Mis ppt unit 3 & 4

Chapter 2

Information
Systems in the
Enterprise

2.1 © 2006 by Prentice Hall

Management Information Systems
Chapter 2 Information Systems in the Enterprise

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



OBJECTIVES (continued)

• Analyze the relationship between organizations,
information systems, and business processes

• Explain how enterprise applications promote
business process integration and improve
organizational performance

• Assess the challenges posed by information
systems in the enterprise and management
solutions



Mango Case: Fast Fashion, Hot Systems

• Challenge: monthly changes in fashions; Mango has
731 stores in 72 countries
• Solutions. Inventory replenishment system tracks all
sales and matches stores with inventory.
• Design teams meet weekly to adjust to trends.
• Distribution system allocates bar-coded items to
specific stores based on store/product mix.
• Reduces time to market, increases agility
• Increases accuracy of decision making



MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Types of Information Systems

2.5 Figure 2-1 © 2006 by Prentice Hall



Different Kinds of Systems
Three main categories of information systems serve
different organizational levels:

1. Operational-level systems: support operational managers,
keeping track of the elementary activities and
transactions

2. Management-level systems: serve the monitoring,
controlling, decision-making, and administrative activities

3. Strategic-level systems: help senior management tackle
and address strategic issues




Major Types of Systems

• Transaction Processing Systems (TPS)

• Management Information Systems (MIS)

• Decision-Support Systems (DSS)

• Executive Support Systems (ESS)




The Four Major Types of Information Systems




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




A Symbolic Representation for a Payroll TPS




Typical Applications of TPS




Management Information Systems (MIS)
Management level

• Inputs: High volume transaction level data

• Processing: Simple models

• Outputs: Summary reports

• Users: Middle managers

Example: Annual budgeting



Management Information Systems (MIS) (continued)




Management Information Systems (MIS) (continued)
A sample MIS report




Decision-Support Systems (DSS)
Management level

• Inputs: Transaction level data

• Processing: Interactive

• Outputs: Decision analysis

• Users: Professionals, staff

Example: Contract cost analysis



Decision-Support Systems (DSS) (Continued)
Voyage-estimating decision-support system




EXECUTIVE SUPPORT SYSTEMS (ESS):

• Inputs: Aggregate data

• Processing: Interactive

• Outputs: Projections

• Users: Senior managers

Example: 5 year operating plan



Model of a Typical Executive Support System




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

T Y P E S O F SY ST E M S

S tr a te g ic L e v e l S y s te m s
E SS 5 -ye a r 5 -y e a r 5 -ye a r P r o fit M anpo w e r
o p e r a tin g bud g e t s a le s t r e n d p la n n in g p la n n in g
p la n fo r e c a s t in g fo r e c a s t in g

M a n a g e m e n t-L e v e l S y s te m s
S a le s In v e n to ry A nnu al C a p ita l R e lo c a tio n
M IS
m an ag e m e nt C o n tro l b u d g e t in g I n v e s tm e n t a n a ly s is a n a ly s is
P r ic in g /p r o fit a b ilit y C o n tra c t c o s t
D SS S a le s r e g io n P r o d u c tio n C o st
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
K W S E n g in e e r in g G r a p h ic s M a n a g e r ia l
w o r k s ta tio n s w o r k s t a t io n s w o r k s t a tio n s
O A S W o rd D o cum e nt E le c tr o n ic
p r o c e s s in g I m a g in g C a le n d a r s

O p e r a tio n a l L e v e l S y s te m s
M a c h in e c o n tr o l S e c u r it ie s P a y r o ll C o m p e n s a tio n
T P S t r a d in g
O r d e r T r a c k in g P la n t s c h e d u lin g A c c o u n ts p a y a b le T r a in in g & d e v e lo p m e n t
O r d e r p r o c e s s in g M a t e r ia l m o v e m e n t C a s h A c c o u n ts r e c e iv a b le E m p lo y e e r e c o r d k e e p in g
c o n tro l m anag e m e n t

S a le s a n d M a n u fa c t u r in g F in a n c e A c c o u n t in g H u m an
2.20 m a r k e tin g R© 2006c by
e so u r e s Prentice Hall



Relationship of Systems to One Another
Interrelationships among systems




Relationship of Systems to One Another

In contemporary digital firms, the 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



SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Sales and Marketing Systems

Major functions of systems:
• Sales management, market research, promotion,
pricing, new products

Major application systems:
• Sales order info system, market research system,
pricing system




Sales and Marketing Systems
SYSTEM DESCRIPTION ORGANIZATIONAL
LEVEL

Order Enter, process, and track orders Operational
processing

Pricing analysis Determine prices for products and Management
services

Sales trend Prepare 5-year sales forecasts Strategic
forecasting

Table 2-2



Manufacturing and Production Systems

• Scheduling, purchasing, shipping, receiving,
engineering, operations

• Materials resource planning systems, purchase
order control systems, engineering systems,
quality control systems




Manufacturing and Production Systems
LEVEL

Machine Control the actions of machines and Operational
control equipment

Production Decide when and how many products Management
planning should be produced

Facilities Decide where to locate new production Strategic
location facilities




Overview of an Inventory System




Financing and Accounting Systems

• Budgeting, general ledger, billing, cost
accounting

• General ledger, accounts receivable, accounts
payable, budgeting, funds management systems




