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Lecture-2- Introduction to Management

Information Systems

Thepul GinigeThepul Ginige

MANAGEMENT CHALLENGES

• Key system applications• Functional perspective of systems• Integrating functions & processes

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MANAGEMENT CHALLENGES1. INTEGRATION: Different systems serve

variety of functions, connecting organizational levels difficult, costly

2. ENLARGING SCOPE OF MANAGEMENT THINKING: Huge system investments, long development time must be guided by common objectives

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TYPES OF INFORMATION SYSTEMSTYPES OF INFORMATION SYSTEMS

DATA WORKERSDATA WORKERS

KIND OF SYSTEM GROUPS SERVEDKIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR STRATEGIC LEVEL SENIOR MANAGERSMANAGERS

MANAGEMENT LEVEL MIDDLE MANAGEMENT LEVEL MIDDLE MANAGERSMANAGERS

OPERATIONAL OPERATIONAL

OPERATIONAL LEVEL OPERATIONAL LEVEL MANAGERS MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE & KNOWLEDGE LEVEL KNOWLEDGE &

SALES & MANUFACTURING FINANCE ACCOUNTING HUMANSALES & MANUFACTURING FINANCE ACCOUNTING HUMAN RESOURCESRESOURCESMARKETINGMARKETING

MAJOR TYPES OF SYSTEMS

1. EXECUTIVE SUPPORT SYSTEMS (ESS)2. DECISION SUPPORT SYSTEMS (DSS)3. MANAGEMENT INFORMATION SYSTEMS (MIS)4. KNOWLEDGE WORK SYSTEMS (KWS)5. OFFICE AUTOMATION SYSTEMS (OAS)6. TRANSACTION PROCESSING SYSTEMS (TPS)

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TYPICAL TPS APPLICATIONSSales & Marketing Systems

MAJOR FUNCTIONS OF SYSTEMS:• Sales management, market research,

promotion, pricing, new productsMAJOR APPLICATION SYSTEMS:• Sales order info system, market

research system, pricing system

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TYPICAL TPS APPLICATIONSManufacturing & Production Systems

MAJOR FUNCTIONS OF SYSTEMS:• Scheduling, purchasing, shipping,

receiving, engineering, operationsMAJOR APPLICATION SYSTEMS:• Materials resource planning systems,

purchase order control systems, engineering systems, quality control systems

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TYPICAL TPS APPLICATIONSFinance & Accounting Systems

MAJOR FUNCTIONS OF SYSTEMS:• Budgeting, general ledger, billing,

cost accountingMAJOR APPLICATION SYSTEMS:• General ledger, accounts receivable,

accounts payable, budgeting, funds management systems

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TYPICAL TPS APPLICATIONSHuman Resources Systems

MAJOR FUNCTIONS OF SYSTEMS:• Personnel records, benefits,

compensation, labor relations, trainingMAJOR APPLICATION SYSTEMS:• Payroll, employee records, benefit

systems, career path systems, personnel training systems

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TYPICAL TPS APPLICATIONSOther Types (e.g., University)

MAJOR FUNCTIONS OF SYSTEMS:• Admissions, grade records, course

records, alumniMAJOR APPLICATION SYSTEMS:• Registration system, student transcript

system, curriculum class control system, alumni benefactor system

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OFFICE AUTOMATION SYSTEMS (OAS)

• Toward a “paperless” office• Redesign of work flow• Integrated software• Ergonomic design• Bright, cheerful work spaceEXAMPLE: PRESENTATION GRAPHICS

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KNOWLEDGE WORK SYSTEMS (KWS)

KNOWLEDGE LEVEL• INPUTS: DESIGN SPECS• PROCESSING: MODELLING• OUTPUTS: DESIGNS, GRAPHICS• USERS: TECHNICAL STAFF

EXAMPLE: ENGINEERING WORK STATION

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MANAGEMENT INFORMATION SYSTEMS (MIS)

