© Andrew Schwarz, 2002Slide 1 Lecture 2/Session 2 Key Information Technology Systems in...

© Andrew Schwarz, 2002 Slide 1

Lecture 2/Session 2Lecture 2/Session 2

Key Information Technology Key Information Technology Systems in OrganizationsSystems in Organizations


Introduction

While we have talked about technology and systems in a broad context, we have yet to understand the different type of information systems that rely upon information technology

This lecture will discuss the key information systems in organizations


Unanswered Questions

1. What are the different types of systems by organizational level?

2. What are the different types of systems by functional area?

3. How do organizations integrate all of the systems?

4. What is the application of this lecture for you, as a manager, in the digital age?


Question #1:Question #1:What are the different types of What are the different types of

systems by organizational level?systems by organizational level?

Organization LevelsOrganizational LevelOrganizational Level Types of ManagersTypes of Managers

STRATEGIC LEVEL SENIOR MANAGERSSTRATEGIC LEVEL SENIOR MANAGERS

MANAGEMENT LEVEL MIDDLE MANAGERSMANAGEMENT LEVEL MIDDLE MANAGERS

OPERATIONAL OPERATIONAL

OPERATIONAL LEVEL OPERATIONAL LEVEL MANAGERS MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE WORKERSKNOWLEDGE LEVEL KNOWLEDGE WORKERS

SALES & MANUFACTURING FINANCE ACCOUNTING HUMANSALES & MANUFACTURING FINANCE ACCOUNTING HUMAN MARKETINGMARKETING RESOURCES RESOURCES


Systems by Org Level Operational level: systems monitor the elementary

activities and transactions of the firm– Transaction Processing Systems

Knowledge level: systems support knowledge and data workers– Knowledge work systems/Office Systems

Management level: systems support monitoring, controlling, decision-making, and administrative activities– Management Information Systems/Decision Support Systems

Strategic level: systems that support long-range planning activities– Executive support systems


Transaction Processing Systems

Computerized systems that perform and record the daily routine transactions necessary to conduct the business

Users: operations personnel; supervisors Examples: accounts payable, accounts

receivable, payroll, order tracking, order processing


Knowledge Work Systems

Systems that aid knowledge workers in the creation and integration of new knowledge in the organization

Users: professionals, technical staff Examples: engineering systems, graphics

systems, 3-D systems


How do Firms Capture Knowledge?

Knowledge management: the set of processes developed in an organization to create, gather, store, maintain, and disseminate the firm’s knowledge– Senior executive in charge of KM: CKO

Types of knowledge:– Structured knowledge, such as product manuals– External knowledge of competitors, products, and

markets (competitive intelligence)– Tacit knowledge—knowledge in the minds of the

employees


Importance of Knowledge As stated in Lecture 1, the dominant workers are

knowledge workers So, if all companies were given the same amount

of resources, raw materials, locations, etc., what would be the source of competitive advantage for that firm?– The knowledge within the employees!

Thus, firms are seeking to capture and retain that knowledge so that they can have a sustainable competitive advantage


Systems Used to Capture Knowledge

Expert system: captures the expertise of a human in limited domains of knowledge– Rules-based capture—if this happens, then I would

make this decision

– Similar to a DSS, but is built upon human knowledge

Some companies attempt to use artificial intelligence (AI) and neural networks so that the systems learn from their history– Problems with AI!


Intelligence

Above knowledge is intelligence, or carrying out the knowledge through implementation

Companies are ultimately attempting to create intelligent agents– Software programs that use a knowledge bask

that carry out tasks for users or complete business tasks


Office Systems Computer systems that are designed to increase

the productivity of data workers in the office Users: Clerical workers Examples:

– Word processing: facilitate the creation of documents (e.g. Microsoft Word)

– Desktop publishing: produces documents combining output from various sources (e.g. Microsoft Publisher)

– Document imaging systems: convert documents and images into digital form so they can be stored on the computer


Decision Support Systems

Systems that combine data and analytic models or data analysis tools to support nonroutine decision making for individuals– Use input from TPS data plus external sources

Users: Professionals; staff managers Examples: sales region analysis, cost

analysis, pricing analysis


Types of DSS

Model driven: stand-alone system that uses models to perform “what-if” and other kinds of analyses

Data-driven: system that relies upon information within databases to make decisions, but is not configured with a model in mind


Components of a DSS

TPSExternal

DataDSSDatabase

DSS Software SystemModels

OLAP ToolsDatamining Tools

UserInterface

User


Group Decision Support System (GDSS)

An interactive computer-based system to facilitate the solution to unstructured problems by a set of decision-makers working together as a group

The group uses software tools to help it arrive at a decision– Questionnaire/voting software

– Electronic brainstorming tools

– Idea organizer

– Electronic meeting system


Differences between DSS/GDSS

Users– DSS: individuals; GDSS: groups

Objective of use– DSS: build models using data; GDSS: facilitate

interaction between individuals Effectiveness

– DSS: depends on how well the tool is built by designers; GDSS: depends on facilitators, tools selected, and participants


