inf. sys. in enterprise lec-02

8/6/2019 Inf. Sys. in Enterprise Lec-02

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Information Systems in the

Enterprise


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Role of Information System

3 fundamental roles are:

Support Business Processand Operations

Support BusinessDecision Making

SupportStrategies

forCompetitive

Advantage

Eg. Retail stores comp. wherethey can keep the record ofcustomer purchase, keep trackof inventory, pay employees,evaluate sales trends etc.

Eg. Help store managers to takedecisions on what lines of merchandiseneed to be added or discontinued,what kind of investment they require

etc. It can be possible after an analysisprovided by IS.

Eg. Require innovation. Storemanager can install touch screenwith link to their website foronline shopping. This can addcompetitive advantage.


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KINDS OF INFORMATION SYSTEMS

Organizational Hierarchy

Organizational Levels

Information Systems


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KINDS OF INFORMATION SYSTEMS

SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN

KIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR MANAGERS

MANAGEMENT LEVEL MIDDLE MANAGERS

OPERATIONAL OPERATIONAL

LEVEL MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE &

DATA WORKERS

RESOURCESMARKETING & ENGINEERING


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Four General Kinds of IS Operational-level systems

support operational managers by monitoring the day-to-days elementary activities and transactions of theorganization. e.g. TPS.

Knowledge-level systems

support knowledge and data workers in designing

products, distributing information, and coping withpaperwork in an organization. e.g. KWS, OAS

Management-level systems

support the monitoring, controlling, decision-making,

and administrative activities ofmiddle managers. e.g.MIS, DSS

Strategic-level systems

support long-range planning activities ofseniormanagement. e.g. ESS


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Types of Information System

1. Operation Support system- which supportthe business operations.

KnowledgeWork Systems (KWS)

Office Automation Systems (OAS)

Transaction Processing Systems (TPS)

2. Management Support System- which

support the management. Executive Support Systems (ESS)

Management Information Systems (MIS)

Decision Support Systems (DSS)


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Transaction Processing Systems (TPS)Transaction Processing Systems (TPS)

Computerized system that performs and records the dailyroutine transactions necessary to conduct the business;

these systems serve the operational level of the

organization

TYPE: Operational-level

INPUTS: transactions, events

PROCESSING: updating

OUTPUTS: detailed reports USERS: operations personnel, supervisors

DECISION-MAKING: highly structured

EXAMPLE:payroll, accounts payable


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Subsystem ofTransaction Information

System

Transaction Processing Information system

Sales &

Marketing

Manufacturing &

Production

Finance and

Accounting

Human Resource

System

Order

Processing

Advertising

Sales

Statistical

Analysis

Ordering raw

material

Accounting

BudgetingGeneral Ledger

Wage System

Attendance

Application


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Eg. OfTransaction in Marketing & Sales

system include:

Sales order Processing- process orderprocessing, invoice production, data supply for

sales analyses and inventory control

Sales Support- customer goods, follow up Telemarketing- sales via phone calls

Point-of-sale support- sales capture data at

cash register, often by scanner Customer credit authorization- clearance of

credit to customer.


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Sales order processing systems

a

Sales quotation

Sales contract

EDI

Manually

Order entry

Outbound advice

Delivery

Invoicing

Close orderFinancial accounting

History/ statistics

Margin control

Customer monitoring

Inventory checkAdditional costs installments

Sales order/ quotation

...

Order

acknowledgement

Picking list

Packing slipPacking list

Bill of landing

Invoice


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Manufacturing & Production System

These are systems that supply data to operate, monitor

and control the production process- purchasing,receiving, shipping, process control, robotics, inventorysystems, production planning & control, productionscheduling, constrain planning, engineering, operations,

quality control, maintenance management, resourcemanagement etc.

Eg; A system in a factory that

Enables production control (fig.)

Gets information by measuring samples of products Does statistical analyses of samples

Enables operators to take corrective actions

Generate bills of materials

Generate production orders.


