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Information and Communication in Business

Information and Operations Management


Kroenke chapter 1, 2, 7, and a bit of chapter 8

Information Technology that converts data to information

Success!

Success factors include:

IT
Use of information. Management Business models. Business processes.

Operations

Information Technology that converts data to information

Success!

?
Operations Management?

Success factors include:

IT
Use of information. Business models. Business processes.

Operations Management deals with the design and management of products, processes, services and supply chains

Measures of information quality


What do we mean by data? What do we mean by information? What do we mean by knowledge?

What sorts of features make information worth having, i.e. useful?


accuracy accessibility timeliness organisation relevance cost effectiveness decision oriented completeness verifiability reliability simplicity security surprise value

Are they different?

Information?
Data the actual values recorded in a system Information the meaning of those values as understood by some user of the system
Data Transformation Process Doctor reads Nurse reads Patient reads Information

The aim of Information Systems is to convert data to useful information, is that the end of the story??
Peter Senge believes that there is much more to it than just this; he suggests the progression: Data - facts Information - meaning Knowledge produce outcomes A grain of wisdom is Insight understand why worth an ounce of Wisdom do good knowledge, which is worth We have a long way to go!! a ton of data. -- Neil Larson

Medical Record Same data; different transformation; different information.

Doctors info Nurses info Patients info

Knowledge
Information is data made more useful by application of knowledge
knowing what info is required for a task or decision knowing what data is required to get the information knowing how and where to get the relevant data knowing how to transform the data into information understanding the meaning of the information

Information Technology that converts data to information

Success!

Success factors include:

IT
Use of information. Business models. Business processes.

Knowledge management:
Capturing the expertise of an organisation from every possible source - peoples heads, paper documents, computer systems - and making it available to others in the organisation who need it.
tacit knowledge explicit knowledge

A Business Model
a summary of how a business will generate revenue, identifying
the products it will offer its value-added services its revenue sources its target customers

Difficulties:
people problems technical problems

an architecture for flow of products, services, and information

Business processes: how organisations operate


the sequences of activities that must be performed to transform inputs into outputs

Organisations are systems:


A system is a collection of interrelated parts . . . that work together for a common goal . . . by accepting inputs . . . and producing outputs . . . through an organised transformation process. Systems consist of subsystems, and are part of larger systems

Stair & Reynolds

Adding the e has changed business process for many organisations:

Business processes depend on organisational structure


Organizational structure: Organizational subunits and the way they are related to the overall organization Hierarchical organizational structure
Series of levels Those at high levels have more power and authority within an organization

Project organizational structure


a structure centred on major products or services
Executive Managers Mid-Level Managers
B. Woods, Chairman Off the Planet Inc.

Technical and Professional Workers Clerical Workers

Supervisors
T. White, Director, Aircraft Division W. Butler, Director, Aerospace Division G. Searle, Director, Communications & Satellite Division

A hierarchical organisational structure

Director, Finance

Director, Director, Marketing Production

Director, Sales

Director, Finance

Director, Director, Marketing Production

Director, Sales

Director, Finance

Director, Director, Director, Marketing Production Sales

Traditional Hierarchical Organizational Structure


U. Grant, Chief Executive Officer

- organised by business function

Multidimensional Organizational Structure


Director, Marketing Publisher, Tertiary Division Publisher, Retail Division Publisher, High School Division Marketing Group Marketing Group Marketing Group Director, Production Production Group Production Group Production Group Director, Finance Finance Group Finance Group Finance Group

B. Lee, Director of Accounting

C. Gregg, Chief Information Officer

R. Haines, Director of Marketing

G. Lincoln, Chief Engineer

B. Mann, Director, Human Resources

S. Samuel Director Aircraft Production

L. Smith Director Satellite and Communications

a structure that may incorporate several structures at the same time

input: data the values physically recorded in the Team organizational structure
An organizational structure centred on work teams or groups, often transitory system

output: information the meaning of those values as


understood by some user

Flat organizational structure


An organizational structure with a reduced number of layers of management Empowerment: giving employees and their managers more power, responsibility, and authority to make decisions, take certain actions, and have more control over their jobs

process: a set of logically related tasks performed to


achieve a defined outcome

environment: the world outside the system objective: to further the goals of the organisation
within which it functions, e.g. by transforming data into information that is useful to the organisation, or by providing support for business processes

Business processes need support from Information Systems


Environment
Boundary (Scope)

Storage

Data

Processing Internal Feedback External Feedback

Information

Does an information system require a computer?

