1. Information Systems – Week 2
Last week – Introduction
What is an Information System?
Why use Information Systems?
Reading and Preparation for Case studies
This week
Discussion of Assignment – any teams yet?
Strategic Role of Information Systems
Types of system and how they fit in
Case Studies

2. Strategic Role
“Understanding Information Technology (IT) is vital to every manager simply because IT is part of every manager's job. Managers in the 1990s must use IT to leverage their contributions to the organisation, and they must be knowledgeable about IT so that they can lead others to do the same.”
Professor Richard L. Nolan, Harvard Business School

3. Strategic Role of Information Systems
Strategic Information System
Can Change:
Goals, Operations
Products, Services
Environment
To Gain Competitive Advantage

4. Changing Concepts of IS
Time period
Conception of information
Information system
Purpose
Bureaucratic requirement
Electronic Accounting
Speed accounting & Paper processing
1960s-1970s
General purpose support
MIS
Speed general Reporting requirements
1970s-1980s
Customized management support
DSS - ESS
Improve, customize Decision making
1985-now
Strategic resource
Strategic system
Promote survival and prosperity of organization
Competitive advantage
Business foundation

5. Business-level Strategy
Product Differentiation
Focused Differentiation
Data-mining
Supply Chain Management
Efficient Customer Response
Enhancing Core Competencies

6. Strategy Levels & IT Strategies Models IT technologies Industry Firm
Cooperation vs competition
Licensing
Standards
Firm
Synergy
Core competencies
Business
Low cost
Differentiation
Scope
Competitive forces model
Network economies
Core competency
Value chain analysis
Electronic transactions
Communications networks
Interorganizational systems
Information partnerships
Knowledge systems
Organizational systems
Datamining
It-based products / services
Supply chain management
Efficient customer response

7. Competitive Forces Model
NEW MARKET ENTRANTS
SUBSTITUTE PRODUCTS & SERVICES
TRADITIONAL COMPETITION
THE FIRM
SUPPLIERS
CUSTOMERS

8. Countering Competitive Forces
Product differentiation
Focused differentiation
Link customers & suppliers
Low-cost producer
Use the Internet!

9. Countering Competitive Forces
Product Differentiation
Focused Differentiation
Links to Customers and Suppliers
Low-cost Producer
Low-cost Vendor
RBC Centura
Hyatt Hotels TravelWeb
Federal Express
AVEX Electronics
E-Buyer

10. Types of Information System
DATA WORKERS
KIND OF SYSTEM GROUPS SERVED
STRATEGIC LEVEL SENIOR MANAGERS
MANAGEMENT LEVEL MIDDLE MANAGERS
OPERATIONAL OPERATIONAL LEVEL MANAGERS
KNOWLEDGE LEVEL KNOWLEDGE &
SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN
RESOURCES
MARKETING

11. Major Types Of Systems Executive Support Systems (ESS)
Management Information Systems (MIS)
Decision Support Systems (DSS)
Knowledge Work Systems (KWS)
Office Automation Systems (OAS)
Transaction Processing Systems (TPS or OLTP)

12. Transaction Processing Systems (TPS)
Operational Level
Inputs: Transactions, Events
Processing: Updating
Outputs: Detailed Reports
Users: Operations Personnel
Example: Accounts Payable
The following examples are taken from Laudon & Laudon
TPS

13. Typical TPS Applications
Sales & Marketing Systems
Major System Functions:
Sales Management
Market Research
Promotion
Pricing
New Products
Major System Applications:
Sales Order Info System
Market Research System
Pricing System
TPS

14. Manufacturing & Production Systems
Major System Applications:
Materials
Resource Planning Systems
Purchase Order Control
Engineering Systems
Quality Control
Major System Functions:
Scheduling
Purchasing
Shipping/Receiving
Engineering
Operations
TPS

15. Finance & Accounting Systems
Major System Functions:
Budgeting
General Ledger
Billing
Cost Accounting
Major System Applications:
General Ledger
Accounts Receivable/Payable
Budgeting
Funds Management
TPS

16. Human Resource Systems
Major System Functions:
Personnel Records
Benefits
Compensation
Labour Relations
Training
Major System Applications:
Payroll
Employee Records
Benefit Systems
Career Path Systems
Personnel Training Systems
TPS

17. Others – e.g. University TPS Major System Functions:
Admissions
Grade Records
Course Records
Time-tabling
Alumni relations
Major System Applications:
Registration System
Student Transcript System
Curriculum Class Control
Scheduling
Alumni Benefactor System
TPS

18. Knowledge Work Systems (KWS)
KNOWLEDGE LEVEL
Inputs: Design Specs
Processing: Modelling
Outputs: Designs, Graphics
Users: Technical Staff
EXAMPLE: ENGINEERING WORK STATION

19. Office Automation Systems (OAS)
Toward A “Paperless” Office
Redesign Of Work Flow
Integrated Software
Ergonomic Design
Bright, Cheerful Work Space
EXAMPLE: PRESENTATION GRAPHICS

20. Management Information Systems (MIS)
MANAGEMENT LEVEL
Inputs: High Volume Data
Processing: Simple Models
Outputs: Summary Reports
Users: Middle Managers
EXAMPLE: ANNUAL BUDGETING

21. Management Information Systems (MIS)
Structured & Semi-structured Decisions
Report Control Oriented
Past & Present Data
Internal Orientation
Lengthy Design Process

22. TPS Data for MIS Applications
Order Processing
System
Materials Resource
Planning System
General Ledger
ORDER FILE
PRODUCTION MASTER FILE
ACCOUNTING FILES
MIS
SALES DATA
UNIT PRODUCT COST
PRODUCT CHANGE DATA
EXPENSE DATA
MIS
REPORTS
MANAGERS
MIS FILES
Source: Laudon & Laudon

23. Decision Support Systems (DSS)
MANAGEMENT LEVEL
Inputs: Low Volume Data
Processing: Interactive
Outputs: Decision Analysis
Users: Professionals, Staff
EXAMPLE: CONTRACT COST ANALYSIS

24. Decision Support Systems (DSS)
Flexible, Adaptable, Quick
User Controls Inputs/outputs
No Professional Programming
Supports Decision Process
Sophisticated Modeling Tools

25. Executive Support Systems (ESS)
STRATEGIC LEVEL
Inputs: Aggregate Data
Processing: Interactive
Outputs: Projections
Users: Senior Managers
EXAMPLE: 5 YEAR OPERATING PLAN
TOP LEVEL MANAGEMENT
Designed to the Individual
Ties CEO to All Levels
Very Expensive to Keep Up
Extensive Support Staff

26. Interrelationships Among Systems
ESS
DSS
MIS
KWS
OAS
TPS

27. Goodsell Estate Agents
Problems identified:
Sales slipping
Rapid staff turnover
Not working as a team
What can be done?
Analysis of missed sales
Are we not showing customers what they want?
Is it lack of expertise from rapid turnover?
How can we share information among the team?
Could improve morale and cut attrition

28. Zilkha Exploration A new approach to oil exploration
Virtual company with low overheads
Purchased oil exploration data, not leases
Hired expert geologists to analyse mass of data
Analysed data using latest computer technology
Then bought leases and contracted other to drill
Had twice the hit rate for new oil fields than conventional exploration procedures
Zilkha was bought out for a billion dollars in

29. Marks & Spencer Case Study on pp.97-98 of Laudon & Laudon Edn.6
Greenbury has since left
What Information Systems solution could you apply to assist M & S?
Operational systems are pretty good
What other IS models could be applied to the infrastructure?
Need to support decision making at all levels
How can M & S get to know its customers better?