Management Information Systems

Systems that support managers as they plan, control, and make decisions– Summarize and report on a company’s basic

operations—not day-to-day, but trends

Users: middle managers Examples: annual budgets, capital

investment analysis, analysis of sales data (aggregated from TPS)

MISMIS

MIS FILESMIS FILES

SALES DATA

UNIT PRODUCT COST

PRODUCT CHANGE DATA

EXPENSE DATA

MISREPORTS

MANAGERSMANAGERS

TPS

Order Processing

System

Materials Resource

Planning System

General Ledger

System

ORDER FILE

PRODUCTION MASTER FILE

ACCOUNTING FILES

Example of Relationship Between TPS and MIS


Executive Support Systems

Systems designed to address nonroutine decision making– Incorporate data from TPS, MIS, DSS, and

other external sources

Users: senior managers Examples: trends in the marketplace,

forecasting, personnel planning

Systems by Level and Decision Type

TPSOAS MIS

KWS

DSS

ESS

ORGANIZATIONAL LEVELORGANIZATIONAL LEVELTYPE OFTYPE OFDECISIONDECISION OPERATIONAL KNOWLEDGE MANAGEMENT STRATEGIC

STRUCTURED ACCOUNTS RECEIVABLE

ELECTRONIC PRODUCTIONSCHEDULING COST OVERRUNS

SEMI- BUDGETSTRUCTURED PREPARATION

PROJECTSCHEDULING

FACILITYLOCATION

UNSTRUCTURED PRODUCT DESIGN NEW PRODUCTSNEW MARKETS


Relationship Between Systems

ESS

TPSKWS

OAS

DSSMIS


Question #2:Question #2:What are the different types of What are the different types of

systems by functional area?systems by functional area?


Systems by Functional Unit Sales/Marketing: Systems that help the company identify

customers; develop, promote, and sell products/services; and provide customer support

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

Finance/Accounting: Systems that keep track of the firm’s financial assets/fund flow

Human Resources: Systems that maintain employee records; track employee skills; job performance and training; and support planning for employee compensation and career development

Examples of Systems by Functional Areas

System Description Organizational Level Machine Control Control Actions Of Equipment Operational Computer-aided-design Design New Products Knowledge Production Planning Decide Number, Schedule Products Management Facilities Location Decide Where To Locate Facilities Strategic

Sales/Marketing

Manufacturing

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

Examples of Systems by Functional Areas

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 HR Planning Plan Long-term Labor Force Needs Strategic

Finance/Accounting

Human Resources

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


An Emerging Sales/Marketing System

Given the proliferation of companies (from our discussion in Session 1), keeping and retaining customers is becoming more crucial

To help keep track of customers, companies are turning to customer relationship management (CRM) software– Coordinates all of the business processes for

dealing with customers


Question #3:Question #3:How do organizations integrate How do organizations integrate

all of the systems?all of the systems?

Are These Systems Separate?

In the discussion thus far, we have treated the systems as being separate from one another

Manufacturing Accounting Finance Marketing/Sales HR

ManufacturingSystems

AccountingSystems

FinanceSystems

Marketing/SalesSystems

HRSystems

Businessprocesses

Businessprocesses

Businessprocesses

Businessprocesses

Businessprocesses


Traditional Views of Systems

Reality check: systems are (and need to be!) integrated

So how do companies integrate systems?– Build their own patches– Use enterprise systems, or firm-wide

information systems that integrate key business processes so that information can flow freely between parts of the firm [also known as ERP, or Enterprise Resource Planning systems]

Enterprise View of Systems

Sales & Marketing

Accounting

Finance

Manufacturing

Human Resources

Business ProcessesBusiness Processes

Enterprise-wide Enterprise-wide Business ProcessesBusiness Processes

Vendors Customers


Why would Firms use an ERP?

1. Creation of one unified organization—no more stovepipes

2. Automation of manually-intensive processes

3. Better reporting and decision making—knowledge is in the hands of the knowledge workers

4. Unified technology platform

5. More efficient company and customer driven business


Why do Firms Not Use an ERP?

1. High up-front cost

2. Challenge of implementation1. Only 10-15% of implementations are smooth

3. Systems are inflexible—they define the processes and your organization must change how you do work

4. Tough to find the strategic value


Question #4:Question #4:What is the application of this What is the application of this

lecture for you, as a manager, in lecture for you, as a manager, in the digital age?the digital age?


Top 3 Applications From This Lecture

1. Are there processes in your organization that need to be automated?

2. Are you thinking at the strategy level for technology—do you see areas where technology could help your firm grow?

3. How integrated are your systems? Are your tasks repetitious (do you have to re-enter data already in another system?)?

© Andrew Schwarz, 2002Slide 1 Lecture 2/Session 2 Key Information Technology Systems in...

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