IT in Business - Lect_5

8/8/2019 IT in Business - Lect_5

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IT in Business

Critical Application inInformation Technology Lecture 05


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Information System in EnterpriseValue Addition

The key reason anyone is in business isbecause they add value to a product or service.


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Business Function

A ll businesses have functions.

A n organization is defined as a set of peopleworking together in a coordinated system toachieve a set of goals.Some functions of business includemarketing, finance, human resources,accounting, IT, sales, public relations,administration etc.


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M anagement Challenges

B usinesses need different types of

information systems to support decisionmaking and work activities for variousorganizational levels and functions.Implementing information systems usuallycreates some problems, just as they solvesome problems. These problems may becategorized as:


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Challenges

Integration

These are systems that allow the sharing of information across different departments. The problemwith these is that they are pretty costly and difficult,because they are technologically complicated.

Enlargement

Most managers are designed to think on a micro level,however, enterprise level systems require managersto take a much larger view of their own behavior andperformance.


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M ajor Types of Information Systemsin Organizations

There are different interests, specialties and levels inorganizations, one organization may need many different types of systems.These can be categorized as: Operational level systems. Information systems that monitor the

elementary activities and transactions of the organization Knowledge level systems. Information systems that support

knowledge workers Management level systems. Information systems that support the

monitoring, controlling, decision making, and administrativeactivities of middle managers Strategic level systems. These support the long range planning

activities of senior management


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Six M ajor Types of Systems

Transaction Processing Systems

Office SystemsKnowledge Work SystemsDecision Support Systems

Management Information SystemsExecutive Support Systems


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Transaction Processing Systems

C omputerized systems that perform and

record the daily routine transactionsnecessary to conduct the business; theyserve the organizations operational levelExamples A ccounting information systems TC S, DHL, all have systems that are TPS


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Office Systems

Information Systems that aid knowledge

workers in the creation and integrations of new knowledge in the organization.Examples Used by professionals such as engineers,

doctors, accountants, M BA s etc Word processors, desktop publishing, document

imaging, communications, scheduling etc


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D ecision Support Systems

IS at the organization's management level thatcombine data and sophisticated analytical models or data analysis tools to support semi structured andunstructured decision makingExamples May take data from both internal sources (TPS, MIS) but

also from external sources (Stock prices or product prices of competitors)

Shipping companies use voyage-estimating systems thattake various shipping information into account and giveadvice on costs, freight rates for various types of cargo andport expenses etc


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M anagement Information Systems

These are at the management level of an

organization that serve the functions of planning,controlling and decision making by providingroutine summary and exception reportsExamples Systems that provide managers with reports and

online real-time access to company performance andhistorical records.

Mostly these are limited to internal events They provide information, they dont analyze anything


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Executive Support Systems

Information Systems at the organizationsstrategic level designed to address unstructureddecision making through advanced graphics andcommunicationsExamples Incorporate data about external events such as tax

laws or competitors, but also draw summarizedinformation from internal MIS and DSS.

Filter, compress and track critical data, emphasizingthe reduction of time and effort required to obtaininformation useful to executives.


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Executive Support Systems(Continued)

A good ESS would tell the board of

directors:What business should we be in?What are our competitors doing?What new acquisitions would protect us from

routine business problems?Which units should we sell to raise cash for acquisitions?


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System From a Functional Perspective

Information Systems can also be classified by

various organizational functions they serve as wellas by organizational level (which we just did)

Sales and Marketing Systems

Manufacturing and Production SystemsFinance and A ccounting SystemsHuman Resource Systems


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Sales and M arketing Systems

Systems that help the firm identify customers

for the firms products or services, developproducts and services to meet customersneeds, promote these products and services,sell the products and services and provide

ongoing customer support.


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M anufacturing and ProductionSystems

Systems that deal with the planning,

development and production of goods andservices, and with controlling the flow of production.Include inventory systems


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Finance and Accounting Systems

Systems that keep track of the firms financial

assets and fund flows.Include accounting systems, payroll systems,stock price management, treasury systemsetc.


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H uman Resource Systems

Systems that maintain employee records,

track employee skills, job performance, andtraining, and support planning for employeecompensation and career development.


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Enterprise Applications

Systems that can coordinate activities,

decisions and knowledge across manydifferent functions, levels and business unitsin a firm.


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Enterprise Applications(Continued)

Why are they necessary?

Electronic C ommerce, electronic business andintensifying global competition are forcing firms tofocus on speed to market, improving customer service and more efficient execution.

A firm needs to work like a well oiled machine. Information needed to support decision making

was often stuck in specialized systems. Operating a global firm was becoming almost

impossible due to restricted information flow


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Enterprise Applications(Continued)

Enterprise applications include:

Enterprise systems Supply chain management systems C ustomer relationship management systems Knowledge management systems

Each of these integrates a related set of functions and business processes toenhance the performance of organization asa whole


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Integrating Functions and BusinessProcesses

B usiness processes refer to the manner in

which work is organized, coordinated, andfocused to produce a valuable product or service.These are basically sets of activities neededto be done in order to run the business.These can become a source of competitiveadvantage if the company can innovatebetter or to execute better than its rivals


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Integrating Functions and Business Processes(Continued)

Some business functions support major

functional areas of a business, whereasothers are cross functionalThe problem with cross functional businessprocesses is that they need to groupemployees from different business functionsand make them work on the same businessprocess together


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Enterprise Systems

Enterprise Systems can integrate the key

business processes of an entire firm into asingle software system that allowsinformation to flow seamlessly throughout theorganization. These systems focus primarily

on internal processes but may includetransactions with customers and vendors


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Supply chain management systems

Supply chain management is the close

linkage and coordination of activities involvedin buying, making, and moving of a product.A supply chain is a network of organizationsand business processes for procuringmaterials, transforming raw materials intointermediate and finished products, anddistributing the finished products tocustomers


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Supply chain management systems(Continued)

S C Planning Systems enable the firm to

generate demand forecasts for a product andto develop sourcing and manufacturing plansfor that product.S C Execution Systems manage the flow of products through distribution centers andwarehouses to ensure that products aredelivered to the right locations in the mostefficient manner.


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Customer relationship managementsystems

Instead of treating customers as exploitable

sources of income, businesses are nowviewing them as long term assets to benurtured through C RMC RM focuses on managing all the ways afirm deals with its existing customers andpotential new customers.


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G ood CR M Systems

G ood C RM systems consolidate data from various sources andprovide analytical tools for answering questions such as:

What is the value of a particular customer over his or her lifetime? Who are our most loyal customers? A ccording to research, it costssix times more to sell to new customers than to sell to existingcustomers.

Who are our most profitable customers? Typically, 80 to 90percent of profit comes from 10 to 20 percent of customers.

What do these profitable customers want to buy?

Firms that can answer these questions acquire new customers,provide better service and support, customize their offeringsmore precisely to customer preferences , and provideongoing value to retain profitable customers


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K nowledge management systems

The value of a firms products and services is

based not only on its physical resources butalso on intangible knowledge assets.Knowledge management systems collect allrelevant knowledge and experience in the

firm and make it available whenever andwherever it is needed to support businessprocesses and management decisions.


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The End

Thank You

Documents

IT in Business - Lect_5