Lecture 2

1.Organizational Level 2.Business Functions /Interests/Speciality 3.Supported Business Process(s) Information Systems serve different management levels and major business functions Classification of Information Systems

Types of Information Systems Categories of Information System

Support Operational ManagersSupport Operational Managers Keep track of elementary activities and transactions of the organizationKeep track of elementary activities and transactions of the organization E.g. Sales receipts, cash deposits, payroll, daily log maintenance, the flow of materials in a factory and query management in a service firm etc.E.g. Sales receipts, cash deposits, payroll, daily log maintenance, the flow of materials in a factory and query management in a service firm etc. Operational Level Systems

Support Middle ManagersSupport Middle Managers Monitoring, controlling, decision-making, and administrative activitiesMonitoring, controlling, decision-making, and administrative activities Provide periodic reports rather than instant information on operationsProvide periodic reports rather than instant information on operations Attrition Reporting System, Planned Vs. Actual Reports etc.Attrition Reporting System, Planned Vs. Actual Reports etc. Knowledge/Management Level Systems

Support Senior ManagementSupport Senior Management Help tackling and addressing strategic issues and long term trends related to the firm and external environment.Help tackling and addressing strategic issues and long term trends related to the firm and external environment. The principle concern is matching changes in the external environment with the existing organizational capability.The principle concern is matching changes in the external environment with the existing organizational capability. E.g. Employment level and capacity planning for next 3-5 years, long term industry cost trends, product and services focus for the next 5 years etc.E.g. Employment level and capacity planning for next 3-5 years, long term industry cost trends, product and services focus for the next 5 years etc. Strategic Level Systems

Major Types of Systems Executive Support Systems (ESS)Executive Support Systems (ESS) Decision Support Systems (DSS)Decision Support Systems (DSS) Management Information Systems (MIS)Management Information Systems (MIS) Knowledge Work Systems (KWS)Knowledge Work Systems (KWS) Office SystemsOffice Systems Transaction Processing Systems (TPS)Transaction Processing Systems (TPS) Major Types of Systems

Transaction Processing Systems (TPS): Basic business systems that serve the operational levelBasic business systems that serve the operational level A computerized system that performs and records the daily routine transactions necessary to the conduct of the businessA computerized system that performs and records the daily routine transactions necessary to the conduct of the business E.g. Employee record keeping, sales order entry etc.E.g. Employee record keeping, sales order entry etc. Central to business – TPS failure for few hours can lead to a firms demise – Airlines without computerizedCentral to business – TPS failure for few hours can lead to a firms demise – Airlines without computerized Reservation systems??Reservation systems?? Major Types of Systems

Payroll TPS Major Types of Systems

Types of TPS Systems Major Types of Systems

Knowledge Work Systems (KWS): Knowledge level  Inputs: Design specs  Processing: Modeling  Outputs: Designs, graphics  Users: Technical staff and professionals Example: Engineering work station Major Types of Systems

Management Information System (MIS):  Serve the management level of the organization  Provides managers with summaries and reports on the company’s basic operations on regular schedule  Internal orientation not environmental/external  Generally not flexible and have little analytical capability  Use simple routines (E.g. summaries and comparisons) as apposed to sophisticated mathematical models /statistical techniques. Major Types of Systems

Management Information System (MIS): Management level  Inputs: High volume data  Processing : Simple models  Outputs: Summary reports  Users: Middle managers Example: Annual budgeting Major Types of Systems

Management Information System (MIS) Major Types of Systems

Decision Support System (DSS):  Serve the management level of the organization  Help managers make decisions that are unique, rapidly changing and not easily specified in advance.  Address problems where the procedure for arriving at a solution may not be fully defined in advance.  Use both internal and external sources of information  Also referred to business intelligence  More analytical power, interactive and user friendly Major Types of Systems

Decision Support System (DSS): Management level  Inputs: Low volume data  Processing: Interactive  Outputs: Decision analysis  Users: Professionals, staff Example: Contract cost analysis Major Types of Systems

Decision Support System (DSS) Major Types of Systems

Decision Support System (DSS) Major Types of Systems

Executive Support System (ESS):  Used by Senior/Strategic Management  They address non-routine decisions requiring judgments, evaluation and insight as there is no agreed-on procedure for arriving at a solution  Incorporate data about external events and draw summarized information from internal MIS, DSS.  General computing/communications capacity applied to an array of problems not just specific problems  E.g. What are competitors going? New acquisitions? etc Major Types of Systems

Executive Support System (ESS): Strategic level  Inputs: Aggregate data  Processing: Interactive  Outputs: Projections  Users: Senior managers Example: 5-year operating plan Major Types of Systems

Executive Support System (ESS) The Information Technology

 Top level management  Designed to the individual  Ties CEO to all levels  Very expensive to keep up  Extensive support staff Executive support system (ESS) The Information Technology

The Interrelationships

Sales and Marketing Systems Systems Functional Perspective

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 Manufacturing and Production Systems Systems Functional Perspective

Manufacturing and Production Systems Systems Functional Perspective

Major functions of systems:  Budgeting, general ledger, billing, cost accounting Major application systems:  General ledger, accounts receivable, accounts payable, budgeting, funds management systems Financing and Accounting Systems Systems Functional Perspective

Financing and Accounting Systems Systems Functional Perspective

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 Human Resource Systems Systems Functional Perspective

Human Resource Systems Systems Functional Perspective

Business processes  Sets of logically related activities for accomplishing a specific business result.  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 Business Processes and Information Systems Enterprise Applications

 Unique ways to coordinate work, information, and knowledge  Ways in which management chooses to coordinate work Business Processes and Information Systems Enterprise Applications

Business Processes and Information Systems Information systems help organizations  Achieve great efficiencies by automating parts of processes  Rethink and streamline processes Enterprise Applications

 Manufacturing and production: Assembling product, checking quality, producing bills of materials  Sales and marketing: Identifying customers, creating customer awareness, selling Examples of Business Processes Enterprise Applications

 Finance and accounting: Paying creditors, creating financial statements, managing cash accounts  Human Resources: Hiring employees, evaluating performance, enrolling employees in benefits plans Examples of Business Processes Enterprise Applications

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 Business Processes and Information Systems Enterprise Applications

The Order Fulfillment Process Enterprise Applications

 Enterprise systems  Supply chain management systems  Customer relationship management systems  Knowledge management systems Enterprise Applications

 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 Traditional View of the Systems Enterprise Applications

Traditional View of the Systems Enterprise Applications

Enterprise Systems Enterprise Applications