Mis lecture 2

Management Information Systems
Chapter 2: Global E-Business: How Businesses use Information Systems

2.1 BUSINESS PROCESSES AND INFORMATION SYSTEMS

Business processes:
• Work is organized, coordinated, and focused to produce a
valuable product or service
• Concrete work flows of material, information, and
knowledge—sets 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
• IS also contributes to completely rethinking processes.
• Business processes typically span several different
functional areas.
2.1


Table 2.1:

Examples of Business Processes

Manufacturing and production: Assembling product, checking
quality, producing bills of materials
Sales and marketing: Identifying customers, creating customer
awareness, selling
Finance & accounting: Paying creditors, creating financial
statements, managing cash accounts
Human resources: Hiring employees, evaluating performance,
enrolling employees in benefits plans

Coordination across department:
•

Boundary between sales, marketing, manufacturing, and research and
development
• Group employees from different functional specialties to a complete
piece of work
2.2
Example: Order Fulfillment Process


Coordination across department

The Order Fulfillment Process

2.3

Figure 2-1



How Information Technology enhances business processes:
• Efficiency: increasing the efficiency of costing processes
• Transforming: enabling entirely new processes that are
capable of transforming the business.
 Automate many steps in business processes
 New technology can actually change the flow of
information
Amazon has become the largest book retailer in the United
States on the strength of its huge online inventory and
recommender system. It has no rivals in size and scope.
2.4


2.2 TYPES OF BUSINESS INFORMATION SYSTEMS
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
Manufacturing and Production Systems
Major functions of systems: Scheduling, purchasing,
shipping, receiving, engineering, operations
Major application systems: Materials resource planning
systems, purchase order control systems, engineering
systems, quality control systems
2.5



Financing and Accounting Systems
Major functions of systems: Budgeting, general ledger,
billing, cost accounting
Major application systems: General ledger, accounts
receivable, accounts payable, budgeting, funds
management systems
Human Resource Systems
Major functions of systems: Personnel records, benefits,
payment, labor relations, training
Major application systems: Payroll, employee records,
benefit systems, career path systems, personnel training
systems
2.6


Human Resource Systems: An Employee Recordkeeping System

2.7

Figure 2-11


SYSTEMS FROM A CONSITUENCY PERSPECTIVE

The Four Major Types of Information Systems
•
•
•
•

2.8

Transaction Processing Systems
(TPS)
(MIS)
Decision-Support Systems (DSS)
Executive Support Systems (ESS)

Figure 2-0

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Transaction Processing Systems (TPS)
• 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
Management Information Systems (MIS)
Management level
• Inputs: High volume transaction level data
• Processing: Simple models
• Outputs: Summary reports
• Users: Middle managers
Example: Annual budgeting
2.9


Management Information Systems (MIS) (continued)

2.10

Figure 2-6


Decision-Support Systems (DSS)
Management level
• Inputs: Transaction level data
• Processing: Interactive
• Outputs: Decision analysis
• Users: Professionals, staff
Example: Contract cost analysis

EXECUTIVE SUPPORT SYSTEMS (ESS):
•
•
•
•

Inputs: Aggregate data
Processing: Interactive
Outputs: Projections
Users: Senior managers
Example: 5 year operating plan
2.11

• Top Level Management
• Designed to the individual
senior manager
• Ties CEO to all levels
• Very expensive to keep up
• Extensive support staff


Decision-Support Systems (DSS) (Continued)
Voyage-estimating decision-support system

2.12

Figure 2-8


Relationship of Systems to One Another

In modern-day digital firms,
the different types of
systems are closely linked to
one another. This is the
ideal. In traditional firms
these systems tend to be
isolated from one another,
and information does not
flow seamlessly from one
end of the organization to the
other. Efficiency and
business value tend to suffer
greatly in these traditional
firms
2.13

Interrelationships among systems

Figure 2-10


2.3: Systems that Span the Enterprise

Enterprise Application Architecture
Designed to support organizationwide process coordination and
integration
Consist of :
• Enterprise systems
• Supply chain management
systems
• Customer relationship
management systems
• Knowledge management
systems

2.14

Figure 2-11



•

•

Enterprise Systems

Enterprise systems, also
known as enterprise resource
planning (ERP) systems,
provide a single information
system for organization-wide
coordination and integration
of key business processes.
Information that was
previously fragmented in
different systems can
seamlessly flow throughout
the firm so that it can be
shared by business
processes in manufacturing,
accounting, human
resources, and other areas.

2.15

Figure 2-12



Supply Chain Management (SCM)
• Close linkage and coordination of activities involved in
buying, making, and moving a product
• Integrates supplier, manufacturer, distributor, and customer
logistics time
• Reduces time, unnecessary effort, and inventory costs
• Network of organizations and business processes
• Helps in procurement of materials, transformation of raw
materials into intermediate and finished products
• Helps in distribution of the finished products to customers
• Includes reverse logistics - returned items flow in the reverse
direction from the buyer back to the seller
2.16



How Information Systems facilitate Supply Chain Management :
Information from Supply Chain Management Systems helps firms:
• Decide when and what to produce, store, and move
• Rapidly communicate orders
• Track the status of orders
• Check inventory availability and monitor inventory levels
• Reduce inventory, transportation, and warehousing costs
• Track shipments
• Plan production based on actual customer demand
• Rapidly communicate changes in product design

2.17



Customer Relationship Management (CRM)
• Manages all ways used by firms to deal with existing and
potential new customers
• Business and technology control
• Uses information system to coordinate entire business
processes of a firm
• Provides end- to- end customer care
• Provides a unified view of customer across the company
• Consolidates customer data from multiple sources and
provides analytical tools for answering questions

2.18



Knowledge Management Systems
• Collects relevant knowledge and make it available wherever and
whenever it is needed
• Support business processes and management decisions
• Also link the firm to external sources of knowledge
• Support processes for acquiring, storing, distributing, and
applying knowledge

2.19



e-business/ e-commerce/ E-Government
Electronic-Business (e-business):
the use of digital technology and the Internet to execute
the major business processes in the enterprise.
Electronic-Commerce (e-commerce):
is the part of e-business that deals with the buying and
selling of goods and services over the internet.
Electronic-Government (E-Government):
the application of the internet and networking
technologies to digitally enable government and public
sector agencies’ relationships with citizens,
businesses, and other arms of government.
2.20


2.4: The information Systems function in Business

Information systems
department:

Information Technology Services

• Formal
organizational
unit
• Responsible for
information
systems in the
organization
Figure 2-0

2.21


2.4: The information Systems function in Business

Includes Specialists:
• Programmers: Highly trained, writers of the software
information for computers
• Systems analysts: Translate business problems into
solutions, between the information systems department
and rest of the organization
• Information system managers: Leaders of various
specialists
• Chief Information Officer (CIO): Senior manager in charge
of information systems function in the firm
• End users: Department representatives outside the
information system department for whom applications are
2.22 developed

Mis lecture 2

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