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Introduction to Information TechnologyTurban, Rainer and Potter
Chapter 9 Functional and Enterprise Systems
1
CHAPTER 9FUNCTIONAL AND
ENTERPRISE SYSTEMS
Introduction to Information TechnologyTurban, Rainer and Potter
Chapter 9 Functional and Enterprise Systems
2
Learning Objectives
Describe the role and characteristics of functional information systems
State the objective and operations of transaction processing and how it is supported by IT
Discuss the managerial and strategic applications in the accounting and finance areas that are supported by IT
Understand the marketing and sales applications provided by IT
Introduction to Information TechnologyTurban, Rainer and Potter
Chapter 9 Functional and Enterprise Systems
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List the various production and operations management activities and describe how they are supported by IT
Discuss the human resources management activities and how they can be improved by IT
Discuss the need for integrating functional information systems and describe the role of ERP and supported software such as SAP
Learning Objectives(continued …)
Introduction to Information TechnologyTurban, Rainer and Potter
Chapter 9 Functional and Enterprise Systems
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Chapter OverviewInformation Systems to Support Business Functions
•Characteristic of• functional• Information• Systems•Functional Support for Managers; Management Information Systems
Transaction Processing Information Systems
• Tracking Business Transactions•Objectives of TPS•The Process of TPS•Modernized TPS: From Online Processing to Intranet•Typical TPS Tasks and Modules
Accounting and Finance Systems
•Financial Planning and Budgeting•Investment Management•Financial Controls
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Chapter Overview (continued …)Marketing and Sales Systems•Customer Service•Telemarketing•Distribution Channels Management•Marketing Management•Ethical and Societal Issues in IT-supported Sales Activities
Production and Operations Systems•Supply-Chain Management•Logistics and Materials Management•Planning Production/Operations•Automatic Design Work and Manufacturing
Human Resources Management Systems•Recruitment•HRM and Development•HRM and Planning•Intranet Applications in HRS
Integrated Information Systems and Enterprise Resource Planning•Why Integrate?•How to Integrate?•Extreme Integration: Putting it All Together
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Case : Colonial Building Supply The Business Problem
Needed a technology to monitor inventory and support-related decisions to provide it with current information about inventory levels and customer buying trends to show the price of the lumber fluctuates daily
The Solution integrated system Point-of-sales (POS) terminals with hand-held
automatic identification and data collection devices
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The Results
Case (continued…)
Lower costs for data entry labor Reduction in inventory and storage space Fast access to information Better customer service Higher employee satisfaction Stay competitive Increase its market share and profitability
What have we learned from this case?? The system’s major applications are in logistics IT can be beneficial to a relatively small company An integration includes connection to business partners
using the Internet
Introduction to Information TechnologyTurban, Rainer and Potter
Chapter 9 Functional and Enterprise Systems
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Characteristics ofFunctional Information Systems
Comprises of several smaller information system Specific IS applications
can be integrated to form a coherent departmental function system
can be completely independent can be integrated across departmental lines
Interface with each other to form the organization wide information system
Interface with the environment
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Chapter 9 Functional and Enterprise Systems
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Management Information Systems Provide routine information to managers in
the functional areas Provide information in exception reports
and ad hoc (demand) reports
A ManagementInformation
System
DataWarehouse
ReportsScheduled,Exception,Demand,Others
Functionalapplications,
DSS
BusinessTransactions
TPS
DatabasesInternal,External
Enterprise Application
such as EIS
Introduction to Information TechnologyTurban, Rainer and Potter
Chapter 9 Functional and Enterprise Systems
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Transaction Processing Information Systems
Transaction Processing major business processes provide the mission-critical activities transaction may generate additional transaction simple transactions large volume and repetitive transactions
Transaction Processing System (TPS) computerized information system supports the transaction processes
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Characteristics of TPS Large amounts of data are processed The sources of data are mostly internal, and the output is intended mainly
for an internal audience The TPS processes information on a regular basis Large storage (database) capacity is required High processing speed is needed due to the high volume Input and output data are structured High level of detail is usually observable Low computation complexity is usually evident High level of accuracy, data integrity, and security is needed High processing reliability is required Inquiry processing is a must
Introduction to Information TechnologyTurban, Rainer and Potter
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Overview of typical transaction processing
