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2.1 © 2006 by Prentice Hall
2Chapter
Global E-Business: Global E-Business: How Businesses use How Businesses use Information SystemsInformation Systems
2.2 © 2006 by Prentice Hall
OBJECTIVES
• Evaluate the role played by the major types of systems in a business and their relationship to each other
• Describe the information systems supporting the major business functions: sales and marketing, manufacturing and production, finance and accounting, and human resources
• Analyze the relationship between organizations, information systems, and business processes
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
2.3 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Types of Information Systems
Figure 2-1
2.4 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Different Kinds of Systems
• Operational-level systems: support operational managers, keeping track of the elementary activities and transactions
• Management-level systems: serve the monitoring, controlling, decision-making, and administrative activities
• Strategic-level systems: help senior management tackle and address strategic issues & long term trends both in firm & external environment.
Three main categories of information systems servedifferent organizational levels:
2.5 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Major Types of Systems
• Transaction Processing Systems (TPS)
• Management Information Systems (MIS)
• Decision-Support Systems (DSS)
• Executive Support Systems (ESS)
2.6 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
The Four Major Types of Information Systems
Figure 2-2
2.7 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
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
• Predefined & highly structured
2.8 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
A Symbolic Representation for a Payroll TPS
Figure 2-3
2.9 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Management Information Systems (MIS)
Management level
• Inputs: High volume transaction level data
• Processing: Simple models
• Outputs: Summary reports
• Users: Middle managers
Example: Annual budgeting
2.10 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Management Information Systems (MIS) (continued)
Figure 2-5
2.11 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Management Information Systems (MIS) (continued)
Figure 2-6
A sample MIS report
2.12 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Decision-Support Systems (DSS)
Management level
• Inputs: Transaction level data
• Processing: Interactive
• Outputs: Decision analysis
• Users: Professionals, staff
Example: Contract cost analysis
2.13 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Decision-Support Systems (DSS) (Continued)Voyage-estimating decision-support system
Figure 2-7
2.14 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
EXECUTIVE SUPPORT SYSTEMS (ESS):
• Inputs: Aggregate data
• Processing: Interactive
• Outputs: Projections
• Users: Senior managers
Example: 5 year operating plan
2.15 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Model of a Typical Executive Support System
Figure 2-8
2.16 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued)
• Top Level Management
• Designed to the individual senior manager
• Ties CEO to all levels
• Very expensive to keep up
• Extensive support staff
2.17 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Relationship of Systems to One Another Interrelationships among systems
Figure 2-9
2.18 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Relationship of Systems to One Another
In digital firmsthe different types of systems are closely linked to one another. This is the ideal.
In traditional firms these systems tend to be isolated from one another, and information does not flow seamlessly from one end of the organization to the other.
Efficiency and business value tend to suffer greatly in these traditional firms
2.19 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Sales and Marketing Systems
Major application systems:
• Sales order info system, • market research system, • pricing system
2.20 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Sales and Marketing Systems
SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL
Order processing
Enter, process, and track orders Operational
Pricing analysis Determine prices for products and services
Management
Sales trend forecasting
Prepare 5-year sales forecasts Strategic
Table 2-2
2.21 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Manufacturing and Production Systems
Major application systems:
• Materials resource planning systems,• purchase order control systems,• engineering systems, • quality control systems
2.22 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL
Machine control
Control the actions of machines and equipment
Operational
Production planning
Decide when and how many products should be produced
Management
Facilities location
Decide where to locate new production facilities
Strategic
Manufacturing and Production Systems
2.23 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Overview of an Inventory System
Figure 2-10
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
2.24 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Financing and Accounting Systems
Major application systems:
• General ledgerGeneral ledger• accounts payable,accounts receivableaccounts payable,accounts receivable• budgeting, budgeting, • funds management systemsfunds management systems
2.25 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Financing & Accounting Systems (Continued)
SYSTEM DESCRIPTION ORGANIZATION-AL LEVEL
Accounts receivable
Tracks money owed the firm Operational
Budgeting Prepares short-term budgets Management
Profit planning Plans long-term profits Strategic
Table 2-4
2.26 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Human Resource Systems
Major application systems:
• employee records, employee records, • personnel training systemspersonnel training systems
2.27 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Human Resource Systems (Continued)
SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL
Training and development
Tracks employee training, skills, and performance appraisals
Operational
Compensation analysis
Monitors the range and distribution of employee wages, salaries, and benefits
Management
Human resources planning
Plans the long-term labor force needs of the organization
Strategic
Table 2-5
2.28 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Human Resource Systems (Continued) An Employee Recordkeeping System
Figure 2-11
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
2.29 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Business Processes and Information Systems
Business processes:Business processes:
• Business processes refer to Business processes refer to sets of logically sets of logically related activities for accomplishing a specific related activities for accomplishing a specific business resultbusiness result
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
• Business processes typically span several Business processes typically span several
different functional areas.different functional areas.
