MIS PPT for IT students

1. Chapter 2
Information
Systems in the
Enterprise
2.1 © 2006 by Prentice Hall

2. Management Information Systems
Chapter 2 Information Systems in the Enterprise
OBJECTIVES
• Evaluate the role played by the major types of
systems in a business and their relationship to
each other
• Describe the information systems supporting the
major business functions: sales and marketing,
manufacturing and production, finance and
accounting, and human resources
2.2 © 2006 by Prentice Hall

3. Management Information Systems
Chapter 2 Information Systems in the Enterprise
OBJECTIVES (continued)
• Analyze the relationship between organizations,
information systems, and business processes
• Explain how enterprise applications promote
business process integration and improve
organizational performance
• Assess the challenges posed by information
systems in the enterprise and management
solutions
2.3 © 2006 by Prentice Hall

4. Management Information Systems
Chapter 2 Information Systems in the Enterprise
Mango Case: Fast Fashion, Hot Systems
• Challenge: monthly changes in fashions; Mango has
731 stores in 72 countries
• Solutions. Inventory replenishment system tracks all
sales and matches stores with inventory.
• Design teams meet weekly to adjust to trends.
• Distribution system allocates bar-coded items to
specific stores based on store/product mix.
• Reduces time to market, increases agility
• Increases accuracy of decision making
2.4 © 2006 by Prentice Hall

5. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Types of Information Systems
2.5 Figure 2-1 © 2006 by Prentice Hall

6. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Different Kinds of Systems
Three main categories of information systems serve
different organizational levels:
1. Operational-level systems: support operational managers,
keeping track of the elementary activities and
transactions
2. Management-level systems: serve the monitoring,
controlling, decision-making, and administrative activities
3. Strategic-level systems: help senior management tackle
and address strategic issues
2.6 © 2006 by Prentice Hall

7. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Major Types of Systems
• Transaction Processing Systems (TPS)
• Management Information Systems (MIS)
• Decision-Support Systems (DSS)
• Executive Support Systems (ESS)
2.7 © 2006 by Prentice Hall

8. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
The Four Major Types of Information Systems
2.8 Figure 2-2 © 2006 by Prentice Hall

9. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Transaction Processing Systems (TPS)
• Basic business systems that serve the
operational level
• A computerized system that performs and
records the daily routine transactions necessary
to the conduct of the business
2.9 © 2006 by Prentice Hall

10. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
A Symbolic Representation for a Payroll TPS
2.10 Figure 2-3 © 2006 by Prentice Hall

11. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Typical Applications of TPS
2.11 Figure 2-4 © 2006 by Prentice Hall

12. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Management Information Systems (MIS)
Management level
• Inputs: High volume transaction level data
• Processing: Simple models
• Outputs: Summary reports
• Users: Middle managers
Example: Annual budgeting
2.12 © 2006 by Prentice Hall

13. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Management Information Systems (MIS) (continued)
2.13 Figure 2-5 © 2006 by Prentice Hall

14. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Management Information Systems (MIS) (continued)
A sample MIS report
2.14 Figure 2-6 © 2006 by Prentice Hall

15. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Decision-Support Systems (DSS)
Management level
• Inputs: Transaction level data
• Processing: Interactive
• Outputs: Decision analysis
• Users: Professionals, staff
Example: Contract cost analysis
2.15 © 2006 by Prentice Hall

16. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Decision-Support Systems (DSS) (Continued)
Voyage-estimating decision-support system
2.16 Figure 2-7 © 2006 by Prentice Hall

17. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
EXECUTIVE SUPPORT SYSTEMS (ESS):
• Inputs: Aggregate data
• Processing: Interactive
• Outputs: Projections
• Users: Senior managers
Example: 5 year operating plan
2.17 © 2006 by Prentice Hall

18. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Model of a Typical Executive Support System
2.18 Figure 2-8 © 2006 by Prentice Hall

19. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued)
• Top Level Management
• Designed to the individual senior manager
• Ties CEO to all levels
• Very expensive to keep up
• Extensive support staff
2.19 © 2006 by Prentice Hall

