Introduction to Management Information Systems Chapter 7 IS within Organization HTM 304 Fall 07.
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1 Introduction to Management Information Systems Chapter 7 IS within Organization HTM 304Fall 07
2 Learning ObjectivesUnderstand the history of Information Systems and three types of Information SystemsFunctional Information Systems:-- Features and ProblemsIntegrated ApplicationsWhy Integrate? (Value Chain Model)Three major integrated systems: CRM, ERP, & EAI
4 Calculation Systems First Kind of IS (1950-1980) Perform tedious, repetitive CalculationBalanced accounting recordsComputed payrollApplied debits & credits to general ledgerTrack inventory, etc…Provide specificallydesigned, smallvolume, numericinformation
5 Functional SystemsAs the technology evolve, every department develops their own Information Systems“Single Function” -- independentPayroll systemStudent registration systemsComputer inventory management systemsAutomate the process for each functional area(Maintaining the same process, streamlining it…)Sales and marketingManufacturingHuman ResourcesFinance,Etc.
6 Example: Human Resources Systems Support recruitment, compensation, evaluation, and development of organization’s employeesRecruiting methods may be simple or complexCompensation includes payroll, processing and tracking vacation, sick leave, health care, other benefitsEmployee evaluation includes publication of job and skill descriptions and performance evaluationsDevelopment and training activities varyHR system concerns every employee in the organization. You should check the website before you accept the job offer…CSUSM HR Webpage:
11 IS supported Manufacturing Activities Will talk more later in ERP system
12 Problem of Functional Systems (inconsistent coding)
13 Integrated SystemsCombining functional areas to better support business goals and objectivesPorter’s Value Chain Model:
14 Simplified Value Chain 1+1>2Simplified Value ChainLinkages – interactions across value activitiesLinkages important source of efficiencies and readily supported by ISEmphasis on the linkages triggered the movement of Business Process Redesign-- Dell, Toyota, etc…Customer placesorderProduct ismanufacturedProduct is deliveredto customer
15 Business Process Redesign Value chain – network of value-creating activities is foundation business process design, or business process redesign (BPR)Organizations should not automate or improve existing functional systemsOrganizations should instead PLUNGECreate new, more efficient, business processesIntegrate activities of all departments involved in value chain
16 The Challenges of Business Process Redesign Projects expensive and difficultHighly trained systems analysts interview key personnel from many departments and document existing system and alternativesManagers review results and try to develop new, improved processesNew information systems developed to implement new business processesEmployee resistance to changeCannot know ahead of time how effective the new processes areFew successes, and many others failed…
17 Inherent ProcessesBuilt-in processes provided by software application (Oracle and SAP)Benefits“Bests Practices”Save substantial amount of money and time in developing new process and systemProved benefits from other organization.DisadvantageMay require substantial organizational changeChange can be disruptive to ongoing operationsDisturbing to employeesHomogenous processes may not be good for differentiation
18 Business Process Application Vendors Page 210, MIS in Use 7-1Largest market share: Oracle/SAP.
19 Three Examples of Integrated IS CRM – Customer Relationship ManagementERP – Enterprise Resource PlanningEAI – Enterprise Application IntegrationNote: Different vendors define their own version of theabove terms to better support their own products.
20 Customer Relationship Management Systems Set of business processes for attracting, selling, managing & supporting customersProvides single data repository about all customer interactionsStores all customer data in one place and enables access to people with permissionsCRM componentsSolicitationLead Tracking (presale)Relationship management (post-sale)
22 Enterprise Resource Planning Enterprise resource planning (ERP) integrates all of organization’s principal processesOutgrowth of MRP II manufacturing systemsPrimary ERP users are manufacturing companiesSAP first & most successfulERP software vendor
23 MRP MRPII ERP MRP (material requirements planning) An Information System that plans the need for materials and inventories of materials used in the manufacturing processDoes not include the planning of personnel, equipment, or facilities requirements.BOM (Bill-of-Material) List of product materials and subassemblies.(see figure 7-8, page 203)MRP II (manufacturing resource planning)Follow-on to MRP that includes the planning of materials, personnel, and machinery.limited cross-functional..PushERP:All the resources in the entire companyDefined processes to link the resources. (see page 212)
25 Potential Benefits of ERP Note: However, you need to trade off between the cost and benefit.Not all the business are suitable for change.
26 Implementing ERP System CEO needs to be cautious in deciding whether to implement.Once decided, it may take years to complete.3rd party consultant may need to come in to facilitate the processTask 1: Model current business processesTask 2: Managers and analysts compare these processes to ERP blueprint processes and note differencesTask 3: Eliminate differences by eitherChanging existing business process to match ERP processAltering ERP system to match business process
27 Enterprise Application Integration (EAI) ERP systems are not for every organizationToo manufacture-orientedToo dauntingAlternative: EAIConnects system “islands” via a new layerof software/systemEnables existing applications tocommunicate and share data(“virtual” database)Provides integrated informationLeverages existing systemsEnables a gradual movetowards ERP.EAIIT infrastructureHuman ResourceManufacturingMarketingInventoryother
28 Key Terms and Concepts Bill of materials (BOM) Business process design Calculation systemsCross-departmental systems / Cross-functional systemsCustomer relationship management (CRM)Customer Life CycleEnterprise application integration (EAI)Enterprise resource planning (ERP)Functional systems (examples)Inherent processesIntegrated systemsLinkagesMRP/MRP IIValue chain