c h a p t e r

INFORMATION
SYSTEMS IN THE
ENTERPRISE
2.1

2002 by Prentice Hall

LEARNING OBJECTIVES
ANALYZE ROLES OF 6 TYPES OF
INFORMATION SYSTEMS
DESCRIBE TYPES OF INFORMATION
SYSTEMS
ANALYZE RELATIONSHIPS BETWEEN
BUSINESS PROCESSES
*
2.2

2002 by Prentice Hall

LEARNING OBJECTIVES
EXPLAIN HOW SYSTEMS &
NETWORKS CREATE NEW
EFFICIENCIES
EVALUATE BENEFITS &
LIMITATIONS OF SYSTEMS &
NETWORKS
*
2.3

2002 by Prentice Hall

MANAGEMENT
CHALLENGES

KEY SYSTEM APPLICATIONS

FUNCTIONAL PERSPECTIVE OF
SYSTEMS
INTEGRATING FUNCTIONS &
PROCESSES
*

2.4

2002 by Prentice Hall

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

2.5

2002 by Prentice Hall

TYPES OF INFORMATION SYSTEMS

KIND OF SYSTEM

GROUPS SERVED

STRATEGIC LEVEL

SENIOR
MANAGERS

MANAGEMENT LEVEL

MIDDLE
MANAGERS

KNOWLEDGE LEVEL

OPERATIONAL
OPERATIONAL
MANAGERS

SALES &
MARKETING

2.6

KNOWLEDGE &
DATA WORKERS

LEVEL
MANUFACTURING

FINANCE

ACCOUNTING

HUMAN
RESOURCES

2002 by Prentice Hall

MAJOR TYPES OF SYSTEMS

2.7

EXECUTIVE SUPPORT SYSTEMS (ESS)

DECISION SUPPORT SYSTEMS (DSS)
MANAGEMENT INFORMATION SYSTEMS (MIS)
KNOWLEDGE WORK SYSTEMS (KWS)
OFFICE AUTOMATION SYSTEMS (OAS)
TRANSACTION PROCESSING
SYSTEMS (TPS)
*

2002 by Prentice Hall

TYPICAL TPS APPLICATIONS

Sales & 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
*
2.8

2002 by Prentice Hall

TYPICAL TPS APPLICATIONS

Manufacturing & 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
*
2.9

2002 by Prentice Hall

TYPICAL TPS APPLICATIONS

Finance & 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
*
2.10

2002 by Prentice Hall

TYPICAL TPS APPLICATIONS

Human Resources 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
*
2.11

2002 by Prentice Hall

TYPICAL TPS APPLICATIONS

Other Types (e.g., University)

MAJOR FUNCTIONS OF SYSTEMS:

Admissions, grade records, course
records, alumni
MAJOR APPLICATION SYSTEMS:
Registration system, student transcript
system, curriculum class control
system, alumni benefactor system
*
2.12

2002 by Prentice Hall

KNOWLEDGE WORK SYSTEMS

(KWS)
KNOWLEDGE LEVEL
INPUTS: DESIGN SPECS
PROCESSING: MODELLING
OUTPUTS: DESIGNS, GRAPHICS
USERS: TECHNICAL STAFF
EXAMPLE: ENGINEERING WORK
STATION
2.13

2002 by Prentice Hall

OFFICE AUTOMATION SYSTEMS

(OAS)

TOWARD A PAPERLESS OFFICE

REDESIGN OF WORK FLOW
INTEGRATED SOFTWARE
ERGONOMIC DESIGN
BRIGHT, CHEERFUL
WORK SPACE

EXAMPLE: PRESENTATION GRAPHICS

2.14

2002 by Prentice Hall

MANAGEMENT INFORMATION
SYSTEMS (MIS)
MANAGEMENT LEVEL
INPUTS: HIGH VOLUME DATA
PROCESSING: SIMPLE MODELS
OUTPUTS: SUMMARY REPORTS
USERS: MIDDLE MANAGERS
EXAMPLE: ANNUAL BUDGETING
2.15

2002 by Prentice Hall

MANAGEMENT INFORMATION
SYSTEMS (MIS)
STRUCTURED & SEMISTRUCTURED DECISIONS
REPORT CONTROL ORIENTED
PAST & PRESENT DATA
INTERNAL ORIENTATION
LENGTHY DESIGN PROCESS
*
2.16

2002 by Prentice Hall

TPS DATA FOR MIS

APPLICATIONS
TPS
Order Processing
System
ORDER FILE
Materials Resource
Planning System
PRODUCTION MASTER FILE
General Ledger
System
ACCOUNTING FILES

2.17

MIS
SALES
DATA
UNIT
PRODUCT
COST
PRODUC
T
CHANGE
DATA
EXPENSE
DATA

MIS

REPORTS

MANAGERS

MIS FILES

2002 by Prentice Hall

DECISION SUPPORT SYSTEMS

(DSS)
MANAGEMENT LEVEL
INPUTS: LOW VOLUME DATA
PROCESSING: INTERACTIVE
OUTPUTS: DECISION ANALYSIS
USERS: PROFESSIONALS, STAFF
EXAMPLE: CONTRACT COST ANALYSIS
2.18

2002 by Prentice Hall

DECISION SUPPORT SYSTEMS

(DSS)

2.19

FLEXIBLE, ADAPTABLE, QUICK

USER CONTROLS INPUTS/OUTPUTS
NO PROFESSIONAL PROGRAMMING
SUPPORTS DECISION PROCESS
SOPHISTICATED MODELING TOOLS
*
2002 by Prentice Hall

