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INFORMATION INFORMATION

SYSTEMS IN THESYSTEMS IN THE

ENTERPRISEENTERPRISE

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This lecture will address the following questions:

– What are the key system applications in a business?

– What role do they play? – How do information systems support the

major business functions?– How do these functions interrelate?– What role does software have in

management of those interrelationships?

OBJECTIVES

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Types of Information Systems

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

• This is one way to view various subtypes of systems in business

• Why do you need to be aware of the various subtypes of systems?– Helps you to understand different uses of

systems– For allocation of resources– For decisions of adoption and maintenance– This is your catalog of what you could buy if you

had all the resources in the World

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Types of Information Systems

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

• Will talk about systems both by level of use within business structure and within functional sub-group areas

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Types of Information Systems

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

• Will talk about systems both by level of use within business structure and within functional sub-group areas (cont.)– Different software helps different groups of users

at different levels within business hierarchy– At each hierarchical level, each of four business

functional areas have their own software types

– Further, some software crosses levels or functional areas and integrates business processes

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Types of Information Systems

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

• Will talk about systems both by level of use within business structure and within functional sub-group areas (cont.)– In industry, each specialized type of software exists – Has specialists who develop, sell, implement, and

maintain just those niches– Usually, specialists are needed within each area based

on knowledge of both technology and business function

(e.g., my old firm hired technologists and taught them about foodservice, or foodservice people and taught them about technology…but both skills were needed for foodservice management software)

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Types of Information Systems

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Overview of Strategic Level Systems: Information Systems that Support Long-Range Planning of Senior Management.

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Types of Information Systems

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Overview of Management Level Systems: Support monitoring, controlling, decision-making, and administration by middle management.

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Types of Information Systems

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Overview of Operational Level Systems: Produces routine answers. Nuts and bolts of the business.

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Six Major Types of Systems

• Examples of types of systems at the 4 levelsExamples of types of systems at the 4 levels

• Level 1-Transaction Processing Systems (TPS)Level 1-Transaction Processing Systems (TPS)

• Level 2-Management Information Systems (MIS)Level 2-Management Information Systems (MIS)

• Level 2-Decision Support Systems (DSS)Level 2-Decision Support Systems (DSS)

• Level 3-Executive Support Systems (ESS)Level 3-Executive Support Systems (ESS)

• Let’s discuss each…Let’s discuss each…

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

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KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Lowest Level (operational)-Lowest Level (operational)-

Transaction Processing Systems (TPS):Transaction Processing Systems (TPS):Inputs: Transactions or eventsProcessing: Sorting; listing; merging; updatingOutputs: Detailed reports; lists; summariesUsers: Operational personnel; supervisors

A computerized system that performs and records daily routine transactions necessary to the conduct of the business

Example: payroll system; production instructions

Six Major Types of Systems

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Level two (management level)-Level two (management level)-

Management Information System (MIS):Management Information System (MIS):

• Inputs: Summary transaction data• Processing: Simple models; low level analysis• Outputs: Summary reports• Users: Middle managers

Example: Weekly, monthly, and annual resource allocation. Not five year plans and not daily details, but something in between.

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Six Major Types of Systems

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Management Information System (MIS)• Some characteristics of MIS that make them

differ from DSS (on next slide)– Structured and semi-structured decisions– Output is often the kind that you need routinely

each term (quarter, month, year) to evaluate how to proceed next (quarterly sales data for past 5 years)

– Generally, you can “eyeball” your decision

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Six Major Types of Systems

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Also level two (management level)-Also level two (management level)-

Decision Support System (DSS):Decision Support System (DSS):• Inputs: databases optimized for statistical analysis• Processing: Interactive. Simulations and statistical

analysis• Outputs: Responses to queries; statistical test results.• Users: Professionals, staff • Example: Could answer the following query:

“We need to trim 5% of our menu offerings to limit complexity in operations. Which items are the worst performing; are most likely to lead to sales of other products left on the menu, and have the most ingredients unique to their recipes?”