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Production control systems

aIssue stock

Report oper.

completed

Report order

completed

Back flushing

Yes/ no

Book hours

Post tostock

Closing andhistory

Finance

Maintain

prod. order

Processprod. order

ReleaseProd. order

Print order

Documents

Planned

Planned Released

Order documents

printedActive

Planned

Closed


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Finance & Accounting System These are systems that maintain records concerning

the flow of funds in the firm and produce financialstatements, such as balance sheets and incomestatements. For eg. Budgeting, general ledger, billing,cost accounting, accounts receivables/payble, fundmanagement and payroll.

Eg. Of financial systems: Financial accounting (fig.)

Cash management

Loan management

Cheque processing Securities trading

Cost accounting

Payroll processing

Travel bill processing


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Financial accounting systems

a Financialstatements

General

ledger

Cash ManagementFixed assets

A/P A/R

Reports M2M3

M4 M5


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Human Resources systems

These are systems that deal with recruitment,placement, training, performance evaluation,appraisal, compensation and careerdevelopment of the firm's employees.

Eg. Of subsystems of human resources: Personal record keeping

Application tracking

Promotions record keeping

Training and skills development (fig.)

Leave record management


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Training and developments systems

a Training plan formulation process

Training needs analysis

Need survey of individuals

Views of controlling authority

Views of HODs

Competency Mapping Process

Organization needs analysis

Required manpower strength

Identification of required

Functional skills

New skill areas required

(future business projection)


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Typical Applications ofTPS

TYPE OF TPS SYSTEMSales/ Manufacturing! Finance/ Human Other types

marketing production accounting resources (e.g., university)

systems systems systems systems

Major functions Sales management Scheduling Budgeting Personnel recard Admissions

of system Market research Purchasing General ledger Benefits Grade records

Promotion Shipping/receiving Billing Cornpensation Course records

Pricing Engineering Cost accounting Labor relations Alumni

New products Operations Training

Major Sales order Materials resource General ledger Payroll Registration system

application information system planning systems

systems Market research Purchase order Accounts Employee records Student transcriptsystem control systems receivable/payable system

Pricing system Engineering Budgeting Benefit systems Curriculum class

systems control systems

Quality control Funds managemenCareer path Alumni benefactor

systems systems systems system


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Office Automation Systems (OAS)Office Automation Systems (OAS)

Computer system, such as word processing, electronic mail system, and schedulingsystem, that is designed to increase the productivity of data workers in the office.

TYPE: Knowledge-level

INPUTS: documents, schedules

PROCESSING: document management, scheduling, communication

OUTPUTS: documents; schedules USERS: clerical workers

EXAMPLE: document imaging system


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Knowledge Work Systems (KWS)Knowledge Work Systems (KWS)

Information system that aids knowledge workers in the creation and integration of newknowledge in the organization.

TYPE: Knowledge-level

INPUTS: design specifications

PROCESSING: modelling

OUTPUTS: designs, graphics USERS: technical staff; professionals

EXAMPLE: Engineering workstations


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Decision Support Systems (DSS)Decision Support Systems (DSS)

Information system at the management level of an organization that combines data andsophisticated analytical models or data analysis tools to support semi-structured and

unstructured decision making.

TYPE: Management-level

INPUTS: low volume data

PROCESSING: simulations, analysis OUTPUTS: decision analysis

USERS: professionals, staff managers

DECISION-MAKING: semi-structured

EXAMPLE: sales region analysis


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Characteristics of Decision-Support

Systems1. DSS offer users flexibility, adaptability, and a quick response.

2. DSS operate with little or no assistance from professional programmers.

3. DSS provide support for decisions and problems whose solutions cannot be specified in

advance.

4. DSS use sophisticated data analysis and modelling tools.


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Management Information SystemsManagement Information Systems

(MIS)(MIS)

Information system at the management level of an organization that serves the functions of

planning, controlling, and decision making by providing routine summary and exception reports.

