Information systems in the enterprise

Chapter 2: Information Systems in the Enterprise

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.

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.

KINDS OF INFORMATION SYSTEMS Organizational Hierarchy Organizational Levels Information Systems

KINDS OF INFORMATION SYSTEMS SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN KIND OF SYSTEM GROUPS SERVED STRATEGIC LEVEL SENIOR MANAGERS MANAGEMENT LEVEL MIDDLE MANAGERS OPERATIONAL OPERATIONAL LEVEL MANAGERS KNOWLEDGE LEVEL KNOWLEDGE & DATA WORKERS RESOURCES MARKETING & ENGINEERING

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

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)

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

A Symbolic Representation for a payroll TPS

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

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

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

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 .

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

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 orientation.

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

Model of a Typical Executive Support System

Major Types of Information Systems

Relationship between different IS ESS MIS DSS TPS KWS/ OAS TPS is a major producer of information for other systems

Classification of IS by Organizational Structure Departmental Information Systems Enterprise Information System Inter-organizational Systems NYCE SABRE or APOLLO

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

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.

Manufacturing and Production Systems Systems that deal with the planning, development, and production of products and services and with controlling the flow of production.

Finance and Accounting Systems Systems that keep track of the firm’s financial assets and fund flows.

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 of Business Processes

The Order Fulfillment Process (F 2.12)

Customer Relationship Management Customer relationship management Business and technology discipline to coordinate alt of the business processes for dealing with customers.

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.

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 Provide product specifications Share information about defect rates and returns

Enterprise Systems Firm wide information systems that integrate key business processes so that information can flow freely between different parts of the firm.

Traditional View of Systems (F. 2.15)

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

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.

Information systems in the enterprise

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Information systems in the enterprise