Introduction to Information SystemsBY SUJITH B R

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Functional, Enterprise, and Interorganizational Systems

The role and function of Management Information Systems (MIS) and Transaction Processing Systems (TPS) in organizations

How functional information systems support Accounting & Finance; Sales and Marketing; Production and Operations; and Human Resource Management

How and why information systems should be integrated

The role of interorganizational systems

Functional Information Systems Comprised of several small information system focused

on specific activities Specific IS applications can be

completely independent, or integrated to form a departmental functional system also, can be integrated to support a broad business process

(cross-departmental)

Interface with each other to form the organization wide information system

Interface with the environment

Functional Information Systems (continued)

Management Information Systems Provide routine information to managers in

the functional areas

BusinessTransactions

TPS

ManagementInformation

System

Data WarehouseDatabases

InternalExternal

Reports

ScheduledDemand

Exception

Transaction Processing Systems

Every business event that occurs during business operations is called a transaction

Business events (transactions) can trigger other business events

Each event (transaction) can be described by a number of data items

Transaction processing systems (TPS) are designed to record and store the data that describes every business event that occurs

Transaction Processing Systems (continued)

TPSs were the first to be automated – repetitive, consistent, high-volume tasks are ideal candidates for computerization

TPSs provide foundation for all other information systems Many TPSs are outward-reaching and convey impressions

to the customers about the quality of the business

Customer makes apurchase

POSsystem

Transaction fileUpdate

files

Inventory file

Sales file

Transaction Processing System (continued) Some characteristics of TPSs

Process large volume of data Data sources mostly internal, and output intended mainly for

internal use TPS operate regularly (on demand, daily, weekly, etc.) Require large storage (database) capacity Require high processing speed (due to the high volume) Input and output data known and well-understood (highly

structured) Requires high processing reliability; organizations cannot function

for long without TPSs

Methods of Processing TransactionsBatch Processing: simple, inexpensive

Employeetimecards

Data entryof timecard

dataPayroll transactions

Processpayroll

Employee data:Pay rate

WithholdingsEtc.

Employeepaychecks

Cash on hand Payroll summary

Methods of Processing TransactionsOnline Processing: complex, expensive

Customer makes apurchase

POSsystem

Transaction history file

Inventory file

Sales file

Methods of Processing TransactionsHybrid Processing: simple, inexpensive, more accurate

Badge readercollects employee

work dataPayroll transactions

Whenever employeesarrive / leave work

Processpayroll

Employee data:Pay rate

WithholdingsEtc.

Employeepaychecks

Cash on hand Payroll summaryNormal payroll

schedule:weekly, monthly,

etc.

Typical TPS TasksOrder processingLedger entriesPayments and receipts Inventory management, shipping, and receivingPayrollPeriodic reports and statements

Accounting and Finance Systems

Financial Planning and BudgetingFinancial and economic forecastingBudgeting

Investment ManagementAccess to financial and economic reportsFinancial analysis

Financial ControlsBudgetary ControlsAuditingFinancial Health AnalysisProfitability Analysis and Cost Control

Accounting and Finance Systems

Marketing & Sales Systems Distribution Channel (definition)

providing the goods or services to the customer; may extend through various intermediaries such as wholesalers and retailers

Other Channel Systems support all marketing linkages, such as after-sales customer

support

Manufacturing

DistributionR&D/Design

Accounting/FinanceCompany

Dealer Systems

Delivery Systems

Customer Support SystemsSales Systems

Target Marketing Systems

Market Intelligence Systems

Channel Systems

Marketing & Sales Systems (continued)

Customer Service customer profiles and preference analysismass customization – high volume production of

specialized product targeted advertising customer inquiry systems and automated Help Desk

Telemarketingadvertisement and reaching customersorder processing customer service sales supportaccount management

Marketing & Sales Systems (continued)

Distribution ChannelsDelivery and shipping management Improve retail stores

Marketing Management Set and monitor prices of products or servicesMonitor and evaluate salesperson productivityEvaluate profitability of products / customersAssess sales trendsAnalyze new products, services, and markets

Marketing & Sales Systems (continued)

Ethical and Social Issues in IT-supported Sales Activities Information collection and usagePrivacy concerns

Current trend – Customer Relationship Management (CRM)Focus is on developing a one-to-one relationship with

customers

Production & Operations Management Systems

Logistics and Material ManagementLogistics Management

• Ordering, purchasing, and inbound and outbound shipping

Inventory Management• Determine how much inventory to carry

Quality Control• Monitor and report quality of materials, work in

process, and finished goods

Planning Production/OperationsMaterial Requirements Planning; MRP II Just-In-Time Project Management (PERT & CPM) Short-term scheduling

Automatic Design Work and ManufacturingComputer Aided Design (CAD)Computer Aided Manufacturing (CAM)Computer Integrated Manufacturing (CIM)

Production & Operations Management Systems (continued)

Human Resources Management Systems

RecruitmentKeep track of vacanciesAdvertise positions via InternetEmployee selection

Human Resources Maintenance and DevelopmentTraining and retraining employeesPerformance assessmentTurnover, tardiness, and absenteeism analysis

Human Resources Management Systems

Human Resources Management and PlanningMaintain personnel files and skills inventoryAdminister benefitsComply with government reportingPersonnel planningSuccession planningLabor negotiations

Integrated Information SystemsReasons for Integration

Existing, functionally oriented information systems are deficient:

• cannot give employees all the information they need

• do not let different departments communicate effectively

• crucial sales, inventory, and production data often entered manually into separate computer systems

Integrated Information SystemsHow to Integrate Information Systems

Connect existing systems• maximize the use of existing systems and allows the

addition of new applications Using supply chain management software

• Overcomes the isolation of traditional departmental structure by integrating processing across several functional areas

Use Enterprise Resource Planning software• control all major business processes with a single

software architecture in real time• increased efficiency to improve quality, productivity,

and profitability

Interorganizational Information Systems (IOS)

Electronic systems involving information flow among two or more organizations in an on-going relationship

Objective – efficient transaction processingMany large businesses require suppliers to be

linked to them though IOS applications IOSs may be implemented with

Private, third-party networks (value-added networks)Publicly accessible networks (Internet)

Interorganizational Systems (continued)

Types of Interorganizational Systems Global systems Electronic data interchange (EDI) Electronic funds transfer (EFT) Extranets Shared databases Integrated messaging

Issues in IOS / Global IS Design

Cultural differences Economic and political differences Cross-border data transfer concerns

Summary

Role and function of TPSs Role and function of MISs In-depth review of how Iss support various

business functional areas Need and methods for integrating functional

information systems Interorganizational and global information

systems provide great opportunities but also great complexity