Work Systems, Information Systems, and E-business

Work system is a system in which human participants/ machines perform a business process using information, technology, and other resources to produce products/services for internal or external customers. An example of a socio-economical system is Tumas Group whereas an example of socio-technical system is BOV. An information system is a work system devoted to capturing, transmitting, storing, retrieving, manipulating, and displaying information, supporting other work systems. Information systems are the foundation of ebusiness. E-business is the practice of performing and coordinating business processes through the extensive use of information technology (IT). Operating in an e-business style requires responsiveness, accuracy, and efficiency that can be accomplished only through highly developed supply chains and value chains supported by information systems that customers may never experience directly. Thus e-business is a style of operating an organization by making extensive use of information technology within critical work systems. E-business= E-commerce + ERP + CRM + SCM E-commerce: the part of e-business that the customer experiences directly. E-commerce often includes tasks such as: 1. 2. 3. 4. 5. 6. Informing a customer of a products existence Providing in-depth information about the product Establishing the customers requirements Performing the purchase transaction Delivering the product electronically if the product happens to be software or information Providing customer service electronically

ERP: Enterprise Resource Planning deals with accounting and finance; capital consists of raw materials, semifinished goods, finished goods, money and labor. ERP is an information system that includes core business activities and performs all the points of e-business. Porters Value Chain: this is a business network. Example like Pavi buying from various suppliers and sell to many customers. CRM: Customer Relationship Management includes market, market research and sales. It refers to a situation where the function of one output is the input of another. SCM: Supply Chain Management includes purchasing, procurement and buying tangible/intangible assets by ecommerce.

Systems
Businesses operate through systems. The work system framework can be used for anything, ranging from ordering pizza over the web to a hiring system, manufacturing of cars, among many others. A crucial management responsibility is to identify ways to do work more efficiently and to produce better products and services. Work in each case might be done with or without extensive use of the Internet and other information technologies. Although using the Internet for part of the work may yield important advantages, the main goals are about providing value for customers and doing work efficiently. Systems and Subsystems A system is a set of interacting components that operate together to accomplish a purpose. A subsystem is a component of a system, even though it can also be considered a system in its own right. However, understanding the significance of any particular system usually requires at least some understanding of the larger system it serves. E.g. a manufacturing firm is the main system, which may contain the following subsystems: product design, production, sales, delivery, service, etc. Each subsystem may then be further subdivided into other smaller subsystems. Some of those smaller subsystems are information systems that help people perform the work and that help coordinate tasks done in different parts of the larger system. Terms used when discussing systems: 1. A systems purpose is the reason for its existence and the reference point for measuring its success. E.g. to efficiently produce and deliver what the customer ordered. 2. A systems boundary defines what is inside the system and what is outside. 3. A systems environment is everything pertinent to the system that is outside of its boundaries. E.g. laws that applies. 4. A systems inputs are the physical objects and information that cross the boundary to enter it from its environment. E.g. customer requirements. 5. A systems outputs are the physical objects and information that go from the system into its environment. E.g. delivery of the final product and warranties. Work systems in businesses need to change frequently to accommodate to changing conditions in their environments and changing customer needs. For example, the computer hardware and software may be changed if they are inadequate, acquiring new skills, people leaving the organization, and so on.

Diagram: Work System Principles

Relationships between work systems and information systems White circle represents the information system: includes hardware and data; this little information system can grow/ enhance/ evolve. The Black circle represents the work system: data which represents the whole data of the company;

1.

Information system is a small, dedicated component of a single work system.

This diagram is the least advanced as it has only one type of cohesive/relating functionality. Small information system in a larger data;

2. Information system is roughly equivalent to work system Here we can notice that the information system has evolved.

3. Information system designed to support a number of different work systems.

4. Large information system supports a number of different work systems. The information system is just as big as the data of the company. Overlap takes place.

Companies move from the first diagram to the second or third diagram by growing and merging. Each of the three viewpoints is essential, but an excessive emphasis on any of them may lead to problems. A good idea is 3

contagious and hence everything should be entered in the information system. A developed information system represents real life. The General Idea of Systems Analysis: This process can be applied to the system as a whole and to its subsystems. However, no guidelines are given as to what has to be done at each step

The principle based systems analysis is a practical approach for analyzing systems at various levels of detail. It combines the general system analysis concepts with the work systems framework. It converts the four steps of system analysis into three steps.