EXECUTIVE SUPPORT SYSTEMS

(ESS)
STRATEGIC LEVEL
INPUTS: AGGREGATE DATA
PROCESSING: INTERACTIVE
OUTPUTS: PROJECTIONS
USERS: SENIOR MANAGERS
EXAMPLE: 5 YEAR OPERATING PLAN
2.20

2002 by Prentice Hall

EXECUTIVE SUPPORT SYSTEMS

(ESS)

2.21

TOP LEVEL MANAGEMENT

DESIGNED TO THE INDIVIDUAL
TIES CEO TO ALL LEVELS
VERY EXPENSIVE TO KEEP UP
EXTENSIVE SUPPORT STAFF
*
2002 by Prentice Hall

INTERRELATIONSHIPS AMONG SYSTEMS

ESS

MIS

KWS
OAS
2.22

DSS

TPS
2002 by Prentice Hall

SYSTEMS FROM A FUNCTIONAL

PERSPECTIVE
SALES & MARKETING SYSTEMS
MANUFACTURING & PRODUCTION
SYSTEMS
FINANCE & ACCOUNTING SYSTEMS
HUMAN RESOURCES SYSTEMS
*

2.23

2002 by Prentice Hall

SALES & MARKETING

INFORMATION SYSTEM
SYSTEM

DESCRIPTION

ORDER PROCESSING ENTER, PROCESS, TRACK ORDERS

ORGANIZATIONAL LEVEL
OPERATIONAL

MARKET ANALYSIS

IDENTIFY CUSTOMERS & MARKETS KNOWLEDGE

PRICING ANALYSIS

DETERMINE PRICES

MANAGEMENT

SALES TRENDS

PREPARE 5-YEAR FORECASTS

STRATEGIC

2.24

2002 by Prentice Hall

MANUFACTURING
INFORMATION SYSTEM
SYSTEM
MACHINE CONTROL

DESCRIPTION

ORGANIZATIONAL LEVEL

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

2002 by Prentice Hall

FINANCE & ACCOUNTING

INFORMATION SYSTEM
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

2.26

STRATEGIC

2002 by Prentice Hall

HUMAN RESOURCES
INFORMATION SYSTEM
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

2.27

STRATEGIC

2002 by Prentice Hall

EXAMPLES OF BUSINESS
PROCESSES
MANUFACTURING & PRODUCTION:
Assembling product, checking
quality, producing bills of materials
SALES & MARKETING: Identifying
customers, creating customer
awareness, selling
*
2.28

2002 by Prentice Hall

EXAMPLES OF BUSINESS
PROCESSES
FINANCE & ACCOUNTING: Paying
creditors, creating financial
statements, managing cash accounts
HUMAN RESOURCES: Hiring
employees, evaluating performance,
enrolling employees in
benefits
plans
*
2.29

2002 by Prentice Hall

SUPPLY-CHAIN MANAGEMENT
CUSTOMERS

ORDER
PROCESSING

PLANNING &
FORECASTING

SUPPLIERS

PROCUREMENT
ACCOUNTING

INTRANET
PRODUCTION

LOGISTICS
SERVICES

2.30

SHIPPING

INVENTORY

DISTRIBUTORS

2002 by Prentice Hall

HOW INFORMATION SYSTEMS

FACILITATES SUPPLY CHAIN
MANAGEMENT
DECIDE WHEN, WHAT TO PRODUCE, STORE, MOVE
RAPIDLY COMMUNICATE ORDERS
TRACK ORDER STATUS
CHECK INVENTORY AVAILABILITY, MONITOR LEVELS
TRACK SHIPMENTS
PLAN PRODUCTION BASED ON ACTUAL DEMAND
RAPIDLY COMMUNICATE PRODUCT DESIGN CHANGES
PROVIDE PRODUCT SPECIFICATIONS
SHARE INFORMATION ABOUT DEFECT RATES, RETURNS...

2.31

2002 by Prentice Hall

TRADITIONAL
VIEW OF 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
*
2.32

2002 by Prentice Hall

ENTERPRISE SYSTEM
Manufacturing

Accounting

Business Processes
Vendors

Human
Resources

2.33

Customers

Enterprise-wide
Business Processes

Sales &
Marketing

Finance

2002 by Prentice Hall

BENEFITS OF ENTERPRISE
SYSTEMS
FIRM STRUCTURE & ORGANIZATION:
One organization
MANAGEMENT: Firmwide knowledgebased management processes
TECHNOLOGY: Unified platform
BUSINESS: More efficient operations &
customer-driven business processes
*
2.34

2002 by Prentice Hall

CHALLENGES OF ENTERPRISE
SYSTEMS
DAUNTING IMPLEMENTATION
HIGH UP FRONT COSTS & FUTURE
BENEFITS
INFLEXIBILITY
HARD TO REALIZE STRATEGIC
VALUE
*
2.35

2002 by Prentice Hall

INDUSTRIAL NETWORKS
LINK FIRMS INTO INDUSTRY-WIDE
SYSTEM
HORIZONTAL: Link firms in same
industry, including competitors
VERTICAL: Link firm with suppliers
in same industry
*
2.36

2002 by Prentice Hall

c h a p t e r

INFORMATION
SYSTEMS IN THE
ENTERPRISE
2.37

2002 by Prentice Hall