1. 2.1 © 2003 by Prentice Hall 2 2 INFORMATION SYSTEMS IN THE ENTERPRISE ENTERPRISE Chapter

2. 2.2 © 2003 by Prentice Hall What are the key system applications in a business? What role do they play?What are the key system applications in a business? What role do they play? How do information systems support the major business functions?How do information systems support the major business functions? Why should managers pay attention to business processes?Why should managers pay attention to business processes? Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise OBJECTIVES

3. 2.3 © 2003 by Prentice Hall What are the business benefits of using collaborative commerce, private industrial networks and enterprise systems?What are the business benefits of using collaborative commerce, private industrial networks and enterprise systems? What types of information systems are used by companies that operate internationally?What types of information systems are used by companies that operate internationally? Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise OBJECTIVES

4. 2.4 © 2003 by Prentice Hall 1.Integration: Different systems serve variety of functions, connecting organizational levels difficult, costly 2.Enlarging scope of management thinking: Huge system investments, long development time must be guided by common objectives Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise MANAGEMENT CHALLENGES

5. 2.5 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Types of Information Systems Figure 2-1 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

6. 2.6 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise 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 Automation Systems (OAS)Office Automation Systems (OAS) Transaction Processing Systems (TPS)Transaction Processing Systems (TPS) KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

7. 2.7 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise TYPES OF INFORMATION SYSTEMS Figure 2-2

8. 2.8 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise KEY SYSTEM APPLICATIONS IN THE ORGANIZATION 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

9. 2.9 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Payroll TPS Figure 2-3 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

10. 2.10 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Types of TPS Systems Figure 2-4 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

11. 2.11 © 2003 by Prentice Hall Knowledge Work Systems (KWS): Knowledge level Inputs: Design specsInputs: Design specs Processing: ModelingProcessing: Modeling Outputs: Designs, graphicsOutputs: Designs, graphics Users: Technical staffUsers: Technical staff Example: Engineering work station Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

12. 2.12 © 2003 by Prentice Hall Management Information System (MIS): Management level Inputs: High volume dataInputs: High volume data Processing : Simple modelsProcessing : Simple models Outputs: Summary reportsOutputs: Summary reports Users: Middle managersUsers: Middle managers Example: Annual budgeting Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

13. 2.13 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Figure 2-5 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION Management Information System (MIS)

14. 2.14 © 2003 by Prentice Hall Structured and semi-structured decisionsStructured and semi-structured decisions Report control orientedReport control oriented Past and present dataPast and present data Internal orientationInternal orientation Lengthy design processLengthy design process Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise KEY SYSTEM APPLICATIONS IN THE ORGANIZATION Management Information System (MIS)

15. 2.15 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Decision Support System (DSS): Management level Inputs: Low volume dataInputs: Low volume data Processing: InteractiveProcessing: Interactive Outputs: Decision analysisOutputs: Decision analysis Users: Professionals, staffUsers: Professionals, staff Example: Contract cost analysis KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

16. 2.16 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Figure 2-6 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION Decision Support System (DSS)

17. 2.17 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Figure 2-7 KEY SYSTEM APPLICATIONS IN THE ORGANIZATION Decision Support System (DSS)

18. 2.18 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Executive Support System (ESS): Strategic level Inputs: Aggregate dataInputs: Aggregate data Processing: InteractiveProcessing: Interactive Outputs: ProjectionsOutputs: Projections Users: Senior managersUsers: Senior managers Example: 5-year operating plan KEY SYSTEM APPLICATIONS IN THE ORGANIZATION

19. 2.19 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise KEY SYSTEM APPLICATIONS IN THE ORGANIZATION Executive Support System (ESS) Figure 2-8

20. 2.20 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Top level managementTop level management Designed to the individualDesigned to the individual Ties CEO to all levelsTies CEO to all levels Very expensive to keep upVery expensive to keep up Extensive support staffExtensive support staff KEY SYSTEM APPLICATIONS IN THE ORGANIZATION Executive support system (ESS)

21. 2.21 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTERRELATIONSHIPS AMONG SYSTEMS Figure 2-9

22. 2.22 © 2003 by Prentice Hall Major functions of systems: Sales management, market research, promotion, pricing, new productsSales management, market research, promotion, pricing, new products Major application systems: Sales order info system, market research system, pricing systemSales order info system, market research system, pricing system Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Sales and Marketing Systems

23. 2.23 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Sales and Marketing Systems

24. 2.24 © 2003 by Prentice Hall Major functions of systems: Scheduling, purchasing, shipping, receiving, engineering, operationsScheduling, purchasing, shipping, receiving, engineering, operations Major application systems: Materials resource planning systems, purchase order control systems, engineering systems, quality control systemsMaterials resource planning systems, purchase order control systems, engineering systems, quality control systems Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Manufacturing and Production Systems SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

25. 2.25 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Manufacturing and Production Systems SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

26. 2.26 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Overview of Inventory Systems Figure 2-10 SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

