Chapter 2
INFORMATION
SYSTEMS IN THE
ENTERPRISE
2.1 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
OBJECTIVES
What are the key system applications in a
business? What role do they play?
How do information systems support the
major business functions?
Why should managers pay attention to
business processes?
2.2 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
OBJECTIVES
What are the business benefits of using
collaborative commerce, private
industrial networks and enterprise
systems?
What types of information systems are
used by companies that operate
internationally?
2.3 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
MANAGEMENT CHALLENGES
1. Integration: Different systems serve variety of
functions, connecting organizational levels
difficult, costly
2. Enlarging scope of management thinking:
Huge system investments, long development
time must be guided by common objectives
2.4 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Types of Information Systems
2.5 Figure 2-1 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Major Types of Systems
Executive Support Systems (ESS)
Decision Support Systems (DSS)
Management Information Systems (MIS)
Knowledge Work Systems (KWS)
Office Automation Systems (OAS)
Transaction Processing Systems (TPS)
2.6 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
TYPES OF INFORMATION SYSTEMS
Figure 2-2
2.7 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
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
2.8 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Payroll TPS
Figure 2-3
2.9 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Types of TPS Systems
Figure 2-4
2.10 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Knowledge Work Systems (KWS):
Knowledge level
Inputs: Design specs
Processing: Modeling
Outputs: Designs, graphics
Users: Technical staff
Example: Engineering work station
2.11 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Management Information System (MIS):
Management level
Inputs: High volume data
Processing: Simple models
Outputs: Summary reports
Users: Middle managers
Example: Annual budgeting
2.12 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Management Information System (MIS)
Figure 2-5
2.13 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Management Information System (MIS)
Structured and semi-structured decisions
Report control oriented
Past and present data
Internal orientation
Lengthy design process
2.14 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Decision Support System (DSS):
Management level
Inputs: Low volume data
Processing: Interactive
Outputs: Decision analysis
Users: Professionals, staff
Example: Contract cost analysis
2.15 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Decision Support System (DSS)
Figure 2-6
2.16 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Decision Support System (DSS)
Figure 2-7
2.17 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Executive Support System (ESS):
Strategic level
Inputs: Aggregate data
Processing: Interactive
Outputs: Projections
Users: Senior managers
Example: 5-year operating plan
2.18 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Executive Support System (ESS)
2.19
Figure 2-8
2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Executive support system (ESS)
Top level management
Designed to the individual
Ties CEO to all levels
Very expensive to keep up
Extensive support staff
2.20 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTERRELATIONSHIPS AMONG SYSTEMS
Figure 2-9
2.21 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
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
2.22 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Sales and Marketing Systems
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
2.23 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Manufacturing and Production Systems
Major functions of systems:
Scheduling, purchasing, shipping,
receiving, engineering, operations
Major application systems:
Materials resource planning systems,
purchase order control systems,
engineering systems, quality control
systems
2.24 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Manufacturing and Production Systems
SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL
MACHINE CONTROL CONTROL ACTIONS OF EQUIPMENT OPERATIONAL
COMPUTER-AIDED-DESIGN DESIGN NEW PRODUCTS KNOWLEDGE
PRODUCTION PLANNING DECIDE NUMBER, SCHEDULE OF PRODUCTS MANAGEMENT
FACILITIES LOCATION DECIDE WHERE TO LOCATE FACILITIES STRATEGIC
2.25 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Overview of Inventory Systems
Figure 2-10
2.26 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Financing and Accounting Systems
Major functions of systems:
Budgeting, general ledger, billing, cost
accounting
Major application systems:
General ledger, accounts receivable,
accounts payable, budgeting, funds
management systems
2.27 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Financing and Accounting Systems
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
2.28 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Human Resource Systems
Major functions of systems:
Personnel records, benefits,
compensation, labor relations, training
Major application systems:
Payroll, employee records, benefit
systems, career path systems, personnel
training systems
2.29 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Human Resource Systems
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
HUMAN RESOURCES PLANNING PLAN LONG-TERM LABOR FORCE NEEDS STRATEGIC
2.30 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Human Resource Systems
Figure 2-11
2.31 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
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 knowledgesets of
activities
2.32 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Business Processes and Information Systems
Unique ways to coordinate work,
information, and knowledge
Ways in which management chooses