Business Processes
A business process is a related group of steps or activities in which people use information and other resources to create value for internal or external customers. These steps are related in time and place, have a beginning and end, and have inputs and outputs. Sub processes are parts of a process that are processes in their own right because they consist of well-defined steps related in time and place, have a beginning and end, and have inputs and outputs. E.g. the process of producing a textbook includes sub processes such as writing the manuscript. Processes involve activities such as communicating with others, motivating employees, and analyzing data. A process must add value for its customers. Functional areas of business: 1. Traditional organizational structure is centered on functional areas. This provides a focus for work and promotes professionalism and expertise. Unfortunately, organizing in terms of business functions sometimes reinforces an inward-looking orientation, functional silos. This inward focus devotes too much attention to what happens within the functional area while showing little concern for coordinating across the functional areas and maximizing customer value. 2. Current trend reorganize around customer-oriented processes. There are 3 different types of processes which indicate problems due to overemphasizing of functional areas: 1. Processes that cross functional areas: such as creating a new product. Seeing these processes from the viewpoint of just one functional area is often misleading and contrary to the way todays business leaders want their organizations to operate. 2. Processes related to a specific functional area: such as manufacturing products, paying taxes. Here one should not really focus on learning about information systems per se. 3. Activities and sub processes occurring in every functional area: such as communicating with other people and analyzing data. These activities often use information systems in one way or another, and are not at all unique to a particular area.

Enterprise Resource Planning

ERP (enterprise resource planning) is an industry term for the broad set of activities that helps a business manage the important parts of its business. The information made available through an ERP system provides visibility for key performance indicators (KPIs) required for meeting corporate objectives. ERP software applications can be used to manage product planning, parts purchasing, inventories, interacting with suppliers, providing customer service, and tracking orders. ERP can also include application modules for the finance and human resources aspects of a business. Typically, an ERP system uses or is integrated with a relational database system. The deployment of an ERP system can involve considerable business process analysis, employee retraining, and new work procedures.

The Value Chain

The value chain is a set of processes a firm uses to create value for its customers. The value chain includes primary processes that directly create the value the firms customer perceives and support processes that add value indirectly by making it easier for others to perform the primary processes. The idea of the value chain is important because the way work is organized within a firm should be related to the way the firm provides value for its customers. To analyze the specific activities through which firms can create a competitive advantage, it is useful to model the firm as a chain of value-creating activities. Porter identified a set of interrelated generic activities common to a wide range of firms. The resulting model is known as the value chain and is depicted below:

Primary Value Chain Activities: The goal of these activities is to create value that exceeds the cost of providing the product or service, thus generating a profit margin. Inbound logistics: include receiving, warehousing, and inventory control of input materials. Operations: are the value-creating activities that transform the inputs into the final product. Outbound logistics: are the activities required to get the finished product to the customer, including warehousing, order fulfillment. Marketing and Sales: those activities associated with getting buyers to purchase the product, including channel selection, advertising, pricing, etc. Service: activities that maintain and enhance the products value including customer support, repair services, etc. Any of all of these primary activities may be vital in developing competitive advantage. For example, logistics activities are critical for a provider of distribution services, and service activities may be the key focus for a firm offering on-site maintenance contracts for office equipment. 7

Support Activities: The primary value chain activities are facilitated by support activities. Porter identified 4 generic categories of support activities, the details of which are industry specific. Procurement: the function of purchasing the raw materials and other inputs used in the value-creating activities. Technology Development: includes research and development, process automation, and other technology development used to support the value-chain activities. Human Resource Management: the activities associated with recruiting, development and compensation of employees. Firm Infrastructure: includes activities such as finance, legal, quality management, etc. Support activities often are viewed as overhead, but some firms successfully have used them to develop a competitive advantage, for example to develop a cost advantage through innovative management of information systems. Value Chain Analysis To understand the activities leading to competitive advantage, one can begin with the generic value chain and then identify the relevant firm specific activities. Once the activities are defined, linkages between activities should be identifies. A linkage exists if the performance of one activity affects that of another. The value chain is useful in outsourcing decisions. The firms value chain links to the value chains of upstream suppliers and downstream buyers, resulting in a value system.

