Information systems in the enterprise

1. 1
Chapter 2: Information Systems in
the Enterprise

2. 2
Reading Notes for Chapter 2 in the textbook

The chapter introduces six types of information systems.
Figure 2.1 and table 2.1 give an overall picture of organizations
and how different types of information systems serve them.
Figure 2.2 depicts different types of information systems and how
they relate to one another (Figure 2.9 as well).
Section 2.2 examines information systems from a
functional view of an organization: Sales and marketing systems,
manufacturing and production systems, finance and accounting
systems, and human resources systems. Read this section
carefully to develop an understanding of how information systems
serve different functions of an organization.

3. 3
Reading Notes for Chapter 2 in the textbook - Continued
Read section 2.3 carefully to understand integration of
functions and business processes. Figure 2.12 illustrates a
cross-functional business process. Pay also attention to
customer relationship management and enterprise systems
that are current trends in business. Contrast Figure 2.15 and
2.16. Extended enterprises and industrial networks are also
recent trends and would not be possible without the support
of information technology.

4. 4
KINDS OF INFORMATION SYSTEMS
Organizational Hierarchy
Organizational Levels
Information Systems

5. 5
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

6. 6
Four General Kinds of IS
Operational-level systems
support operational managers by monitoring
the day-to-day’s elementary activities and
transactions of the organization. e.g. TPS.
Knowledge-level systems
support knowledge and data workers in
designing products, distributing information, and
coping with paperwork in an organization. e.g.
KWS, OAS
Management-level systems
support the monitoring, controlling, decision-
making, and administrative activities of middle
managers. e.g. MIS, DSS
Strategic-level systems
support long-range planning activities of senior
management. e.g. ESS

7. 7
A Framework for IS
(with respect to support provided)
•Executive Support Systems (ESS)
•Management Information Systems (MIS)
•Decision Support Systems (DSS)
•Knowledge Work Systems (KWS)
•Office Automation Systems (OAS)
•Transaction Processing Systems (TPS)

8. 8
Transaction Processing Systems (TPS)Transaction Processing Systems (TPS)
Computerized system that performs and records Computerized system that performs and records
the daily routine transactions necessary to the daily routine transactions necessary to
conduct the business; these systems serve the conduct the business; these systems serve the
operational level of the organizationoperational level of the organization
•TYPE: Operational-levelTYPE: Operational-level
•INPUTS: transactions, eventsINPUTS: transactions, events
•PROCESSING: updatingPROCESSING: updating
•OUTPUTS: detailed reportsOUTPUTS: detailed reports
•USERS: operations personnel, supervisorsUSERS: operations personnel, supervisors
•DECISION-MAKING: highly structuredDECISION-MAKING: highly structured
EXAMPLE:EXAMPLE: payroll, accounts payable payroll, accounts payable

9. 9
A Symbolic Representation for a payroll
TPS
P a y r o l l S y s t e m
M a n a g e m e n t
R e p o r t s
O n - l i n e
q u e r i e s
P a y r o l l
m a s t e r
f i l e
E m p l o y e e d a t a ( v a r i o u s d e p a r t m e n t s ) T o g e n e r a l l e d g e r : w a g e s a n d s a l a r i e s
G o v e r n m e n t d o c u m e n t s
E m p l o y e e c h e c k s

10. 10
Typical Applications of TPS
TYPE OF TPS SYSTEM
Sales/ Manufacturing! Finance/ Human Other types
marketing production accounting resources (e.g., university)
systems systems systems systems
Major functionsSales managementScheduling Budgeting Personnel recardAdmissions
of system Market research Purchasing General ledger Benefits Grade records
Promotion Shipping/receivingBilling Cornpensation Course records
Pricing Engineering Cost accountingLabor relationsAlumni
New products Operations Training
Major Sales order Materials resourceGeneral ledger Payroll Registration system
application information systemplanning systems
systems Market research Purchase order Accounts Employee recordsStudent transcript
system control systemsreceivable/payable system
Pricing system Engineering Budgeting Benefit systemsCurriculum class
systems control systems
Quality controlFunds managementCareer path Alumni benefactor
systems systems systems system