to coordinate work
2.33 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Business Processes and Information Systems
Information systems help organizations
Achieve great efficiencies by automating
parts of processes
Rethink and streamline processes
2.34 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Examples of Business Processes
Manufacturing and production:
Assembling product, checking quality,
producing bills of materials
Sales and marketing: Identifying
customers, creating customer awareness,
selling
2.35 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Examples of Business Processes
Finance and accounting: Paying
creditors, creating financial statements,
managing cash accounts
Human Resources: Hiring employees,
evaluating performance, enrolling
employees in benefits plans
2.36 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Business Processes and Information Systems
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
2.37 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
The Order Fulfillment Process
Figure 2-12
2.38 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Customer Relationship Management (CRM)
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
2.39 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Customer Relationship Management (CRM)
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
2.40 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Customer Relationship Management (CRM)
Figure 2-13
2.41 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Supply Chain Management (SCM)
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
2.42 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Supply Chain Management (SCM)
Supply Chain
Network of organizations and business
processes
Helps in procurement of materials,
transformation of raw materials into
intermediate and finished products
2.43 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Supply Chain Management (SCM)
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
2.44 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Supply Chain Management
Figure 2-14
2.45 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
How Information Systems Facilitate Supply Chain Management
Decide when, what to produce, store, move
Rapidly communicate orders
Communicate orders, track order status
Check inventory availability, monitor levels
Track shipments
Plan production based on actual demand
Rapidly communicate product design change
Provide product specifications
Share information about defect rates, returns
2.46 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Supply Chain Management (SCM)
Limitations:
Inefficiencies can waste as much as 25%
of companys operating costs
Bullwhip Effect: Information about the
demand for the product gets distorted as
it passes from one entity to next
2.47 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Supply Chain Management (SCM)
Supply chain planning system: Enables
firm to generate forecasts for a product and
to develop sourcing and a manufacturing
plan for the product
Supply chain execution system:
Manages flow of products through
distribution centers and warehouses
2.48 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Collaborative Commerce
Uses digital technologies to enable
multiple organizations to collaboratively
design, develop, build, move, and manage
products
Increases efficiencies in reducing product
design life cycles, minimizing excess
inventory, forecasting demand, and
keeping partners and customers informed
2.49 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Collaborative Commerce
Figure 2-15
2.50 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Industrial Networks
Private Industrial Networks
Web-enabled networks
Link systems of multiple firms in an
industry
Coordinate transorganizational business
processes
2.51 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Traditional View of the Systems
Within the business: There are functions,
each having its uses of information systems
Outside the organizations boundaries:
There are customers and vendors
Functions tend to work in isolation
2.52 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Traditional View of the Systems
Figure 2-16
2.53 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Enterprise Systems
2.54 Figure 2-17 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Benefits of Enterprise Systems
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
2.55 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND 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
2.56 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTERNATIONAL INFORMATION SYSTEMS
Forms of Global Business Organization
Four main ways of organizing businesses
internationally:
Domestic Exporter: Heavy centralization of
corporate activities in the home country of origin
Multinational: Financial management and
control out of a central home base, production,
sales and marketing operations decentralized
2.57 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTERNATIONAL INFORMATION SYSTEMS
Forms of Global Business Organization
Franchiser: Product created, designed,
financed, and produced in the home country,
relies on foreign personnel for production,
marketing and human resources
Transnational: No national headquarters;
value-added activities managed from a global
perspective, no reference to national borders,
sources of supply and demand and local
competitive advantage optimized
2.58 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTERNATIONAL INFORMATION SYSTEMS
Global System Configuration
Four types of system configuration:
Centralized Systems
Duplicated Systems
Decentralized Systems
Networked Systems
2.59 2003 by Prentice Hall
Essentials of Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTERNATIONAL INFORMATION SYSYTEMS
Global System Configuration
Figure 2-18
2.60 2003 by Prentice Hall
Chapter 2
INFORMATION
SYSTEMS IN THE
ENTERPRISE
2.61 2003 by Prentice Hall