MANAGEMENT LEVEL• INPUTS: HIGH VOLUME DATA• PROCESSING: SIMPLE MODELS• OUTPUTS: SUMMARY REPORTS• USERS: MIDDLE MANAGERS

EXAMPLE: ANNUAL BUDGETING

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MANAGEMENT INFORMATION SYSTEMS (MIS)

• Structured & semi-structured decisions

• Report control oriented• Past & present data• Internal orientation• Lengthy design process

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MISMIS

MIS FILESMIS FILES

SALES DATA

UNIT PRODUCT COST

PRODUCT CHANGE DATA

EXPENSE DATA

MISREPORTS

MANAGERSMANAGERS

TPS

Order Processing

System

Materials Resource

Planning System

General Ledger

System

ORDER FILE

PRODUCTION MASTER FILE

ACCOUNTING FILES

TPS DATA FOR MIS APPLICATIONS

DECISION SUPPORT SYSTEMS (DSS)

MANAGEMENT LEVEL

• Inputs: low volume data• Processing: interactive• Outputs: decision analysis• Users: professionals, staffEXAMPLE: CONTRACT COST ANALYSIS

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DECISION SUPPORT SYSTEMS (DSS)

• Flexible, adaptable, quick• User controls inputs/outputs• No professional programming• Supports decision process• Sophisticated modeling tools

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EXECUTIVE SUPPORT SYSTEMS (ESS)

STRATEGIC LEVEL

• Inputs: aggregate data• Processing: interactive• Outputs: projections• Users: senior managers EXAMPLE: 5 YEAR OPERATING PLAN

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EXECUTIVE SUPPORT SYSTEMS (ESS)

• Top level management• Designed to the individual• Ties CEO to all levels• Very expensive to keep up• Extensive support staff

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INTERRELATIONSHIPS AMONG SYSTEMS

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ESS

TPSKWS

OAS

DSSMIS

SUPPLY-CHAIN MANAGEMENT

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SHIPPINGSHIPPING INVENTORYINVENTORY

PLANNING & PLANNING & FORECASTINGFORECASTING

ORDER ORDER PROCESSINGPROCESSING

PRODUCTIONPRODUCTION

PROCUREMENTPROCUREMENT

ACCOUNTINGACCOUNTING

SUPPLIERSSUPPLIERSCUSTOMERSCUSTOMERS

LOGISTICS LOGISTICS SERVICESSERVICES

DISTRIBUTORSDISTRIBUTORS

INTRANETINTRANETINTRANET

Supply Chain Management

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Supply chain management is the streamlining of a business' supply-side activities to maximize customer value and to gain a competitive advantage in the marketplace. Supply chain management (SCM) represents an effort by suppliers to develop and implement supply chains that are as efficient and economical as possible.

HOW INFORMATION SYSTEMS FACILITATES SUPPLY CHAIN MANAGEMENT

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Decide when, what to produce, store, move…Decide when, what to produce, store, move…

rapidly communicate orders, track order status, check rapidly communicate orders, track order status, check inventory availability, monitor levels, track shipments, inventory availability, monitor levels, track shipments, plan production based on actual demand…rapidly plan production based on actual demand…rapidly communicate product design changes…provide product communicate product design changes…provide product specifications…specifications… share information about defect rates, share information about defect rates, returns...returns...

TRADITIONAL VIEW OF SYSTEMS

• WITHIN THE BUSINESS: There are functions, each having its uses of information systems

• OUTSIDE THE ORGANIZATION’S BOUNDARIES: There are customers and vendors

FUNCTIONS TEND TO WORK IN ISOLATION

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BENEFITS OF ENTERPRISE SYSTEMS• FIRM STRUCTURE & ORGANIZATION: One

organization• MANAGEMENT: Firm wide knowledge-

based management processes• TECHNOLOGY: Unified platform• BUSINESS: More efficient operations &

customer-driven business processes

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CHALLENGES OF ENTERPRISE SYSTEMS

• Daunting implementation• High up front costs & future

benefits• Inflexibility• Hard to realize strategic value

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INDUSTRIAL NETWORKS

LINK FIRMS INTO INDUSTRY-WIDE SYSTEM

• HORIZONTAL: Link firms in same industry, including competitors

• VERTICAL: Link firm with suppliers in same industry

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Enterprise Resource Planning systems

Enterprise Resource Planning systems(ERP) are software systems for businesses management encompassing modules supporting functional areas such as Manufacturing , Accounting, Finance, Sales & Marketing, Human Resource, ect.