11. 11
Office Automation Systems (OAS)Office Automation Systems (OAS)
Computer system, such as word processing,
electronic mail system, and scheduling system,
that is designed to increase the productivity of
data workers in the office.
• TYPE: Knowledge-levelTYPE: Knowledge-level
• INPUTS: documents, schedulesINPUTS: documents, schedules
• PROCESSING: document management, PROCESSING: document management,
scheduling, communicationscheduling, communication
• OUTPUTS: documents; schedulesOUTPUTS: documents; schedules
• USERS: clerical workersUSERS: clerical workers
EXAMPLE:EXAMPLE: document imaging system document imaging system

12. 12
Knowledge Work Systems (KWS)Knowledge Work Systems (KWS)
Information system that aids knowledge workers in
the creation and integration of new knowledge in
the organization.
•TYPE: Knowledge-levelTYPE: Knowledge-level
• INPUTS: design specifications INPUTS: design specifications
• PROCESSING: modellingPROCESSING: modelling
• OUTPUTS: designs, graphicsOUTPUTS: designs, graphics
• USERS: technical staff; professionalsUSERS: technical staff; professionals
EXAMPLE:EXAMPLE: Engineering workstations Engineering workstations

13. 13
Decision Support Systems (DSS)Decision Support Systems (DSS)
Information system at the management level of an
organization that combines data and sophisticated
analytical models or data analysis tools to support
semi-structured and unstructured decision making.
•TYPE: Management-levelTYPE: Management-level
• INPUTS: low volume dataINPUTS: low volume data
• PROCESSING: simulations, analysis PROCESSING: simulations, analysis
• OUTPUTS: decision analysisOUTPUTS: decision analysis
• USERS: professionals, staff managersUSERS: professionals, staff managers
• DECISION-MAKING: semi-structuredDECISION-MAKING: semi-structured
EXAMPLE:EXAMPLE: sales region analysis sales region analysis

14. 14
Characteristics of Decision-Support
Systems
1. 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.

15. 15
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-levelTYPE: Management-level
• INPUTS: high volume dataINPUTS: high volume data
• PROCESSING: simple models PROCESSING: simple models
• OUTPUTS: summary reportsOUTPUTS: summary reports
• USERS: middle managersUSERS: middle managers
• DECISION-MAKING: structured to semi-structuredDECISION-MAKING: structured to semi-structured
EXAMPLEEXAMPLE: annual budgeting: annual budgeting

16. 16
Characteristics of Management information
Systems
1. MIS support structured decisions at the
operational and management control levels.
However, they are also useful for planning
purposes of senior management staff.
2. MIS are generally reporting and control oriented.
They are designed to report on existing operations
and therefore to help 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.

17. 17
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 levelTYPE: Strategic level
• INPUTS: aggregate data; internal and externalINPUTS: aggregate data; internal and external
• PROCESSING: interactivePROCESSING: interactive
• OUTPUTS: projectionsOUTPUTS: projections
• USERS: senior managersUSERS: senior managers
• DECISION-MAKING: highly unstructured DECISION-MAKING: highly unstructured
EXAMPLEEXAMPLE: 5 year operating plan: 5 year operating plan

18. 18
Model of a Typical Executive Support
System
I n t e r n a l D a t a
T P S / M I S D a t a
F i n a n c i a l D a t a
O f f i c e S y s t e m s
M o d e l i n g /
a n a l y s i s
E x t e r n a l D a t a
D o w J o n e s
G a l l u p P o l l
S t a n d a r d &
P o o r ' s
E S S
w o r k s t a t i o n
E S S
w o r k s t a t i o n
E S S
w o r k s t a t i o n
M e n u s
G r a p h i c s
C o m m u n i c a t i o n s
L o c a l p r o c e s s i n g
M e n u s
G r a p h i c s
C o m m u n i c a t i o n s
L o c a l p r o c e s s i n g
M e n u s
G r a p h i c s
C o m m u n i c a t i o n s
L o c a l p r o c e s s i n g

