Ch2 unit 3 & 4
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The document discusses different types of information systems used in organizations. It describes operational systems like transaction processing systems (TPS) that handle daily transactions, knowledge systems like office automation systems (OAS) that support knowledge workers, management systems such as management information systems (MIS) that provide routine reports, and strategic systems like executive support systems (ESS) that aid long-term planning. Different systems serve the information needs of various organizational levels from operations to senior management.
Ch2 unit 3 & 4
- 1. Chapter 2: Information Systems in the Enterprise 1
- 2. Reading Notes for Chapter 2 in the textbook The chapter introduces six types of information systems. Figure 2.1 and table 2.1 give an overall picture of organizations and how different types of information systems serve them. Figure 2.2 depicts different types of information systems and how they relate to one another (Figure 2.9 as well). Section 2.2 examines information systems from a functional view of an organization: Sales and marketing systems, manufacturing and production systems, finance and accounting systems, and human resources systems. Read this section carefully to develop an understanding of how information systems serve different functions of an organization. 2
- 3. Reading Notes for Chapter 2 in the textbook - Continued Read section 2.3 carefully to understand integration of functions and business processes. Figure 2.12 illustrates a cross-functional business process. Pay also attention to customer relationship management and enterprise systems that are current trends in business. Contrast Figure 2.15 and 2.16. Extended enterprises and industrial networks are also recent trends and would not be possible without the support of information technology. 3
- 4. KINDS OF INFORMATION SYSTEMS Organizational Hierarchy Organizational Levels Information Systems 4
- 5. KINDS OF INFORMATION SYSTEMS KIND OF SYSTEM GROUPS SERVED STRATEGIC LEVEL SENIOR MANAGERS MANAGEMENT LEVEL MIDDLE MANAGERS KNOWLEDGE LEVEL KNOWLEDGE & DATA WORKERS OPERATIONAL OPERATIONAL LEVEL MANAGERS SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN MARKETING & ENGINEERING RESOURCES 5
- 6. Four General Kinds of IS Operational-level systems support operational managers by monitoring the day-to-day’s elementary activities and transactions of the organization. e.g. TPS. Knowledge-level systems support knowledge and data workers in designing products, distributing information, and coping with paperwork in an organization. e.g. KWS, OAS Management-level systems support the monitoring, controlling, decision- making, and administrative activities of middle managers. e.g. MIS, DSS Strategic-level systems support long-range planning activities of senior management. e.g. ESS 6
- 7. A Framework for IS (with respect to support provided) • Executive Support Systems (ESS) • Management Information Systems (MIS) • Decision Support Systems (DSS) • Knowledge Work Systems (KWS) • Office Automation Systems (OAS) • Transaction Processing Systems (TPS) 7
- 8. Transaction Processing Systems (TPS) Computerized system that performs and records the daily routine transactions necessary to conduct the business; these systems serve the operational level of the organization • TYPE: Operational-level • INPUTS: transactions, events • PROCESSING: updating • OUTPUTS: detailed reports • USERS: operations personnel, supervisors • DECISION-MAKING: highly structured EXAMPLE: payroll, accounts payable 8
- 9. A Symbolic Representation for a payroll TPS Em ploye e data (variou s de partm e n ts ) To ge n e ral le dge r: wage s an d s alarie s Man age m e n t P ayr o l l Sys te m R e ports Gove rn m e n t docu m e n ts P ayr o l l m as te r Em ploye e ch e ck s fi l e O n -lin e qu e rie s 9
- 10. Typical Applications of TPS TYPE OF TPS SYSTEM Sales/ Manufacturing! Finance/ Human Other types marketing production accounting resources (e.g., university) systems systems systems systems Major functions Sales management Scheduling Budgeting Personnel recard Admissions of system Market research Purchasing General ledger Benefits Grade records Promotion Shipping/receiving Billing Cornpensation Course records Pricing Engineering Cost accounting Labor relations Alumni New products Operations Training Major Sales order Materials resource General ledger Payroll Registration system application information system planning systems systems Market research Purchase order Accounts Employee records Student transcript system control systems receivable/payable system Pricing system Engineering Budgeting Benefit systems Curriculum class systems control systems Quality control Funds managementCareer path Alumni benefactor systems systems systems system 10
- 11. Office Automation Systems (OAS) Computer system, such as word processing, electronic mail system, and scheduling system, that is designed to increase the productivity of data workers in the office. • TYPE: Knowledge-level • INPUTS: documents, schedules • PROCESSING: document management, scheduling, communication • OUTPUTS: documents; schedules • USERS: clerical workers EXAMPLE: document imaging system 11
- 12. Knowledge Work Systems (KWS) Information system that aids knowledge workers in the creation and integration of new knowledge in the organization. •TYPE: Knowledge-level • INPUTS: design specifications • PROCESSING: modelling • OUTPUTS: designs, graphics • USERS: technical staff; professionals EXAMPLE: Engineering workstations 12
