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CHAPTER 8 Information Systems within the Organization 1 Copyright John Wiley & Sons Canada.

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1 CHAPTER 8 Information Systems within the Organization 1 Copyright John Wiley & Sons Canada

2 2 8.1 Transaction Processing Systems 8.2 Functional Area Information Systems 8.3 Enterprise Resource Planning Systems 8.4 Reports Chapter 8: Information Systems within the Organization

3 LEARNING OBJECTIVES 1.Explain the purposes of transaction processing systems. Provide at least one example of how businesses use these systems. 2.Define functional area information systems. Provide an example of the support they provide for each functional area of the organization. 3Copyright John Wiley & Sons Canada

4 LEARNING OBJECTIVES (CONTINUED) 3.Explain the purpose of enterprise resource planning systems. Identify four advantages and four drawbacks to implementing an ERP system. 4.Discuss the three major types of reports generated by the functional area information systems and enterprise resource planning systems. Provide an example of each type. 4Copyright John Wiley & Sons Canada

5 8.1 OPENING CASE: IS BASEBALL A SCIENCE? The Problem –John Dewan, the owner of Baseball Info Solutions (BIS;, has made collecting data on fielding statistics his latest mission. The BIS data, however, are not perfect. For example, they do not indicate where a fielder was standing when the ball was hit. In addition, the data are susceptible to human error, and could be off by 15 to 20 feet (4.5 to 6 m) on some plays. Dewan estimated that BIS and its video scouts could measure only 60 percent of a fielder’s ability. 5Copyright John Wiley & Sons Canada

6 8.1 OPENING CASE: IS BASEBALL A SCIENCE? The Solution –Sportvision created Fieldf/x, a motion-capture, or optical tracking system that helps eliminate human error and the need to be in the right place at the right time. Fieldf/x uses four cameras placed high above the field to track players and the ball, and to log their movements. The system generates more than 2.5 million records per game, or 2 terabytes of data. 6Copyright John Wiley & Sons Canada

7 8.1 OPENING CASE: IS BASEBALL A SCIENCE? The Results –Ultimately, Fieldf/x will generate new baseball metrics, such as degree-of-difficulty fielding ratings. Fieldf/x also will make coaching more precise; for example, coaches will be able to better position their fielders, depending on the hitter and the pitch being thrown (e.g., fast ball versus slow curve ball). Finally, the system will enhance the process by which clubs evaluate— and pay—their players. 7Copyright John Wiley & Sons Canada

8 8.1 OPENING CASE: IS BASEBALL A SCIENCE? Discussion –What is the major attribute of Fieldf/x? –What was the significant difference between the 2 systems that mitigated human error? 8Copyright John Wiley & Sons Canada

9 8.1 IT’S ABOUT [SMALL AND BIG] BUSINESS Pizza Pizza’s Customer AppPizza Pizza’s –created an iPhone app for ordering customized pizza –app is free and fun –won several design awards –brings in more sales –convenient for customers –reduces costs and saves the potential for error 9Copyright John Wiley & Sons Canada

10 8.1 TRANSACTION PROCESSING SYSTEMS (TPS) Grocery store clerks use a bar code scanner that produces data captured by a transaction processing system The TPS collects data continuously, in real time, as soon as the data are generated, and it provides the input data for the corporate databases. 10Copyright John Wiley & Sons Canada

11 FIGURE 8.1 HOW TPS MANAGE DATA 11Copyright John Wiley & Sons Canada

12 8.2 FUNCTIONAL AREA INFORMATION SYSTEMS Functional Area Information Systems (FAIS) provide support for the various functional areas (below) in an organization by increasing each area’s internal efficiency and effectiveness –Accounting –Finance –Marketing –Operations (POM) –Human Resources Management 12Copyright John Wiley & Sons Canada

13 INFORMATION SYSTEMS FOR ACCOUNTING AND FINANCE Financial Planning and Budgeting –Financial and economic forecasting –Planning and Budgeting Managing Financial Transactions –Global stock exchanges –Multiple currency management –Virtual close –Expense management automation 13Copyright John Wiley & Sons Canada

