6-1 Chapter 6 (Part II) Organizational Information Systems Robert Riordan, Carleton University

6-1

Chapter 6(Part II)

OrganizationalInformation

Systems

www.pearsoned.ca/jessup

Robert Riordan, Carleton University

6-2Information Systems Today, 2/C/e ©2008 Pearson Education Canada

Learning Objectives

1. Review the characteristics that differentiate the operational, managerial, and executive levels of an organization

2. Different Organizational Systems:• Manufacturing Systems• Marketing Systems• Human Resources Systems


Levels of the Organization


System Examples: Functional Area Info Systems


Questions: What kind of tactical information would be

useful to a branch manager of a Coca-Cola or Pepsi distributorship?(sample answer):Sales:

- by product line- this year vs last year- comparative analysis of sales by

account for last 5 years

Review Characteristics of Organizational Systems


What kind of strategic information would be useful to the president of a four-year liberal arts college?

- demographic data

- no. of 18-year olds who are planning to enter college over the next 10 years

Other:

- age distributions of the overall population

- characteristics of student population

- gender, socio-economic status



Categorize each decision as strategic planning, tactical or operational

a. Rejecting credit for a company with an overdue account (Operational)

b. Analyzing sales by product line within each geographic region, this year to date vs. last year to date (Tactical)

c. Using a simulation model to forecast profitability of a new product, using projected sales data, competitive industry statistics, and economic trends (Strategic)

d. Comparing planned vs. actual expenses for department staff (Tactical)

e. Allocating salespeople's time to the highest potential market prospects(Tactical)


6-8

Marketing Systems


The Marketing Function

• Marketing can be defined as “the process of planning and executing the

conception, pricing, promotion, sales and distribution

of ideas, goods and / or services to create exchanges that satisfy individual (customer) and organizational (business ) goals.”


Marketing Mix

• Product• Price• Promotion• Place (where and when product available to

customers)


System Co-ordination Needed

• To be successful, marketing systems must be coordinated with other organizational systems, e.g.,– Order Entry– Manufacturing– Inventory– Credit management


Marketing Information System

Model : Kotler P. (2003)


Model : Kotler P. (2003)

Marketing Information System


Operational Systems in Marketing

• Sales force automation:– Salesperson with laptop can demonstrate

benefits of insurance policy alternatives in customer’s home

– Information from calls on customer purchasing managers (eg. Quotations, Orders) can be entered on site


Sales Force Automation Tools

• Sales Process/Activity Management– Include a sequence of sales activities– Guide sales reps through each discrete step

in the sales process

Opportunity GeneratedOpportunity

GeneratedLead allocated

Prospect contacted

Prospect qualified

Solution identified

Order placed

Sales process

Sales activity



• Customer contact management systems– Provide information on past contacts with

specific customers– Output: call report:

• No. of sales calls made by a salesperson• No. and dollar amount of sales made by

this person



• Telemarketing systems– Identify customers and automatically call them– Use electronic phone directories– Can make notes about calls– In a LAN-based system, 200 telemarketers

can use the same system at the same time• Direct mail advertising systems

– Create mailing labels• Delivery tracking and routing systems

– Help plan optimal delivery routes



Tactical Systems in Marketing

• Data from operational systems, which now ‘sits’ in tables in a relational database on disk, is summarized in various ways for extra managerial insight

• Considerable ad hoc reporting is available here



• Objective of tactical marketing managers:– To reach the sales goals set by top marketing

executives– They must make tactical decisions such as:

• How sales territories should be shaped• How to allocate salespersons to territories• What products should be offered to what

customers– Sales management systems help here


• Sales management systems:

• Examples of output:– Effectiveness of different salespersons with

different segments of the market– Assessment of the productivity of the sales

force, and the fertileness of sales territories– Success of products by salesperson, territory

and product type



• Advertising and promotion systems– Help decide which advertising media and

promotion system to use– Can produce tactical reports e.g., on

effectiveness of advertising campaigns– Marketing research firms specialize in

advertising and promotion data collection and analysis



• Pricing systems– Help managers set prices for their products

and services– Inputs may be:

• Costs of labour and materials• Costs of advertising• Expected competitive prices etc.