2.30 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Examples of Business Processes
Manufacturing and production: • Assembling product• checking quality• producing bills of materials
Sales and marketing: • Identifying customers• Making customer aware of the product• Selling the product
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.31 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Finance & accountingFinance & accounting: • Paying creditorsPaying creditors• Creating financial statementsCreating financial statements• Managing cash accountsManaging cash accounts
Human resourcesHuman resources: • Hiring employeesHiring employees• Evaluating performanceEvaluating performance• Enrolling employees in benefits plansEnrolling employees in benefits plans
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
Examples of Business Processes (Continued)
2.32 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Business Processes and Information Systems
Cross-Functional Business Processes: Cross-Functional Business Processes:
• Transcend boundary between sales & marketing, Transcend boundary between sales & marketing, manufacturing, and finance & accounting.manufacturing, and finance & accounting.
• Group employees from different functional Group employees from different functional specialties to a complete piece of workspecialties to a complete piece of work
Example: Order Fulfillment ProcessExample: Order Fulfillment Process
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.33 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
The Order Fulfillment Process
Figure 2-12
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.34 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Systems for Enterprise-Wide Process Integration
Enterprise applications: • Designed to support organization-wide process Designed to support organization-wide process
coordination and integrationcoordination and integration• These systems are These systems are
-Cross-level-Cross-level
-Cross-functional-Cross-functional
-Business process oriented-Business process oriented
-Beyond the organization -Beyond the organization (suppliers and customers)(suppliers and customers)
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.35 © 2006 by Prentice Hall
Consist of Consist of :
• Enterprise systems - ERP
• Supply chain management systems - SCM
• Customer relationship management systems -CRM
• Knowledge management systems - KMS
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Systems for Enterprise-Wide Process Integration (Continued)
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.36 © 2006 by Prentice HallFigure 2-13
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Enterprise Application Architecture
2.37 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Enterprise Systems
• Enterprise systems, also known as enterprise Enterprise systems, also known as enterprise resource planning (ERP) systems, provide a resource planning (ERP) systems, provide a single information system for organization-wide single information system for organization-wide coordination and integration of key business coordination and integration of key business processes.processes.
• Information that was previously fragmented in Information that was previously fragmented in different systems can seamlessly flow throughout different systems can seamlessly flow throughout the firm so that it can be shared by business the firm so that it can be shared by business processes in manufacturing, accounting, human processes in manufacturing, accounting, human resources, and other areas.resources, and other areas.
