By: Mr Hashem Alaidaros MIS 211 Lecture 3 Title: Business Process Types of IS: TPS, MIS, DSS, and ESS ERP System By: Mr Hashem Alaidaros MIS 211

Objective To know about Business Process To be familiar with TPS, MIS, DSS and ESS and how to manage them. To know the Four major applications of Enterprise Application

Business Process Business processes: Workflows of material, information, knowledge Sets of activities, steps are at the heart of every business Businesses: Can be seen as collection of business processes How well a business performs depends on how well its business processes are designed and coordinated.

Cont. Examples of functional business processes Manufacturing and production Assembling the product Sales and marketing Identifying customers Finance and accounting Creating financial statements Human resources Hiring employees

The Order Fulfillment Process Cont. The Order Fulfillment Process Fulfilling a customer order involves a complex set of steps that requires the close coordination of the sales, accounting, and manufacturing functions.

E-coordination all the business functions in an enterprise (previous figure) The sales function begins the process by completing a sales order, electronically inputting the data into the system. The sales system updates daily sales totals and decreases inventory. The accounting department electronically receives the order and runs a credit check. If the credit is not approved, system sends an exception notification to an accounting specialist and the sales person. If credit is approved, the order is sent to the manufacturing and production system and product assembly begins. When the product is completed, electronic shipping documents are prepared and logistics is notified. When the product is shipped, electronic notifications are sent to Sales, Manufacturing and Production, Accounting, and the customer. The system electronically bills the customer.

Information technology enhances business processes Information technology enhances business processes in two main ways: Increasing efficiency of existing processes Automating steps that were manual (check credit or generate invoice) Enabling entirely new processes that are capable of transforming the businesses Replace sequential steps with parallel steps Eliminate delays in decision making

Types of Information Systems how information systems serve various management levels in companies. It’s important that they understand how one system helps serve other systems and that ultimately, all of them serve the entire organization. Four Types of IS: TPS MIS DSS ESS

TPS 1. Transaction processing systems Perform and record daily routine transactions necessary to conduct business Examples: sales order entry, payroll, shipping Allow managers to monitor status of operations and relations with external environment Serve operational levels Serve predefined, structured goals and decision making

A Payroll TPS Note that the outputs of the payroll system are useful not only within the company to managers, but also to regulatory agencies and other entities relying on the accuracy of the reported data. A TPS for payroll processing captures employee payment transaction data (such as a time card). System outputs include online and hard-copy reports for management and employee paychecks.

MIS 2. Management information systems Serve middle management Middle management needs systems to help with monitoring, controlling, decision making, and administrative activities. Provide reports on firm’s current performance, based on data from TPS Provide answers to routine questions with predefined procedure for answering them (Are things working well?) Typically have little analytic capability (predicting the future of the company) MIS serve managers primarily interested in weekly, monthly, and yearly results

How Management Information Systems Obtain Their Data from the Organization’s TPS Emphasize the relationship between TPS and MIS here. MIS receive data from an organization’s TPS systems and create outputs that management can use to make strategic decisions. In the system illustrated by this diagram, three TPS supply summarized transaction data to the MIS reporting system at the end of the time period. Managers gain access to the organizational data through the MIS, which provides them with the appropriate reports.

Sample MIS report This report, showing summarized annual sales data, was produced by the MIS in Figure 2-3.

DSS 3. Decision support systems Serve middle management Support nonroutine decision making Example: What is impact on production schedule if December sales doubled? While MIS use internal information, DSS Often use external information as well from TPS and MIS supports “what-if” analyses support semistructured and unstructured decision-making activities include interactive, user-friendly software

ESS 4. Executive support systems Support senior management help senior managers address strategic issues and long-term trends, both in the firm and in the external environment Address nonroutine decisions requiring judgment, evaluation, and insight because there is no agreed-on procedure for arriving at a solution Incorporate data about external events (e.g. new tax laws or competitors) as well as summarized information from internal MIS and DSS

Relationships Emphasize the connection between ESS, MIS, and DSS. MIS rely on accurate inputs from TPS. ESS rely on accurate inputs from a firm’s MIS and DSS to provide useful information to executives. These systems should not exist in isolation from one another. If they are isolated from each other, it is a kind of organizational dysfunction, probably inherited from the past.