Objective?

A computer-based information system


Computer-based information system computer system hardware
CPU disk keyboard mouse monitor printer network

Transaction Processing

data
manual computerised

procedures
manual computerised

people
managers users analysts programmers technologists

software
system software application software

Transaction: any business related exchange

A set of hardware, software, data, people, and procedures that work together to produce information

Information Systems provide. . .


Transaction processing Collaboration tools, and office automation Process control Information for managers Support for decision making AI applications in business

Some of Together Weddings transactions:


Signing up a new client Recording consultation hours with clients Hiring a new Wedding planner Booking a venue

Overview of transaction processing

Basic Steps of transaction processing


Data Collection
process of gathering all necessary data ideally captured at source
bar code scanning at supermarket on-line tutorial registration

can be used to measure employee performance

Basic Steps of transaction processing


Data Collection

How would I prevent errors when transactions are recorded in an Excel spreadsheet?
you cant! BUT you can prevent some. Data/Validation

Data Edit

correct
Data Correction

incorrect

Data Manipulation

TPS reports

Storage Document Production

Basic Steps of transaction processing


Data Editing
as the data is captured it is checked for validity and completeness

Basic Steps of transaction processing


Document Production
payslips transaction receipts delivery dockets invoices reports
items on order from a supplier current inventory

Data Correction
system should provide some means of correcting invalid input.

Basic Steps of transaction processing


Data Manipulation
could involve classifying the data, sorting it, calculating values, and summarising results

batch

Methods of Transaction Processing

transactions are accumulated over a period of time and prepared for processing as a single unit or batch.

online transaction processing (OLTP)


each transaction is processed immediately and the affected records are updated used for e-commerce applications

Data Storage
data is stored in one or more databases. The data can then be used for further processing by other systems

online entry with delayed processing


transactions are entered into the system as they occur, but they are not processed immediately

The business processes that involve transaction processing are so critical to the businesss operation that they are sometimes referred to as the lifeblood of the organisation

Causes of Problems / Disasters


Malicious damage
Deliberate Accidental

Physical security
Equipment Building

Equipment failure
Telecommunications, LAN failure Equipment breakdowns

Natural disaster
Flood Electrical storm Fire

Control and Management Issues


Business Continuity Planning the process of anticipating, preventing, and providing for recovery from problems implementing backup procedures Focus:
maintaining the integrity of corporate information keeping key information systems running

But prevention is better than cure . . .


Redundancy Critical hardware / software components
Computers Communications

Security Unauthorised access to system


Software controlled Physical access control Preventative measures
Camera Security personnel

Backup
Full Incremental Testing by restoring Off-site storage of backup data

Virus Protection
Scanning for viruses Updating virus software Staff awareness and motivation

Disaster Recovery implementing the business resumption plan after a disaster

Electronic Data Interchange (EDI)

How do businesses exchange transactions with each other?

computer to computer exchange of transactions from standard business documents in standard data formats replaces paper
but the basic business processes remain the same

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What does that zig-zag line represent?

Information Systems provide. . .


Transaction processing Collaboration tools, and office automation Process control Information for managers Support for decision making AI applications in business

Collaboration tools, and office automation


Project management Personal productivity tools Collaboration technologies

Information Systems provide. . .


Transaction processing Collaboration tools, and office automation Process control Information for managers Support for decision making AI applications in business

TEAM DYNAMICS e-Mail, Electronic Bulletin Boards Electronic Meeting Support Group Scheduling Software Videoconferencing Software Whiteboard Software Workflow Systems

Collaboration Technologies

Process Control - control of machinery and production processes

DOCUMENT MANAGEMENT A database that stores and organises documents for a group and manages access to them

computers control lathes, mills, robots, entire production lines outside our scope

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Information Systems provide. . .


Transaction processing Collaboration tools, and office automation Process control Information for managers Support for decision making

What does management do?


Plan

measure performance / take corrective action.


Control

objectives, strategies and tactics

Organise

Direct

AI applications in business
communicate, instruct and motivate

money, people, material and management structure

Good management is becoming more complex . . .


globalisation
the advent of a global economy, in which products and services flow relatively freely around the globe expanding markets
more intense competition shorter product life cycle

What do each of the management tasks (planning, organising, directing and controlling) at any management level have in common?

