Management Information System

INFORMATION
SYSTEMS IN THE
ENTERPRISE
Topics

Information Systems Evolution of IS Advantages of IS Types of IS
What are the major types of systems in a business? What role do they play? How do information systems support the major business functions?
Why should managers pay attention to business processes?
Information Systems
Definition: A set of interrelated components

that collect, process, store and distribute information to support decision making and control in an organization
People Business Process IT Data
Evolution of IS
1970 TPS 1980 DSS 1990 Business transformation 2000 Strategic transformation e.g., BPCL, HLL, M&M, ICICI, Indian Railways, TISCO
Advantages of IS
Reduction in Cost of Labor Reduction in transaction cost for customers, suppliers, distributors Effective decision making High productivity and performance
Management Information Systems

KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Types of Information Systems
Figure 2-1

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Major Types of Systems
Transaction Information System
Management Information System

Executive/decision Information System Knowledge Information System Strategic Information System

Transaction Information Systems

Collect and store information about business transactions, and control some aspects of transactions Basic business systems that serve the operational level A computerized system that performs and records the daily routine transactions necessary to the conduct of the business

Payroll TPS
Figure 2-3

Types of TPS Systems
Figure 2-4

Knowledge Information Systems Knowledge level Inputs: Design specs Processing: Modeling Outputs: Designs, graphics Users: Technical staff and professionals Example: Engineering work station

Management Information System (MIS): Management level Inputs: High volume data Processing: Simple models Outputs: Summary reports Users: Middle managers Example: Annual budgeting

Management Information System (MIS)
Figure 2-5

Management Information System (MIS)
Structured and semi-structured decisions Report control oriented Past and present data Internal orientation
Lengthy design process

Executive / Decision Information System Management level Inputs: Low volume data Processing: Interactive Outputs: Decision analysis Users: Professionals, staff Example: Contract cost analysis

Decision Support System (DSS)
Figure 2-6

Decision Support System (DSS)
Figure 2-7

Executive Support System (ESS): Strategic level Inputs: Aggregate data Processing: Interactive Outputs: Projections Users: Senior managers Example: 5-year operating plan

Executive Support System (ESS)
Figure 2-8

Executive support system (ESS)
Top level management Designed to the individual Ties CEO to all levels Very expensive to keep up
Extensive support staff

INTERRELATIONSHIPS AMONG SYSTEMS
Figure 2-9

SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Sales and Marketing Systems
Major functions of systems:

Sales management, market research, promotion, pricing, new products
Major application systems:

Sales order info system, market research system, pricing system

Sales and Marketing Systems
SYSTEM
DESCRIPTION
ORGANIZATIONAL LEVEL OPERATIONAL
ORDER PROCESSING ENTER, PROCESS, TRACK ORDERS
MARKET ANALYSIS
IDENTIFY CUSTOMERS & MARKETS KNOWLEDGE
PRICING ANALYSIS
DETERMINE PRICES
MANAGEMENT
SALES TRENDS
PREPARE 5-YEAR FORECASTS
STRATEGIC
Table 2-2

Manufacturing and Production Systems

Scheduling, purchasing, shipping, receiving, engineering, operations

Materials resource planning systems, purchase order control systems, engineering systems, quality control systems

Manufacturing and Production Systems
SYSTEM MACHINE CONTROL
DESCRIPTION CONTROL ACTIONS OF EQUIPMENT
COMPUTER-AIDED-DESIGN DESIGN NEW PRODUCTS
KNOWLEDGE
PRODUCTION PLANNING
DECIDE NUMBER, SCHEDULE OF PRODUCTS
MANAGEMENT
FACILITIES LOCATION
DECIDE WHERE TO LOCATE FACILITIES
STRATEGIC
Table 2-3

Overview of Inventory Systems
Figure 2-10

Financing and Accounting Systems

Budgeting, general ledger, billing, cost accounting

General ledger, accounts receivable, accounts payable, budgeting, funds management systems

Financing and Accounting Systems

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL OPERATIONAL
ACCOUNTS RECEIVABLE TRACK MONEY OWED TO FIRM
PORTFOLIO ANALYSIS
DESIGN FIRM'S INVESTMENTS
KNOWLEDGE
BUDGETING
PREPARE SHORT TERM BUDGETS MANAGEMENT
PROFIT PLANNING
PLAN LONG-TERM PROFITS
STRATEGIC
Table 2-4

