INFORMATION

SYSTEMS IN THE
ENTERPRISE
 OBJECTIVES

• What are the key system applications in a

business? What role do they play?

• How do information systems support the major

business functions?

• Why should managers pay attention to business

processes?
 OBJECTIVES

• What are the business benefits of using

collaborative commerce, private industrial
networks and enterprise systems?

• What types of information systems are used by

companies that operate internationally?
 MANAGEMENT CHALLENGES

1. Integration: Different systems serve variety of

functions, connecting organizational levels
difficult, costly

2. Enlarging scope of management thinking:

Huge system investments, long development
time must be guided by common objectives
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Types of Information Systems

Figure 2-1
 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Major Types of Systems

• Executive Support Systems (ESS)

• Decision Support Systems (DSS)
• Management Information Systems (MIS)
• Knowledge Work Systems (KWS)
• Office Automation Systems (OAS)
• Transaction Processing Systems (TPS)
TYPES OF INFORMATION SYSTEMS

Figure 2-2
 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

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
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Payroll TPS

Figure 2-3
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Types of TPS Systems

Figure 2-4
 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Knowledge Work Systems (KWS):

Knowledge level
• Inputs: Design specs
• Processing: Modeling
• Outputs: Designs, graphics
• Users: Technical staff

Example: Engineering work station

 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Management Information System (MIS):

Management level
• Inputs: High volume data
• Processing: Simple models
• Outputs: Summary reports
• Users: Middle managers

Example: Annual budgeting

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Management Information System (MIS)

Figure 2-5
 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Management Information System (MIS)

• Structured and semi-structured decisions

• Report control oriented
• Past and present data
• Internal orientation
• Lengthy design process
 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Decision Support System (DSS):

Management level
• Inputs: Low volume data
• Processing: Interactive
• Outputs: Decision analysis
• Users: Professionals, staff

Example: Contract cost analysis

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Decision Support System (DSS)

Figure 2-7
 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Executive Support System (ESS):

Strategic level
• Inputs: Aggregate data
• Processing: Interactive
• Outputs: Projections
• Users: Senior managers

Example: 5-year operating plan

 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Executive support system (ESS)

• Top level management

• Designed to the individual

• Ties CEO to all levels

• Very expensive to keep up

• Extensive support staff

INTERRELATIONSHIPS AMONG SYSTEMS

Figure 2-9
 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
 SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Sales and Marketing Systems

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

 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
 SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Manufacturing and Production Systems

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

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

SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Overview of Inventory Systems

Figure 2-10
 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
 SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Financing and Accounting Systems

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

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

 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
 SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Human Resource Systems

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

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

SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Human Resource Systems

Figure 2-11
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

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

knowledge—sets of activities
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Business Processes and Information Systems

• Unique ways to coordinate work,

information, and knowledge

• Ways in which management chooses

to coordinate work
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Business Processes and Information Systems

Information systems help organizations

• Achieve great efficiencies by automating parts of

processes

• Rethink and streamline processes

 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

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

Examples of Business Processes

• Finance and 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

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

The Order Fulfillment Process

Figure 2-12
Customer Relationship Management (CRM)
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Supply Chain Management (SCM)

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
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Supply Chain Management (SCM)

Supply Chain

• Network of organizations and business processes

• Helps in procurement of materials,

transformation of raw materials into intermediate
and finished products
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Supply Chain Management (SCM)

• 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
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Supply Chain Management

Figure 2-14
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

How Information Systems Facilitate Supply Chain Management

• Decide when, what to produce, store, move

• Rapidly communicate orders
• Communicate orders, track order status
• Check inventory availability, monitor levels
• Track shipments
• Plan production based on actual demand
• Rapidly communicate product design change
• Provide product specifications
• Share information about defect rates, returns
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Supply Chain Management (SCM)

• Supply chain planning system: Enables firm to

generate forecasts for a product and to develop
sourcing and a manufacturing plan for the product

• Supply chain execution system: Manages flow of

products through distribution centers and
warehouses
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Collaborative Commerce

• Uses digital technologies to enable multiple

organizations to collaboratively design, develop,
build, move, and manage products

• Increases efficiencies in reducing product design

life cycles, minimizing excess inventory,
forecasting demand, and keeping partners and
customers informed
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Collaborative Commerce

Figure 2-15
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Industrial Networks

Private Industrial Networks

• Web-enabled networks

• Link systems of multiple firms in an industry

• Coordinate transorganizational business

processes
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Traditional View of the Systems

• Within the business: There are functions, each

having its uses of information systems

• Outside the organization’s boundaries: There

are customers and vendors
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Traditional View of the Systems

Figure 2-16
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Enterprise Systems

Figure 2-17
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Benefits of Enterprise Systems

• Firm structure and organization: One

organization

• Management: Firm-wide knowledge-based

management processes

• Technology: Unified platform

• Business: More efficient operations and customer-

driven business processes
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

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
 INTERNATIONAL INFORMATION SYSTEMS

Forms of Global Business Organization

Four main ways of organizing businesses

internationally:
• Domestic Exporter: Heavy centralization of
corporate activities in the home country of origin

• Multinational: Financial management and control

out of a central home base, production, sales and
marketing operations decentralized
 INTERNATIONAL INFORMATION SYSTEMS

Forms of Global Business Organization

• Franchiser: Product created, designed, financed, and

produced in the home country, relies on foreign
personnel for production, marketing and human
resources

• Transnational: No national headquarters; value-

added activities managed from a global perspective,
no reference to national borders, sources of supply
and demand and local competitive advantage
optimized
 INTERNATIONAL INFORMATION SYSTEMS

Global System Configuration

Four types of system configuration:

• Centralized Systems

• Duplicated Systems

• Decentralized Systems

• Networked Systems
INTERNATIONAL INFORMATION SYSYTEMS

Global System Configuration

Figure 2-18