The Items’Processing
System
InventoryFile
SalesFiles
Customermakes a purchase
of an item
POSTerminal
TransactionFile
PaymentProcessing Queries,
Answers
MasterFiles
Report
TPS (continued…)
Introduction to Information TechnologyTurban, Rainer and Potter
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The Process of TPS
Data are collectedand entered automatically
BatchProcessing
OnlineProcessing
Hybrid System
Online Transaction Processing (OLTP) created on a client/server architecture can save money
Internet (Intranet) transaction Processing allow multimedia data transfer, fast response time,
and storage of large databases of graphics and videos
Modernized TPS: from OLTP to the Internet
Introduction to Information TechnologyTurban, Rainer and Potter
Chapter 9 Functional and Enterprise Systems
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Accounting & Finance Systems Financial Planning and Budgeting
Financial and Economic Forecasting much of the interrelated indicators are available on the Internet many software packages conducting forecasting and planning
Planning for Cash Management build a decision support model make decisions about when and how much to refinance
Budgeting Budget 2000 and Comshare BudgetPlus are available to support
budgeting and to facilitate communication among all participants in the preparation process
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Accounting & Finance Systems (continued …)
Major activities
TACTIAL SYSTEMSa. Budgeting Preparation and Controlb. Investment Managementc. Capital Budgeting d. Cost Analysis and Controle. Tax Management f. Auditingg. Financial Planning
INTERNAL ENVIRONMENTTop ManagementOperation/ProductionMarketingHRMEngineering
EXTERNAL ENVIRONMENT
IRSSECVendorsClientsCPA CompaniesSuppliersCustomersBusiness Partners
STRATEGIC SYSTEMSa. Strategic Planning b. Ratios and Financial Healthc. Merger and Acquisition Analysis
OPERATIONAL ANDTRANSACTION PROCESSING
SYSTEMSa. The General Ledger b. Sales Order Processingc. Accounts Payable and Receivabled. Receiving and Shipping e. Payroll f. Inventory Management g. Periodical Reports & Statements
Introduction to Information TechnologyTurban, Rainer and Potter
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Accounting & Finance Systems(continued …)
Investment Management Access to financial and economic reports
hundreds of sources for the financial and economic reports and news
Financial analysis is executed with a spreadsheet program, or with
commercially available, ready-made decision support software
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Financial Controls Budgetary Controls
more sophisticated software attempts to tie expenditures to program accomplishment
Auditing auditing software is especially suitable when
computerized information systems are audited Financial Health Analysis
supported by expert systems Profitability Analysis and Cost Control
profitability analysis software allows accurate computation of profitability for individual products and for entire organizations
Accounting & Finance Systems(continued …)
Introduction to Information TechnologyTurban, Rainer and Potter
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Marketing & Sales Systems
Distribution Channel provide the goods or services to the
customer, and may extend through various intermediaries such as wholesalers and retailers
Channel Systems support all marketing linkages, such as
after-sales customer support
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Marketing & Sales Systems (continued ...)
CHANNELSYSTEMS
Market IntelligenceSystems
Target MarketingSystems
Sales SystemsCustomer Support
Systems
Delivery Systems
Dealer Systems
COMPANY
Manufacturing R & D/Design
DistributionAccounting/
Finance
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Marketing & Sales (continued ...) Customer Service
Customer Profiles and Preference Analysis IT creates customer database and merges computerized lists
Mass Customization Dell computers assembles computers according to the specifications of the buyers J.C. Penny measures you and transfers the data directly to the production floor
Targeted Advertisement on the Web match appropriate ads with specific groups of customers
Customer Inquiry Systems and Automated Help Desk expert systems and intelligent agents
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Telemarketing
Marketing & Sales (continued ...)
Five major activities which are supported by IT : advertisement and reaching customers order processing customer service sales support account management
Distribution Channels Delivery management
DSS models are used to support decisions like use own outlets or distributors, and transportation mode
Improving sales at retail stores IT reduces the long lines in stores by reengineering the checkout process
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Marketing Management
Marketing & Sales (continued ...)
Pricing of Products or Services - online analytical processing is supporting pricing decisions
Salesperson Productivity - sales-force automation provides salespeople in the field with portable computers, access to databases, and to the web
Product-Customer Profitability Analysis - a cost-accounting system identifies profitable customers and frequency
Sales Analysis and Trends - geographical information system (GIS) analyzes customers and competitors and examines potential strategies
New Products, Services, and Market Planning - IT evaluates large number of factors and uncertainties and conducts survey
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Ethical and Social Issues in IT-supported Sales Activities
Marketing & Sales (continued ...)