Human Resource Systems

Personnel records, benefits, compensation, labor relations, training

Payroll, employee records, benefit systems, career path systems, personnel training systems

SYSTEM TRAINING & DEVELOPMENT
DESCRIPTION TRACK TRAINING, SKILLS, APPRAISALS
CAREER PATHING
DESIGN EMPLOYEE CAREER PATHS
KNOWLEDGE
COMPENSATION ANALYSIS
MONITOR WAGES, SALARIES, BENEFITS
MANAGEMENT
HUMAN RESOURCES PLANNING PLAN LONG-TERM LABOR FORCE NEEDS
STRATEGIC
Table 2-5

Figure 2-11

ENTERPRISE APPLICATIONS
Business Processes and Information Systems
Business processes
Manner in which work is organized, coordinated, and focused to produce a valuable product or service Concrete work flows of material, information, and knowledgesets of activities

Unique ways to coordinate work, information, and knowledge Ways in which management chooses to coordinate work

Information systems help organizations

Achieve great efficiencies by automating parts of processes Rethink and streamline processes

Examples of Business Processes
Manufacturing and production:

Assembling product, checking quality, producing bills of materials
Sales and marketing: Identifying

customers, creating customer awareness, selling

Examples of Business Processes
Finance and accounting: Paying

creditors, creating financial statements, managing cash accounts
Human Resources: Hiring employees,

evaluating performance, enrolling employees in benefits plans

Cross-Functional Business Processes

Transcend boundary between sales, marketing, manufacturing, and research and development Group employees from different functional specialties to a complete piece of work
Example: Order Fulfillment Process

The Order Fulfillment Process
Figure 2-12

Enterprise Applications Enterprise systems Supply chain management systems Customer relationship management systems Knowledge management systems

Traditional View of the Systems
Within the business: There are functions,

each having its uses of information systems
Outside the organizations boundaries:

There are customers and vendors
Functions tend to work in isolation

Traditional View of the Systems
Figure 213

Enterprise Systems
Figure 2-14

Benefits of Enterprise Systems
Firm structure and organization: One

organization
Management: Firm-wide knowledgebased management processes
Technology: Unified platform
Business: More efficient operations and

customer-driven business processes

Challenges of Enterprise Systems
Difficult to build: Require fundamental

changes in the way the business operates
Technology: 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 operate

Management Information System

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INFORMATION

Information Systems Evolution of IS Advantages of IS Types of IS

Why should managers pay attention to business processes?

Definition: A set of interrelated components

Management Information Systems

Management Information Systems

Major Types of Systems

Transaction Information System

Management Information System

Management Information Systems

Transaction Information Systems

Management Information Systems

Management Information Systems

Types of TPS Systems

Management Information Systems

Management Information Systems

Management Information Systems

Management Information System (MIS)

Management Information Systems

Management Information System (MIS)

Lengthy design process

Management Information Systems

Management Information Systems

Decision Support System (DSS)

Management Information Systems

Decision Support System (DSS)

Management Information Systems

Management Information Systems

Executive Support System (ESS)

Management Information Systems

Executive support system (ESS)

Extensive support staff

Management Information Systems

Management Information Systems

Sales and Marketing Systems

Major functions of systems:

Major application systems:

Management Information Systems

Sales and Marketing Systems

ORGANIZATIONAL LEVEL OPERATIONAL

ORDER PROCESSING ENTER, PROCESS, TRACK ORDERS

IDENTIFY CUSTOMERS & MARKETS KNOWLEDGE

PREPARE 5-YEAR FORECASTS

Management Information Systems

Manufacturing and Production Systems

Major functions of systems:

Major application systems:

Management Information Systems

Manufacturing and Production Systems

SYSTEM MACHINE CONTROL

DESCRIPTION CONTROL ACTIONS OF EQUIPMENT

ORGANIZATIONAL LEVEL OPERATIONAL

COMPUTER-AIDED-DESIGN DESIGN NEW PRODUCTS

DECIDE NUMBER, SCHEDULE OF PRODUCTS

DECIDE WHERE TO LOCATE FACILITIES

Management Information Systems

Overview of Inventory Systems

Management Information Systems

Financing and Accounting Systems

Major functions of systems:

Major application systems:

Management Information Systems

Financing and Accounting Systems