27. 2.27 © 2003 by Prentice Hall Major functions of systems: Budgeting, general ledger, billing, cost accountingBudgeting, general ledger, billing, cost accounting Major application systems: General ledger, accounts receivable, accounts payable, budgeting, funds management systemsGeneral ledger, accounts receivable, accounts payable, budgeting, funds management systems Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Financing and Accounting Systems SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

28. 2.28 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Financing and Accounting Systems SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

29. 2.29 © 2003 by Prentice Hall Major functions of systems: Personnel records, benefits, compensation, labor relations, trainingPersonnel records, benefits, compensation, labor relations, training Major application systems: Payroll, employee records, benefit systems, career path systems, personnel training systemsPayroll, employee records, benefit systems, career path systems, personnel training systems Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Human Resource Systems

30. 2.30 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Human Resource Systems SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

31. 2.31 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Figure 2-11 Human Resource Systems SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

32. 2.32 © 2003 by Prentice Hall Business processes Manner in which work is organized, coordinated, and focused to produce a valuable product or serviceManner 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 activitiesConcrete work flows of material, information, and knowledge—sets of activities Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Business Processes and Information Systems INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

33. 2.33 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Unique ways to coordinate work,Unique ways to coordinate work, information, and knowledge Ways in which management choosesWays in which management chooses to coordinate work Business Processes and Information Systems

34. 2.34 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Business Processes and Information Systems INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Information systems help organizations Achieve great efficiencies by automating parts of processesAchieve great efficiencies by automating parts of processes Rethink and streamline processesRethink and streamline processes

35. 2.35 © 2003 by Prentice Hall Manufacturing and production: Assembling product, checking quality, producing bills of materialsManufacturing and production: Assembling product, checking quality, producing bills of materials Sales and marketing: Identifying customers, creating customer awareness, sellingSales and marketing: Identifying customers, creating customer awareness, selling Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Examples of Business Processes INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

36. 2.36 © 2003 by Prentice Hall Finance and accounting: Paying creditors, creating financial statements, managing cash accountsFinance and accounting: Paying creditors, creating financial statements, managing cash accounts Human Resources: Hiring employees, evaluating performance, enrolling employees in benefits plansHuman Resources: Hiring employees, evaluating performance, enrolling employees in benefits plans Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Examples of Business Processes INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

37. 2.37 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Cross-Functional Business Processes Transcend boundary between sales, marketing, manufacturing, and research and developmentTranscend boundary between sales, marketing, manufacturing, and research and development Group employees from different functional specialties to a complete piece of workGroup employees from different functional specialties to a complete piece of work Example: Order Fulfillment Process Business Processes and Information Systems

38. 2.38 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Figure 2-12 The Order Fulfillment Process INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

39. 2.39 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Customer Relationship Management (CRM) Manages all ways used by firms to deal with existing and potential new customersManages all ways used by firms to deal with existing and potential new customers Business and Technology disciplineBusiness and Technology discipline Uses information system to coordinate entire business processes of a firmUses information system to coordinate entire business processes of a firm Customer Relationship Management (CRM)

40. 2.40 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Provides end-to-end customer careProvides end-to-end customer care Provides a unified view of customer across the companyProvides a unified view of customer across the company Consolidates customer data from multiple sources and provides analytical tools for answering questionsConsolidates customer data from multiple sources and provides analytical tools for answering questions Customer Relationship Management (CRM)

41. 2.41 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Customer Relationship Management (CRM) Figure 2-13

42. 2.42 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Supply Chain Management (SCM) Close linkage and coordination of activities involved in buying, making, and moving a productClose linkage and coordination of activities involved in buying, making, and moving a product Integrates supplier, manufacturer, distributor, and customer logistics timeIntegrates supplier, manufacturer, distributor, and customer logistics time Reduces time, redundant effort, and inventory costsReduces time, redundant effort, and inventory costs Supply Chain Management (SCM)

43. 2.43 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Supply Chain Network of organizations and business processesNetwork of organizations and business processes Helps in procurement of materials, transformation of raw materials into intermediate and finished productsHelps in procurement of materials, transformation of raw materials into intermediate and finished products Supply Chain Management (SCM)

44. 2.44 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Helps in distribution of the finished products to customersHelps in distribution of the finished products to customers Includes reverse logistics - returned items flow in the reverse direction from the buyer back to the sellerIncludes reverse logistics - returned items flow in the reverse direction from the buyer back to the seller Supply Chain Management (SCM)

45. 2.45 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Supply Chain Management Figure 2-14

46. 2.46 © 2003 by Prentice Hall Decide when, what to produce, store, moveDecide when, what to produce, store, move Rapidly communicate ordersRapidly communicate orders Communicate orders, track order statusCommunicate orders, track order status Check inventory availability, monitor levelsCheck inventory availability, monitor levels Track shipmentsTrack shipments Plan production based on actual demandPlan production based on actual demand Rapidly communicate product design changeRapidly communicate product design change Provide product specificationsProvide product specifications Share information about defect rates, returnsShare information about defect rates, returns Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise How Information Systems Facilitate Supply Chain Management INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

