Chapter 2

INFORMATION
SYSTEMS IN THE
ENTERPRISE
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Types of Information Systems

Figure 2-1
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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)
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

TYPES OF INFORMATION SYSTEMS

Figure 2-2
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Payroll TPS

Figure 2-3
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Types of TPS Systems

Figure 2-4
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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

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Chapter 2 Information Systems in the Enterprise

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

Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Management Information System (MIS)

Figure 2-5
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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

 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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

Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Decision Support System (DSS)

Figure 2-6
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Decision Support System (DSS)

Figure 2-7
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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

Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Executive Support System (ESS)

Figure 2-8
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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

Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

INTERRELATIONSHIPS AMONG SYSTEMS

Figure 2-9
 Essentials of 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, TRACK ORDERS OPERATIONAL

MARKET ANALYSIS IDENTIFY CUSTOMERS & MARKETS KNOWLEDGE

PRICING ANALYSIS DETERMINE PRICES MANAGEMENT

SALES TRENDS PREPARE 5-YEAR FORECASTS STRATEGIC

 Essentials of 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
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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

Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Overview of Inventory Systems

Figure 2-10
 Essentials of 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
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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

 Essentials of 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
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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

Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Human Resource Systems

Figure 2-11
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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
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Chapter 2 Information Systems in the Enterprise

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

 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Examples of Business Processes

Assembling product,
 Manufacturing and production:
checking quality, producing bills of
materials

Identifying customers,
 Sales and marketing:
creating customer awareness, selling
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Examples of Business Processes

Paying creditors,
 Finance and accounting:
creating financial statements, managing
cash accounts

Hiring employees, evaluating

 Human Resources:
performance, enrolling employees in
benefits plans
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

The Order Fulfillment Process

Figure 2-12
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Customer Relationship Management (CRM)

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
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Customer Relationship Management (CRM)

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
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Customer Relationship Management (CRM)

Figure 2-13
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Supply Chain Management

Figure 2-14
 Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

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
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Chapter 2 Information Systems in the Enterprise

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Supply Chain Management (SCM)

Enables firm to
 Supply chain planning system:
generate forecasts for a product and to
develop sourcing and a manufacturing
plan for the product

Manages flow of
 Supply chain execution system:
products through distribution centers and
warehouses
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Collaborative Commerce

Figure 2-15
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Chapter 2 Information Systems in the Enterprise

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
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Traditional View of the Systems

Figure 2-16
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Enterprise Systems

Figure 2-17
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Chapter 2 Information Systems in the Enterprise

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Benefits of Enterprise Systems

 Firm structure and organization: One organization

Firm-wide knowledge-based
 Management:
management processes

 Technology: Unified platform

More efficient operations and

 Business:
customer-driven business processes
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Chapter 2 Information Systems in the Enterprise

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Challenges of Enterprise Systems

Require fundamental changes

 Difficult to build:
in the way the business operates

Require complex pieces of

 Technology:
software and large investments of time,
money, and expertise

 Centralized organizational coordination and decision making:

Not the best way for the firms to operate
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Chapter 2 Information Systems in the Enterprise

INTERNATIONAL INFORMATION SYSTEMS

Forms of Global Business Organization

Four main ways of organizing businesses

internationally:

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

Financial management and control

 Multinational:
out of a central home base, production, sales
and marketing operations decentralized
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Chapter 2 Information Systems in the Enterprise

INTERNATIONAL INFORMATION SYSTEMS

Forms of Global Business Organization

Product created, designed, financed,

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

No national headquarters; value-

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

Global System Configuration

Four types of system configuration:

Centralized Systems

Duplicated Systems

Decentralized Systems

Networked Systems
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise

INTERNATIONAL INFORMATION SYSYTEMS

Global System Configuration

Figure 2-18