Lecturer: Gareth Jones. What are the major features of a business that are important for understanding the role of information systems? How do information

Lecturer: Gareth Jones

• What are the major features of a business that are important for understanding the role of information systems?

• How do information systems support the major business functions: sales and marketing, manufacturing and production, finance and accounting, and human resources?

• How do systems serve the various levels of management in a business and how are these systems related?

Tuesday, 17 March 2009Management Information Systems (BUS-

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• How do enterprise applications, collaboration and communication systems, and intranets improve organizational performance?

• What is the role of the information system’s function in a business?


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Business: Formal organization that makes products or provides a service in order to make a profit

Four basic business functions• Manufacturing and production

• Sales and marketing

• Finance and accounting

• Human resources


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• Five basic business entities: • Suppliers

• Customers

• Employees

• Invoices/payments

• Products and services


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• Logically related set of tasks that define how specific business tasks are performed

• The tasks each employee performs, in what order, and on what schedule

• E.g. Steps in hiring an employee

• Some processes tied to functional area• Sales and marketing: Identifying customers

• Some processes arre cross-functional• Fulfilling customer order


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Firms coordinate work of employees by developing hierarchy in which authority is concentrated at top◦ Senior management

◦ Middle management

◦ Operational management

◦ Knowledge workers

◦ Data workers

◦ Production or service workers Each group has different needs for information


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Global environment Global environment factorsfactors

• Technology and Technology and sciencescience

• EconomyEconomy

• PoliticsPolitics

• International changeInternational change


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Immediate Immediate environment factorsenvironment factors

• CustomersCustomers

• SuppliersSuppliers

• Competitors Competitors

• RegulationsRegulations

• StockholdersStockholders


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• Firms invest in information systems in order to: • Achieve operational excellence• Develop new products and services• Attain customer intimacy and service• Improve decision making• Promote competitive advantage• Ensure survival


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• Sales and marketing systems

• Manufacturing and production systems

• Finance and accounting systems

• Human resources systems


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• Sales and marketing systems • Support activities for selling and marketing firm’s products or services• Senior management:

• Monitor trends affecting products and sales, planning for new products and services, monitor performance of competitors

• Middle management: • Support market research, analyze marketing campaigns, pricing decisions, sales

performance• Operational management and employees:

• Locating and contacting prospective customers, process orders, provide customer service support


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• Manufacturing and production systems • Support activities for producing firm’s products or services• Senior management:

• Help plan long-term manufacturing goals, such as technology investments and locating new plants

• Middle management: • Analyze and monitor manufacturing and production costs and resources

• Operational management • Manage status of production tasks


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• Finance and accounting systems • Support activities for managing financial assets, firm’s capitalization, and financial

records• Senior management:

• Establish long-term investment goals and provide long-range forecasts of firm’s financial performance

• Middle management: • Oversee and control firm’s financial resources

• Operational management • Track flow of funds in firm through transactions (paychecks, payments, securities

reports, receipts, etc.)


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• Human resources systems • Support activities for attracting, developing, and maintaining firm’s workforce• Senior management:

• Identify manpower requirements (skill, education level, types and numbers of positions, etc.) for meeting long-term business plans

• Middle management: • Monitor and analyze recruitment, allocation, and compensation of employees

• Operational management • Track recruitment and placement of employees


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• Transaction processing systems• Keep track of basic activities and transactions of organization (e.g. sales,

receipts, cash deposits, payroll, credit decisions, flow of materials in a factory))

• Management information systems and decision-support systems

• Help with monitoring, controlling, decision-making, and administrative activities

• Executive support systems::• Help address strategic issues and long-term trends, both in firm and in

external environment


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• Transaction processing systems • Serve operational managers

• Principal purpose is to answer routine questions and to track the flow of transactions through the organization

• E.g. Inventory questions, granting credit to customer

• Monitor status of internal operations and firm’s relationship with external environment

• Major producers of information for other systems

• Highly central to business operations and functioning


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• Management information systems • Provide middle managers with reports on firm’s performance

• To monitor firm and help predict future performance

• Summarize and report on basic operations using data from TPS

• Provide weekly, monthly, annual results, but may enable drilling down into daily or hourly data

• Typically not very flexible systems with little analytic capability


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• Decision support systems (DSS)• Support non-routine decision making for middle management

• E.g. What would impact on production schedules be if sales doubled in December?

• Use information from TPS, MIS, and external sources

• Use models to analyze data

• E.g. voyage estimating system of metals company that calculates financial and technical voyage details

• Focus on extracting, analyzing information from large amounts of data


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• Executive support systems (ESS)• Serve senior managers

• Address strategic issues and long-term trends

• E.g. What products should we make in 5 years?

• Address non-routine decision-making

• Provide generalized computing capacity that can be applied to changing array of problems

• Draw summarized information from MIS, DSS and data from external events

• Typically use portal with Web interface to present content


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• TPS: Major source of data for other systems

• ESS: Primarily a recipient of data from lower-level systems

• Other systems may exchange data as well

• Exchange of data between functional areas

• E.g. Sales order transmitted to manufacturing system

• In most organizations, systems are loosely integrated


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• Integrate data from key business processes into single system

• Speed communication of information throughout firm• Enable greater flexibility in responding to customer

requests, greater accuracy in order fulfillment• Enable managers of large firms to assemble overall

view of operations


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• Manage relationships with suppliers, purchasing firms, distributors, and logistics companies

• Manage shared information about orders, production, inventory levels, etc.

• Goal is to move correct amount of product from source to point of consumption as quickly as possible and at lowest cost

• Type of inter-organizational system: • Automating flow of information across organizational boundaries


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• Help manage relationship with customers• Coordinate business processes that deal with customers

to optimize revenue and customer satisfaction, and increase sales

• Combine sales, marketing, and service record data from multiple communication channels to provide unified view of customer, eliminate duplicate efforts

• E.g. Saab CRM applications to achieve 360º view of customers resulted in greater follow-up rate on sales leads and increased customer satisfaction


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• Intangible knowledge assets• Knowledge about producing and delivering products• Source of value and advantage for firms

• Knowledge management systems: • Help capture, storage, distribute, and apply knowledge so that it can be

leveraged for strategic benefit• Include systems for:

• Managing and distributing documents, graphics, other digital knowledge objects

• Creating knowledge directories of employees with specialized expertise• Distributing knowledge


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• E-business• Use of digital technology and Internet to drive major business processes

• E-commerce• Subset of e-business

• Buying and selling goods and services through Internet

• E-government:• Using Internet technology to deliver information and services to

citizens, employees, and businesses


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4 Business Functions and Systems 5 Business Entities Support Systems (TSS, MIS, DSS, ESS) Management Systems (SCM, CRM, KMS)


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Identify all the current processes in the case study and think about the:◦ Business Functions◦ Business Entities

Please justify any assumptions you make


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Documents

Lecturer: Gareth Jones. What are the major features of a business that are important for understanding the role of information systems? How do information