Management
Information Systems,
Raymond McLeod
Jr. and George P.
10/e
Schell
2007 by Prentice Hall
Management Information Systems, 10/e
Raymond McLeod and George Schell
Chapter 8
Information in Action
2007 by Prentice Hall
Management Information Systems, 10/e
Raymond McLeod and George Schell
Learning Objectives
Know that a firms ability to develop effective
information systems can be a key factor in its success.
Recognize that the transaction processing system
processes describes the firms basic daily operations.
Be familiar with the processes performed by a
transaction processing system for a distribution firm.
Recognize that organizational information systems
have been developed for business areas and
organizational levels.
Be familiar with architectures of marketing, human
resources, manufacturing, and financial information
systems.
2007 by Prentice Hall
Management Information Systems, 10/e
Raymond McLeod and George Schell
Learning Objectives (Contd)
Know the architecture of an executive information system.
Understand what customer relationship management is
and why it requires a large computer storage capability.
Recognize how a data warehouse differs from a database.
Understand the architecture of a data warehouse system.
Know how data are stored in a data warehouse data
repository.
Know how a user navigates through the data repository.
Know what on-line analytical processing (OLAP) is.
Know the two basic ways to engage in data mining.
2007 by Prentice Hall
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Information as a Critical Success
Factor
Critical
success factor (CSF) was coined by
Ronald Daniel to identify a few key activities
that spell success or failure for any type of
organization.
Transaction processing system (TPS) is the
information system that gathers data
describing the firms activities, transforms the
data into information, and makes the
information available to users both inside and
outside the firm.
1st business application to be installed on computers.
Also
electronic data processing (EDP) system and
accounting information system .
2007 by Prentice Hall
Management Information Systems, 10/e
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Figure 8.1 A Model of a
Transaction Processing System
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System Overview
Distribution
system is a TPS used by
distribution firms.
Distribution firms distribute products or
services to their customers.
We will use data flow diagrams, or
DFDs, to document the system.
Figure 8.2 represents the highest level.
Figure 8.3 identifies the three major
subsystems.
2007 by Prentice Hall
Management Information Systems, 10/e
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Figure 8.2 A Context Diagram of
Distribution System
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Figure 8.3 A Figure 0 Diagram of
the Distribution System
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Major Subsystems of
Distribution System
Systems
that fill customer orders.
Systems
that order replenishment stock.
Order entry system enters customer orders into
the system.
Inventory system maintains the inventory
records.
Billing system prepares the customer invoices.
Accounts receivable system collects the money
from the customers.
Purchasing system issues purchase orders to
suppliers for needed stock.
Receiving system receives the stock.
Accounts payable system makes payments.
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Figure 8.4 A Figure 1 Diagram of
the System that Fills Customers
Orders
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Figure 8.5 A Figure 2 Diagram of
Systems That Order
Replenishment Stock
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Major Subsystems of
Distribution System (Contd)
Systems
that perform general ledger processes.
General ledger system is the accounting system
that combines data from other accounting systems
for the purpose of presenting a composite financial
picture of the firms operations.
General ledger is the file that contains the
combined accounting data.
Updated general ledger system posts records
that describe various actions and transactions to the
general ledger.
Prepare management reports system uses the
contents of the general ledger to prepare the
balance sheet, income statement, and other reports.
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Figure 8.6 A Figure 3 Diagram of the
Systems that Perform General Ledger
Processes
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Organizational Information
Systems
Organizational
information systems
are developed to meet the needs for
information relating to those particular
parts of the organization.
Marketing information system
(MKIS) provides information that relates
to the firms marketing activities.
Consists of a combination of input and
output subsystems connected by a database.
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Figure 8.7 A Model of Marketing
Information System
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Marketing Information
System
Output subsystems provide information about
critical elements in marketing mix.
Marketing mix consists of four main ingredients that
management manages in order to meet customers
needs at a profit.
Product subsystem provides information about the firms
products.
Place subsystem provides information about the firms
distribution network.
Promotion subsystem provides information about the
firms advertising and personal selling activities.
Price subsystem helps the manager make pricing decisions.
Integrated-mix subsystem enables the manager to
develop strategies that consider the combined effects of the
ingredients.
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Marketing Information System
(Contd)
Database
is populated with data from the
three MKIS input subsystems.
Input subsystems
Transaction processing system gathers data
from both internal and environmental sources and
enters the data into the database.
Marketing research subsystem gathers internal
and environmental data by conducting special
studies.
Marketing intelligence subsystem gathers
environmental data that serves to keep
management informed of activities of the firms
competitors and customers and other elements that
can influence marketing operations.
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Other Organizational
Information System
Human
Resources information system
(HRIS) provides information to managers
throughout the firm concerning the firms
human resources.
