1. Introduction to Management Information Systems Chapter 7 IS within Organization
HTM 304
Fall 07

2. Learning Objectives
Understand the history of Information Systems and three types of Information Systems
Functional Information Systems:
-- Features and Problems
Integrated Applications
Why Integrate? (Value Chain Model)
Three major integrated systems: CRM, ERP, & EAI

3. Three Types of Information Systems

4. Calculation Systems First Kind of IS (1950-1980)
Perform tedious, repetitive Calculation
Balanced accounting records
Computed payroll
Applied debits & credits to general ledger
Track inventory, etc…
Provide specifically
designed, small
volume, numeric
information

5. Functional Systems
As the technology evolve, every department develops their own Information Systems
“Single Function” -- independent
Payroll system
Student registration systems
Computer inventory management systems
Automate the process for each functional area
(Maintaining the same process, streamlining it…)
Sales and marketing
Manufacturing
Human Resources
Finance,
Etc.

6. Example: Human Resources Systems
Support recruitment, compensation, evaluation, and development of organization’s employees
Recruiting methods may be simple or complex
Compensation includes payroll, processing and tracking vacation, sick leave, health care, other benefits
Employee evaluation includes publication of job and skill descriptions and performance evaluations
Development and training activities vary
HR system concerns every employee in the organization. You should check the website before you accept the job offer…
CSUSM HR Webpage:

8. Accounting and Finance Systems

9. Sales and Marketing Systems

10. Operations Systems

11. IS supported Manufacturing Activities
Will talk more later in ERP system

12. Problem of Functional Systems
(inconsistent coding)

13. Integrated Systems
Combining functional areas to better support business goals and objectives
Porter’s Value Chain Model:

14. Simplified Value Chain
1+1>2
Simplified Value Chain
Linkages – interactions across value activities
Linkages important source of efficiencies and readily supported by IS
Emphasis on the linkages triggered the movement of Business Process Redesign
-- Dell, Toyota, etc…
Customer places
order
Product is
manufactured
Product is delivered
to 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 systems
Organizations should instead PLUNGE
Create new, more efficient, business processes
Integrate activities of all departments involved in value chain

16. The Challenges of Business Process Redesign
Projects expensive and difficult
Highly trained systems analysts interview key personnel from many departments and document existing system and alternatives
Managers review results and try to develop new, improved processes
New information systems developed to implement new business processes
Employee resistance to change
Cannot know ahead of time how effective the new processes are
Few successes, and many others failed…

17. Inherent Processes
Built-in processes provided by software application (Oracle and SAP)
Benefits
“Bests Practices”
Save substantial amount of money and time in developing new process and system
Proved benefits from other organization.
Disadvantage
May require substantial organizational change
Change can be disruptive to ongoing operations
Disturbing to employees
Homogenous processes may not be good for differentiation

18. Business Process Application Vendors
Page 210, MIS in Use 7-1
Largest market share: Oracle/SAP.

19. Three Examples of Integrated IS
CRM – Customer Relationship Management
ERP – Enterprise Resource Planning
EAI – Enterprise Application Integration
Note: Different vendors define their own version of the
above terms to better support their own products.

20. Customer Relationship Management Systems
Set of business processes for attracting, selling, managing & supporting customers
Provides single data repository about all customer interactions
Stores all customer data in one place and enables access to people with permissions
CRM components
Solicitation
Lead Tracking (presale)
Relationship management (post-sale)

21. 3 New Processes Creates Customer Life Cycle

22. Enterprise Resource Planning
Enterprise resource planning (ERP) integrates all of organization’s principal processes
Outgrowth of MRP II manufacturing systems
Primary ERP users are manufacturing companies
SAP first & most successful
ERP 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 process
Does 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..Push
ERP:
All the resources in the entire company
Defined processes to link the resources. (see page 212)

24. Characteristics of ERP

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 process
Task 1: Model current business processes
Task 2: Managers and analysts compare these processes to ERP blueprint processes and note differences
Task 3: Eliminate differences by either
Changing existing business process to match ERP process
Altering ERP system to match business process

27. Enterprise Application Integration (EAI)
ERP systems are not for every organization
Too manufacture-oriented
Too daunting
Alternative: EAI
Connects system “islands” via a new layer
of software/system
Enables existing applications to
communicate and share data
(“virtual” database)
Provides integrated information
Leverages existing systems
Enables a gradual move
towards ERP.
EAI
IT infrastructure
Human Resource
Manufacturing
Marketing
Inventory
other

28. Key Terms and Concepts Bill of materials (BOM) Business process design
Calculation systems
Cross-departmental systems / Cross-functional systems
Customer relationship management (CRM)
Customer Life Cycle
Enterprise application integration (EAI)
Enterprise resource planning (ERP)
Functional systems (examples)
Inherent processes
Integrated systems
Linkages
MRP/MRP II
Value chain