Example of Privacy Policy : 3M Corp. Information Collection
» personally identifiable information that you voluntarily provide through 3M’s website or e-mail correspondence
» general information (such as the type of browser you use, the files you request, and the domain name and country from which you submit the request for information)
Use of Information» responding to your inquires
» tracking orders you place with 3M
» supplying you with requested information on 3M products
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Supply-Chain Management (SCM)
Production Operations & Logistics
Supplier
Manufacturing
Transfer
Distribution
Transfer
Retail Outlet
RetailTransfer
Consumer
Transfer
INFORMATION FLOW
CASH FLOW
SCM plans and controls the flow of information and cash
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Logistics and Material Management
Production Operations & Logistics (continues …)
Inventory Management determining how much inventory to keep what to order, from whom, when to order and how much inventory model : economic order quantity (EOQ) many low cost commercial inventory software packages
Quality Control providing information about the quality of incoming material
and parts, as well as the quality of in-process semi-finished, and finished products
standard quality control information systems and expert systems
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Planning Production/Operations
Production Operations & Logistics (continues …)
Material Requirements Planning (MRP) - facilitates the plan for acquiring parts, subassemblies, or material
Manufacturing Resource Planning (MRPII) - connects the regular MRP to other functional areas
Just-in-Time Systems - minimizes waste of all kinds, improves processes and systems, and maintains respect for all workers
Project Management - Program Evaluation and Review Technique (PERT) and Critical Path Method (CPM)
Short-Term Schedules - schedule jobs and employees on a daily or weekly basis
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Automatic Design Work and Manufacturing
Production Operations & Logistics (Continues …)
Computer-Aided Design (CAD) enables drawings to be constructed on a computer screen and
subsequently stored, manipulated, and updated electronically
Computer-Aided Manufacturing (CAM) facilitates planning, operation, and control of production jobs
Computer-Integrated Manufacturing (CIM) concept or philosophy about the implementation of various
integrated computer systems in factory automation
Introduction to Information TechnologyTurban, Rainer and Potter
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Human Resources Management Systems
Recruitment finding, testing, and deciding which employees to hire Positions inventory
matching open positions with available personnel allowing data to be viewed by an employee over the intranet
Employee Selection conducting interviews by video teleconferencing expediting the testing and evaluation process, assuring consistency
in selection by using expert systems
Using the Internet advertising position openings on the Internet
Introduction to Information TechnologyTurban, Rainer and Potter
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Performance Evaluation online evaluations - supports many decisions, ranging from
rewards to transfer to layoffs expert systems - provide an unbiased and systematic
interpretation of performance over time paperless wage system (PWS) - tracks employee review dates
and automatically initiates the wage review process
Human Resources Management Systems (continued …)
Training and Human Resources Development digital video-editing system - produces training videotapes
Turnover, Tardiness, and Absenteeism Analyses DSS models - identifies causes and patterns
Human Resources Maintenance and Development
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Human Resources Management and Planning
Human Resources Management Systems (continued …)
Personal files and skills inventory - computerized personnel files identify qualified employees within the company for open positions, promotion, transfer, special training programs, and layoffs
Benefits administration - Networks and voice technology, or the intranets, specifying the value of each benefit and the available benefits balance of each employee
Government reports - Availability of computerized personnel records greatly eases the reporting process
Personnel planning - IT is used to collect, update, and process the information
Succession planning and implementation - expert systems and personnel databases supporting and implementing planning
Labor-Management Negotiations - DSS improve the negotiation climate and considerably reduce the time needed for reaching an agreement
Introduction to Information TechnologyTurban, Rainer and Potter
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Intranet Applications in HRM
Human Resources Management Systems (continued …)
Edify Corp.’s employee service system Oracle Corp.’s flexible benefits enrollment
program on the intranet Aetna health Plan’s online directory of primary
care physicians, hospitals, medical services, and health information
Apple Computers’ extensive education and development activities on the intranet
Merck Inc.’s intranet for HR transactions
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Integrated Information Systems
Reasons for Integration using twentieth-century computer technology,
which is functionally oriented : cannot give employees all the information they need do not let different departments communicate
effectively with each other in the same language crucial sales, inventory, and production data often
have to be painstakingly entered manually into separate computer systems every time a person who is not a member of a specific department needs ac hoc information related to the specific department
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How to Integrated Information Systems
Connect existing systems maximize the use of existing systems and minimize the
changes in them allows the addition of new applications to existing ones
and the connection of systems to intranets and the Internet Using supply chain management software
use one integrated package in one or several functional areas
overcomes the isolation of the traditional departmental structure where the functional areas are separated from one another
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How to Integrated Information Systems (continued …)
Enterprise resource planning (ERP) control all major business processes with a single
software architecture in real time increased efficiency to improved quality, productivity,
and profitability SAP software (R|3; my SAP.com)
crosses functional departments and can be extended along the supply chain to both suppliers and customers
composed of four major parts : accounting, manufacturing, sales and human resources
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SAP concept
ERP
Central SAPDatabase &
Servers
Central SAPDatabase &
Servers
SalesOffices
The factory automati-cally receives thesales order and canbegin production.
FACTORYThe warehouse is si-multaneously informedabout the order and can schedule shipping.
WAREHOUSEAccounting gets up-dated sales and pro-duction data at everystep of the process
ACCOUNTINGHeadquarters can tapinto up-to-the-minutedata on sales, inven-tory, and production
HEAD QUARTERS
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For Accounting Executing TPS effectively is a major concern of any
accountant
For Finance The use of IT helps financial analysts and managers
perform their difficult tasks better
For Marketing By understanding how ERP software operates,
marketing people can greatly improve the software utilization by developing challenging corporate applications
What’s in IT for Me?
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What’s in IT for Me? (continued …)
For Production/Operations Management Supply chain management and ERP are critical
today for any medium and large manufacturing company, and for service organizations such as banks
For Human Resources Management IT can improve the efficiency and effectiveness of
the HRM activities conducting training on the intranet
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What’s in IT for Me? (continued …)
For Human Resource Management Human resource managers utilize their
corporate networks extensively for posting job openings, and use internal corporate networks to publish corporate policies, company newsletters and job openings
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