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ENTERPRISE SYSTEM

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Sales & Marketing

Accounting

Finance

Manufacturing

Human Resources

Business ProcessesBusiness Processes

Enterprise-wide Enterprise-wide Business ProcessesBusiness Processes

Vendors Customers

ERP system contd..• ERP is a commodity -- product in the form of

software

• SAP, Oracle Applications, PeopleSoft, JD Edwards, Greatplains etc. are world’s leading ERP packages

• The market leader is “SAP”

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Features of an ERP system

• Architecture of ERP system facilitates transparent integration of modules providing flow of information between all function within enterprise in real time.

• Many different software are replaced by one integrated system.

• Reliable information access through common DBMS

• Eliminates data and operational redundancies (no duplication of work or data entries etc.)

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Features of an ERP system contd..• Cost reduction through time saving, improved control by

organizational wise analysis of organizational decisions.• Delivery and cycle time reduction• Scalable systems• Global outreach through extended modules such as CRM or

SCM, E-Business• Providing business solutions in support of core processes

• Process-oriented view cutting across functions of an enterprise

• Huge potential for customizing

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Business and Technical Benefits

• Automation of business transactions

• Flexibility in changing the system catering to newer business processes.

• Coordination across business functions

• Coordination across geographical distances resulting in better Managerial control

• Consistent information and interface thus easier to understand and work in

• Single system33

Prime Reasons for Implementing ERP

• Need for common platform

• Process improvement.

• Data visibility that could be used to improve operating decisions.

• Operation cost reductions.

• Increased customer responsiveness.

• Improved strategic decision making

• Personal Improvement

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Knowledge Management

• Knowledge management is the process of capturing, distributing, and effectively using knowledge.

• So it’s a discipline that promotes an integrated approach to identifying, capturing, evaluating, retrieving, and sharing all of an enterprise's information assets.

• These assets may include databases, documents, policies, procedures, and previously un-captured expertise and experience in individual workers.

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Customer Relationship Management (CRM)

• Customer relationship management (CRM) refers to the practices, strategies and technologies that companies use to manage, record and evaluate customer interactions in order to drive sales growth by deepening and enriching relationships with their customer bases.

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The CRM StrategyThe CRM strategy allows you to following:• Understand the customer• Retain customers through better customer

experience• Attract new customers• Win new clients and contracts• Increase profitably• Decrease customer management costs

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The Impact of Technology on CRM

• Technology and the Internet have changed the way companies approach customer relationship strategies. Advances in technology have changed consumer buying behavior, and today there are many ways for companies to communicate with customers and to collect data about them. With each new advance in technology — especially the proliferation of self-service channels like the Web and smartphones — customer relationships are being managed electronically.

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The Benefits of CRM

• The biggest benefit most businesses realize when moving to a CRM system comes directly from having all your business data stored and accessed from a single location. Before CRM systems, customer data was spread out over office productivity suite documents, email systems, mobile phone data and even paper note cards and Rolodex entries

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• Storing all the data from all departments (e.g., sales, marketing, customer service and HR) in a central location gives management and employees immediate access to the most recent data when they need it.

• Departments can collaborate with ease, and CRM systems help organization to develop efficient automated processes to improve business processes.

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• Other benefits include a 360-degree view of all customer information, knowledge of what customers and the general market want, and integration with your existing applications to consolidate all business information.

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