Decision making
To make good decisions, managers need access to quality information.

more complex government regulation the information revolution ecommerce

Information for managers


Summarized reports: predefined reports that
aggregate information e.g Key-indicator reports
summarize the previous days critical activities typically available at the beginning of each workday

Sample reports for managers


(a) Periodic Report

Comparative reports
show two or more sets of similar information to illustrate a relationship

[Figure 9.2]

Summarized reports may be


Periodic: produced periodically on a schedule (daily, weekly, monthly) Ad hoc: generated only when a manager requests them

continued...

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Information for managers


Exception reports
Automatically produced when a situation is unusual or requires management action e.g a report produced to show any project that is more than $10,000 over budget trigger points need to be carefully set!

Sample reports for managers


(c) Ad hoc Report

[Figure 9.2 continued]

Case Study Part 2

Information Systems provide. . .


Transaction processing Collaboration tools, and office automation Process control Information for managers Support for decision making AI applications in business

You will be creating a simple system to support Together Weddings business operations
Transaction Processing:
Employing a new wedding planner Signing up a new client Changing a clients details Recording consultation details

An alternative way to classify information systems - by business function:

Information for managers:


Average number of guests catered for at events Summary of events in each calendar year

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Traditional Hierarchical Organizational Structure


U. Grant, Chief Executive Officer

- organised by business function

Functions of a Sales and Marketing System:


Lead-generation Lead-tracking Customer management Sales forecasting Product and brand management

B. Lee, Director of Accounting

C. Gregg, Chief Information Officer

R. Haines, Director of Marketing

G. Lincoln, Chief Engineer

B. Mann, Director, Human Resources

S. Samuel Director Aircraft Production

L. Smith Director Satellite and Communications

Kroenke Fig 7-4

An alternative way to classify information systems - by business function:


Sales / Marketing

Functions of an Operations Information System


order entry order management finished-goods inventory management customer service
Adapted from: Kroenke Fig 7-6

Production / Manufacturing

Functional Business Systems

Human Resource Management

Accounting / Finance

Operations

Functions of a manufacturing information system


inventory manufacturing planning manufacturing scheduling MRP MRP II manufacturing operations
Adapted from Kroenke Fig 7-7

Functions of a combined accounting and finance information system

Adapted from Kroenke Fig 7-12

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Functions of a Human Resources Information System


recruiting assessment planning compensation development and training
Adapted from Kroenke Fig 7-11

Problem!

Functional information systems dont integrate business processes and data throughout an organization

Kroenke Fig 7-13 Major Problems of Isolated Functional Systems

Todays trend: a strategic approach to business systems . . .

Cross-functional systems . . .
Customer relationship management Enterprise resource planning Enterprise application integration

Remember that organisations are systems, and


Systems consist of subsystems Subsystems interact with and affect each other So it makes sense that Information systems that support an organisations subsystems should interact with each other

Customer Relationship Management Systems (CRM)


use information about customers to gain insights into their needs, wants, and behaviours in order to serve them better

may include
sales force automation customer service and support

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Customer relationship management crosses functional boundaries . . .

Enterprise Resource Planning (ERP) Systems


A collection of software modules that together integrate ALL the organisations transaction processing using a common database

Sales and Marketing

Accounting and Finance Human Resources

Operations

Major components of a typical Customer Relationship Management (CRM) system

ERP systems . . .

Some characteristics:

Some benefits:
Adapted from Kroenke Fig 7-18

Enterprise application integration (EAI)


When an ERP system is inappropriate for an organization, it can still integrate its existing systems by creating special software to connect systems together.

Enterprise application integration . . .


Lower costs to implement than a full ERP. Less disruption to operations and employees. Integration of selected parts of the organization. A step-wise implementation process that allows the business eventually to achieve the full benefits of an ERP.

Some benefits:
Enterprise application integration enables a businesss existing applications to communicate and share data, providing many of the benefits of a cross-functional system without some of the disadvantages.

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Enterprise application integration systems


act as an intermediary to enable existing functional systems to automatically exchange data take data from the sending system and convert it into a format suitable for the receiving system to process combine data from several systems

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