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Six Major Types of Systems

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Top level (strategic level)-Top level (strategic level)-

Executive Support System (ESS):Executive Support System (ESS):• Inputs: Aggregate data. Internal and external• Processing: Interactive and graphical simulations• Outputs: Projections• Users: Senior managers

Example: 5-year operating plan. Answer question like “what are long-term industry cost trends and how are we doing relative to them?”

• Gets data from all internal IS plus external industry data bases

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Six Major Types of Systems

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• Top level management

• Designed to the individual

• Ties CEO to all levels

• Very expensive to keep up

• Extensive support staff

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Characteristics of Executive Support Systems (ESS)

Six Major Types of Systems

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• Notes to be aware of:Note #1 - A single software package like Microsoft Office or

even an application like Microsoft Excel could be classified as any or all of the following: DSS, TPS, MIS, or ESS (albeit, a trivial ESS, DSS, etc.)

• What matters here is how the tool is used• Basically, a CBIS meets a need posed by the environment• A service is provided by the CBIS is a solution. It is a

DSS, etc., depending on what solution in the corporate hierarchy it serves.– Analogy: a BMW is either a luxury car or an expensive paper

weight depending on what you use it for. But it can be either or both.

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Six Major Types of Systems

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Note #2 – Software “packages” aren’t what you think

• Software is mostly a collection of software “components” assembled and reused as needed (like Lego blocks)

• Applications don’t really exist except as a way to describe a set of “software services”

• Many services share components but are bundled and marketed differently based on user group and task

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

Six Major Types of Systems

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INTERRELATIONSHIPS: INTERRELATIONSHIPS: -TPS generally feed all other systems- MIS generally indicate when a DSS is needed and provide input for them to crunch- ESS take all internal data but usually only summary data from MIS and DSS level

Output data from one is input data for others to process

Six Major Types of Systems

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

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• We now understand what the three types of systems are based on hierarchy within an organization

• However, each business function has its own specialized information systems at each level

• See the book for examples of specialized software within each business function

SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

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• Not all business activities are contained within a single functional area, so you can’t just identify applications by area

• Can also identify systems by processes• Important because some business tasks are subsets of a

business process and some processes are cross-functional

Business processes • Def: manner in which work is organized, coordinated, and

focused to produce a valuable product or serviceCross-Functional Business Processes• Def: Transcend boundary between sales, marketing,

manufacturing, and research and development (e.g., order fulfillment process…)

Business Processes and Information Systems

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

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The Order Fulfillment Process

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

Here you see that order fulfillment cuts across sales, accounting,Here you see that order fulfillment cuts across sales, accounting,and manufacturing and distributionand manufacturing and distribution

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• Many processes are larger than one division and the software should be too – If goes across entire enterprise, is called an

“Enterprise System” (ERP)– If across multiple firms is “interorganizational

system” (IOS). Eliminates media breaks!• This way software has a single point of management to

handle integration and settle disputes.• Standardization of hardware, software, and data allows

for easier maintenance• Share data and avoid redundancy

Benefits of Cross Functional Systems

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

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• Difficult to build: Often manual processes need to be changed at same time. Creates political and motivational problems

• Technology: Standardization of hardware, software, and data difficult if systems are legacy (although e-Business helps…see ch.4)

• Centralized organizational coordination and decision making: takes control away from end users. Makes decision making across groups easier but may be bad decisions.

Challenges of Cross Functional Systems

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

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Conclusion

– We see that specialized software exists for each niche of the pyramid in Figure 2-1, as well as across niches

– To reiterate:• In industry, each specialized type of software exists and

has specialists who develop, sell, implement, and maintain just those niches

• Usually, specialists are needed within each area based on knowledge of both the technology and the business function (including integration specialists and providers of IOS and ERP)

– You need to be aware of various subtypes of systems because it helps you to understand different uses of systems for allocation of resources and for decisions of adoption (as discussed in lecture ch3) and maintenance

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INFORMATION INFORMATION

SYSTEMS IN THESYSTEMS IN THE

ENTERPRISEENTERPRISE