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CHAPTER 8
Organizational Information Systems
CHAPTER OUTLINE
8.1 Transaction Processing Systems
8.2 Functional Area Information Systems
8.3 Enterprise Resource Planning Systems
8.4 Customer Relationship Management Systems
8.5 Supply Chain Management Systems
8.6 Electronic Data Interchange and Extranets
LEARNING OBJECTIVES
Describe transaction processing systems. Describe functional area information systems
and the support they provide for each functional area of the organization.
Describe enterprise resource planning systems.
LEARNING OBJECTIVES (continued)
Describe customer relationship management systems.
Describe supply chain management systems. Discuss electronic data interchange and
extranets.
Chapter Opening Case
Toyota Production System
Toyota Production System (continued)
Electronic dashboard showing status of assembly line
Toyota Production System (continued)
Toyota Production System (continued)
How light curtains work
8.1 Transaction Processing Systems (TPS)
Batch Processing
Online Transaction Processing (OLTP)
Rudy Giuliani checking out of a Wal-Mart using a bar code scanner that produces data captured by a transaction processing system
Note: the barcode scanner is an example of source data automation
How Transaction Processing Systems Manage Data
8.2 Functional Area Information Systems
Functional area information Systems are designed to support a functional area by increasing its internal effectiveness and efficiency in the following areas: Accounting Finance Marketing Operations (POM) Human Resources Management
Examples of Information Systems Supporting the Functional Areas
Functional Area Information Systems Reports
Routine reports Ad hoc (on demand) reports
Drill-down reports Key-indicator reports Comparative reports
Exception reports
Summary Report
A summary report is one type of routine report
Detailed Report
A detailed report is another type of routine report
Drill-Down Report
Drill-down report is a type of ad-hoc report
Key-Indicator Report
Key-indicator report is a type of ad-hoc report
Comparative Report
Comparative report is one type of ad-hoc report.
Exception Report
8.3 Enterprise Resource Planning Systems (ERP)
The major objective of ERP systems is to tightly integrate the functional areas of the organization and to enable seamless information flows across the functional areas.
Problems with information silos
ERP Systems (continued)
SAP Modules
ERP Systems (continued)
A business process is a set of related steps or procedures designed to produce a specific outcome.
8.4 Customer Relationship Management Includes a one-to-one
relationship between a customer and a seller.
One simple idea “Treat different customers differently.”
Helps keep profitable customers and maximizes lifetime revenue from them.
The Need for CRM
It costs six times more to sell to a new customer than to sell to an existing one.
A typical dissatisfied customer will tell 8-10 people.
By increasing the customer retention rate by 5%, profits could increase by 85%.
Odds of selling to new customers = 15%, compared to the odds of selling to existing customers (50%)
70% of complaining customers will remain loyal if problem is solved
The Customer Life Cycle
Customer Value
Customer Touch Points
Telephone
Conventional mail Help desk
Web site
Store
CRM Applications
CRM systems provide applications in 3 major areas:Sales - sales force automation (SFA).
Marketing – support marketing campaigns & provide opportunities for cross-selling, up-selling and bundling.
Customer Service – can take many Web-based forms.
Customer Service
Customer service can take many forms and includes: Technical and other information and services Customized products and services Tracking account or order status Personalized Web pages FAQs E-mail and automated response Call centers
Software as a Service for CRM (IT’s About Business 8.2)
Putting it all together
The relationships among SCM, ERP, and CRM
8.5 Supply Chain Management Systems (SCM)
Supply chain
Supply chain management (SCM)
Interorganizational information system (IOS)
Global information system
Supply Chain (recall Figure 2.2)
Warner’s Digital Supply Chain (IT’s About Business 8.3)
The Structure & Components of Supply Chains
A supply chain involves three segments:Upstream
Internal
Downstream
Tiers of suppliers
Generic Supply Chain
The Flows of the Supply Chain
Material flows Information flows Financial flows
Problems Along the Supply Chain
Poor customer service Poor quality product High inventory costs Loss of revenues New technologies
Problems Along the Supply Chain (continued)
Problems stem mainly from two sources: Uncertainties due to demand forecast, delivery
times, quality problems in materials and parts that can create production delays;
The need to coordinate several activities, internal units and business partners.
Bullwhip effect refers to erratic shifts in orders up and down the supply chain.
The Bullwhip Effect
Issues of Global IOS Design
Cultural differences Localization Economic and Political Differences Legal issues Cross-border data transfer which refers to the
flow of corporate data across nations’ borders.
8.6 Electronic Data Interchange (EDI) and Extranets
Electronic data interchange (EDI)
Extranets
EDI Benefits
Minimize data entry errors Length of messages are shorter Messages are secured Reduces cycle time Increases productivity Enhances customer service Minimizes paper usage and storage
EDI Limitations
Significant initial investment to implement Ongoing operating costs are high due to the
use of expensive, private VANs Traditional EDI system is inflexible Long startup period Multiple EDI standards exist
Comparing Purchase Order Fulfillment Without EDI
Comparing Purchase Order Fulfillment With EDI
Extranets
The main goal of extranets is to foster collaboration between business partners.
An extranet is open to selected B2B suppliers, customers and other business partners.
The Structure of an Extranet
Types of Extranets
A company and its dealers, customers or suppliers
An industry’s extranet
Joint ventures and other business partnerships
Chapter Closing Case
The JetBlue Fiasco