14 INFORMATION SYSTEMS FOR ACCOUNTING AND FINANCE (CONTINUED) Investment Management Control and Auditing –Budgetary control –Internal auditingInternal auditing –Financial ratio analysis 14Copyright John Wiley & Sons Canada

15 INFORMATION SYSTEMS FOR MARKETING Customer relations Customer profiles and preferences Sales force automation 15Copyright John Wiley & Sons Canada

16 INFORMATION SYSTEMS FOR PRODUCTION AND OPERATIONS MANAGEMENT In-House Logistics and Materials Management –Inventory Management –Quality Control Planning Production and Operations Computer-Integrated Manufacturing Product Life Cycle Management 16Copyright John Wiley & Sons Canada

17 INFORMATION SYSTEMS FOR HUMAN RESOURCES Recruitment HR Maintenance and Development HR Planning and Management –Payroll and employees’ records –Benefits administration –Employee relationship management 17Copyright John Wiley & Sons Canada


19 8.3 ENTERPRISE RESOURCE PLANNING SYSTEMS (ERP) Enterprise Resource Planning (ERP) system adopts a business process view of the overall organization to integrate the planning, management, and use of all of an organization’s resources, employing a common software platform and database. 19Copyright John Wiley & Sons Canada

20 ERP SOFTWARE VENDORS Most organizations use commercially available ERP software from major vendors including: – SAPSAP –OracleOracle –PeopleSoft Click here for up-to-date information on ERP softwarehere 20Copyright John Wiley & Sons Canada

21 8.2 IT’S ABOUT BUSINESS Airgas switched over its hard-goods supply chain operation to SAP in July 2010:Airgas –affects nearly every area of Airgas –70 percent of its information systems functional on SAP as of March 2013 –expected to have saved up to $125 million by the end of 2013 –improved sales, better price management, and leaner operating costs 21Copyright John Wiley & Sons Canada

22 ERP II SYSTEMS 22Copyright John Wiley & Sons Canada

23 ERP MODULES Core ERP Modules –Financial Management –Operations Management –Human resource management Extended ERP Modules –Customer relationship management –Supply Chain Management –Business intelligence –E-business 23Copyright John Wiley & Sons Canada

24 BENEFITS OF ERP SYSTEMS Organizational flexibility and agility Decision support Quality and efficiency 24Copyright John Wiley & Sons Canada

25 LIMITATIONS OF ERP SYSTEMS Companies may need to change existing business processes to fit the predefined business processes of the software (best practices) Complex, expensive, and time consuming to implement Underestimating the complexity of the planning, development, and training required to prepare for a new ERP system 25Copyright John Wiley & Sons Canada

26 8.4 REPORTS Routine reports are produced at scheduled intervals (hourly quality control report, daily reports on absenteeism rates) Non-routine or Ad hoc (on demand) reports: – Drill-down reports – Key-indicator reports – Comparative reports Exception reports include only information that falls outside certain threshold standards 26Copyright John Wiley & Sons Canada

27 TYPES OF REPORTS Summary Report Detailed report Drill-down report Key-indicator report Comparative report Exception Report 27Copyright John Wiley & Sons Canada

28 CHAPTER CLOSING TPSs monitor, store, collect, and process data generated from all business transactions. Major business functional areas are production/operations management, marketing, accounting/finance, and human resources management. Enterprise resource planning (ERP) systems integrate the planning, management, and use of all of the organization’s resources. Three major types of reports generated by FAIS and ERP systems are: Routine, Nonroutine or ad hoc (on- demand) and Exception. 28Copyright John Wiley & Sons Canada

29 Copyright Copyright © 2014 John Wiley & Sons Canada, Ltd. All rights reserved. Reproduction or translation of this work beyond that permitted by Access Copyright (the Canadian copyright licensing agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these files or programs or from the use of the information contained herein.

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