Financing & Accounting Systems (Continued)
SYSTEM DESCRIPTION ORGANIZATION-
AL LEVEL

Accounts Tracks money owed the firm Operational
receivable

Budgeting Prepares short-term budgets Management

Profit planning Plans long-term profits Strategic

2.29 Table 2-4 © 2006 by Prentice Hall



Human Resource Systems

• Personnel records, benefits, compensation, labor
relations, training

• Payroll, employee records, benefit systems,
career path systems, personnel training systems




Human Resource Systems (Continued)
LEVEL

Training and Tracks employee training, skills, Operational
development and performance appraisals

Compensation Monitors the range and distribution Management
analysis of employee wages, salaries, and
benefits

Human resources Plans the long-term labor force Strategic
planning needs of the organization

Table 2-5



Human Resource Systems (Continued) An Employee Recordkeeping System


Chapter 2 Informatiystems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

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
• Unique ways to coordinate work, information, and
knowledge
• Ways in which management chooses to
coordinate work


(Continued)

• Information systems help organizations
achieve great efficiencies by automating parts
of processes

• IS also contributes to completely rethinking
processes.

• Business processes typically span several
different functional areas.



Examples of Business Processes

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

Sales and marketing:
• Identifying customers, creating customer
awareness, selling

Table 2.6



Examples of Business Processes (Continued)

Finance & accounting:
accounting
• Paying creditors, creating financial statements,
managing cash accounts

Human resources:
resources
• Hiring employees, evaluating performance,
enrolling employees in benefits plans
Table 2.6 continued




Cross-Functional Business Processes:

• Transcend boundary between sales, marketing,
manufacturing, and research and development

• Group employees from different functional
specialties to a complete piece of work

Example: Order Fulfillment Process




The Order Fulfillment Process



Systems for Enterprise-Wide Process Integration

Enterprise applications:
• Designed to support organization-wide process
coordination and integration



Systems for Enterprise-Wide Process Integration
(Continued)
Consist of :
• Enterprise systems
• Supply chain management systems
• Customer relationship management systems
• Knowledge management systems




Enterprise Systems

• Enterprise systems, also known as enterprise
resource planning (ERP) systems, provide a
single information system for organization-wide
coordination and integration of key business
processes.

• Information that was previously fragmented in
different systems can seamlessly flow
throughout the firm so that it can be shared by
business processes in manufacturing,
accounting, human resources, and other areas.



Enterprise Application Architecture



Traditional “Silo” View of Information Systems

Within the business:
• There are functions, each having its uses of
information systems

Outside the organization’s boundaries:
• There are customers and vendors

Functions tend to work in isolation



Traditional View of Systems



Enterprise Systems




Benefits of Enterprise Systems

• Help to unify the firm’s structure and
organization: One organization

• Management: Firm wide knowledge-based
management processes

• Technology: Unified platform

• Business: More efficient operations & customer-
driven business processes


Challenges of Enterprise Systems

• Difficult to build: Require fundamental changes in
the way the business operates

• Technology: Require complex pieces of software
and large investments of time, money, and
expertise

• Centralized organizational coordination and
decision making: Not the best way for the firms to
operate


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

• Network of organizations and business
processes



Supply Chain Management (SCM)
• Helps in procurement of materials,
transformation of raw materials into intermediate
and finished products

• 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



Haworth’s Supply Chain Management Systems



Information from Supply Chain Management
Systems helps firms:

• Decide when and what to produce, store,
and move

• Rapidly communicate orders

• Track the status of orders

• Check inventory availability and monitor
inventory levels


Information from Supply Chain Management
Systems helps firms: (Continued)
• Reduce inventory, transportation, and
warehousing costs

• Track shipments

• Plan production based on actual customer
demand

• Rapidly communicate changes in product design


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



(Continued)

• 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




Knowledge Management Systems

• Collects relevant knowledge and make it available
wherever and whenever it is needed
• Support business processes and management
decisions
• Also link the firm to external sources of
knowledge
• Support processes for acquiring, storing,
distributing, and applying knowledge


MANAGEMENT OPPORTUNITIES, CHALLENGES, AND
SOLUTIONS

Management Opportunities:

• There are extraordinary opportunities to use
information systems to achieve business value,
and increase profitability



SOLUTIONS

Management Challenges:

• Integration and the whole firm view: Given the
different interests and perspectives within a firm,
it is difficult to achieve consensus about the need
for the "whole firm" viewpoint.

• Management and employee training: Training a
large number of employees on many systems in a
large organization involves commensurately large
investments.



SOLUTIONS

Management Challenges: (Continued)

• Accounting for the cost of systems and managing
demands for systems: Given the large number of
different types of systems in a firm, and the large
number of people involved with using them, it is
a complex task to understand which systems are
truly necessary and productive with high returns
on investment


SOLUTIONS

Solution Guidelines:

• Inventory the firm’s information systems: Develop
a list of firm-wide information requirements to give
a 360-degree view of the most important
information needs of the firm.

• Employee and management education: Ensure that
you understand how much training is required.

• Account for the costs and benefits: Develop an
accounting system for information services firm-
wide.

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