Information systems in the enterprise

Information Systems in the Enterprise
1
Management
Information 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
Management Information Systems
Chapter - Information Systems in the Enterprise
Mango Case: Fast Fashion, Hot Systems
Chapter: Information Systems in the Enterprise
Source: Management Information Systems by Kenneth C. Laudon, Jane P. Laudon
2

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Types of Information Systems
Figure 2-1
3

Different Kinds of Systems
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
Three main categories of information systems serve
different organizational levels:
4

Major Types of Systems
• Transaction Processing Systems (TPS)
• Management Information Systems (MIS)
• Decision-Support Systems (DSS)
• Executive Support Systems (ESS)
5

The Four Major Types of Information Systems
Figure 2-2
6

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
7

A Symbolic Representation for a Payroll TPS
Figure 2-3
8

Typical Applications of TPS
Figure 2-4
9

Management Information Systems (MIS)
Management level
• Inputs: High volume transaction level data
• Processing: Simple models
• Outputs: Summary reports
• Users: Middle managers
Example: Annual budgetingChapter: Information Systems in the Enterprise
10

Management Information Systems (MIS) (continued)
Figure 2-5
11

Management Information Systems (MIS) (continued)
Figure 2-6
A sample MIS report
12

Decision-Support Systems (DSS)
Management level
• Inputs: Transaction level data
• Processing: Interactive
• Outputs: Decision analysis
• Users: Professionals, staff
Example: Contract cost analysis
13

Decision-Support Systems (DSS) (Continued)
Voyage-estimating decision-support system
Figure 2-7
14

EXECUTIVE SUPPORT SYSTEMS (ESS):
• Inputs: Aggregate data
• Processing: Interactive
• Outputs: Projections
• Users: Senior managers
Example: 5 year operating planChapter: Information Systems in the Enterprise
15

Model of a Typical Executive Support System
Figure 2-8
16

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 staffChapter: Information Systems in the Enterprise
17

Relationship of Systems to One Another
Interrelationships among systems
Figure 2-9
18

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
19

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
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Sales and Marketing Systems
SYSTEM DESCRIPTION ORGANIZATIONAL
LEVEL
Order
processing
Enter, process, and track orders Operational
Pricing analysis Determine prices for products and
services
Management
Sales trend
forecasting
Prepare 5-year sales forecasts Strategic
Table 2-2
21

Manufacturing and Production Systems
• Scheduling, purchasing, shipping, receiving,
engineering, operations
• Materials resource planning systems, purchase
order control systems, engineering systems,
quality control systems
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LEVEL
Machine
control
Control the actions of machines and
equipment
Operational
Production
planning
Decide when and how many products
should be produced
Management
Facilities
location
Decide where to locate new production
facilities
Strategic
Manufacturing and Production Systems
23

Overview of an Inventory System
Figure 2-10
24

Financing and Accounting Systems
• Budgeting, general ledger, billing, cost accounting
• General ledger, accounts receivable, accounts payable, budgeting,
funds management systems
25

Financing & Accounting Systems (Continued)
SYSTEM DESCRIPTION ORGANIZATION-
AL LEVEL
Accounts
receivable
Tracks money owed the firm Operational
Budgeting Prepares short-term budgets Management
Profit
planning
Plans long-term profits Strategic
Table 2-4
26

Human Resource Systems
• Personnel records, benefits, compensation, labor relations,
training
• Payroll, employee records, benefit systems, career path systems,
personnel training systems
27

Human Resource Systems (Continued)
LEVEL
Training and
development
Tracks employee training, skills,
and performance appraisals
Operational
Compensation
analysis
Monitors the range and distribution
of employee wages, salaries, and
benefits
Management
Human resources
planning
Plans the long-term labor force
needs of the organization
Strategic
Table 2-5
28

Human Resource Systems (Continued) An Employee Recordkeeping System
Figure 2-11
29

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
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
30

(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.
31

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
32

Finance & accounting:
• Paying creditors, creating financial statements, managing cash
accounts
Human resources:
• Hiring employees, evaluating performance, enrolling employees in
benefits plans
Examples of Business Processes (Continued)
Table 2.6 continuedChapter: Information Systems in the Enterprise
33

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
34

The Order Fulfillment Process
Figure 2-12
35

Systems for Enterprise-Wide Process Integration
Enterprise applications:
• Designed to support organization-wide process coordination and
integration
36

Consist of :
• Enterprise systems
• Supply chain management systems
• Customer relationship management systems
• Knowledge management systems
Systems for Enterprise-Wide Process Integration
(Continued)
37

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.
38

Enterprise Application Architecture
Figure 2-13
39

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
40

Traditional View of Systems
Figure 2-14
41

Enterprise Systems
Figure 2-15
42

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
43

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
44

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
45

• 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
Supply Chain Management (SCM)
46

Haworth’s Supply Chain Management Systems
Figure 2-16
47

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
48

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
49

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
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(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
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Figure 2-17
52

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
53

• There are extraordinary opportunities to use information systems
to achieve business value, and increase profitability
MANAGEMENT OPPORTUNITIES, CHALLENGES, AND
SOLUTIONS
Management Opportunities:
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• 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:
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• 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
Management Challenges: (Continued)
56

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.
57

Information systems in the enterprise

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