I NFORMATION SYSTEMS & B USINESS PROCESSES Improving Business Processes with Information Systems

W HAT I S A B USINESS P ROCESS ? The method with which work is organized, coordinated and controlled is the Business Process. Business Processes are also the flow of information – sets of activities through the organization. Examples include: processing payroll, account payables, class registration, inventory management, sales, purchases etc. Activities transform resources and information of one type into resources and information of another type. In a payroll process, the activity of paying an employee turns into an activity of salaries and benefits information report for the organization.

B USINESS P ROCESS & F UNCTIONAL AREAS Traditionally, business processes are often tied to specific functional area of the organization. Examples include the following: FunctionProcess Sales & MarketingIdentify potential clients and Sell products Finance & AccountingProcessing payroll, managing cash accounts, paying creditors, collecting receivables. Human ResourcesHiring employees, managing employees’ benefits

B USINESS P ROCESS & INFORMATION SYSTEMS How do information systems enhance business processes? Automation Change the flow of information replacing sequential steps with tasks that can be performed. The result is the elimination of delays in decision making. Transform the way an organization works and reduce costs for everyone – textbooks can now be ordered online at lower costs. In some processes, several activities use one information system. In other processes, each activity has its own information system, and in still other processes, some activities use several different information systems.

B USINESS P ROCESS & F UNCTIONAL AREAS Processes affect many functional areas. Consider the steps involved in fulfilling a customer order. Customer enters request for order via website or makes a phone call to Sales (Sales function). Request would pass to Accounting to verify that the customer can pay. (Accounting function) and pass the verification back to Sales. The Warehouse department will then pull the item(s) from inventory and arrange for shipping perhaps through an independent shipper such as FedEx or UPS. (Production or Warehouse). This can and usually results in the fragmentation of information and data across the organization. How do we resolve this problem?

E NTERPRISE SYSTEMS An ERP system’s key objective is to integrate information and processes from all functional divisions of an organization and merge it for effortless access and structured work flow. The integration is typically accomplished by constructing a single database repository that communicates with multiple software applications, providing different divisions of an organization with various business statistics and information. Advantage: Information that was previously fragmented in different systems can now be easily shared across the firm to help different parts of the organization work more effectively together. An example of how this may work when a customer places an order: Order transaction triggers the warehouse to pick the items and schedule shipment. The warehouse informs the factory to replenish what was depleted. The accounting department is notified to generate an invoice. Customer service track the progress of the order to inform customers of the status of their order.

T YPES OF INFORMATION SYSTEMS Systems that keep track of elementary activities of the organization, such as sales, cash deposits, employee clock punches are known as Transaction Processing System (TPS). The main purpose of a TPS is to record daily routine transactions, answer routine questions and track the flow of transactions. Common TPS application is a payroll TPS. Systems that monitor, control, and administer other activities are known as Management Information Systems (MIS). MIS summarize and reports on an organization’s data as supplied by TPS. MIS is a specific category of internal IS serving middle level managers. This is not to be confused with the field of study of Management Information Systems in general.

T YPES OF INFORMATION SYSTEMS Suppose a manager needs to answer the following question: How many employees should be on the schedule for next week in order to meet production deadlines and reduce the need for overtime? Decision Support System(DSS) support non-routine decision making for middle management. DSS focus on unique and constantly changing problems. DSS use combinations of information from TPS, DSS and external sources. DSS use modeling to visualize the problem and proposed solutions. (Solver, Scenario Managers, Logical functions).

I NFORMATION SYSTEMS THAT SPANS THE ORGANIZATION Intranets and Extranets - GullnetGullnet Knowledge Management Systems codecademy Supply Chain Management Customer Relations Management. An Information System is a set of interrelated components that collect, store, organize, process and disseminate information.