2.1 © 2002 by Prentice Hall c h a p t e r 2 2 INFORMATION SYSTEMS IN THE ENTERPRISE ENTERPRISE

2.2.11 © 2002 by Prentice Hall

c h a p t e r

22INFORMATION INFORMATION

SYSTEMS IN THESYSTEMS IN THE

ENTERPRISEENTERPRISE


LEARNING OBJECTIVESLEARNING OBJECTIVES

• ANALYZE ROLES OF 6 TYPES OF ANALYZE ROLES OF 6 TYPES OF INFORMATION SYSTEMSINFORMATION SYSTEMS

• DESCRIBE TYPES OF INFORMATION DESCRIBE TYPES OF INFORMATION SYSTEMSSYSTEMS

• ANALYZE RELATIONSHIPS ANALYZE RELATIONSHIPS BETWEEN BUSINESS BETWEEN BUSINESS PROCESSESPROCESSES

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© 2002 by Prentice Hall


LEARNING OBJECTIVESLEARNING OBJECTIVES

• EXPLAIN HOW SYSTEMS & EXPLAIN HOW SYSTEMS & NETWORKS CREATE NEW NETWORKS CREATE NEW EFFICIENCIESEFFICIENCIES

• EVALUATE BENEFITS & EVALUATE BENEFITS & LIMITATIONS OF SYSTEMS & LIMITATIONS OF SYSTEMS & NETWORKSNETWORKS

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© 2002 by Prentice Hall


MANAGEMENT MANAGEMENT CHALLENGESCHALLENGES

• KEY SYSTEM APPLICATIONSKEY SYSTEM APPLICATIONS

• FUNCTIONAL PERSPECTIVE OF FUNCTIONAL PERSPECTIVE OF SYSTEMSSYSTEMS

• INTEGRATING FUNCTIONS & INTEGRATING FUNCTIONS & PROCESSESPROCESSES

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MANAGEMENT MANAGEMENT CHALLENGESCHALLENGES

1. INTEGRATION:1. INTEGRATION: Different systems serve Different systems serve variety of functions, variety of functions, connecting connecting organizational levels difficult, costlyorganizational levels difficult, costly

2. ENLARGING SCOPE OF MANAGEMENT 2. ENLARGING SCOPE OF MANAGEMENT THINKING:THINKING: Huge system investments, Huge system investments, long development time must be guided long development time must be guided by common objectives by common objectives

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TYPES OF INFORMATION SYSTEMSTYPES OF INFORMATION SYSTEMS

DATA WORKERSDATA WORKERS

KIND OF SYSTEM GROUPS SERVEDKIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR STRATEGIC LEVEL SENIOR MANAGERSMANAGERS

MANAGEMENT LEVEL MIDDLE MANAGEMENT LEVEL MIDDLE MANAGERSMANAGERS

OPERATIONAL OPERATIONAL

OPERATIONAL LEVEL OPERATIONAL LEVEL MANAGERS MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE &KNOWLEDGE LEVEL KNOWLEDGE &

SALES & MANUFACTURING FINANCE ACCOUNTING HUMANSALES & MANUFACTURING FINANCE ACCOUNTING HUMAN RESOURCESRESOURCESMARKETINGMARKETING


MAJOR TYPES OF SYSTEMSMAJOR TYPES OF SYSTEMS

• EXECUTIVE SUPPORT SYSTEMS EXECUTIVE SUPPORT SYSTEMS (ESS)(ESS)• DECISION SUPPORT SYSTEMS DECISION SUPPORT SYSTEMS (DSS)(DSS)• MANAGEMENT INFORMATION SYSTEMS MANAGEMENT INFORMATION SYSTEMS (MIS)(MIS)• KNOWLEDGE WORK SYSTEMS KNOWLEDGE WORK SYSTEMS (KWS)(KWS)• OFFICE AUTOMATION SYSTEMS OFFICE AUTOMATION SYSTEMS (OAS)(OAS)• TRANSACTION PROCESSING TRANSACTION PROCESSING SYSTEMS SYSTEMS