20. T Y P E S O F SY ST E M S
S tr a te g ic L e v e l S y s te m s
E SS 5 -ye a r 5 -y e a r 5 -ye a r P r o fit M anpo w e r
o p e r a tin g bud g e t s a le s t r e n d p la n n in g p la n n in g
p la n fo r e c a s t in g fo r e c a s t in g
M a n a g e m e n t-L e v e l S y s te m s
S a le s In v e n to ry A nnu al C a p ita l R e lo c a tio n
M IS
m an ag e m e nt C o n tro l b u d g e t in g I n v e s tm e n t a n a ly s is a n a ly s is
P r ic in g /p r o fit a b ilit y C o n tra c t c o s t
D SS S a le s r e g io n P r o d u c tio n C o st
a n a ly s is a n a ly s is
a n a ly s is S c h e d u lin g a n a ly s is
K n o w le d g e -L e v e l S y s t e m s
K W S E n g in e e r in g G r a p h ic s M a n a g e r ia l
w o r k s ta tio n s w o r k s t a t io n s w o r k s t a tio n s
O A S W o rd D o cum e nt E le c tr o n ic
p r o c e s s in g I m a g in g C a le n d a r s
O p e r a tio n a l L e v e l S y s te m s
M a c h in e c o n tr o l S e c u r it ie s P a y r o ll C o m p e n s a tio n
T P S t r a d in g
O r d e r T r a c k in g P la n t s c h e d u lin g A c c o u n ts p a y a b le T r a in in g & d e v e lo p m e n t
O r d e r p r o c e s s in g M a t e r ia l m o v e m e n t C a s h A c c o u n ts r e c e iv a b le E m p lo y e e r e c o r d k e e p in g
c o n tro l m anag e m e n t
S a le s a n d M a n u fa c t u r in g F in a n c e A c c o u n t in g H u m an
2.20 m a r k e tin g R© 2006c by
e so u r e s Prentice Hall

21. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Relationship of Systems to One Another
Interrelationships among systems
2.21 Figure 2-9 © 2006 by Prentice Hall

22. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Relationship of Systems to One Another
In contemporary digital firms, the different types of
systems are closely linked to one another. This is
the ideal. In traditional firms these systems tend to
be isolated from one another, and information does
not flow seamlessly from one end of the organization
to the other. Efficiency and business value tend to
suffer greatly in these traditional firms
2.22 © 2006 by Prentice Hall

23. Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Sales and Marketing Systems
Major functions of systems:
• Sales management, market research, promotion,
pricing, new products
Major application systems:
• Sales order info system, market research system,
pricing system
2.23 © 2006 by Prentice Hall

24. Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Sales and Marketing Systems
SYSTEM DESCRIPTION ORGANIZATIONAL
LEVEL
Order Enter, process, and track orders Operational
processing
Pricing analysis Determine prices for products and Management
services
Sales trend Prepare 5-year sales forecasts Strategic
forecasting
Table 2-2
2.24 © 2006 by Prentice Hall

25. Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Manufacturing and Production Systems
Major functions of systems:
• Scheduling, purchasing, shipping, receiving,
engineering, operations
Major application systems:
• Materials resource planning systems, purchase
order control systems, engineering systems,
quality control systems
2.25 © 2006 by Prentice Hall

26. Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Manufacturing and Production Systems
SYSTEM DESCRIPTION ORGANIZATIONAL
LEVEL
Machine Control the actions of machines and Operational
control equipment
Production Decide when and how many products Management
planning should be produced
Facilities Decide where to locate new production Strategic
location facilities
2.26 © 2006 by Prentice Hall

27. Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Overview of an Inventory System
2.27 Figure 2-10 © 2006 by Prentice Hall

28. Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Financing and Accounting Systems
Major functions of systems:
• Budgeting, general ledger, billing, cost
accounting
Major application systems:
• General ledger, accounts receivable, accounts
payable, budgeting, funds management systems
2.28 © 2006 by Prentice Hall

29. Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Financing & Accounting Systems (Continued)
SYSTEM DESCRIPTION ORGANIZATION-
AL LEVEL
Accounts Tracks money owed the firm Operational
receivable
Budgeting Prepares short-term budgets Management
Profit planning Plans long-term profits Strategic
2.29 Table 2-4 © 2006 by Prentice Hall

30. Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Human Resource Systems
Major functions of systems:
• Personnel records, benefits, compensation, labor
relations, training
Major application systems:
• Payroll, employee records, benefit systems,
career path systems, personnel training systems
2.30 © 2006 by Prentice Hall

31. Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Human Resource Systems (Continued)
SYSTEM DESCRIPTION ORGANIZATIONAL
LEVEL
Training and Tracks employee training, skills, Operational
development and performance appraisals
Compensation Monitors the range and distribution Management
analysis of employee wages, salaries, and
benefits
Human resources Plans the long-term labor force Strategic
planning needs of the organization
Table 2-5
2.31 © 2006 by Prentice Hall

32. Management Information Systems
Chapter 2 Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Human Resource Systems (Continued) An Employee Recordkeeping System
2.32 Figure 2-11 © 2006 by Prentice Hall

33. Management Information Systems
Chapter 2 Informatiystems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Business Processes and Information Systems
Business processes:
• Manner in which work is organized, coordinated,
and focused to produce a valuable product or
service
• Concrete work flows of material, information, and
knowledge—sets of activities
• Unique ways to coordinate work, information, and
knowledge
• Ways in which management chooses to
coordinate work
2.33 © 2006 by Prentice Hall

34. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Business Processes and Information Systems
(Continued)
• Information systems help organizations
achieve great efficiencies by automating parts
of processes
• IS also contributes to completely rethinking
processes.
• Business processes typically span several
different functional areas.
2.34 © 2006 by Prentice Hall

35. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Examples of Business Processes
Manufacturing and production:
• Assembling product, checking quality, producing
bills of materials
Sales and marketing:
• Identifying customers, creating customer
awareness, selling
Table 2.6
2.35 © 2006 by Prentice Hall

36. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Examples of Business Processes (Continued)
Finance & accounting:
accounting
• Paying creditors, creating financial statements,
managing cash accounts
Human resources:
resources
• Hiring employees, evaluating performance,
enrolling employees in benefits plans
Table 2.6 continued
2.36 © 2006 by Prentice Hall

37. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Business Processes and Information Systems
Cross-Functional Business Processes:
• Transcend boundary between sales, marketing,
manufacturing, and research and development
• Group employees from different functional
specialties to a complete piece of work
Example: Order Fulfillment Process
2.37 © 2006 by Prentice Hall

38. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
The Order Fulfillment Process
2.38 Figure 2-12 © 2006 by Prentice Hall

39. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Systems for Enterprise-Wide Process Integration
Enterprise applications:
• Designed to support organization-wide process
coordination and integration
2.39 © 2006 by Prentice Hall

40. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Systems for Enterprise-Wide Process Integration
(Continued)
Consist of :
• Enterprise systems
• Supply chain management systems
• Customer relationship management systems
• Knowledge management systems
2.40 © 2006 by Prentice Hall

41. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Enterprise Systems
• Enterprise systems, also known as enterprise
resource planning (ERP) systems, provide a
single information system for organization-wide
coordination and integration of key business
processes.
• Information that was previously fragmented in
different systems can seamlessly flow
throughout the firm so that it can be shared by
business processes in manufacturing,
accounting, human resources, and other areas.
2.41 © 2006 by Prentice Hall

42. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Enterprise Application Architecture
2.42 Figure 2-13 © 2006 by Prentice Hall

43. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Traditional “Silo” View of Information 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
2.43 © 2006 by Prentice Hall

44. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Traditional View of Systems
2.44 Figure 2-14 © 2006 by Prentice Hall

45. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Enterprise Systems
2.45 Figure 2-15 © 2006 by Prentice Hall

46. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Benefits of Enterprise Systems
• Help to unify the firm’s structure and
organization: One organization
• Management: Firm wide knowledge-based
management processes
• Technology: Unified platform
• Business: More efficient operations & customer-
driven business processes
2.46 © 2006 by Prentice Hall

47. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Challenges of Enterprise Systems
• Difficult to build: Require fundamental changes in
the way the business operates
• Technology: Require complex pieces of software
and large investments of time, money, and
expertise
• Centralized organizational coordination and
decision making: Not the best way for the firms to
operate
2.47 © 2006 by Prentice Hall

48. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Supply Chain Management (SCM)
• Close linkage and coordination of activities
involved in buying, making, and moving a
product
• Integrates supplier, manufacturer, distributor,
and customer logistics time
• Reduces time, redundant effort, and inventory
costs
• Network of organizations and business
processes
2.48 © 2006 by Prentice Hall

49. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Supply Chain Management (SCM)
• Helps in procurement of materials,
transformation of raw materials into intermediate
and finished products
• Helps in distribution of the finished products to
customers
• Includes reverse logistics - returned items flow in
the reverse direction from the buyer back to the
seller
2.49 © 2006 by Prentice Hall

50. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Haworth’s Supply Chain Management Systems
2.50 Figure 2-16 © 2006 by Prentice Hall

51. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Information from Supply Chain Management
Systems helps firms:
• Decide when and what to produce, store,
and move
• Rapidly communicate orders
• Track the status of orders
• Check inventory availability and monitor
inventory levels
2.51 © 2006 by Prentice Hall

52. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Information from Supply Chain Management
Systems helps firms: (Continued)
• Reduce inventory, transportation, and
warehousing costs
• Track shipments
• Plan production based on actual customer
demand
• Rapidly communicate changes in product design
2.52 © 2006 by Prentice Hall

53. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Customer Relationship Management (CRM)
• Manages all ways used by firms to deal with
existing and potential new customers
• Business and technology discipline
• Uses information system to coordinate entire
business processes of a firm
2.53 © 2006 by Prentice Hall

54. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Customer Relationship Management (CRM)
(Continued)
• Provides end- to- end customer care
• Provides a unified view of customer across the
company
• Consolidates customer data from multiple
sources and provides analytical tools for
answering questions
2.54 © 2006 by Prentice Hall

55. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Customer Relationship Management (CRM)
2.55 Figure 2-17 © 2006 by Prentice Hall

56. Management Information Systems
Chapter 2 Information Systems in the Enterprise
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications
Knowledge Management Systems
• Collects relevant knowledge and make it available
wherever and whenever it is needed
• Support business processes and management
decisions
• Also link the firm to external sources of
knowledge
• Support processes for acquiring, storing,
distributing, and applying knowledge
2.56 © 2006 by Prentice Hall

57. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MANAGEMENT OPPORTUNITIES, CHALLENGES, AND
SOLUTIONS
Management Opportunities:
• There are extraordinary opportunities to use
information systems to achieve business value,
and increase profitability
2.57 © 2006 by Prentice Hall

58. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MANAGEMENT OPPORTUNITIES, CHALLENGES, AND
SOLUTIONS
Management Challenges:
• Integration and the whole firm view: Given the
different interests and perspectives within a firm,
it is difficult to achieve consensus about the need
for the "whole firm" viewpoint.
• Management and employee training: Training a
large number of employees on many systems in a
large organization involves commensurately large
investments.
2.58 © 2006 by Prentice Hall

59. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MANAGEMENT OPPORTUNITIES, CHALLENGES, AND
SOLUTIONS
Management Challenges: (Continued)
• Accounting for the cost of systems and managing
demands for systems: Given the large number of
different types of systems in a firm, and the large
number of people involved with using them, it is
a complex task to understand which systems are
truly necessary and productive with high returns
on investment
2.59 © 2006 by Prentice Hall

60. Management Information Systems
Chapter 2 Information Systems in the Enterprise
MANAGEMENT OPPORTUNITIES, CHALLENGES, AND
SOLUTIONS
Solution Guidelines:
• Inventory the firm’s information systems: Develop
a list of firm-wide information requirements to give
a 360-degree view of the most important
information needs of the firm.
• Employee and management education: Ensure that
you understand how much training is required.
• Account for the costs and benefits: Develop an
accounting system for information services firm-
wide.
2.60 © 2006 by Prentice Hall