19. 19
Major Types of Information Systems
S t r a t e g i c L e v e l S y s t e m s
5 - y e a r
s a l e s t r e n d
f o r e c a s t i n g
5 - y e a r
o p e r a t i n g
p l a n
5 - y e a r
b u d g e t
f o r e c a s t i n g
P r o f i t
p l a n n i n g
M a n p o w e r
p l a n n i n g
M a n a g e m e n t - L e v e l S y s t e m s
S a l e s
m a n a g e m e n t
S a l e s r e g i o n
a n a l y s i s
I n v e n t o r y
C o n t r o l
P r o d u c t i o n
S c h e d u l i n g
A n n u a l
b u d g e t i n g
C o s t
a n a l y s i s
C a p i t a l
I n v e s t m e n t a n a l y s i s
P r i c i n g / p r o f i t a b i l i t y
a n a l y s i s
R e l o c a t i o n
a n a l y s i s
C o n t r a c t c o s t
a n a l y s i s
K n o w l e d g e - L e v e l S y s t e m s
E n g i n e e r i n g
w o r k s t a t i o n s
W o r d
p r o c e s s i n g
G r a p h i c s
w o r k s t a t i o n s
D o c u m e n t
I m a g i n g
M a n a g e r i a l
w o r k s t a t i o n s
E l e c t r o n i c
C a l e n d a r s
O p e r a t i o n a l L e v e l S y s t e m s
O r d e r T r a c k i n g
O r d e r p r o c e s s i n g
M a c h i n e c o n t r o l
P l a n t s c h e d u l i n g
M a t e r i a l m o v e m e n t
c o n t r o l
S e c u r i t i e s
t r a d i n g
C a s h
m a n a g e m e n t
P a y r o l l
A c c o u n t s p a y a b l e
A c c o u n t s r e c e i v a b l e
C o m p e n s a t i o n
T r a i n i n g & d e v e l o p m e n t
E m p l o y e e r e c o r d k e e p i n 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 a l e s a n d
m a r k e t i n g
M a n u f a c t u r i n g F i n a n c e A c c o u n t i n g H u m a n
R e s o u r c e s

20. 20
Relationship between different IS
ESS
MIS DSS
TPS
KWS/
OAS
TPS is a major producer of information for other systems

21. 21
Classification of IS
by Organizational Structure
Departmental Information Systems
Enterprise Information System
Inter-organizational Systems
NYCE
SABRE or APOLLO

22. 22
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

23. 23
Sales & Marketing Systems
Systems that help the firm identify customers
for the firm’s products or services, develop
products and services to meet customer’s
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

24. 24
Manufacturing and Production Systems
Systems that deal with the planning,
development, and production of
products and services and with
controlling the flow of production.
Examples
System Description Organizational Level
Machine control Control the actions of machinesOperational
and equipment
Computer-aided design (CAD)Design new products using Knowledge
the computer
Production planning Decide when and how many Management
products should be produced
Facilities location Decide where to locate newStrategic
production facilities

25. 25
Finance and Accounting Systems
Systems that keep track of the firm’s
financial assets and fund flows.
Examples
System Description Organizational Level
Accounts receivableTrack money owed the firm Operational
Portfolio analysisDesign the firm's portfolio of investmentsKnowledge
Budgeting Prepare short-term budgets Management
Profit planning Plan long-term profits Strategic

26. 26
Human Resources Systems
Systems that maintain employee
records; Track employee skills, job
performance, and training; And support
planning for employee compensation
and career development.
Examples
System Description Organizational Level
Training and developmentTrack 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 planningPlan the long-term labor force needsStrategic
of the organization

27. 27
Examples of Business Processes
Functional Area Business Process
Manufacturing and productionAssembling the product
Checking for quality
Producing bills of materials
Sales and marketing Identifying customers
Making customers aware of the product
Selling the product
Finance and accounting paying creditors
Creating financial statements
Managing cash accounts
Human resources Hiring employees
Evaluating employees' job performance
Enrolling employees in benefits plans

28. 28
The Order Fulfillment Process (F 2.12)
S a l e s
A c c o u n t i n g
M a n u f a c t u r i n g
& P r o d u c t i o n
G e n e r a t e
O r d e r
S u b m i t
O r d e r
C h e c k
C r e d i t
A p p r o v e
C r e d i t
G e n e r a t e
I n v o i c e
A s s e m b l e
P r o d u c t
S h i p
P r o d u c t