TYPE: Management-level

INPUTS: high volume data

PROCESSING: simple models

OUTPUTS: summary reports

USERS: middle managers

DECISION-MAKING: structured to semi-structured

EXAMPLE: annual budgeting


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Characteristics ofManagement information

Systems

1.MIS support structured decisions at the operational andmanagement control levels. However, they are also usefulfor planning purposes of senior management staff.

2.MIS are generally reporting and control oriented. They are

designed to report on existing operations and therefore tohelp provide day-to-day control of operations.

3.MIS rely an existing corporate data-and data flows.

4.MIS have little analytical capability.

5.MIS generally aid in decision making using past and

present data.6.MIS are relatively inflexible.

7. MIS have an internal rather than an external orientation.


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Executive Support Systems (ESS)Executive Support Systems (ESS)

Information system at the strategic level of an organization that address unstructured decision

making through advanced graphics and communications.

TYPE: Strategic level

INPUTS: aggregate data; internal and external

PROCESSING: interactive

OUTPUTS: projections

USERS: senior managers DECISION-MAKING: highly unstructured

EXAMPLE: 5 year operating plan


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Model of a Typical Executive Support

System

Internal Data

TPS/MIS Data

Financial Data

Office Systems

Modeling/

analysis

External Data

Dow Jones

Gallup Poll

Standard &

Poor's

ESS

workstationESS

workstation

ESS

workstation

Menus

Graphics

CommunicationsLocal process ing

Menus

Graphics

Communications

Local process ing

Menus

Graphics

Communications

Local process ing


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Major Types of Information Systems

S trate gic L e ve l S y s te m s

5 - y e ar

s ale s tre n d

fo re ca s t ing

5 - y e ar

o pe rating

plan

5 -y e ar

b u d g e t

fo re ca s t ing

P ro fit

p la nning

M an p o w e r

p la nning

M anag e m e nt - L e ve l S y s te m sS ale s

m a na g e me nt

S ale s re g io na na ly s is

Inv e nt o ry

C o n tro l

P ro d u c t io nS c h e d ul ing

A n n u a l

b u d g e ting

C o s ta na ly s is

C apita l

I n v e s tme nt a na ly s is

P ric ing /p ro fitabilit y

a na ly s is

Re lo ca t io n

a na ly s is

C o ntra c t c o s t

a na ly s is

Kn o w le d g e -L e ve l S y s te m s

E ng ine e ring

w o rks tat io n s

W o rd

p ro c e s s in g

G raphic s

w o rks tat io n s

D o c u m e n t

I m a g i n g

M anag e r ia l

w o rks tat io n s

E le ct ro n ic

C ale n d ars

O pe ratio n al L e ve l S y s te m s

O rd e r T rac k ing

O rd e r p ro c e s s in g

M achine c o n tro l

P lant s c h e d ul ing

M ate rial m o ve me nt

c o n tro l

S e curitie s

trad in g

C a s h

ma n a g e me nt

P a y ro ll

A c c o u n ts p a y able

A c c o u n ts re ce ivab le

C o m pe n s atio n

Tra in ing & d e ve lo pm e nt

E m p lo y e e re co rd k e e pin g

T Y P E S O F S Y S T E M S

E S S

M I S

D S S

K W S

O A S

T P S

S ale s an d

m ark e ting

M an ufac tu rin g F in an c e A c c o u n tin g H u m an

Re s o u r c e s


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Relationship between different IS

ESS

MIS DSS

TPSKWS/

OAS

TPS is a major producer of information for other systems


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Classification of IS

by Organizational Structure

Departmental Information Systems

Enterprise Information System

Inter-organizational Systems NYCE

SABRE or APOLLO


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Classification of IS

by Functional Area

The accounting information system

The finance information system

The manufacturing (operations, production)information system

The marketing information system

The human resources information system


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Sales & Marketing Systems

Systems that help the firm identify customers for the

firms products or services, develop products and

services to meet customers needs, promote

products and services, sell the products and services,

and provide ongoing customer support.