– May employ pricing models that identify the best price for a product under a variety of conditions



Strategic Systems in Marketing

• May contain both strategic and tactical elements• Sales forecasting systems

– Forecast sales for entire industry– For entire organization– For each product– For market segments for a product– Employ sophisticated statistical models and

may produce considerable graphic output


• Market research systems– Process results of surveys and interviews– Provide analyses of statistical significance– Use considerable data from outside the

company

Strategic & Tactical Systems in Marketing


Software used in Marketing• General purpose software:

– Database mgt, spreadsheets & graphics, statistical software

• Specific marketing systems (such as identified earlier)

• Recall also: data mining of data warehouses (to identify undiscovered relationships



• Customer Relationship Management

– using data on previous contacts with a specific customer to enhance future contacts with that customer

– Enables customization of products / services– Will be covered later



Managing Sales Opportunities



Create quick Quotations for each Opportunity



Track your activities per opportunity and report on them



Reports – In Progress



Reports & Charts – In Progress


6-32

Human Resource Management Systems


Human Resource (HR) Systems

• Major activities in HR:– Recruiting employees, evaluating applicants– Selecting, placing, promoting, transferring and

terminating employees– Training employees– Managing employee wage and benefit plans– Analyzing and designing job positions

• Producing job descriptions– Producing government reports– Planning for workforce needs


Operational Systems in HR

• Historically, payroll was the first– But, we consider it to be part of the AIS

• Related to expenditure cycle• Employee information systems

– Maintain information on every employee for various reporting purposes

– Employee profile: basic personal data, education, previous experience, employment history in org., preferred location for work ….


Human Resources Management Systems (HRMS)



• Employee Information System– May contain skills inventory component

• Employee’s work experience, work preferences, test scores, interests, special skills

• How could this be used• Attendance recording systems

– May use negative reporting (only when absent)

– Include overtime credits etc.


• Employee scheduling systems– can get complex with shift work (e.g, nurses)– Must adhere to union regulations

• Performance management systems– Appraisal data can be filled out on special

screens– Performance measures (no. of purchase

orders processed per day) may be included



• Performance management systems:– Collect and store textual data e.g., written

comments of supervisor– Need careful documentation of employee

performance and how performance was measured (e.g., for grievance hearings)

– May have tactical components• Which supervisors give high number of poor

evals.• Which labour sources provide unacceptable

workers



Tactical Systems in HR

• Position control systems– Keep data on each job position in the org.

• E.g. task content– Can be useful for job redesign

• Which job positions require data entry?• Which require statistical analysis

• Recruiting systems– Provide list of planned retirements– List skills, preferences of current employees– Analyze turnover rates among various classes

of employees


• Compensation and benefit systems– “cafeteria style benefits” for employees to

choose from– Considerable data storage here– Tactical:

• how much to increase compensation plans to attract high quality employees

• What kind of benefits are different categories of employees choosing?

– May be available on organizational intranet

Tactical Systems in HR


Strategic Systems in HR

• Long-term workforce planning– What are the HR needs to meet organization’s

strategic plan for next 5-10 years?– Forecasting supply and demand of required

workforce• Labour negotiation support systems

– Must be timely and have ad hoc capacity– Assist in bargaining sessions with unions


HRMS Software

• HR systems store much more textual data than other functional systems

• There are specific HR systems for sale• Use of HRMS is not as widespread in small to

medium businesses

6-43

Manufacturing Systems


Computers in Manufacturing

• Computer-aided design (CAD)• Computer-aided engineering (CAE)

– 3-D representation of car engine on screen– Simulation of engine’s performance– Performance data gathered

• Automated control of production machines– Computer control of sawing patterns– Computer control of industrial robots


Manufacturing Resource Planning (MRP)

• Master Production Scheduling system• Material requirements planning system• Capacity requirements planning system• Detailed Production Schedule• Shop floor control (comp. to schedule)• Quality control (comp. to quality standards)• Cost accounting; inventory control


MarketMarketDemandDemand

ProductionProductionplanplan

Problems?Problems?

