1. Chapter 6 (Part I) Organizational Information Systems
Robert Riordan, Carleton University

2. Learning Objectives
Describe the characteristics that differentiate the operational, managerial, and executive levels of an organization
Explain the characteristics of the three information systems designed to support each unique level of an organization: Transaction Processing Systems (TPS), Management Information Systems (MIS), and Executive Information Systems (EIS)

3. Learning Objectives
3. Describe the characteristics of six information systems that span the organizational, managerial, and executive levels: Decision Support Systems (DSS), Expert Systems (ES), Office Automation Systems (OAS), Collaboration Technologies, Functional Area Information Systems, and Global Information Systems

4. The Organizational Pyramid
Figure 9.1 The management pyramid

5. The Nature of Managerial Work
Management:
- the process of directing tasks and directing resources to achieve organizational goals
- management functions: planning, organizing, directing, motivating, controlling...  

6. The Nature of Managerial Work
Planning
Planning at different levels
Long-term mission and vision
Strategic goals
Tactical objectives
Most important planning activities
Scheduling
Budgeting
Resource allocation

7. The Nature of Managerial Work
Figure 9.3 An example of a mission statement, strategic goals, and tactical objectives for an in-line skate manufacturer

8. The Nature of Managerial Work
Figure 9.4 The main ingredients of planning

9. The Nature of Managerial Work
Control
Managers control activities by comparing plans to results.
Figure 9.5 Examples of processes used to control projects

10. Levels of the Organization

11. Levels of the Organization Explained
Executive Level
Strategic planning and responses to strategic issues occur here. Executive decisions are usually unstructured and are made using consolidated internal and external information
Managerial Level
Monitoring and controlling of operational activities and executive information support occur here. Managerial decisions are usually semistructured and are made using procedures and ad hoc tools
Operational Level
Day-to-day business processes and interactions with customers occur here. Operational decisions are usually structured and are made using established policies and procedures

12. Who, What, Why: Organizational Level

13. Who, What, Why: Managerial Level

14. Who, What, Why: Executive Level

15. Basic Systems Model

16. System Type: Transaction Processing Systems

17. System Description: Transaction Processing Systems
TPSs are a special class of information system designed to process business events and transactions
Architecture Components
Source Documents – these contain the event or transaction information to be processed by system
Data Entry Methods
Manual – a person entering a source document by hand
Semiautomated – using a capture device to enter the source document (e.g. a barcode scanner)
Fully Automated – no human intervention, one computer talks or feeds another computer (e.g. automatic orders from inventory systems)
Processing – transactions can be either:
Online – processed individually in real-time
Batch – grouped and processed together at a later time

18. System Example: Payroll System (TPS)

19. System Architecture: Transaction Processing System

20. System Type: Management Information System

21. System Description: Management Information Systems
MISs are used by managerial employees to support recurring decision making in managing a function or the entire business
Supported Activities
Scheduled Reporting - the system produces automatically based on a predetermined schedule. Some include:
Key Indicator – High-level summaries to monitor performance (e.g. Monthly Sales Report)
Exception – Highlights situations where data is out of normal range (e.g. Monthly Late Shipments)
Drill Down – Provides lower-level detail aggregated in a summary report (printed only if needed)
Ad Hoc Reporting – unscheduled reports that are usually custom built to answer a specific question (e.g. sales data by person report to identify issues)

22. System Architecture: Management Information System

23. System Type: Executive Information System (EIS)

24. System Description: Executive Information Systems
EISs, also called Executive Support Systems (ESS), are special purpose information systems to support executive decision-making
System Details
These systems use graphical user interfaces to display consolidated information and can deliver both:
Soft Data - textual news stories or non-analytical data
Hard Data – facts, numbers, calculations, etc.
Supported Activities
The activities supported by these kinds of systems include:
Executive Decision Making
Long-range Strategic Planning
Monitoring of Internal and External Events
Crisis Management
Staffing and Labour Relations

25. System Architecture: Executive Information Systems

26. System Example: Executive Reporting Drill-down (EIS)
Second Level
Data Drill Down
First Level
Graphical Summary

27. Systems That Span Organizational Boundaries

28. Systems That Span Organizational Boundaries

29. System Description: Decision Support Systems
Special-purpose information systems designed to support managerial-level employees in organizational decision making
System Details
These systems use computational software to construct models for analysis (most common is MS Excel) to solve semi-structured problems (e.g. sales or resource forecasts)
Supported Activities:
“What-if” analysis – changing one or more variables in the model to observe the effect (e.g. What is the payment if the interest rate increases by 1% ?)