EXAMPLES

System Description Organizational Level

Order processing Enter, process, and track orders Operational

Market analysis Identify customers and markets using Knowledge

data on demographics, markets,

consumer behavior, and trends

Pricing analysis Determine prices for products Management

and services


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Manufacturing and Production Systems

Systems that deal with the planning,development, and production of productsand services and with controlling the flow ofproduction.

Examples


Machine control Control the actions of machines Operational

and equipment

Computer-aided design (CAD) Design new products using Knowledge

the computerProduction planning Decide when and how many Management

products should be produced

Facilities location Decide where to locate new Strategic

production facilities


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Finance and Accounting Systems

Systems that keep track of the firmsfinancial assets and fund flows.

Examples

System Description Organizational LevelAccounts receivable Track money owed the firm Operational

Portfolio analysis Design the firm's portfolio of investments Knowledge

Budgeting Prepare short-term budgets Management

Profit planning Plan long-term profits Strategic


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Human Resources Systems Systems that maintain employee records;

Track employee skills, job performance,and training; And support planning foremployee compensation and careerdevelopment.

Examples


Training and development Track employae training, skills, Operational

and performance appraisals

Career pathing Design career paths for employees Knowledge

Compensation analysis Monitor the range and distribution Management

ofemployee wages, salaries, and bene6cs

Human resources planning Plan the long-term labor force needs Strategic

of the organization


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Examples of Business Processes

Func na rea Bus ness Pr cess

Manu actu ng and p oduction A e b ing the p oduct

Checking o quality

Producing bills o materials

Sales and marketing dentifying customersMaking customers awareof theproduct

Selling theproduct

Finance and accounting paying creditors

Creating financial statements

Managing cash accounts

Human resources Hiringemployees

Evaluatingemployees' jobperformance

Enrollingemployees in benefits plans


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The Order Fulfillment Process

Sales

Accounting

Manufacturing

& Production

Generate

Order

Submit

Order

Check

Credit

Approve

Credit

Generate

Invoice

Assemble

Product

Ship

Product


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MANAGERIAL ISSUES The transition to e-business:- Converting an organization to a networked-computing-based

e-business may be a complicated process. The e-business requires a client/ server

architecture, an intranet, an Internet connection, and e-commerce policy and strategy, all in

the face of many unknowns and risks. However, in many organizations this potentially

painful conversion may be the only way to succeed or even to survive. When to do it, how to

do it, what the role of the enabling information technologies will be, and what the impacts

will be of such a conversion are major issues for organizations to consider.

From legacy systems to client/server to intranets, corporate portals, and Web-based

systems:- A related major issue is whether and when and how to move from the legacy

systems to a Web-based client/server enterprise-wide architecture. While the general trend is

toward Web-based client/server, there have been several unsuccessful transformations, and

many unresolved issues regarding the implementation of these systems. The introduction of

intranets seems to be much easier than that of other client/server applications. Yet, moving

to any new architecture requires new infrastructure and a decision about what to do with the

legacy systems, which may have a considerable impact on people, quality of work, and

budget. A major aspect is the introduction of wireless infrastructure.

How to deal with the outsourcing and utility computing trends:- As opportunities for

outsourcing (e.g., ASPs) are becoming cheaper, available, and viable, the concept becomes

more attractive. In the not-so-distant future, we will see outsourcing in the form of utility

computing. How much to outsource is a major managerial issue.


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MANAGERIAL ISSUES Continued How much infrastructure? Justifying information system applications is not an easy job

due to the intangible benefits and the rapid changes in technologies that often makesystems obsolete. Justifying infrastructure is even more difficult since many users and

applications share the infrastructure that will be used for several years in the future. This

makes it almost impossible to quantify the benefits. Basic architecture is a necessity, but

there are some options.