(TPS)(TPS)

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TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONSSales & Marketing SystemsSales & Marketing Systems

MAJOR FUNCTIONS OF SYSTEMS:MAJOR FUNCTIONS OF SYSTEMS:

• Sales management, market research, Sales management, market research, promotion, pricing, new productspromotion, pricing, new products

MAJOR APPLICATION SYSTEMS:MAJOR APPLICATION SYSTEMS:

• Sales order info system, market Sales order info system, market research system, pricing systemresearch system, pricing system

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TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONSManufacturing & Production SystemsManufacturing & Production Systems

MAJOR FUNCTIONS OF SYSTEMS:MAJOR FUNCTIONS OF SYSTEMS:• Scheduling, purchasing, shipping, Scheduling, purchasing, shipping,

receiving, engineering, operationsreceiving, engineering, operations

MAJOR APPLICATION SYSTEMS:MAJOR APPLICATION SYSTEMS:• Materials resource planning systems, Materials resource planning systems,

purchase order control systems, purchase order control systems, engineering systems, quality control engineering systems, quality control systemssystems

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TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONSFinance & Accounting SystemsFinance & Accounting Systems


• Budgeting, general ledger, billing, Budgeting, general ledger, billing, cost accountingcost accounting


• General ledger, accounts receivable, General ledger, accounts receivable, accounts payable, budgeting, funds accounts payable, budgeting, funds management systemsmanagement systems

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TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONSHuman Resources SystemsHuman Resources Systems


• Personnel records, benefits, Personnel records, benefits, compensation, labor relations, trainingcompensation, labor relations, training


• Payroll, employee records, benefit Payroll, employee records, benefit systems, career path systems, systems, career path systems, personnel training systemspersonnel training systems

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TYPICAL TPS APPLICATIONSTYPICAL TPS APPLICATIONSOther Types (e.g., University)Other Types (e.g., University)


• Admissions, grade records, course Admissions, grade records, course records, alumnirecords, alumni


• Registration system, student transcript Registration system, student transcript system, curriculum class control system, curriculum class control system, alumni benefactor systemsystem, alumni benefactor system

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KNOWLEDGE LEVELKNOWLEDGE LEVEL• INPUTS:INPUTS: DESIGN SPECS DESIGN SPECS• PROCESSING:PROCESSING: MODELLING MODELLING• OUTPUTS:OUTPUTS: DESIGNS, GRAPHICS DESIGNS, GRAPHICS• USERS:USERS: TECHNICAL STAFF TECHNICAL STAFF

EXAMPLE: ENGINEERING WORK EXAMPLE: ENGINEERING WORK STATION STATION

KNOWLEDGE WORK SYSTEMS KNOWLEDGE WORK SYSTEMS (KWS)(KWS)


OFFICE AUTOMATION SYSTEMS OFFICE AUTOMATION SYSTEMS (OAS)(OAS)

• TOWARD A “PAPERLESS” OFFICETOWARD A “PAPERLESS” OFFICE

• REDESIGN OF WORK FLOWREDESIGN OF WORK FLOW

• INTEGRATED SOFTWAREINTEGRATED SOFTWARE

• ERGONOMIC DESIGNERGONOMIC DESIGN

• BRIGHT, CHEERFULBRIGHT, CHEERFUL WORK SPACEWORK SPACE

EXAMPLE: PRESENTATION GRAPHICSEXAMPLE: PRESENTATION GRAPHICS


MANAGEMENT LEVELMANAGEMENT LEVEL

• INPUTS:INPUTS: HIGH VOLUME DATA HIGH VOLUME DATA

• PROCESSING:PROCESSING: SIMPLE MODELS SIMPLE MODELS

• OUTPUTS:OUTPUTS: SUMMARY REPORTS SUMMARY REPORTS

• USERS:USERS: MIDDLE MANAGERS MIDDLE MANAGERS

EXAMPLE: ANNUAL BUDGETINGEXAMPLE: ANNUAL BUDGETING

MANAGEMENT INFORMATION MANAGEMENT INFORMATION SYSTEMS SYSTEMS (MIS)(MIS)


