1. Global E-Business: How Businesses Use Information Systems
CHAPTER 2

2. Business Processes and Information Systems
How information technology enhances business processes: Efficiency and Transformation

3. Examples of Functional Business Processes
Major Functional Area
Business Process
Manufacturing & Production
Assembling product, checking quality, producing bills of materials
Sales & Marketing
Identifying customers, creating customer awareness, generating sales order
Finance & Accounting
Credit reporting, Creating Financial Statements, Managing cash accounts
Human Resources
Hiring employees, Evaluating performance, Developing benefit plans

4. Cross-Functional Business Processes
Transcend boundary between sales, manufacturing, finance and accounting etc.
Group of employees from different functional specialties complete a piece of work
Example: Order Fulfillment Process

5. Cross-Functional Business Processes
Order Fulfillment Process
Fulfilling a customer order involves a complex set of steps that requires coordination of different functions.

6. Management Level

7. Management Level & Functional Areas

8. Types of Business Information Systems
Systems from a functional perspective
Sales and marketing systems
Manufacturing and production systems
Finance and accounting systems
Human resources systems
Systems from a constituency perspective
Transaction processing systems
Management information systems
Decision support systems
Executive support systems

9. Systems from a Functional Perspective
Sales and Marketing Systems
Help identify customers
Develop products and services
Promote products and services
Sell products and services
Provide ongoing customer support

10. Systems from a Functional Perspective (Contd.)
Example of Sales & Marketing Information systems
SYSTEM
DESCRIPTION
GROUPS SERVED
Order processing
Enter, process and track orders
Operational management
Pricing analysis
Determine prices for products and services
Middle management
Sales trend forecasting
Prepare five-year sales forecasts
Senior management

11. Systems from a Functional Perspective (Contd.)
Example of Sales Information systems

12. Systems from a Functional Perspective (Contd.)
Manufacturing and Production Systems
Planning, development, production of products and services
Maintenance of production facilities
Acquisition, storage, availability of materials
Scheduling materials, facilities, labor
Controlling the flow of production

13. Systems from a Functional Perspective (Contd.)
Example of Manufacturing & Production Information systems
SYSTEM
DESCRIPTION
GROUPS SERVED
Machine control
Controls the actions of machines and equipment
Operational management
Production planning
Decides when and how many products should be produced
Middle management
Facilities location
Decides where to locate production facilities
Senior management

14. Systems from a Functional Perspective (Contd.)
Inventory Management System for Manufacturing & Production Information systems
This system provides information about available inventory to support production process

15. Systems from a Functional Perspective (Contd.)
Finance & Accounting Systems
Manage firm’s assets: cash, stocks, investments etc.
Manage capitalization of firm and finding new financial assets
Maintain and manage financial records

16. Systems from a Functional Perspective (Contd.)
Example of Finance & Accounting Information systems
SYSTEM
DESCRIPTION
GROUPS SERVED
Accounts receivable
Tracks money owed the firm
Operational management
Budgeting
Prepares short-term budgets
Middle management
Profit planning
Plans long-term profits
Senior management

17. Systems from a Functional Perspective (Contd.)
An Accounts Receivable System

18. Systems from a Functional Perspective (Contd.)
Human Resources Systems
Identify potential employees
Maintain employee records
Track employee skills, job performance, and training
Support planning for employee compensation and career development

19. Systems from a Functional Perspective (Contd.)
Example of Human Resources Information systems
SYSTEM
DESCRIPTION
GROUPS SERVED
Training and development
Tracks employee training, skills and performance appraisals
Operational management
Compensation analysis
Monitors the range and distribution of employee wages, salaries and benefits
Middle management
Human resources planning
Plans the long-term labor force needs of the organization
Senior management

20. Systems from a Functional Perspective (Contd.)
Employee Record Keeping System for HRIS

21. Systems from a constituency perspective
Transaction Processing Systems (TPS)
Management Information Systems (MIS)
Decision-Support Systems (DSS)
Executive Support Systems (ESS)

22. Systems from a constituency perspective (Contd.)
TPS
Basic business systems that serve the operational level
Input: Transactions, events
Processing: Sorting, listing, merging, updating
Output: Detailed reports, lists, summaries
User: Operations personnel, supervisors

23. Systems from a constituency perspective (Contd.)
A Symbolic Representation for a Payroll TPS

24. Systems from a constituency perspective (Contd.)
MIS
Input: High volume transaction level data
Processing: Simple models
Output: Summary reports
User: Middle managers
Example: Annual budgeting

25. Systems from a constituency perspective (Contd.)
MIS (continued)

26. Systems from a constituency perspective (Contd.)
MIS (continued)
A sample MIS report

27. Systems from a constituency perspective (Contd.)
DSS
Input: Transaction level data
Processing: Interactive
Output: Decision analysis
User: Professionals staff
Example: Contract cost analysis

28. Systems from a constituency perspective (Contd.)
ESS
Input: Aggregate data
Processing: Interactive
Output: Projections
User: Senior managers
Example: 5 years operating plan

29. Systems from a constituency perspective (Contd.)
ESS (continued)
Model of a typical ESS

30. Systems from a constituency perspective (Contd.)
Interrelationship among systems
The various types of systems in the organization have interdependencies. TPS are major producers of information that is required by many other systems in the firm, which, in turn, produce information for other systems. These different types of systems are loosely coupled in most business firms, but increasingly firms are using new technologies to integrate information that resides in many different systems.

31. Relationship of Systems to One Another
In contemporary digital firms, the different types of systems are closely linked to one another. 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.

32. Systems for Enterprise-Wide Process Integration
Enterprise applications:
Designed to support organization-wide process coordination and integration

33. Systems for Enterprise-Wide Process Integration (Contd.)
Systems that Span the Enterprise consists of :
Enterprise systems
Supply chain management systems
Customer relationship management systems
Knowledge management systems

34. 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.

35. Enterprise Systems (Contd.)
Enterprise Application Architecture

36. Functions tend to work in isolation
Traditional View
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

37. View of Enterprise Systems

38. 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

39. 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

40. 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

41. Supply Chain Management (Contd.)
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

42. Supply Chain Management (Contd.)
Information from Supply Chain Management Systems helps firm:
Decide when and what to produce, store, and move
Rapidly communicate orders
Track the status of orders
Check inventory availability and monitor inventory levels

43. Supply Chain Management (Contd.)
Information from Supply Chain Management Systems helps firm (contd.):
Reduce inventory, transportation, and warehousing costs
Track shipments
Plan production based on actual customer demand
Rapidly communicate changes in product design

44. Supply Chain Management (Contd.)
Example of Supply Chain Management System
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.

45. Customer Relationship Management (CRM)
Manages all ways used by firms to deal with existing and potential new customers
Uses information system to coordinate entire business processes of a firm
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

46. Customer Relationship Management (Contd.)
How it works?

47. 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