HUANG Lihua, Fudan University Session 3 Understanding IS from Business Perspective PART I Foundations of Information Systems in Business

HUANG Lihua, Fudan University

Session 3 Understanding IS from Business Perspective

PART I Foundations of Information Systems in Business

HUANG Lihua, Fudan UniversityFeb., - July., 2006

Challenge Faced by FORD Management in 1985

• How to do cost saving

• How to do downsizing

• How to increase profitability by downsizing

Case study ：


FORD change in Procurement Process

1 ） Old business process

PurchasingWhen purchasing department wrote a purchase order, it sent a copy to accounts payables.

VendorThe vendor sent an invoice to accounts payables when they delivered goods.

Receiving When material control received the goods, it sent a copy of the receiving document.

AccountPayables

Thus, the account payables received three documents from various senders ： Purchasing order, invoice and receiving document. It was up to account payables to match the purchasing against the receiving document and the invoice. If they matched, the department issued payment. Otherwise, an accounts payable clerk would investigate the discrepancy, hold up payment, generate documents and all in all gum up the works.


• What is the solution to increase profitability by downsizing?

Case study ： FORD change in Procurement Process


2 ） Business process IS enabled

PurchasingReceiving Goods

IS

（ 1 ） When the purchasing department initiates an order, it enters the information into an information system ；

（ 1 ）（ 2 ）（ 2 ） When the goods arrive at the receiving dock,the clerk checks the DB to see if they correspond to an outstanding purchase order. If so, he or she accepts them and enters the transaction into the computer system. If receiving can’t find an entry for the received goods, it simply returns the goods 。


The account payables dept. payaccording to the rule.

(3)


3 ） effectiveness after use of information system

After Ford instituted this new process, since there are no discrepancies between the financial record and the physical record, material control is simpler and financial information is more accurate. Ford has achieve a 75% reduction in head count (from more than 400 to 125 head counts).




Question?

• What function is the information system?

• What solution to organizational and management in implementation such information system?


Wrap-up from cases

• Understanding of Information Systems ：– An Information System is an organizational and

management solution , based on information technology, to a challenge posed by the environment.


Information SystemsBusiness Processes

Information Processing Activities

Business Value

Management Activities

SupplyChainManagement

EnterpriseManagement

CustomerManagement

KnowledgeManagement

DataCollectionandStorage

TransformationIntoBusinessSystems

Dissemination

Planning CoordinatingControlling Modeling andDecision Making

FirmProfitability

andStrategicPosition


Information Systems: From Business Perspective

ORGANIZA-

TIONS

TECHNOLOGY

MANAGEMENT

INFORMATIONINFORMATION

SYSTEMSSYSTEMS

An Information System is an organizational and management solution , based on information technology, to a challenge posed by the environment.


ORGANIZATIONS

• PEOPLE: Managers, knowledge workers, data workers, production or service workers

• STRUCTURE: Organization chart, groups of specialists, products, geography

*


ORGANIZATIONS

• OPERATING PROCEDURES: Standard Operating Procedures (SOP), rules for action

• POLITICS: Power to persuade, get things done

• CULTURE: Behavior of staff, employee

*


MAJOR BUSINESS FUNCTIONS

• SALES & MARKETING

• MANUFACTURING

• FINANCE

• ACCOUNTING

• HUMAN RESOURCES

• ……

*


COMPUTER TECHNOLOGY

• HARDWARE

• SOFTWARE

• DATA STORAGE

• COMMUNICATIONS

• NETWORKS

*


SOCIOTECHNICAL PERSPECTIVE

OPTIMIZE SYSTEM PERFORMANCE:

Technology & Organization Mutually Adjust to One Another Until Fit Is Satisfactory

*

SOURCE: Liker, et al, 1987


SYSTEM INTERDEPENDENCE

BUSINESSBUSINESS

StrategyStrategy

RulesRules

ProceduresProcedures

ORGANIZATION ORGANIZATION INFORMATION SYSTEMINFORMATION SYSTEM

HARDWAREHARDWARE

SOFTWARESOFTWARE DATABASEDATABASE

TELE-TELE-COMMUNICATIONSCOMMUNICATIONS

INTERDEPENDENCEINTERDEPENDENCE


Learning from Cisco


IS Application in Cisco

• ERP: Enterprise Resource Planning

• SCM: Supply Chain Management

• CRM: Customer Relationship Management

• E-Business/e-Commerce

• EIS/DSS

• ………


CompanyBoundary

IS App. Framework in Business

Manufacturing,Production,Operation

Supply Chain Management:Procurement, Distribution, and Logistics

Customer Relationship Management:Marketing, Sale, and Customer service

Accounting& Finance

Engineering and Research

Consumer and Business Customers

Suppliers and Other Business Partners

Intranet

The Internet

Extranet


CompanyBoundary

IS App. Framework in Business

Manufacturing,Production,Operation

Supply Chain Management:Procurement, Distribution, and Logistics

Customer Relationship Management:Marketing, Sale, and Customer service

Accounting& Finance

Engineering and Research

Consumer and Business Customers

Suppliers and Other Business Partners

Intranet

The Internet

Extranet

ERP

Purchase Order

Sell Order


Wrap Up

• Re-conceptualizing IS from Business Perspective

• IS Application Framework in Business


Assignment for Session 3

• Individual Assignment and submit– Please suggest to Mr. Wang which IS

application will be adopted by his company in coming future?

• Preparation for session 4– Reading Materials

• Textbook: chapter 2

– Group Case study: Moen, Incorporated. (P51)• Preparing the case study questions on P.51

Documents

HUANG Lihua, Fudan University Session 3 Understanding IS from Business Perspective PART I Foundations of Information Systems in Business