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Chapter 2

How BusinessesUse

InformationSystems

Uma GuptaIntroduction to Information Systems

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Learning Objectives

After studying this chapter, you will be able to:

Describe basic business structures and functional areas

Identify four types of information systems Explain the role and function of marketing information

systems Summarize the purpose of manufacturing and service

information systems Outline the purpose of financial and accounting

information systems and how they support a business

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Learning Objectives (cont.)

Explain the role and function of human resource information systems

Discuss the purpose and effects of cross-functional systems

Define and describe global information systems

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A Business Structured by Cross-Functional Teams

PRODUCTOR SERVICE

DEVELOPMENT

Accounting

Human Resources

Manufacturing

Marketing

Finance

Information Systems

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The Functional Product Design and Development Process

Marketing

Finance

Accounting Manufacturing

HumanResources

Productor ServiceDevelopment

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Four Types of Information Systems

Personal, Work-Group, Enterprise-Wide Systems Sometimes information systems are

grouped into categories based on the number of individuals who use them: personal systems (one user), work-group systems (a group of users), or enterprise-wide systems (the entire organization).

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Four Types of Information Systems (cont.)

Systems Based on Type of Decision Decisions can be classified as operational,

tactical, and strategic.

Strategic Information Systems Information systems that give a company a

significant strategic advantage over its market competitors. These can be transaction processing systems, management information systems, decision support systems, or any combination of these systems.

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Four Types of Information Systems (cont.)

Function-Oriented Information Systems Systems classified according to their

business function: marketing information systems, manufacturing information systems, financial information systems, etc.

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Comparison of Types of Decisions

Types of Decisions Description

Operational

Tactical

Strategic

Structured decisions. Routine, require minimal judgment, focus on day-to-day operations.

Semistructured decisions that support tactical goals. Often made by middle managers.

Unstructured. Rely heavily on intuition, judgment, and experience. Usually made by top-level managers and executives.

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Information Systems Based on Type of Decisions

Systems that support operational, tactical, and strategic decision are broadly classified into the following categories: Transaction processing systems (TPS) Management information systems (MIS) Intelligent support systems (ISS), which include

decision support systems (DSS), executive information systems (EIS), and expert systems (ES)

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Information Systems Based on Type of Decisions (cont.)

Intelligent support systems (ISS) refer to a group of systems that support decisions requiring the use of knowledge, intuition, experience, and expertise Decision support systems (DSS) Executive information systems (EIS) Artificial intelligence (AI) and expert systems

(ES)

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Functional Information Systems

Information systems can also be classified according to function in these four areas: Marketing Manufacturing and service Accounting and finance Human resources

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Marketing Information Systems

Information systems that meet the information needs of an organization in the areas of sales, distribution, advertising and promotion, market analysis, market intelligence, product research, service management, and other marketing functions.

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•Databases to improve customer service•Point-of-sale systems•Kiosks

Developing the Strategic Marketing Information Systems

Plan

Company Mission, Goals, Objectives

Strategic Marketing Plan

Strategic Marketing Information Plan

Marketing Information Systems

Examples:

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Manufacturing Information Systems

A set of systems that support the manufacturing and service functions of purchasing, receiving, quality control, inventory management, material requirements planning, capacity planning, production scheduling, and plant design.

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Developing a Manufacturing Information System Plan for

Manufacturing and Service Businesses

• Automation systems• Logistics systems• Material requirements planning software• Manufacturing resource planning software• Agile manufacturing environments• ERP

Company Mission, Goals, Objectives

Strategic Manufacturing and Service Plan

Strategic Manufacturing and Service Information Plan

Manufacturing Information Systems

Examples:

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Financial and Accounting Information Systems

Computerized systems that provide accounting and financial information to improve decision making.

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Developing the Strategic Financial and Accounting Information Systems Plan

General ledger systems Asset management systems Order-entry systems Cash management systemsAccounts receivable and accounts payable systems

Inventory control systems Payroll systemsCapital budgeting systems

Company Mission, Goals, Objectives

Strategic Financial and Accounting Plan

Strategic Financial and Accounting Information Systems Plan

Financial and Accounting Information Systems

Examples:

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Human Resource Information Systems (HRIS)

Computerized systems that support the planning, control, coordination, administration, and management of the human resource assets in an organization.

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Developing the Strategic Human Resource Information Systems

Plan

Personnel databases Payroll systems Benefits administration Performance appraisal

Personnel action systems (hiring, firing, recruiting)Labor law compliance system Compensation systems

Workforce scheduling systems

Company Mission, Goals, Objectives

Strategic Human Resources Plan

Strategic Human Resources Information Systems Plan

Human Resources Information Systems

Examples:

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Putting the Functions Together: Cross-Functional Systems

Systems that integrate functional systems give end users more complete information for decision making

The case for cross-functional information systems is even stronger in global companies A strong and consistent flow of information

is essential to project a uniform “face” to all people who have a stake in the business

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Global Information Systems

A system that links people, systems, and business units located around the world through the use of telecommunications (hardware and software that links two or more electronic devices that are geographically separated).

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Ten Critical Points for Global Success

Incorporate diversity into your organization

Build trust Create team identity Build consensus Teach sensitivity Establish ground rules Be fair Communicate progress Designate responsibilities Go face to face

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Guidelines for Business Information Systems Success

Give Employees Information Access for Improved Decision Making Many companies that use information systems

successfully do so because they trust employees enough to give them access to information so they can make decision that affect their jobs.

Problems Won’t Go Away. Opportunities Will. Be Prepared to Act on Both. Opportunities to apply technology to achieve

competitive advantage slip away quickly.

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Guidelines for Business Information Systems Success (cont.)

Use Information Systems to Improve Customer Satisfaction The key question when approving an information

system project should be “How will this help our company better serve our customers?”

Integration Leads to Success Companies that invest in systems that are

isolated from other internal systems often create complex problems

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Guidelines for Business Information Systems Success (cont.)

Take Calculated Risks Many new and innovative information systems are

also risky investments RISK

– “R” is for return: Are we achieving an appropriate return for the risks we take?

– “I” is for immunization: Do we have the controls and limits in place to manage risk?

– “S” is for systems: Do we have the systems to measure and report risk?

– “K” is for knowledge: Do we have the right people, skills, culture, and incentives for effective risk management?