- 13. Decision Support Systems (DSS) Information system at the management level of an organization that combines data and sophisticated analytical models or data analysis tools to support semi-structured and unstructured decision making. •TYPE: Management-level • INPUTS: low volume data • PROCESSING: simulations, analysis • OUTPUTS: decision analysis • USERS: professionals, staff managers • DECISION-MAKING: semi-structured EXAMPLE: sales region analysis 13
- 14. Characteristics of Decision-Support Systems 1. DSS offer users flexibility, adaptability, and a quick response. 2. DSS operate with little or no assistance from professional programmers. 3. DSS provide support for decisions and problems whose solutions cannot be specified in advance. 4. DSS use sophisticated data analysis and modelling tools. 14
- 15. Management Information Systems (MIS) Information system at the management level of an organization that serves the functions of planning, controlling, and decision making by providing routine summary and exception reports. •TYPE: Management-level •INPUTS: high volume data •PROCESSING: simple models •OUTPUTS: summary reports •USERS: middle managers •DECISION-MAKING: structured to semi-structured EXAMPLE: annual budgeting 15
- 16. Characteristics of Management information Systems 1. MIS support structured decisions at the operational and management control levels. However, they are also useful for planning purposes of senior management staff. 2. MIS are generally reporting and control oriented. They are designed to report on existing operations and therefore to help provide day-to-day control of operations. 3. MIS rely an existing corporate data-and data flows. 4. MIS have little analytical capability. 5. MIS generally aid in decision making using past and present data. 6. MIS are relatively inflexible. 7. MIS have an internal rather than an external 16
- 17. Executive Support Systems (ESS) Information system at the strategic level of an organization that address unstructured decision making through advanced graphics and communications. TYPE: Strategic level • INPUTS: aggregate data; internal and external • PROCESSING: interactive • OUTPUTS: projections • USERS: senior managers • DECISION-MAKING: highly unstructured EXAMPLE: 5 year operating plan 17
- 18. Model of a Typical Executive Support System E SS w o r k s t at i o n Me n u s Graph ics C om m u n ication s Local proce s s in g E SS In t e r n al D at a E xt e r n al D at a E SS w o r k s t at i o n TP S /M IS D at a D o w J o ne s w o r k s t at i o n F i n an c i al D at a G al l u p P o l l O ffi c e S ys t e m s S t an d ar d & M o de l i ng / P o o r 's Me n u s an al ys i s Me n u s Graph ics Graph ics C om m u n ication s C om m u n ication s Local proce s s in g Local proce s s in g 18
- 19. Major Types of Information Systems T YPE S O F SYST E M S S t ra t e g ic L e v e l S y s t e m s E SS 5 -ye ar 5 -ye ar 5 -ye ar P ro fit M anpo w e r o p e ra t in g budg e t s a le s t re n d p la n n in g p la n n in g p la n fo re c a s t in g fo re c a s t in g M an ag e m e n t-L e v e l S ys te m s S a le s I n v e n t o ry A nnual C a p it a l R e lo c a t io n M IS m anag e m e nt C o n t ro l b u d g e t in g I n v e s t m e n t a n a ly s is a n a ly s is P ric in g /p ro fit a b ilit y C o n t ra c t c o s t D SS S a le s re g io n P ro d u c t io n Cost a n a ly s is a n a ly s is a n a ly s is S c h e d u lin g a n a ly s is K n o w le d g e - L e v e l S y s t e m s KWS E n g in e e rin g G ra p h ic s M a n a g e ria l w o rk s t a t io n s w o rk s t a t io n s w o rk s t a t io n s OAS W o rd D o cum e nt E le c t ro n ic p ro c e s s in g I m a g in g C a le n d a rs O p e ra t io n a l L e v e l S y s t e m s M a c h in e c o n t ro l S e c u rit ie s P a y ro ll C o m p e n s a t io n TPS t ra d in g O rd e r T ra c k in g P la n t s c h e d u lin g A c c o u n t s p a y a b le T ra in in g & d e v e lo p m e n t O rd e r p ro c e s s in g M a t e ria l m o v e m e n t C a s h A c c o u n t s re c e iv a b le E m p lo y e e re c o rd k e e p in g c o n t ro l m anag e m e nt S a le s a n d m a rk e t in g M a n u fa c t u rin g F in a n c e A c c o u n t in g H um an R e s o u rc e s 19
- 20. Relationship between different IS ESS MIS DSS KWS/ TPS OAS TPS is a major producer of information for other systems 20
- 21. Classification of IS by Organizational Structure Departmental Information Systems Enterprise Information System Inter-organizational Systems NYCE SABRE or APOLLO 21
- 22. Classification of IS by Functional Area The accounting information system The finance information system The manufacturing (operations, production) information system The marketing information system The human resources information system 22
- 23. Sales & Marketing Systems Systems that help the firm identify customers for the firm’s products or services, develop products and services to meet customer’s needs, promote products and services, sell the products and services, and provide ongoing customer support. EXAMPLES System Description Organizational Level Order processing Enter, process, and track orders Operational Market analysis Identify customers and markets using Knowledge data on demographics, markets, consumer behavior, and trends Pricing analysis Determine prices for products Management and services 23