• STRUCTURED & SEMI-STRUCTURED & SEMI-STRUCTURED DECISIONSSTRUCTURED DECISIONS

• REPORT CONTROL ORIENTEDREPORT CONTROL ORIENTED

• PAST & PRESENT DATAPAST & PRESENT DATA

• INTERNAL ORIENTATIONINTERNAL ORIENTATION

• LENGTHY DESIGN PROCESSLENGTHY DESIGN PROCESS

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MANAGEMENT INFORMATION MANAGEMENT INFORMATION SYSTEMS SYSTEMS (MIS)(MIS)


MISMIS

MIS FILESMIS FILES

SALES DATA

UNIT PRODUCT COST

PRODUCT CHANGE DATA

EXPENSE DATA

MISREPORTS

MANAGERSMANAGERS

TPS

Order Processing

System

Materials Resource

Planning System

General Ledger

System

ORDER FILE

PRODUCTION MASTER FILE

ACCOUNTING FILES

TPS DATA FOR MIS TPS DATA FOR MIS APPLICATIONSAPPLICATIONS


MANAGEMENT LEVELMANAGEMENT LEVEL

• INPUTS:INPUTS: LOW VOLUME DATA LOW VOLUME DATA

• PROCESSING:PROCESSING: INTERACTIVE INTERACTIVE

• OUTPUTS:OUTPUTS: DECISION ANALYSIS DECISION ANALYSIS

• USERS:USERS: PROFESSIONALS, STAFF PROFESSIONALS, STAFF

EXAMPLE: CONTRACT COST ANALYSISEXAMPLE: CONTRACT COST ANALYSIS

DECISION SUPPORT SYSTEMS DECISION SUPPORT SYSTEMS (DSS)(DSS)


• FLEXIBLE, ADAPTABLE, QUICKFLEXIBLE, ADAPTABLE, QUICK

• USER CONTROLS INPUTS/OUTPUTSUSER CONTROLS INPUTS/OUTPUTS

• NO PROFESSIONAL PROGRAMMINGNO PROFESSIONAL PROGRAMMING

• SUPPORTS DECISION PROCESSSUPPORTS DECISION PROCESS

• SOPHISTICATED MODELING TOOLSSOPHISTICATED MODELING TOOLS

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DECISION SUPPORT SYSTEMS DECISION SUPPORT SYSTEMS (DSS)(DSS)


STRATEGIC LEVELSTRATEGIC LEVEL

• INPUTS:INPUTS: AGGREGATE DATA AGGREGATE DATA

• PROCESSING:PROCESSING: INTERACTIVE INTERACTIVE

• OUTPUTS:OUTPUTS: PROJECTIONS PROJECTIONS

• USERS:USERS: SENIOR MANAGERS SENIOR MANAGERS

EXAMPLE: 5 YEAR OPERATING PLANEXAMPLE: 5 YEAR OPERATING PLAN

EXECUTIVE SUPPORT SYSTEMS EXECUTIVE SUPPORT SYSTEMS (ESS)(ESS)


• TOP LEVEL MANAGEMENTTOP LEVEL MANAGEMENT

• DESIGNED TO THE INDIVIDUALDESIGNED TO THE INDIVIDUAL

• TIES CEO TO ALL LEVELSTIES CEO TO ALL LEVELS

• VERY EXPENSIVE TO KEEP UPVERY EXPENSIVE TO KEEP UP

• EXTENSIVE SUPPORT STAFFEXTENSIVE SUPPORT STAFF

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EXECUTIVE SUPPORT SYSTEMS EXECUTIVE SUPPORT SYSTEMS (ESS)(ESS)