Manufacturing information system
provides information to managers throughout
the firm concerning the firms manufacturing
operations.
Financial information system provides
information to managers throughout the firm
concerning the firms financial activities.
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Figure 8.8 A Model of a Human
Resource Information System
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Figure 8.9 A Model of
Manufacturing Information
System
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Figure 8.10 A Model of Financial
Information System
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The Executive Information
System
Executive
information system (EIS) is a
system that provides information to upperlevel managers on the overall performance
of the firm; also called Executive support
system (ESS).
Drill-down capability allows for executives
to bring up a summary display and then
successively display lower levels of detail
until executives are satisfied that they have
obtained as much detail as is necessary.
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Figure 8.11 An Executive
Information System Model
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Figure 8.12 Drill-Down
Technique
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Customer Relationship
Management
Customer
relationship management
(CRM) is the management of the relationships
between the firm and its customers so that
both the firm and its customers receive
maximum value from the relationship.
CRM system accumulates customer data over
a long term5 years, 10 years, or more-and
uses that data to produce information for
users.
Uses a data warehouse.
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Data Warehousing
Data
warehouse describes data storage that
has the following characteristics:
Storage capacity is very large.
Data are accumulated by adding new records, as
opposed to being kept current by updating existing
records with new information.
Date are easily retrievable.
Date are used solely for decision making, not for use
in the firms daily operations.
Data
mart is a database that contains data
describing only a segment of the firms
operations.
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The Data Warehousing
System
Data
warehousing is the creation and
use of a data warehouse or data mart.
Primary data sources are TPS and data
obtained from other sources, both internal
and environmental; any data identified as
having potential value in decision making.
Staging area is where the data undergoes
extraction, transformation, and loading
(abbreviated as ETL process)
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Data Warehousing System
(Contd)
Extraction
process combines data from the various
sources.
Transformation process cleans the data, puts it
into standardized format, and prepares summaries.
Data stored in both detail and summary form.
Loading
process involves the entry of the data into
the data warehouse repository.
Metadata
Data about data
Data that describes the data in the data repository
Tracks data as it flows through the data warehouse
system
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Figure 8.13 A Model of a Data
Warehousing System
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Storing Data in the Warehouse
Data Repository
Dimension
tables store the identifying and
descriptive data.
Dimension provides the basis for viewing the
data from various perspectives or dimensions.
Fact
tables are separate tables containing
the quantitative measures of an entity.
Combined with dimension table data, various
analyses can be prepared.
Users can request information that involves any
combination of the dimensions and facts.
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Figure 8.14 A Sample Dimension
Table
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Figure 8.15 A Sample Fact
Table
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Storing Data (Contd)
Information
package identifies all of the
dimensions that will be used in analyzing a
particular activity.
Star schema-for each dimension, a key
identifies the dimension and provides the link
to the information package that results in a
structure that is similar to the pattern of a star.
The warehouse data repository contains multiple
star schemas, one for each type of activity to be
analyzed.
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Figure 8.16 Information Package
Format
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Figure 8.17 A Sample
Information Package
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Figure 8.18 Star Schema
Format
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Figure 8.19 A Sample Star
Schema
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Information Delivery
Drill
down-the process of navigating down
through the levels of detail.
Roll up-enables the user to begin with a
detail display and then summarizes the
details into increasingly higher summary
levels.
Drill across-moving from one data hierarchy
to another.
Drill through-going from a summary level to
the lowest level of detail.
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Figure 8.20 Navigating Through
the Warehouse Data Repository
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Figure 8.21 Drilling Across
Hierarchies Produces Multiple
Views
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OLAP
On-line analytical processing (OLAP) enables the
user to communicate with the data warehouse either
through a GUI or a Web interface and quickly produce
information in a variety of forms, including graphics.
Relational OLAP (ROLAP) uses a standard relational
database management system.
ROLAP data exists in detailed form.
Analyses must be performed to produce summaries.
Constrained to a limited number of dimensions.
Multidimensional OLAP (MOLAP) uses a special
multidimensional database management system.
MOLAP data are preprocessed to produce summaries at the
various levels of detail and arranged by the various dimensions.
Faster summary ability, can use many dimensions10 or more.
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Figure 8.22 ROLAP and MOLAP
Architectures
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Figure 8.23 An Example of a
Report than Could Be Produced
with ROLAP
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Figure 8.24 An Example of a
Report that Could Be Produced
with MOLAP
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Data Mining
Data
mining is the process of finding
relationships in data that are unknown to the
user.
Hypothesis verification begins with the users
hypothesis of how data are related.
Retrieval process guided entirely by user.
Selected information can be no better than users
understanding of the data.
Traditional way to query a database.
Knowledge
discovery is when the data
warehousing system analyzes the warehouse
data repository, looking for groups with common
characteristics.
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