Enterprise Application Enterprise applications are used to ensure that TPS, MIS, DSS, and ESS work together smoothly Span functional areas Execute business processes across firm Include all levels of management Four major applications: Enterprise systems (ERP) Supply chain management systems Customer relationship management systems Knowledge management systems

Systems That Span the Enterprise Enterprise Application Architecture Representing an integrated enterprise system in a single graphic is very difficult. The basic point is that enterprise systems are very large and diverse databases that pull information from many parts of the firm, and many systems, and then dispense that information to a very wide variety of groups. This is precisely their advantage: one system, one company, one world. The multi-colored triangle represents an organization – the ovals represent the business functions and organizational levels affected by enterprise applications. The horizontal oval extends outside of the triangle because even business functions involving outside entities may be automated by enterprise applications. Enterprise applications automate processes that span multiple business functions and organizational levels and may extend outside the organization. Figure 2-7

Enterprise System (ERP) 1. Enterprise systems Collects data from different firm functions and stores data in single central data repository Resolves problem of fragmented, redundant data sets and systems Enable: Coordination of daily activities Efficient response to customer orders (production, inventory) Provide valuable information for improving management decision making

Enterprise Systems Emphasize the central repository used in enterprise systems for all types of information collected and used by the business. Ask students what the difficulties of creating such a system might be (standardization across many business units, size of the system). Enterprise systems integrate the key business processes of an entire firm into a single software system that enables information to flow seamlessly throughout the organization. These systems focus primarily on internal processes but may include transactions with customers and vendors.

SCMS 2. Supply chain management systems Manage firm’s relationships with suppliers Share information about Orders, production, inventory levels, delivery of products and services Goal: Right amount of products to destination with least amount of time and lowest cost

Example of a Supply Chain Management System This example of Haworths supply chain management system features ‘middleware’ that connects company warehouses to its distributors. That way, both groups are able to get up-to-the-minute information about the stock of particular goods in their own warehouses as well as their partner’s. Customer orders, shipping notifications, optimized shipping plans, and other supply chain information flow among Haworth’s Warehouse Management System (WMS), Transportation Management System (TMS), and its back-end corporate systems.

CRMS 3. Customer relationship management systems: Provide information to coordinate all of the business processes that deal with customers in sales, marketing, and service to optimize revenue, customer satisfaction, and customer retention Integrate firm’s customer-related processes and consolidate customer information from multiple communication channels

KMS 4. Knowledge management systems businesses are beginning to realize how much expertise and experience is locked away in employees’ heads and that it’s important to find a way to capture that information Moreover, it’s important that businesses find a way to make the expertise and experience available to a wide range of users employees are very reluctant to impart with their individual knowledge due to fear or self-preservation.

KMS Managing documents, graphics and other digital knowledge objects Support processes for acquiring, creating, storing, distributing, applying, integrating knowledge Collect internal knowledge and link to external knowledge Include enterprise-wide systems for: Managing documents, graphics and other digital knowledge objects Directories of employees with expertise Examples: the knowledge required to run a fast food restaurant the knowledge required to operate a Web site like Amazon

Intranet and Extranet Intranets and Extranets: As Internet-based technologies continue to expand the basic platforms for distributing information, smaller businesses that cannot afford to implement enterprise applications can turn to intranets and extranets. Intranets are limited to internal users; extranets are available to external users as well as internal users. Both are an inexpensive way to quickly share information and data across functional lines and organizational boundaries.

E-business and E-commerce e-business refers to the use of digital technology and the Internet to execute major business processes e-commerce is more narrowly centered on the buying and selling of goods and services over the Internet.