INTERRELATIONSHIPS AMONG SYSTEMSINTERRELATIONSHIPS AMONG SYSTEMS

ESS

TPSKWS

OAS

DSSMIS


SYSTEMS FROM A FUNCTIONAL SYSTEMS FROM A FUNCTIONAL PERSPECTIVEPERSPECTIVE

• SALES & MARKETING SYSTEMSSALES & MARKETING SYSTEMS

• MANUFACTURING & PRODUCTION MANUFACTURING & PRODUCTION SYSTEMSSYSTEMS

• FINANCE & ACCOUNTING SYSTEMSFINANCE & ACCOUNTING SYSTEMS

• HUMAN RESOURCES SYSTEMSHUMAN RESOURCES SYSTEMS

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SALES & MARKETING SALES & MARKETING INFORMATION SYSTEMINFORMATION SYSTEM

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

ORDER PROCESSING ENTER, PROCESS, TRACK ORDERS OPERATIONAL

MARKET ANALYSIS IDENTIFY CUSTOMERS & MARKETS KNOWLEDGE

PRICING ANALYSIS DETERMINE PRICES MANAGEMENT

SALES TRENDS PREPARE 5-YEAR FORECASTS STRATEGIC


MANUFACTURING MANUFACTURING INFORMATION SYSTEMINFORMATION SYSTEM


MACHINE CONTROL CONTROL ACTIONS OF EQUIPMENT OPERATIONAL

COMPUTER-AIDED-DESIGN DESIGN NEW PRODUCTS KNOWLEDGE

PRODUCTION PLANNING DECIDE NUMBER, SCHEDULE OF PRODUCTS MANAGEMENT

FACILITIES LOCATION DECIDE WHERE TO LOCATE FACILITIES STRATEGIC


FINANCE & ACCOUNTING FINANCE & ACCOUNTING INFORMATION SYSTEMINFORMATION SYSTEM


ACCOUNTS RECEIVABLE TRACK MONEY OWED TO FIRM OPERATIONAL

PORTFOLIO ANALYSIS DESIGN FIRM'S INVESTMENTS KNOWLEDGE

BUDGETING PREPARE SHORT TERM BUDGETS MANAGEMENT

PROFIT PLANNING PLAN LONG-TERM PROFITS STRATEGIC


HUMAN RESOURCES HUMAN RESOURCES INFORMATION SYSTEMINFORMATION SYSTEM


TRAINING & DEVELOPMENT TRACK TRAINING, SKILLS, APPRAISALS OPERATIONAL

CAREER PATHING DESIGN EMPLOYEE CAREER PATHS KNOWLEDGE

COMPENSATION ANALYSIS MONITOR WAGES, SALARIES, BENEFITS MANAGEMENT

HUMAN RESOURCES PLANNING PLAN LONG-TERM LABOR FORCE NEEDS STRATEGIC


EXAMPLES OF BUSINESS EXAMPLES OF BUSINESS PROCESSESPROCESSES

• MANUFACTURING & PRODUCTION:MANUFACTURING & PRODUCTION: Assembling product, checking Assembling product, checking quality, producing bills of materialsquality, producing bills of materials

• SALES & MARKETING:SALES & MARKETING: Identifying Identifying customers, creating customer customers, creating customer awareness, sellingawareness, selling

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EXAMPLES OF BUSINESS EXAMPLES OF BUSINESS PROCESSESPROCESSES

• FINANCE & ACCOUNTING:FINANCE & ACCOUNTING: Paying Paying creditors, creating financial creditors, creating financial statements, managing cash accountsstatements, managing cash accounts

• HUMAN RESOURCES:HUMAN RESOURCES: Hiring Hiring employees, evaluating performance, employees, evaluating performance, enrolling employees in enrolling employees in benefits benefits plansplans

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SHIPPINGSHIPPING INVENTORYINVENTORY