- 24. Manufacturing and Production Systems Systems that deal with the planning, development, and production of products and services and with controlling the flow of production. Examples System Description Organizational Level Machine control Control the actions of machines Operational and equipment Computer-aided design (CAD) Design new products using Knowledge the computer Production planning Decide when and how many Management products should be produced Facilities location Decide where to locate new Strategic production facilities 24
- 25. Finance and Accounting Systems Systems that keep track of the firm’s financial assets and fund flows. Examples System Description Organizational Level Accounts receivable Track money owed the firm Operational Portfolio analysis Design the firm's portfolio of investments Knowledge Budgeting Prepare short-term budgets Management Profit planning Plan long-term profits Strategic 25
- 26. Human Resources Systems Systems that maintain employee records; Track employee skills, job performance, and training; And support planning for employee compensation and career development. Examples System Description Organizational Level Training and development Track employae training, skills, Operational and performance appraisals Career pathing Design career paths for employees Knowledge Compensation analysis Monitor the range and distribution Management ofemployee wages, salaries, and bene6cs Human resources planning Plan the long-term labor force needs Strategic of the organization 26
- 27. Examples of Business Processes Functional Area Business Process Manufacturing and production Assembling the product Checking for quality Producing bills of materials Sales and marketing Identifying customers Making customers aware of the product Selling the product Finance and accounting paying creditors Creating financial statements Managing cash accounts Human resources Hiring employees Evaluating employees' job performance Enrolling employees in benefits plans 27
- 28. The Order Fulfillment Process (F 2.12) Generate Subm it Sales Order Order Ac c ounting Chec k Approve Generate Credit Credit Invoic e M a n uf a c t ur in g As s em ble Ship & P r o duc t io n Produc t Produc t 28
- 29. Customer Relationship Management Customer relationship management Business and technology discipline to coordinate alt of the business processes Sa le s T e le p h o n e sa le s for dealing with customers. W e b sa le s F ie ld sa le s R e t a il sa le s Unified view of c ustom ers M a r k e t in g Consistent m essage to c ustom ers C a m p a ign da t a Co n t en t End-to-end c ustom er c are D a t a a n a ly sis Long-term c ustom er relationships C ust o m e r Se r v ic e Identific ation of best c ustom ers C a ll c e n t e r da t a W e b se lf se r v ic e da t a F ie ld se r v ic e da t a W ir e le ss da t a 29
- 30. Customer Relationship Management Supply chain management Integration of supplier, distributor, and customer logistics requirements into one cohesive process. Supply chain Network of facilities for procuring materials, transforming raw materials into finished products,' and distributing finished produce to customers. Capac ity, inventory level, delivery sc hedule, paym ent term s Retail Supplier Manufac turer Distributor Custom er Outlet Orders, return requests, repair and servic e requests, paym ents 30
- 31. HOW INFORMATION SYSTEMS CAN FACILITATE SUPPLY CHAIN MANAGEMENT Information systems can help participants in the supply chain: Decide when and what to produce, store, and move Rapidly communicate orders Track the status of orders Check inventory availability and monitor inventory levels Track shipments Plan production based on actual customer demand Rapidly communicate changes in product design 31
- 32. Enterprise Systems Firm wide information systems that integrate key business processes so that information can flow freely between different parts of the firm. 32
- 33. Traditional View of Systems (F. 2.15) Busine ss Functions Mark e ting and Hum an Manufacturing Accounting Finance Sale s Re source s O rg a n iza t io n a l O rg a n iza t io n a l B o u n da rie s B o u n da rie s Busine ss Busine ss Busine ss Busine ss Busine ss Proce sse s Proce sse s Proce sse s Proce sse s Proce sse s Human Manufacturing Accounting Finance Mark e ting and Res ources Syste m s Syste m s Syste m s Sale s Syste m s S ys tems Ve ndors Inform ation Syste m s Custom e rs 33
- 34. Enterprise Systems (F. 2.16) Man u factu rin g A ccou n tin g En te rpris e S ys te m O rgan ization al O rgan ization al Bu s in e s s Proce s s Bou n darie s Bou n darie s Bu s in e s s Proce s s V e n dors Bu s in e s s Proce s s C u s tom e rs En te rpris e -wide bu s in e s s proce s s e s Hu m an S ale s an d Fin an ce R e s ou rce s Mark e tin g 34
- 35. Benefits and Challenges of Enterprise Systems Benefits 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 Challenges Daunting Implementation High Up-front Costs and Future Benefits Inflexibility 35
- 36. Extended Enterprises Extended Enterprises: Networks linking systems of multiple firms in an industry. Also called extended enterprises. Vertical industrial networks Networks for integrating the operations of a firm with its suppliers. Horizontal industrial networks Networks for linking firms across an entire industry. 36
- 37. Industrial Networks (F. 2.17) Horizon tal in du s trial n e twork F irms F ir m F ir m F ir m F ir m in a s in g le 1 2 3 4 in d u s t ry Firm value c hains and enterprise systems Industry value Industrial Netw orks c hain Firms in F ir m S upplie S upplie S upplie c omplementary r r r 1 1 2 3 business V e rtical in du s trial n e twork 37