Chapter 8:

Functional, Enterprise, and

Interorganizational Systems
Functional Information Systems
• Characteristics:
– Comprised of several small information system
focused on specific activities
– Specific IS applications can be
• completely independent, or
• integrated to form a coherent departmental functional system
• also, can be integrated across departmental lines to support
a broad business process (cross-departmental)
– Interface with each other to form the organization
wide information system
– Interface with the environment
 Functional Information Systems
(continued)
• Management Information Systems
– Provide routine information to managers in
the functional areas
Business Reports
Transactions
Management Scheduled
Information Demand
TPS System Exception

Databases
Internal Data Warehouse
External
 Transaction Processing
Systems
• What is a transaction?
– Every business event that occurs during
business operations
– Business events (transactions) can trigger
other business events
– Each event (transaction) can be described
by a number of data items
– Transaction processing systems (TPS) are
designed to record and store the data that
describes every business event that occurs
 Transaction Processing Systems
(continued)
• TPSs were the first to be automated – repetitive,
consistent, high-volume tasks are ideal candidates for
computerization
• TPSs provide foundation for all other information
systems
• Many TPSs are outward-reaching and convey
impressions to the customers about the quality of the
business
Customer POS
makes a system
purchase
Inventory file
Update
Transaction file
files Sales file
 Transaction Processing System
•
( continued
Some characteristics of TPSs
)
– Process large volume of data
– Data sources mostly internal, and output intended mainly for
internal audience
– TPS operate regularly (on demand, daily, weekly, etc.)
– Require large storage (database) capacity
– Require high processing speed (due to the high volume)
– Input and output data known and well-understood (highly
structured)
– Involves high level of detail but low computation complexity
– Requires high level of accuracy, data integrity, and security
– Requires high processing reliability; organizations cannot
function for long without TPSs
– Inquiry processing supported
 Methods of Processing
Transactions
Batch Processing: simple, inexpensive

Employee Data entry

of timecard Payroll transactions
timecards
data

Employee data:
Pay rate Process Employee
Withholdings payroll paychecks
Etc.

Cash on hand Payroll summary

 Methods of Processing
Transactions
Online Processing: complex, expensive

Transaction history file

Customer
POS
makes a Inventory file
system
purchase
Sales file
 Methods of Processing
Transactions
Hybrid Processing: simple, inexpensive, more accurate

Badge reader Whenever employees

collects employee Payroll transactions arrive / leave work
work data

Employee data: Process Employee

Pay rate payroll paychecks
Withholdings
Etc.
Normal payroll
Cash on hand Payroll summary
schedule:
weekly, monthly,
etc.
 TPS Today
• Traditionally, TPS were implemented on
mainframe systems using batch processing
• Online Transaction Processing (OLTP)
– can be built on a client/server architecture
– can save money
• Internet (Intranet) Transaction Processing
– allows multimedia data transfer
– fast response time
– storage of large databases of graphics and videos
– real time
– low cost
 Typical TPS Tasks
• Order processing
• General ledger
• Accounts payable and receivable
• Inventory management, shipping, and
receiving
• Payroll
• Periodic reports and statements
 Accounting and Finance
Systems
• Financial Planning and Budgeting
– Financial and economic forecasting
– Budgeting
• Investment Management
– Access to financial and economic reports
– Financial analysis
 Accounting and Finance
Systems
• Financial Controls
– Budgetary Controls
– Auditing
– Financial Health Analysis
– Profitability Analysis and Cost Control
 Marketing & Sales Systems
• Distribution Channel (definition)
– providing the goods or services to the customer; may extend
through various intermediaries such as wholesalers and retailers

Manufacturing R&D/Design
Company
Distribution Accounting/Finance
 Other Channel Systems
 support all marketing linkages, such as after-sales customer support

Market Intelligence Channel Dealer Systems

Systems Systems Delivery Systems
Target Marketing
Customer Support
Systems Sales Systems Systems
 Marketing & Sales Systems
(continued)
• Customer Service
– customer profiles and preference analysis
– mass customization – high volume production of
specialized product
– targeted advertising
– customer inquiry systems and automated Help
Desk
• Telemarketing
– advertisement and reaching customers
– order processing
– customer service
– sales support
– account management
 Marketing & Sales Systems
(continued)
• Distribution Channels
– Delivery and shipping management
– Improve retail stores
• Marketing Management
– Set and monitor prices of products or services
– Monitor and evaluate salesperson productivity
– Evaluate profitability of products / customers
– Assess sales trends
– Analyze new products, services, and markets
 Marketing & Sales Systems
(continued)
• Ethical and Social Issues in IT-supported
Sales Activities
– Information collection and usage
– Privacy concerns
• Current trend – Customer Relationship
Management (CRM)
– Focus is on developing a one-to-one relationship
with customers
 Production & Operations
Management Systems
• Logistics and Material Management
– Logistics Management
• Ordering, purchasing, and inbound and
outbound shipping
– Inventory Management
• Determine how much inventory to carry
– Quality Control
• Monitor and report quality of materials, work in
process, and finished goods
 Production & Operations
Management Systems (continued)
• Planning Production/Operations
– Material Requirements Planning; MRP II
– Just-In-Time
– Project Management (PERT & CPM)
– Short-term scheduling
• Automatic Design Work and
Manufacturing
– Computer Aided Design (CAD)
– Computer Aided Manufacturing (CAM)
– Computer Integrated Manufacturing (CIM)
Human Resources Management
Systems
• Recruitment
– Keep track of all open positions
– Advertise positions via Internet
– Employee selection
• Human Resources Maintenance and
Development
– Training and retraining employees
– Performance assessment
– Turnover, tardiness, and absenteeism analysis
Human Resources Management
Systems
• Human Resources Management and
Planning
– Maintain personnel files and skills inventory
– Administer benefits
– Comply with government reporting
– Personnel planning
– Succession planning
– Labor negotiations
 Integrated Information
Systems
• Reasons for Integration
– Existing, functionally oriented information
systems are deficient:
• cannot give employees all the information they
need
• do not let different departments communicate
effectively
• crucial sales, inventory, and production data
often entered manually into separate computer
systems
 Integrated Information
Systems
• How to Integrate Information Systems
– Connect existing systems
• maximize the use of existing systems and allows
the addition of new applications
– Using supply chain management software
• Overcomes the isolation of traditional
departmental structure by integrating processing
across several functional areas
– Use Enterprise Resource Planning software
• control all major business processes with a single
software architecture in real time
• increased efficiency to improve quality,
productivity, and profitability
 Interorganizational Information
Systems (IOS)
• Electronic systems involving information flow
among two or more organizations in an on-
going relationship
• Objective – efficient transaction processing
• Many large businesses require suppliers to be
linked to them though IOS applications
• IOSs may be implemented with
– Private, third-party networks (value-added
networks)
– Publicly accessible networks (Internet)
 Interorganizational Systems
(continued)
• Types of Interorganizational Systems
– Global systems
– Electronic data interchange (EDI)
– Electronic funds transfer (EFT)
– Extranets
– Shared databases
– Integrated messaging
 Issues in IOS / Global IS
Design
• Cultural differences
• Economic and political differences
• Cross-border data transfer concerns