PLANNING & PLANNING & FORECASTINGFORECASTING

ORDER ORDER PROCESSINGPROCESSING

PRODUCTIONPRODUCTION

PROCUREMENTPROCUREMENT

ACCOUNTINGACCOUNTING

SUPPLIERSSUPPLIERSCUSTOMERSCUSTOMERS

LOGISTICS LOGISTICS SERVICESSERVICES

DISTRIBUTORSDISTRIBUTORS

INTRANETINTRANETINTRANET

SUPPLY-CHAIN MANAGEMENTSUPPLY-CHAIN MANAGEMENT


HOW INFORMATION SYSTEMS HOW INFORMATION SYSTEMS FACILITATES SUPPLY CHAIN FACILITATES SUPPLY CHAIN

MANAGEMENTMANAGEMENT

DECIDE WHEN, WHAT TO PRODUCE, STORE, MOVE…DECIDE WHEN, WHAT TO PRODUCE, STORE, MOVE…RAPIDLY COMMUNICATE ORDERS…RAPIDLY COMMUNICATE ORDERS…TRACK ORDER STATUS…TRACK ORDER STATUS…CHECK INVENTORY AVAILABILITY, MONITOR LEVELS…CHECK INVENTORY AVAILABILITY, MONITOR LEVELS…TRACK SHIPMENTS…TRACK SHIPMENTS… PLAN PRODUCTION BASED ON ACTUAL DEMAND…PLAN PRODUCTION BASED ON ACTUAL DEMAND…RAPIDLY COMMUNICATE PRODUCT DESIGN CHANGES…RAPIDLY COMMUNICATE PRODUCT DESIGN CHANGES…PROVIDE PRODUCT SPECIFICATIONS…PROVIDE PRODUCT SPECIFICATIONS…SHARE INFORMATION ABOUT DEFECT RATES, RETURNS...SHARE INFORMATION ABOUT DEFECT RATES, RETURNS...


TRADITIONALTRADITIONALVIEW OF SYSTEMSVIEW OF SYSTEMS

• WITHIN THE BUSINESS:WITHIN THE BUSINESS: There are There are functions, each having its uses of functions, each having its uses of information systemsinformation systems

• OUTSIDE THE ORGANIZATION’S OUTSIDE THE ORGANIZATION’S BOUNDARIES:BOUNDARIES: There are customers and There are customers and vendorsvendors

FUNCTIONS TEND TO WORK IN FUNCTIONS TEND TO WORK IN ISOLATIONISOLATION

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Sales & Marketing

Accounting

Finance

Manufacturing

Human Resources

ENTERPRISE SYSTEMENTERPRISE SYSTEM

Business ProcessesBusiness Processes

Enterprise-wideEnterprise-wide Business ProcessesBusiness Processes

Vendors Customers


BENEFITS OF ENTERPRISE BENEFITS OF ENTERPRISE SYSTEMSSYSTEMS

• FIRM STRUCTURE & ORGANIZATION:FIRM STRUCTURE & ORGANIZATION: One organizationOne organization

• MANAGEMENT:MANAGEMENT: Firmwide knowledge- Firmwide knowledge-based management processesbased management processes

• TECHNOLOGY:TECHNOLOGY: Unified platform Unified platform• BUSINESS:BUSINESS: More efficient operations & More efficient operations &

customer-driven business processescustomer-driven business processes

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CHALLENGES OF ENTERPRISE CHALLENGES OF ENTERPRISE SYSTEMSSYSTEMS

• DAUNTING IMPLEMENTATIONDAUNTING IMPLEMENTATION

• HIGH UP FRONT COSTS & FUTURE HIGH UP FRONT COSTS & FUTURE BENEFITSBENEFITS

• INFLEXIBILITYINFLEXIBILITY

• HARD TO REALIZE STRATEGIC HARD TO REALIZE STRATEGIC VALUEVALUE

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INDUSTRIAL NETWORKSINDUSTRIAL NETWORKS

LINK FIRMS INTO INDUSTRY-WIDE LINK FIRMS INTO INDUSTRY-WIDE SYSTEMSYSTEM

• HORIZONTAL: HORIZONTAL: Link firms in same Link firms in same industry, including competitorsindustry, including competitors

• VERTICAL: VERTICAL: Link firm with suppliers Link firm with suppliers in same industryin same industry

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c h a p t e r

22INFORMATION INFORMATION

SYSTEMS IN THESYSTEMS IN THE

ENTERPRISEENTERPRISE

Documents

2.1 © 2002 by Prentice Hall c h a p t e r 2 2 INFORMATION SYSTEMS IN THE ENTERPRISE ENTERPRISE