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.38 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Traditional View of Information Systems
Within the business:Within the business: • There are functions, each having its uses of There are functions, each having its uses of
information systemsinformation systems
Outside the organization’s boundaries:Outside the organization’s boundaries: • There are customers and vendorsThere are customers and vendors
Functions tend to work in iFunctions tend to work in isolationsolation
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.39 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Traditional View of Systems
Figure 2-14
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.40 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Enterprise Systems
Figure 2-15
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.41 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Benefits of Enterprise Systems
• Help to unify the firm’s structure and Help to unify the firm’s structure and organization:organization: One organization One organization
• Management:Management: Firm wide knowledge-based Firm wide knowledge-based management processesmanagement processes
• Technology:Technology: Unified platform Unified platform
• Business:Business: More efficient operations & customer- More efficient operations & customer-driven business processesdriven business processes
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.42 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Challenges of Enterprise Systems
• Difficult to build:Difficult to build: Require fundamental changes in Require fundamental changes in the way the business operatesthe way the business operates
• Technology:Technology: Require complex pieces of software Require complex pieces of software and large investments of time, money, and and large investments of time, money, and expertiseexpertise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.43 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Supply Chain Management (SCM)
• Close linkage and coordination of activities Close linkage and coordination of activities involved in involved in buying, making, and moving a productbuying, making, and moving a product
• Integrates supplier, manufacturer, distributor, and Integrates supplier, manufacturer, distributor, and customer logistics timecustomer logistics time
• Reduces time and inventory costsReduces time and inventory costs
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.44 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
• Helps in procurement of materials, Helps in procurement of materials, transformation of raw materials into intermediate transformation of raw materials into intermediate and finished productsand finished products
• Helps in distribution of the finished products to Helps in distribution of the finished products to customers. customers. Materials, information, and payments Materials, information, and payments flow through the supply chain in flow through the supply chain in both directionsboth directions..
• IIncludes reverse logisticsncludes reverse logistics - returned items flow in - returned items flow in the reverse direction from the buyer back to the the reverse direction from the buyer back to the sellerseller
Supply Chain Management (SCM)
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.45 © 2006 by Prentice Hall
A Supply Chain
Figure 11-3
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS
PROCESSES: Introduction to Enterprise Applications
2.46 © 2006 by Prentice HallFigure 11-7
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS
PROCESSES: Introduction to Enterprise Applications
Push- versus Pull-Based Supply Chain Models
2.47 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Information from Supply Chain Management Systems helps firms:
• Decide when and what to produce, store, Decide when and what to produce, store, and moveand move
• Rapidly communicate ordersRapidly communicate orders
• Track the status of ordersTrack the status of orders
• Check inventory availability and monitor Check inventory availability and monitor inventory levelsinventory levels
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.48 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Information from Supply Chain Management Systems helps firms: (Continued)
• Reduce inventory, transportation, and Reduce inventory, transportation, and warehousing costswarehousing costs
• Track shipmentsTrack shipments
• Plan production based on actual customer Plan production based on actual customer demanddemand
• Rapidly communicate changes in product designRapidly communicate changes in product design
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.49 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Customer Relationship Management (CRM)
• Manages all ways used by firms to deal with Manages all ways used by firms to deal with existing and potential new customersexisting and potential new customers
• One coherent face to the customerOne coherent face to the customer
• Provides end- to- end customer careProvides end- to- end customer care
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.50 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Customer Relationship Management (CRM) (Continued)
• Provides a unified view of customer across the Provides a unified view of customer across the companycompany
• Consolidates customer data from multiple Consolidates customer data from multiple sources and provides analytical tools for sources and provides analytical tools for answering questionsanswering questions
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.51 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Customer Relationship Management (CRM)
Figure 2-17
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.52 © 2006 by Prentice Hall
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
Knowledge Management Systems
• Collects relevant knowledge and make it available Collects relevant knowledge and make it available
wherever and whenever it is neededwherever and whenever it is needed
• Support business processes and management Support business processes and management
decisionsdecisions
• Also link the firm to external sources of Also link the firm to external sources of
knowledgeknowledge
• Support processes for acquiring, storing, Support processes for acquiring, storing,
distributing, and applying knowledgedistributing, and applying knowledge
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications
2.53 © 2006 by Prentice Hall
Example
an engineer could know the metallurgical composition of
an alloy that reduces sound in gear systems.
Sharing this information organization wide can lead to
more effective engine design and it could also lead to ideas
for new or improved equipment.
Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS
PROCESSES: Introduction to Enterprise Applications