M ANAGEMENT I NFORMATION S YSTEM Chapter 8 Information In Action 1

O VERVIEW Information as a critical Success Factor Transaction Processing Systems Organizational Information Systems Marketing IS Human Resource IS Financial IS Executive IS Data Warehouse OLAP 2

I NFORMATION AS A C RITICAL S UCCESS F ACTOR Critical success factor (CSF) was coined by Ronald Daniel to identify a few key activities that spell success or failure for any type of organization. Transaction processing system (TPS) is the information system that gathers data describing the firm’s activities, transforms the data into information, and makes the information available to users both inside and outside the firm. 1 st business application to be installed on computers. Also electronic data processing (EDP) system and accounting information system. 3

A M ODEL OF A T RANSACTION P ROCESSING S YSTEM 4

S YSTEM O VERVIEW Distribution system is a TPS used by distribution firms. Distribution firms distribute products or services to their customers. We will use data flow diagrams, or DFDs, to document the system. Figure slide 6 represents the highest level. Figure slide 7 identifies the three major subsystems. 5

A C ONTEXT D IAGRAM OF D ISTRIBUTION S YSTEM 6

A F IGURE 0 D IAGRAM OF THE D ISTRIBUTION S YSTEM 7

M AJOR S UBSYSTEMS OF D ISTRIBUTION S YSTEM Systems that fill customer orders. Order entry system enters customer orders into the system. Inventory system maintains the inventory records. Billing system prepares the customer invoices. Accounts receivable system collects the money from the customers. Systems that order replenishment stock. Purchasing system issues purchase orders to suppliers for needed stock. Receiving system receives the stock. Accounts payable system makes payments. 8

A F IGURE 1 D IAGRAM OF THE S YSTEM THAT F ILLS C USTOMERS O RDERS 9

A F IGURE 2 D IAGRAM OF S YSTEMS T HAT O RDER R EPLENISHMENT S TOCK 10

M AJOR S UBSYSTEMS OF D ISTRIBUTION S YSTEM (C ONT ’ D ) Systems that perform general ledger processes. General ledger system is the accounting system that combines data from other accounting systems for the purpose of presenting a composite financial picture of the firm’s operations. General ledger is the file that contains the combined accounting data. Updated general ledger system posts records that describe various actions and transactions to the general ledger. Prepare management reports system uses the contents of the general ledger to prepare the balance sheet, income statement, and other reports. 11

D IAGRAM OF THE S YSTEMS THAT P ERFORM G ENERAL L EDGER P ROCESSES 12

O RGANIZATIONAL I NFORMATION S YSTEMS Organizational information systems are developed to meet the needs for information relating to those particular parts of the organization. Marketing information system (MKIS) provides information that relates to the firm’s marketing activities. Consists of a combination of input and output subsystems connected by a database. 13

M ODEL OF M ARKETING I NFORMATION S YSTEM 14

M ARKETING I NFORMATION S YSTEM Output subsystems provide information about critical elements in marketing mix. Marketing mix consists of four main ingredients that management manages in order to meet customers’ needs at a profit. Product subsystem provides information about the firm’s products. Place subsystem provides information about the firm’s distribution network. Promotion subsystem provides information about the firm’s advertising and personal selling activities. Price subsystem helps the manager make pricing decisions. Integrated-mix subsystem enables the manager to develop strategies that consider the combined effects of the ingredients. 15

M ARKETING I NFORMATION S YSTEM (C ONT ’ D ) Database is populated with data from the three MKIS input subsystems. Input subsystems Transaction processing system gathers data from both internal and environmental sources and enters the data into the database. Marketing research subsystem gathers internal and environmental data by conducting special studies. Marketing intelligence subsystem gathers environmental data that serves to keep management informed of activities of the firm’s competitors and customers and other elements that can influence marketing operations. 16

O THER O RGANIZATIONAL I NFORMATION S YSTEM Human Resources information system ( HRIS ) provides information to managers throughout the firm concerning the firm’s human resources. Manufacturing information system provides information to managers throughout the firm concerning the firm’s manufacturing operations. Financial information system provides information to managers throughout the firm concerning the firm’s financial activities. 17

H UMAN R ESOURCE I NFORMATION S YSTEM 18

M ANUFACTURING I NFORMATION S YSTEM 19

F INANCIAL I NFORMATION S YSTEM 20

T HE E XECUTIVE I NFORMATION S YSTEM Executive information system (EIS) is a system that provides information to upper-level managers on the overall performance of the firm; also called Executive support system (ESS). Drill-down capability allows for executives to bring up a summary display and then successively display lower levels of detail until executives are satisfied that they have obtained as much detail as is necessary. 21

E XECUTIVE I NFORMATION S YSTEM M ODEL 22

C USTOMER R ELATIONSHIP M ANAGEMENT Customer relationship management ( CRM ) is the management of the relationships between the firm and its customers so that both the firm and its customers receive maximum value from the relationship. CRM system accumulates customer data over a long term– 5 years, 10 years, or more-and uses that data to produce information for users. Uses a data warehouse. 23

D ATA W AREHOUSING Data warehouse describes data storage that has the following characteristics: Storage capacity is very large. Data are accumulated by adding new records, as opposed to being kept current by updating existing records with new information. Date are easily retrievable. Date are used solely for decision making, not for use in the firm’s daily operations. Data mart is a database that contains data describing only a segment of the firm’s operations. 24

T HE D ATA W AREHOUSING S YSTEM Data warehousing is the creation and use of a data warehouse or data mart. Primary data sources are TPS and data obtained from other sources, both internal and environmental; any data identified as having potential value in decision making. Staging area is where the data undergoes extraction, transformation, and loading (abbreviated as ETL process) 25

D ATA W AREHOUSING S YSTEM (C ONT ’ D ) Extraction process combines data from the various sources. Transformation process cleans the data, puts it into standardized format, and prepares summaries. Data stored in both detail and summary form. Loading process involves the entry of the data into the data warehouse repository. Metadata “Data about data” Data that describes the data in the data repository Tracks data as it flows through the data warehouse system 26

OLAP On-line analytical processing ( OLAP ) enables the user to communicate with the data warehouse either through a GUI or a Web interface and quickly produce information in a variety of forms, including graphics. Relational OLAP ( ROLAP ) uses a standard relational database management system. ROLAP data exists in detailed form. Analyses must be performed to produce summaries. Constrained to a limited number of dimensions. Multidimensional OLAP ( MOLAP ) uses a special multidimensional database management system. MOLAP data are preprocessed to produce summaries at the various levels of detail and arranged by the various dimensions. Faster summary ability, can use many dimensions–10 or more. 27

ROLAP AND MOLAP A RCHITECTURES 28

D ATA M INING Data mining is the process of finding relationships in data that are unknown to the user. Hypothesis verification begins with the user’s hypothesis of how data are related. Retrieval process guided entirely by user. Selected information can be no better than user’s understanding of the data. Traditional way to query a database. Knowledge discovery is when the data warehousing system analyzes the warehouse data repository, looking for groups with common characteristics. 29