Organizational Information Systems Chapter 7 Organizational Information Systems Organizational Information Systems Chapter 7 Information Systems Foundations, Jessup/Valavich

Chapter 7 Organizational Information Systems Chapter Objectives Describe characteristics that differentiate operational, managerial, and executive levels Explain characteristics of the three levels of IS: TPS, MIS, and EIS Describe characteristics of three IS that span levels: DSS, expert systems, and office automation Explain the general IS needs of organizational functional areas This chapter describes several types of information systems that are widely used in organizations. Three systems are described as being widely used to support each separate organizational level. First, transaction processing systems are described as being used to collect and process day-to-day business events that occur at the operational level. Next, management information systems are shown as being used to help mid-level manages track and control operational activities by aggregating and summarizing TPS data. Finally, executive information systems are characterized as being used by top-level managers to assist in long-range planning and decision making by delivering highly aggregate information in a very user friendly format. Three systems are discussed that are widely used across organizational levels. First, decision support systems are described as being able to combine analytic models with numeric data to help managers make better decisions. Next, expert systems are shown as being able to make suggestions and recommendations by codifying human knowledge and expertise. Finally, office automation systems, used for preparing documents, coordinating activities, and assisting in organizational communication, are presented. Information Systems Foundations, Jessup/Valavich

Different Types of Information Require Different Types of Systems Chapter 7 Organizational Information Systems Different Types of Information Require Different Types of Systems Organizational levels Operational Managerial Executive Different levels have different information needs The following sections provide a general foundation for understanding why there are various types of information systems, each with unique characteristics. Information Systems Foundations, Jessup/Valavich

Levels of an Organization

Chapter 7 Organizational Information Systems Operational Level Where the routine day-to-day interaction with customers occurs Information system Automates repetitive activities Improves efficiency of the customer interface Decisions Highly structured Repetitive Examples of supervisor decisions at this level include when to reorder supplies or how best to allocate personnel for the completion of a project. Many decisions at this level are so straightforward that they can be programmed directly into operational information systems so these decisions can be made with little or no human intervention. For an example, an inventory system could keep track of inventory and issue an order for more supplies as needed. BRIEF CASE: Transaction Processing at Eddie Bauer Eddie Bauer now uses Web-based sales. All transactions are processed more quickly and efficiently in one single database. Information Systems Foundations, Jessup/Valavich

Operational Level

Managerial Level Where functional managers monitor operations Chapter 7 Organizational Information Systems Managerial Level Where functional managers monitor operations Information system Provides summary information of operational activities Decisions Moderately complex Time horizon up to a few months Semi-structured Functional managers (marketing, finance, etc.) focus on effectively utilizing and deploying organizational resources. The scope of their decisions is usually contained within the functional area. The decisions are referred to as semi-structured because solutions are not as clear cut as at the operational level. BRIEF CASE: Decision Making at Sara Lee Sara Lee’s meat division had difficulty making decisions because each different brand (Jimmy Deans, Kahns, etc.) had a different computing infrastructure. They adopted the Decision Support Suite from Information Advantage which integrated the old systems and gave managers the ability to quickly create up-to-the minute reports. Information Systems Foundations, Jessup/Valavich

Managerial Level

Executive Level Where long-term strategic issues are decided Chapter 7 Organizational Information Systems Executive Level Where long-term strategic issues are decided Information systems Aggregate summaries Statistical analyses, trends, and projections Decisions Very complex Long-term ramifications Unstructured Managers at this level include the president, chief executive officer, vice presidents, and possibly the Board of Directors. Executives must consider the ramifications of their decisions on the overall organization. BRIEF CASE: Executive Information at Blue Cross Blue Shield of Florida Executives at BC/BS use an Executive Information System to analyze complex data in textual and graphical summaries. This system helps the executives to more easily deal with the complexities of their rapidly changing environment and achieve a strategic advantage. Information Systems Foundations, Jessup/Valavich

Executive Level

General Types of Information Systems Chapter 7 Organizational Information Systems General Types of Information Systems All Information Systems use the basic systems model Input, process, and output Levels of business information systems Transaction Processing Systems Management Information Systems Executive Information Systems The following slides use the basic systems model (input, process, output) to describe various types of business information systems. Information Systems Foundations, Jessup/Valavich

Transaction Processing Systems Chapter 7 Organizational Information Systems Transaction Processing Systems Process business transactions Transactions: events that occur as a regular part of business day-to-day operations Used at operational level Goals Automate repetitive information processing activities to increase speed and accuracy Lower the cost of processing Make the organization more efficient Because TPS are typically used to process large volumes of information, organizations have spent considerable resources designing TPS to maximize the processing speed and accuracy while lowering the cost of processing each transaction. Much of the evolution of TPS has focused on reducing the role people play in the processing of transactions. Information Systems Foundations, Jessup/Valavich

Activities of TPS Payroll processing Sales Online Batch Chapter 7 Organizational Information Systems Activities of TPS Payroll processing Sales Online Batch There are many other types of transaction processing systems. Online processing provides immediate results. Batch processing collects several transactions and processes them later. When customers need immediate notification of the success or failure of a transaction, system designers use online processing. When immediate notification is not needed, batch processing is the chosen system design. Information Systems Foundations, Jessup/Valavich