Rough-cutRough-cutcapacity planningcapacity planning

YesYes NoNo YesYesNoNo

FinancFinancee

MarketingMarketing

ManufacturingManufacturing

AdjustAdjustproduction planproduction plan

MasterMasterproduction scheduleproduction schedule

MRPMRP

CapacityCapacityplanningplanning

Problems?Problems?RequirementsRequirements

schedulesschedules

Ad

just

mas

ter

sch

edu

leA

dju

st m

aste

r sc

hed

ule

MRP


Production Planning & Control

• Raw materials acquisition (when, how much)• Machine and worker requirements• Detailed production schedules• Gathering evaluation statistics

– Sensors, scanners, shop floor terminals– Quality control– Comparing performance data to plans

• Cost accounting for mfg. goods


In More Detail

• Master Production Schedule– Based on

- accepted sales orders• Sales forecast• Current finished goods inventory

• Lists #units to be produced each week


Bill of Materials

• A list of raw materials needed to produce one unit of finished product and the quantity of each material

• Material Requirements Planning (MRP)– With the MPS and BOM, a system can

produce time-phased purchase orders for raw materials (main output of MRP)


Capacity Requirements Planning (CRP)

• What MRP is to materials required• CRP is to machines time and worker time

required• What the bill of materials is to MRP, the Route Sheet is to CRP

- shows sequence of required operations and the standard time allowed for each operation (usually person + machine)


Capacity

• How much machine time and worker time do we have?– May need to rent more floor space and / or

machines– May need to hire temp workers

• CRP generates a detailed production schedule

• It releases manufacturing orders to the production floor


Inventory Control

• In manufacturing, we have:– Raw materials inventory– Work-in-process inventory– Finished goods inventory

• Systems keep track of quantities and costs of each


Just-In-Time (JIT) Manufacturing

• Raw materials arrive just when they are needed on the production floor

• Minimizes inventory• Requires complex information systems

(operational)• May have vendor managed inventory

(supplier’s computers tap into our inv. systems)


MRP in Services

• Service applications such as:– Professional services– Postal services– Retail– Banking– Healthcare– Higher education– Engineering– Logistical services– Real estate


• Enterprise resource planning (ERP): – Next step in an evolution that began

with MPR and evolved into MRPII– Integration of financial, manufacturing,

and human resources on a single computer system.

ERP


ERP Software

– ERP software provides a system to capture and make data available in real time to decision makers and other users in the organization

– Provides tools for planning and monitoring various business processes

– Includes• Production planning and scheduling• Inventory management• Product costing• Distribution


ERP Strategy Considerations

• High initial cost• High cost to maintain• Future upgrades• Training

6-58

Supply Chain Management (SCM) Systems


Supply Chain Management Software (SCM)

• Supply chain: flow of materials, services and information from suppliers of merchandise and raw materials through to the organization’s customers– Now: supply network

• Supply chain management: processes and procedures used to ensure the delivery of goods and services to customers at the lowest cost while providing highest value to the customers


• Supply chain: flow of materials, services and information from suppliers of merchandise and raw materials through to the organization’s customers– Now: supply network

• Supply chain management: processes and procedures used to ensure the delivery of goods and services to customers at the lowest cost while providing highest value to the customers



• Suppliers are gaining access to an organization’s production planning schedules to assure an ability to fulfill orders

• Producing organization is opening its systems to the customer to allow the customer to view inventory and production levels before placing orders





• Dell uses Ariba SCM to automate its purchasing process

• SCM system is connected to its broad supplier network

• System provides Dell with data to id inefficiencies within its supply network; and to negotiate key contracts for goods and services







• Although we studied systems supporting each functional area separately, there is a dire need for connectivity among these systems

• How can systems “talk” to each other?– E.g. can share common database

• How might order entry, accounts receivable, finance, manufacturing systems need to be connected? How would this help?



• Various systems were developed at different times, in different languages, using different data sources and maybe different hardware technologies

• Legacy systems: “inherited” from the “good old days” of COBOL or RPG

• Read p. 237, 239• Is it worth revamping such old systems?



• An option for system integration throughout most of the organization is to implement an enterprise resource planning system (ERP)


Documents

6-1 Chapter 6 (Part II) Organizational Information Systems Robert Riordan, Carleton University