Supply Chain Management (SCM)

4 separate layers involved in performing work efficiently and maximizing value to the customer: 1. 2. 3. 4. The suppliers value chain The supply chain between the supplier and the firm The firms value chain The customers experience in acquiring and using the product

The supply chain is the transactions, coordination, and movement of goods between the firms suppliers and the firm. SCM enables you to plan for and streamline your firms network of logistics and resources that come together to form a supply chain. Generally speaking, a supply chain comprises 3 areas raw material supply, manufacturing and distribution. Thus, SCM opens the door to cross-company collaboration as a firm gains visibility into its suppliers, vendors and customers. SCM empowers a firm by: Improving responsiveness via real-time insight into the entire supply chain Improving inventory turns by synchronizing inputs/supply with outputs/demands Encouraging collaboration by providing visibility into trends as seen through supply chain monitoring and business analysis

Benefits of SCM through Advanced Planner and Optimizer (APO), Inventory Collaboration Hub (ICH) and Event Management (EM): Better supply/demand responsiveness Improved customer satisfaction Improved regulatory compliance Better coordination and synchronization with suppliers and business partners Improved cash flows

Customer Relationship Management (CRM)

CRM supports customer related processes end-to-end. It therefore enables a 360 degree view of its customers and their various touch-points into the organisation. CRM makes possible enterprise wide customer intelligence or business intelligence specific to the firms customers and their needs. It also facilitates better and faster decision making and improves profitability per customer while helping address the businesss strategic priorities. CRM effectively extends ERP because it brings together and integrates industry-specific processes to better support a firms customers. CRM features: Marketing support Sales support Service support (post-sales service) Web channel Interaction centre management support which complements your field-based sales force Partner channel management Business communication management Real-time offer management

Industry specific CRM processes: Professional services manage client relationships, project resources and opportunities Automotive manage sales cycle from start to finish Leasing address end-to-end lease management Consumer products manage customer trade promotions Media industry manage intellectual property Utilities manage both commercial and industrial customers from a sales perspective High-tech manage business volume and channel relationship needs Public sector manage and address tax administration, service programs and more Pharmaceutical manage and support the stages of drug commercialization Manufacturing manage orders and manufacturing process

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The Role of Information Technology

Computerized systems can now help monitor the work as it is being done, thereby warning workers about obvious or likely errors before those errors cascade to create additional problems elsewhere. IT has helped firms improve their internal operations, thereby reducing internal costs and accelerating product development. IT also supports sales and marketing processes in many ways. IT applications also make the actual purchase transactions simpler and faster. The role of IT does not end onve the customer has purchased the product. Information Technology as a driving force for innovation: Technological progress 6 basic data processing operations: 1. 2. 3. 4. 5. 6. Capturing Transmitting Storing Retrieving Manipulating Displaying data

The continuous aim is about performing the 6 functions of IT faster and more efficiently. Major directions for these improvements include: 1. Greater miniaturization, speed, and portability The increasing speed and power of electronic components is the force underlying the immense progress to date in computers and telecommunications. 2. Greater connectivity and continuing convergence of computing and communications Connectivity is the ability to transmit data between electronic devices at different locations. Increasingly, computerized data can be transmitted almost instantaneously nearly anywhere in the world. The scope of connectivity includes interactive communication between people, electronic mail, transmittal of faxes, and transmission of business data. Connectivity is important to businesses because it reduced some of the disadvantages of being separated geographically. It also makes it easier to obtain important business information, much of which comes from outside sources, such as customers and suppliers. Connectivity means more than just transmitting a signal from one place to another. Interoperability is important because true connectivity often depends on the ability of heterogeneous components (software and hardware) to work together conveniently and inexpensively. E.g. the interoperability of two word processing programs is determined by the extent to which a document produced using one word processor looks that same and is handled the same way when it is displayed by another word processor, perhaps on a different type of computer. In this case, interoperability requires compatible internal coding of data, compatible program logic, compatible user interfaces, and compatible communication with storage devices and printers.

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The need for connectivity and interoperability has generated customer demand for open systems, which are technical systems that use clearly described, nonproprietary industry standard available to anyone. Deploying open systems supports a range of opportunities to compete more effectively. Within the firm, these trends make it easier and cheaper to build information systems to help people work together and to link more effectively with customers. Greater connectivity supports the continuing convergence of computing and communications whereby communication capabilities have become essential to many computer systems and computing capabilities have become essential to many computer systems. 3. Greater use of digitized information and multimedia Information exists in 5 different forms each of which can be digitized: 1. 2. 3. 4. 5. Predefined data items Text Pictures Sounds Video

Digitization involves coding the data as an equivalent or approximately equivalent set of numbers. E.g. a picture can be digitized by dividing it into tiny dots on a grid and assigning a number to represent the colour and intensity of the dot. Because any type of data can be digitized, any type of data can be stored, manipulated, and transmitted by computerized systems. 4. Better software techniques and interfaces with people

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