1. Chapter 2  2000 by Prentice Hall. 2-1 How Businesses Use Information Systems Uma Gupta Introduction to Information Systems

2.  2000 by Prentice Hall.2-2 Learning Objectives After studying this chapter, you will be able to:  Describe basic business structures and functional areas  Identify four types of information systems  Explain the role and function of marketing information systems  Summarize the purpose of manufacturing and service information systems  Outline the purpose of financial and accounting information systems and how they support a business

3.  2000 by Prentice Hall.2-3 Learning Objectives (cont.)  Explain the role and function of human resource information systems  Discuss the purpose and effects of cross- functional systems  Define and describe global information systems

4.  2000 by Prentice Hall.2-4 A Business Structured by Cross-Functional Teams PRODUCT OR SERVICE DEVELOPMENT Accounting Human Resources Manufacturing Marketing Finance Information Systems

5.  2000 by Prentice Hall.2-5 The Functional Product Design and Development Process Marketing Finance AccountingManufacturing Human Resources Product or Service Development

6.  2000 by Prentice Hall.2-6 Four Types of Information Systems  Personal, Work-Group, Enterprise- Wide Systems  Sometimes information systems are grouped into categories based on the number of individuals who use them: personal systems (one user), work-group systems (a group of users), or enterprise- wide systems (the entire organization).

7.  2000 by Prentice Hall.2-7 Four Types of Information Systems (cont.)  Systems Based on Type of Decision  Decisions can be classified as operational, tactical, and strategic.  Strategic Information Systems  Information systems that give a company a significant strategic advantage over its market competitors. These can be transaction processing systems, management information systems, decision support systems, or any combination of these systems.

8.  2000 by Prentice Hall.2-8 Four Types of Information Systems (cont.)  Function-Oriented Information Systems  Systems classified according to their business function: marketing information systems, manufacturing information systems, financial information systems, etc.

9.  2000 by Prentice Hall.2-9 Comparison of Types of Decisions Types of DecisionsDescription Operational Tactical Strategic Structured decisions. Routine, require minimal judgment, focus on day-to-day operations. Semistructured decisions that support tactical goals. Often made by middle managers. Unstructured. Rely heavily on intuition, judgment, and experience. Usually made by top-level managers and executives.

10.  2000 by Prentice Hall.2-10 Information Systems Based on Type of Decisions  Systems that support operational, tactical, and strategic decision are broadly classified into the following categories:  Transaction processing systems (TPS)  Management information systems (MIS)  Intelligent support systems (ISS), which include decision support systems (DSS), executive information systems (EIS), and expert systems (ES)

11.  2000 by Prentice Hall.2-11 Information Systems Based on Type of Decisions (cont.)  Intelligent support systems (ISS) refer to a group of systems that support decisions requiring the use of knowledge, intuition, experience, and expertise  Decision support systems (DSS)  Executive information systems (EIS)  Artificial intelligence (AI) and expert systems (ES)

12.  2000 by Prentice Hall.2-12 Functional Information Systems  Information systems can also be classified according to function in these four areas:  Marketing  Manufacturing and service  Accounting and finance  Human resources

13.  2000 by Prentice Hall.2-13 Marketing Information Systems  Information systems that meet the information needs of an organization in the areas of sales, distribution, advertising and promotion, market analysis, market intelligence, product research, service management, and other marketing functions.

14.  2000 by Prentice Hall.2-14 Databases to improve customer service Point-of-sale systems Kiosks Developing the Strategic Marketing Information Systems Plan Company Mission, Goals, Objectives Strategic Marketing Plan Strategic Marketing Information Plan Marketing Information Systems Examples:

15.  2000 by Prentice Hall.2-15 Manufacturing Information Systems  A set of systems that support the manufacturing and service functions of purchasing, receiving, quality control, inventory management, material requirements planning, capacity planning, production scheduling, and plant design.

16.  2000 by Prentice Hall.2-16 Developing a Manufacturing Information System Plan for Manufacturing and Service Businesses Automation systems Logistics systems Material requirements planning software Manufacturing resource planning software Agile manufacturing environments ERP Company Mission, Goals, Objectives Strategic Manufacturing and Service Plan Strategic Manufacturing and Service Information Plan Manufacturing Information Systems Examples:

17.  2000 by Prentice Hall.2-17 Financial and Accounting Information Systems  Computerized systems that provide accounting and financial information to improve decision making.

18.  2000 by Prentice Hall.2-18 Developing the Strategic Financial and Accounting Information Systems Plan General ledger systems Asset management systems Order-entry systems Cash management systems Accounts receivable and accounts payable systems Inventory control systems Payroll systems Capital budgeting systems Company Mission, Goals, Objectives Strategic Financial and Accounting Plan Strategic Financial and Accounting Information Systems Plan Financial and Accounting Information Systems Examples:

19.  2000 by Prentice Hall.2-19 Human Resource Information Systems (HRIS)  Computerized systems that support the planning, control, coordination, administration, and management of the human resource assets in an organization.

20.  2000 by Prentice Hall.2-20 Developing the Strategic Human Resource Information Systems Plan Personnel databases Payroll systems Benefits administration Performance appraisal Personnel action systems (hiring, firing, recruiting) Labor law compliance system Compensation systems Workforce scheduling systems Company Mission, Goals, Objectives Strategic Human Resources Plan Strategic Human Resources Information Systems Plan Human Resources Information Systems Examples:

21.  2000 by Prentice Hall.2-21 Putting the Functions Together: Cross-Functional Systems  Systems that integrate functional systems give end users more complete information for decision making  The case for cross-functional information systems is even stronger in global companies  A strong and consistent flow of information is essential to project a uniform “face” to all people who have a stake in the business

22.  2000 by Prentice Hall.2-22 Global Information Systems  A system that links people, systems, and business units located around the world through the use of telecommunications (hardware and software that links two or more electronic devices that are geographically separated).

23.  2000 by Prentice Hall.2-23 Ten Critical Points for Global Success Incorporate diversity into your organization Build trust Create team identity Build consensus Teach sensitivity Establish ground rules Be fair Communicate progress Designate responsibilities Go face to face

24.  2000 by Prentice Hall.2-24 Guidelines for Business Information Systems Success  Give Employees Information Access for Improved Decision Making  Many companies that use information systems successfully do so because they trust employees enough to give them access to information so they can make decision that affect their jobs.  Problems Won’t Go Away. Opportunities Will. Be Prepared to Act on Both.  Opportunities to apply technology to achieve competitive advantage slip away quickly.

25.  2000 by Prentice Hall.2-25 Guidelines for Business Information Systems Success (cont.)  Use Information Systems to Improve Customer Satisfaction  The key question when approving an information system project should be “How will this help our company better serve our customers?”  Integration Leads to Success  Companies that invest in systems that are isolated from other internal systems often create complex problems

26.  2000 by Prentice Hall.2-26 Guidelines for Business Information Systems Success (cont.)  Take Calculated Risks  Many new and innovative information systems are also risky investments  RISK –“R” is for return: Are we achieving an appropriate return for the risks we take? –“I” is for immunization: Do we have the controls and limits in place to manage risk? –“S” is for systems: Do we have the systems to measure and report risk? –“K” is for knowledge: Do we have the right people, skills, culture, and incentives for effective risk management?