The roles of the ISD and end users:-The role of the ISD can be extremely important, yet

top management frequently mistreats it. By constraining the ISD to technical duties, topmanagement may jeopardize an organizations entire future. However, it is not

economically feasible for the ISD to develop and manage all IT applications in an

organization. End users play an important role in IT development and management. The

end users know best what their information needs are and to what degree they are

fulfilled. Properly managed end-user computing is essential for the betterment of all

organizations. Ethical issues:- Systems developed by the ISD and maintained by end users may

introduce some ethical issues. The ISDs major objective should be to build efficient and

effective systems. But, such systems may invade the privacy of the users or create

advantages for certain individuals at the expense of others.


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Customer Relationship

Management

Customer relationship management

Business and technology discipline to

coordinate alt of the business processes

for dealing with customers.Sales

T elephone sales

Web sales

ield sales

etail sales

arketingampaign data

ontent

ata analysis

ustomerService

all center data

Web sel service data

ield service data

Wireless data

ni ied vie o cus tomers

onsistent message to customersnd-to-end customer c are

ong-term customer relationships

Identi ication o best customers


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Customer Relationship Management

Supply chain management Integration ofsupplier, distributor, and customer logistics

requirements into one cohesive process.

Supply chain Network of facilities for procuring materials, transforming raw

materials into finished products,' and

distributing finished produce to customers.

Supplier anu acturer istributor etail

utletustomer

apacity, inventory level, delivery schedule, payment terms

rders, return requests, repair and service requests, payments


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HOW INFORMATION SYSTEMS CAN

FACILITATE SUPPLY CHAIN

MANAGEMENTInformation systems can help participants in the supplychain:

Decide when and what to produce, store, and move

Rapidly communicate orders

Track the status of orders

Check inventory availability and monitor inventory levels

Track shipments

Plan production based on actual customer demand

Rapidly communicate changes in product design Provide product specifications

Share information about defect rates and returns


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Enterprise Systems

Firm wide information systems that integrate

key business processes so that information

can flow freely between different parts of the

firm.


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Traditional View of Systems (F. 2.15)

Ma fact ri g Accounting inanceMarketing an

ales

Human

esources

Manufacturing

Systems

Accounting

Systems

Finance

Systems

Marketing an

Sales Systems

Human

esources

Systems

Businessrocesses

Businessrocesses

Businessrocesses

Businessrocesses

Businessrocesses

BusinessFunctions

InformationSystems

Organizational

Bou

naries

Organizational

Bou

naries

Ven ors ustomers


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Enterprise Systems (F. 2.16)

BusinessProcess

BusinessProcess

BusinessProcess

Enterprise-wide business

processes

Manufacturing Accounting

Human

ResourcesSales and

Marketing

Finance

Enterprise System

Vendors Customers

Organizational

Boundaries

Organizational

Boundaries


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Benefits and Challenges of Enterprise

Systems

Benefits Firm structure and organization: One Organization

Management: Firm wide Knowledge-basedManagement Processes

Technology: Unified

P

latform Business:More Efficient Operations and Customer-

driven Business Processes

Challenges Daunting Implementation

High Up-front Costs and Future Benefits Inflexibility


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Extended Enterprises

Extended Enterprises: Networks linking systems ofmultiple firms in an industry. Also called extendedenterprises.

Vertical industrial networks Networks for integrating the

operations of a firm with its suppliers. Horizontal industrial networks Networks for linking firms

across an entire industry.


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Industrial Networks (F. 2.17)

Firm

1

Firm

4

Firm

3

Firm

2

Firm

1

Supplie

r

1

Supplie

r

3

Supplie

r

2

Industrial et orks

Horizontal in ustrial network

Vertical in ustrial network

Firm value chains and enterprise systems

Firms

in a s ingle

industry

Firms in

complementary

business

Industryvalue

chain