29. 29
Customer Relationship Management
Customer relationship management
Business and technology discipline to
coordinate alt of the business
processes for dealing with customers.
S a l e s
T e l e p h o n e s a l e s
W e b s a l e s
F i e l d s a l e s
R e t a i l s a l e s
M a r k e t i n g
C a m p a i g n d a t a
C o n t e n t
D a t a a n a l y s i s
C u s t o m e r S e r v i c e
C a l l c e n t e r d a t a
W e b s e l f s e r v i c e d a t a
F i e l d s e r v i c e d a t a
W i r e l e s s d a t a
U n i f i e d v i e w o f c u s t o m e r s
C o n s i s t e n t m e s s a g e t o c u s t o m e r s
E n d - t o - e n d c u s t o m e r c a r e
L o n g - t e r m c u s t o m e r r e l a t i o n s h i p s
I d e n t i f i c a t i o n o f b e s t c u s t o m e r s

30. 30
Customer Relationship Management
Supply chain management Integration of
supplier, 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.
S u p p l i e r M a n u f a c t u r e r D i s t r i b u t o r
R e t a i l
O u t l e t
C u s t o m e r
C a p a c i t y , i n v e n t o r y l e v e l , d e l i v e r y s c h e d u l e , p a y m e n t t e r m s
O r d e r s , r e t u r n r e q u e s t s , r e p a i r a n d s e r v i c e r e q u e s t s , p a y m e n t s

31. 31
HOW INFORMATION SYSTEMS CAN
FACILITATE SUPPLY CHAIN
MANAGEMENT
Information systems can help participants in
the supply chain:
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

32. 32
Enterprise Systems
Firm wide information systems that
integrate key business processes so
that information can flow freely
between different parts of the firm.

33. 33
Traditional View of Systems (F. 2.15)
M a n u f a c t u r i n g A c c o u n t i n g F i n a n c e
M a r k e t i n g a n d
S a l e s
H u m a n
R e s o u r c e s
M a n u f a c t u r i n g
S y s t e m s
A c c o u n t i n g
S y s t e m s
F i n a n c e
S y s t e m s
M a r k e t i n g a n d
S a l e s S y s t e m s
H u m a n
R e s o u r c e s
S y s t e m s
B u s i n e s s
P r o c e s s e s
B u s i n e s s
P r o c e s s e s
B u s i n e s s
P r o c e s s e s
B u s i n e s s
P r o c e s s e s
B u s i n e s s
P r o c e s s e s
B u s i n e s s F u n c t i o n s
I n f o r m a t i o n S y s t e m s
O r g a n i z a t i o n a l
B o u n d a r i e s
O r g a n i z a t i o n a l
B o u n d a r i e s
V e n d o r s C u s t o m e r s

34. 34
Enterprise Systems (F. 2.16)
B u s i n e s s P r o c e s s
B u s i n e s s P r o c e s s
B u s i n e s s P r o c e s s
E n t e r p r i s e - w i d e b u s i n e s s
p r o c e s s e s
M a n u f a c t u r i n g A c c o u n t i n g
H u m a n
R e s o u r c e s
S a l e s a n d
M a r k e t i n g
F i n a n c e
E n t e r p r i s e S y s t e m
V e n d o r s C u s t o m e r s
O r g a n i z a t i o n a l
B o u n d a r i e s
O r g a n i z a t i o n a l
B o u n d a r i e s

35. 35
Benefits and Challenges of
Enterprise Systems
Benefits
Firm structure and organization: One Organization
Management: Firm wide Knowledge-based
Management Processes
Technology: Unified Platform
Business: More Efficient Operations and
Customer-driven Business Processes
Challenges
Daunting Implementation
High Up-front Costs and Future Benefits
Inflexibility

36. 36
Extended Enterprises
Extended Enterprises: Networks linking
systems of multiple firms in an industry. Also
called extended enterprises.
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.

37. 37
Industrial Networks (F. 2.17)
F i r m
1
F i r m
4
F i r m
3
F i r m
2
F i r m
1
S u p p l i e
r
1
S u p p l i e
r
3
S u p p l i e
r
2
I n d u s t r i a l N e t w o r k s
H o r i z o n t a l i n d u s t r i a l n e t w o r k
V e r t i c a l i n d u s t r i a l n e t w o r k
F i r m v a l u e c h a i n s a n d e n t e r p r i s e s y s t e m s
F i r m s
i n a s i n g l e
i n d u s t r y
F i r m s i n
c o m p l e m e n t a r y
b u s i n e s s
I n d u s t r y
v a l u e
c h a i n