30. Characteristics of Decision Support Systems

31. System Description: Common Decision Support Systems

32. System Architecture: Decision Support Systems

33. System Example – Loan Calculator
Variables to be Analyzed
Loan Calculator Model
Analysis Results

34. Systems That Span Organizational Boundaries

35. System Description: Expert Systems
Special-purpose systems used by operational level employees to make decisions usually made by more experienced employees or an expert in the field
System Details
These systems use inference engines that match facts and rules, sequence questions for the user, draw a conclusion, and present a recommendation to the user
Supported Activities:
These systems support many activities, including:
Medical Diagnosis
Machine Configuration
Financial Planning
Software Application Assistance (help wizards)

36. System Architecture: Expert Systems

37. System Dialogue Example – Expert Systems
End user
The end-user usually sees an expert system through an , an example of which follows:
Q. Do you know which restaurant you want to go to?
A. No
Q. Is there any kind of food you would particularly like?
Q. Do you like spicy food?
Q. Do you usually drink wine with meals?
A. Yes
Q. When you drink wine, is it French wine?
As can be seen from this dialog, the system is leading the user through a set of questions, the purpose of which is to determine a suitable set of restaurants to recommend. This dialog begins with the system asking if the user already knows the restaurant choice (a common feature of expert systems) and immediately illustrates a characteristic of expert systems; users may choose not to respond to any question. In expert systems, dialogs are not pre-planned. There is no fixed control structure. Dialogs are synthesized from the current information and the contents of the knowledge base. Because of this, not being able to supply the answer to a particular question does not stop the consultation.
Explanation system
Another major distinction between expert systems and traditional systems is illustrated by the following answer given by the system when the user answers a question with another question, "Why", as occurred in the above example. The answer is:
A. I am trying to determine the type of restaurant to suggest. So far Chinese is not a likely choice. It is possible that French is a likely choice. I know that if the diner is a wine drinker, and the preferred wine is French, then there is strong evidence that the restaurant choice should include French.

38. Systems That Span Organizational Boundaries

39. System Description: Office Automation Systems
A collection of software and hardware products that increase productivity within the office setting
Supported Activities
The activities supported by these kinds of systems include:
Scheduling Resources
Examples: electronic calendars with resource management (equipment, facilities, etc.)
Document Preparation
Examples: software (word processing and desktop publishing); hardware (printers)
Communicating
Examples: , voice mail, videoconferencing and groupware

40. System Architecture: Office Automation Systems

41. System Example – Scheduling System

42. Systems That Span Organizational Boundaries

43. System Description: Collaboration Technologies
Videoconferencing
Software and hardware that allow parties to meet electronically with both picture and voice
Supported Activities
Stand-alone Videoconferencing
High quality, typically very expensive systems using dedicated microphones, cameras and hardware
Can support meetings between several people and locations simultaneously
Desktop Videoconferencing
Lower quality, relatively inexpensive systems using a PC, small camera, and a microphone or telephone for voice communication
Allows two individuals to communicate from a desktop

44. System Description: Collaborative Techs (Groupware)
Software that enables people to work together more effectively
Supported Activities
These systems come in two types:
Asynchronous Groupware – Systems that do not require users to be on the system working at the same time, including: , newsgroups, workflow automation, group calendars, and collaborative writing tools
Synchronous Groupware – Systems that allow and support simultaneous group interactions including shared whiteboards, electronic meeting support systems, video communication systems

