2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Business Processes and Information Systems
(Continued)

Information systems help organizations
achieve great efficiencies by automating parts
of processes

IS also contributes to completely rethinking
processes.

Business processes typically span several
different functional areas.

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.34
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Examples of Business Processes
Manufacturing and production:
Assembling product, checking quality, producing
bills of materials

Sales and marketing:
Identifying customers, creating customer
awareness, selling
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

Table 2.6
2.35
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Finance & accounting:
Paying creditors, creating financial statements,
managing cash accounts

Human resources:
Hiring employees, evaluating performance,
enrolling employees in benefits plans
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Examples of Business Processes (Continued)
Table 2.6 continued
2.36
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Business Processes and Information Systems
Cross-Functional Business Processes:

Transcend boundary between sales, marketing,
manufacturing, and research and development

Group employees from different functional
specialties to a complete piece of work

Example: Order Fulfillment Process

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.37
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
The Order Fulfillment Process
Figure 2-12
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.38
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Systems for Enterprise-Wide Process Integration
Enterprise applications:
Designed to support organization-wide process
coordination and integration

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.39
2006 by Prentice Hall
Consist of :
Enterprise systems
Supply chain management systems
Customer relationship management systems
Knowledge management systems

Management Information Systems
Chapter 2 Information Systems in the Enterprise
Systems for Enterprise-Wide Process Integration
(Continued)
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.40
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Enterprise Systems
Enterprise systems, also known as enterprise
resource planning (ERP) systems, provide a
single information system for organization-wide
coordination and integration of key business
processes.

Information that was previously fragmented in
different systems can seamlessly flow throughout
the firm so that it can be shared by business
processes in manufacturing, accounting, human
resources, and other areas.
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.41
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Enterprise Application Architecture
Figure 2-13
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.42
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Traditional Silo View of Information Systems
Within the business:
There are functions, each having its uses of
information systems

Outside the organizations boundaries:
There are customers and vendors

Functions tend to work in isolation
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

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2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Traditional View of Systems
Figure 2-14
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.44
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Enterprise Systems
Figure 2-15
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.45
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Benefits of Enterprise Systems
Help to unify the firms structure and
organization: One organization

Management: Firm wide knowledge-based
management processes

Technology: Unified platform

Business: More efficient operations & customer-
driven business processes
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

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Management Information Systems
Chapter 2 Information Systems in the Enterprise
Challenges of Enterprise Systems
Difficult to build: Require fundamental changes in
the way the business operates

Technology: Require complex pieces of software
and large investments of time, money, and
expertise

Centralized organizational coordination and
decision making: Not the best way for the firms to
operate
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

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Management Information Systems
Chapter 2 Information Systems in the Enterprise
Supply Chain Management (SCM)
Close linkage and coordination of activities
involved in buying, making, and moving a
product

Integrates supplier, manufacturer, distributor, and
customer logistics time

Reduces time, redundant effort, and inventory
costs

Network of organizations and business
processes
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

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2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Helps in procurement of materials,
transformation of raw materials into intermediate
and finished products

Helps in distribution of the finished products to
customers

Includes reverse logistics - returned items flow in
the reverse direction from the buyer back to the
seller
Supply Chain Management (SCM)
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.49
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Haworths Supply Chain Management Systems
Figure 2-16
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.50
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Information from Supply Chain Management
Systems helps firms:
Decide when and what to produce, store,
and move

Rapidly communicate orders

Track the status of orders

Check inventory availability and monitor
inventory levels

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.51
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Information from Supply Chain Management
Systems helps firms: (Continued)
Reduce inventory, transportation, and
warehousing costs

Track shipments

Plan production based on actual customer
demand

Rapidly communicate changes in product design
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.52
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Customer Relationship Management (CRM)

Manages all ways used by firms to deal with
existing and potential new customers

Business and technology discipline

Uses information system to coordinate entire
business processes of a firm

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.53
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Management Information Systems
Chapter 2 Information Systems in the Enterprise
Customer Relationship Management (CRM)
(Continued)
Provides end- to- end customer care

Provides a unified view of customer across the
company

Consolidates customer data from multiple
sources and provides analytical tools for
answering questions
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.54
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Customer Relationship Management (CRM)
Figure 2-17
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.55
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise
Knowledge Management Systems
Collects relevant knowledge and make it available
wherever and whenever it is needed
Support business processes and management
decisions
Also link the firm to external sources of
knowledge
Support processes for acquiring, storing,
distributing, and applying knowledge
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

2.56
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Management Information Systems
Chapter 2 Information Systems in the Enterprise

There are extraordinary opportunities to use
information systems to achieve business value,
and increase profitability
MANAGEMENT OPPORTUNITIES, CHALLENGES, AND
SOLUTIONS
Management Opportunities:
2.57
2006 by Prentice Hall
Management Information Systems
Chapter 2 Information Systems in the Enterprise

Integration and the whole firm view: Given the
different interests and perspectives within a firm,
it is difficult to achieve consensus about the need
for the "whole firm" viewpoint.

Management and employee training: Training a
large number of employees on many systems in a
large organization involves commensurately large
investments.

MANAGEMENT OPPORTUNITIES, CHALLENGES, AND
SOLUTIONS
Management Challenges:
2.58
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Management Information Systems
Chapter 2 Information Systems in the Enterprise
Accounting for the cost of systems and managing
demands for systems: Given the large number of
different types of systems in a firm, and the large
number of people involved with using them, it is
a complex task to understand which systems are
truly necessary and productive with high returns
on investment


MANAGEMENT OPPORTUNITIES, CHALLENGES, AND
SOLUTIONS
Management Challenges: (Continued)
2.59
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Management Information Systems
Chapter 2 Information Systems in the Enterprise


MANAGEMENT OPPORTUNITIES, CHALLENGES, AND
SOLUTIONS
Solution Guidelines:

Inventory the firms information systems: Develop
a list of firm-wide information requirements to give
a 360-degree view of the most important
information needs of the firm.

Employee and management education: Ensure that
you understand how much training is required.

Account for the costs and benefits: Develop an
accounting system for information services firm-
wide.