47. 2.47 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Limitations: Inefficiencies can waste as much as 25% of company’s operating costsInefficiencies can waste as much as 25% of company’s operating costs Bullwhip Effect: Information about the demand for the product gets distorted as it passes from one entity to nextBullwhip Effect: Information about the demand for the product gets distorted as it passes from one entity to next Supply Chain Management (SCM)

48. 2.48 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Supply chain planning system: Enables firm to generate forecasts for a product and to develop sourcing and a manufacturing plan for the productSupply chain planning system: Enables firm to generate forecasts for a product and to develop sourcing and a manufacturing plan for the product Supply chain execution system: Manages flow of products through distribution centers and warehousesSupply chain execution system: Manages flow of products through distribution centers and warehouses Supply Chain Management (SCM)

49. 2.49 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Uses digital technologies to enable multiple organizations to collaboratively design, develop, build, move, and manage productsUses digital technologies to enable multiple organizations to collaboratively design, develop, build, move, and manage products Increases efficiencies in reducing product design life cycles, minimizing excess inventory, forecasting demand, and keeping partners and customers informedIncreases efficiencies in reducing product design life cycles, minimizing excess inventory, forecasting demand, and keeping partners and customers informed Collaborative Commerce

50. 2.50 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Figure 2-15 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Collaborative Commerce

51. 2.51 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTEGRATING FUNCTIONS AND BUSINESS PROCESSES Private Industrial Networks Web-enabled networksWeb-enabled networks Link systems of multiple firms in an industryLink systems of multiple firms in an industry Coordinate transorganizational business processesCoordinate transorganizational business processes Industrial Networks

52. 2.52 © 2003 by Prentice Hall Within the business: There are functions, each having its uses of information systemsWithin the business: There are functions, each having its uses of information systems Outside the organization’s boundaries: There are customers and vendorsOutside the organization’s boundaries: There are customers and vendors Functions tend to work in isolation Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Traditional View of the Systems INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

53. 2.53 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Figure 2-16 Traditional View of the Systems INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

54. 2.54 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Figure 2-17 Enterprise Systems INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

55. 2.55 © 2003 by Prentice Hall Firm structure and organization: One organizationFirm structure and organization: One organization Management: Firm-wide knowledge- based management processesManagement: Firm-wide knowledge- based management processes Technology: Unified platformTechnology: Unified platform Business: More efficient operations and customer-driven business processesBusiness: More efficient operations and customer-driven business processes Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Benefits of Enterprise Systems INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

56. 2.56 © 2003 by Prentice Hall Difficult to build: Require fundamental changes in the way the business operatesDifficult to build: Require fundamental changes in the way the business operates Technology: Require complex pieces of software and large investments of time, money, and expertiseTechnology: Require complex pieces of software and large investments of time, money, and expertise Centralized organizational coordination and decision making: Not the best way for the firms to operateCentralized organizational coordination and decision making: Not the best way for the firms to operate Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Challenges of Enterprise Systems INTEGRATING FUNCTIONS AND BUSINESS PROCESSES

57. 2.57 © 2003 by Prentice Hall Four main ways of organizing businesses internationally: Domestic Exporter: Heavy centralization of corporate activities in the home country of originDomestic Exporter: Heavy centralization of corporate activities in the home country of origin Multinational: Financial management and control out of a central home base, production, sales and marketing operations decentralizedMultinational: Financial management and control out of a central home base, production, sales and marketing operations decentralized Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTERNATIONAL INFORMATION SYSTEMS Forms of Global Business Organization

58. 2.58 © 2003 by Prentice Hall Franchiser: Product created, designed, financed, and produced in the home country, relies on foreign personnel for production, marketing and human resourcesFranchiser: Product created, designed, financed, and produced in the home country, relies on foreign personnel for production, marketing and human resources Transnational: No national headquarters; value-added activities managed from a global perspective, no reference to national borders, sources of supply and demand and local competitive advantage optimizedTransnational: No national headquarters; value-added activities managed from a global perspective, no reference to national borders, sources of supply and demand and local competitive advantage optimized Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTERNATIONAL INFORMATION SYSTEMS Forms of Global Business Organization

59. 2.59 © 2003 by Prentice Hall Four types of system configuration: Centralized SystemsCentralized Systems Duplicated SystemsDuplicated Systems Decentralized SystemsDecentralized Systems Networked SystemsNetworked Systems Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise INTERNATIONAL INFORMATION SYSTEMS Global System Configuration

60. 2.60 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 2 Information Systems in the Enterprise Global System Configuration INTERNATIONAL INFORMATION SYSYTEMS Figure 2-18

61. 2.61 © 2003 by Prentice Hall 2 2 INFORMATION SYSTEMS IN THE ENTERPRISE ENTERPRISE Chapter