45. System Description: Groupware

46. System Description: Groupware Benefits

47. System Examples – Groupware

48. System Examples – Collaborative Technology
Children Create Awareness for Darfur

49. Systems That Span Organizational Boundaries

50. System Description: Global Information Systems
A variety of special-class systems used to support organizations that operate globally
Supported Activities
Depending on the organization, one or more of these systems may be required (definitions on next slide):
International Accounting Systems
Transnational Information Systems
Multinational Information Systems
Collaborative Information Systems

51. System Examples: Global Information Systems

52. System Examples: Global Information Systems

53. Systems That Span Organizational Boundaries

54. System Description: Functional Area Info Systems
Functional Area Information Systems
Cross-organizational information systems are designed to support a specific functional area
Supported Activities
The following functional organizations have systems to support their operational and managerial activities
Accounting
Finance
Human Resources
Marketing
Operations

55. System Description: Functional Area Info Systems

56. System Examples: Functional Area Info Systems

57. Finance Information Systems
Finance area: acquires and manages cash for a business
Acquire thru shares or loans
Invest cash wisely
Company must maintain liquidity
Meet short term obligations
Need to analyze considerable financial info

58. System Description: Functional Area Info Systems

59. Tactical Systems in Finance
A BUDGETING SYSTEMS
- plan revenues and expenses line-by-line
Can summarize in various ways
Can compare this year’s budget to last year’s
Can compare actual expenses vs budgeted (get actuals from General ledger System)

60. Tactical Systems in Finance
BUDGETING (cont’d)
Comparing budgeted to actuals allows for variances analysis
Eg. Current budgeted expenses, actual expenses and variances by line item
Eg. Projected expenses for each budget line item for entire year based on expenses incurred to date

61. Tactical Systems in Finance
BUDGETING (cont’d)
Spreadsheet-type systems are useful for budgeting (ie. formulas)
Can use last year’s budget as a base for next year and maybe 5 years
How are such system tactical? explain

62. Tactical Systems in Finance
B CASH MANAGEMENT SYSTEMS
Ensure that business has sufficient cash to meet its needs
For day-to-day operations
For acquisition of long-term assets
Important output is the cash flow report
Can forecast cash flows for , say 6 months
Flow= tl cash receipts – tl cash payments

63. Tactical Systems in Finance
C. CAPITAL BUDGETING SYSTEMS
Provide help with planning acquisition (disposal) of major plant assets that will be used by the business during many years
Provide outgoing and incoming cash for the life of the asset
Use assumptions
Consider the time value of money (net present value)

64. Tactical Systems in Finance
C. CAPITAL BUDGETING SYSTEMS
Eg. Can help to decide whether to lease or buy a new printer
What computing is useful here?

65. Tactical Systems in Finance
D. INVESTMENT MANAGEMENT SYSTEMS
- oversee organization’s investment in stocks, bonds, and other securities
- Online databases provide immediate updates for stock and bond prices

66. Tactical Systems in Finance
INVESTMENT MANAGEMENT SYSTEMS
e.g. Value Screen inputs the current price of each stock and calculates the gain or loss the company’s investment portfolio would generate if sold now
what computing is needed here?

67. System Description: Functional Area Info Systems

68. Strategic Systems in Finance
Support very high-level managers
Strategic systems relate to organizational goals
Often, such systems use internal data (which may have originated in organizational AIS) and external data (eg. From online databases that contain economic, social, demographic, etc, info)

69. Strategic Systems in Finance
A FINANCIAL CONDITION ANALYSIS SYSTEMS
Provide insightful analyses of financial statements and data (e.g., ratios: current ratio, debt:equity ratio)
Online databases can allow for financial analysis of competitors, suppliers, buyers and other organizations)

70. Strategic Systems in Finance
B. LONG RANGE FORECASTING SYSTEMS
May use both internal and external data
Apply statistical techniques
May use graphics
Analyze trends

71. Strategic Systems in Finance
C. CORPORATE PLANNING SYSTEMS
Use data from past, like forecasting systems
More elaborate; contain simulation models of various aspects of business
Models must have valid assumptions