Architecture of a Transaction Processing System

Forms of TPS Data Entry Manual Semi-automated Fully automated Chapter 7 Organizational Information Systems Forms of TPS Data Entry Manual Semi-automated Fully automated Manual data entry is a person manually entering a source document, such as when a clerk enters data from a form filled out by a customer. Semi-automated data entry system uses some type of data capture device to speed the entry and processing of the transaction, such as when a check-out clerk scans a bar code into a cash register. Fully-automated data entry requires no human intervention. Two computers “talk” to each other via a communication link. BRIEF CASE: Transaction Processing System at Ford Motor Company Ford has linked their WWW site to their TPS. The inputs to this system are zip codes entered by customers. Processing occurs back at Ford, where a TPS matches the customer’s zip code to one in a database containing all dealers. When a match is made, the output of the system is a report to the customer giving the name, address, and phone of the nearest dealer. This online TPS provides a valuable customer service with no human intervention. Information Systems Foundations, Jessup/Valavich

Management Information Systems Chapter 7 Organizational Information Systems Management Information Systems Support the ongoing decision-making activities of a business or functional area Used at managerial level Goals Help managers make more effective decisions Get the right information to the right person in the right format at the right time Management Information Systems is a term has two meanings. It is used to describe the field of study that encompasses the use of computer-based information systems in organizations. It also refers to a specific type of organizational information system used at the managerial level. Each functional area within an organization can have a MIS. Information Systems Foundations, Jessup/Valavich

Activities of MIS Sales forecasting Chapter 7 Organizational Information Systems Activities of MIS Sales forecasting Financial management and forecasting Manufacturing planning and scheduling Inventory management and planning Advertising and product pricing These are just some of the examples of how an MIS can be used in an organization. Information Systems Foundations, Jessup/Valavich

Architecture of a Management Information System

Executive Information Systems Chapter 7 Organizational Information Systems Executive Information Systems Provide information for long-term decision making Used at executive level Goals To provide aggregate information To provide information that can be quickly scanned for trends and anomalies EIS are not as widely used as other types of information systems. This trend is rapidly changing as more and more executives become comfortable with information technology. Information Systems Foundations, Jessup/Valavich

Activities of EIS Executive-level decision-making Chapter 7 Organizational Information Systems Activities of EIS Executive-level decision-making Long-range and strategic planning Monitoring internal and external events, and resources Crisis management Staffing and labor relations One key element of an EIS is its capability to deliver both “soft” and “hard” data. Hard data includes facts and numbers mostly generated by the TPS and MIS. Soft data is news stories and other non-analytical information. Information Systems Foundations, Jessup/Valavich

Architecture of an Executive Information System

Information Systems that Span Organizational Boundaries Chapter 7 Organizational Information Systems Information Systems that Span Organizational Boundaries Decision support systems Expert systems Office automation systems Functional area IS Some information systems cannot be neatly associated with a particular level. The following slides will discuss these systems. Information Systems Foundations, Jessup/Valavich

Boundary-spanning IS

Decision Support Systems Chapter 7 Organizational Information Systems Decision Support Systems Special-purpose systems Designed to solve a recurring problem Support semi-structured problems Use decision analysis tools Allows user to examine alternative solutions What-if analysis The key distinction between a DSS and other types of previously described information systems is that with a DSS the user actively uses decision analysis tools to either analyze or create meaningful data to address non-routine problems. A DSS is an interactive aid. TPS, MIS, and EIS are passive receivers or givers of information. A cash manager could examine what if scenarios of the effect of various interest rates on cash availability. Results could be displayed in both textual and graphical formats. The most commonly used DSS is an electronic spreadsheet such as Microsoft Excel. Information Systems Foundations, Jessup/Valavich

Architecture of a Decision Support System

Chapter 7 Organizational Information Systems Expert Systems Use knowledge of a subject to solve problems or provide advise Mimic human expertise Human knowledge represented by codifying facts and rule Examples Financial planning Computer help desk Expert systems are used to mimic human expertise by manipulating knowledge (understanding acquired through experience and extensive learning) rather than simply information. The most difficult part of building an ES is acquiring the knowledge from the expert and getting this knowledge into a consistent and complete form capable of making recommendations. Other examples include medical diagnosis, machine configuration, automobile diagnosis, software application assistance. Information Systems Foundations, Jessup/Valavich

Architecture of a Expert System

Office Automation Systems Chapter 7 Organizational Information Systems Office Automation Systems Develop documents Word processing Desktop publishing Schedule resources Electronic calendars Communicate Electronic and voice mail Video conferencing Groupware Office automation systems are also covered in Chapter 3. Smart electronic calendars can examine multiple schedules to find the first opportunity when all resources (people, rooms, equipment) are available. Information Systems Foundations, Jessup/Valavich

Architecture of an Office Automation System

Functional Area Information Systems