11 INFORMATION SYSTEMS CHAPTER Discuss why computers are used in organizations How does information flow in an organization? end-users need to be aware of the different types of computer-based information systems Transaction processing Management information systems Decision support systems Executive support systems

Competencies Explain how organizations can be structured according to the five functions and three management levels Describe how information flows in an organization Distinguish among the different systems

Competencies cont. Distinguish between office automation systems and knowledge work systems Explain the difference between data workers and knowledge workers

Organizational Information Flow Organizations can be viewed according to how they function Management has three levels Information flows up, down, and across A good exercise is to use an order entry company as an example. Have the students trace how a transaction starts with a telephone or computer order for goods.

Functions Accounting Marketing Human Resources Production Research and Development Most businesses will have these five functioning department within their organization. They may go by slightly different names; but their functions will be basically the same. Each needs information from the other; some from more than one Information, therefore, flows vertically and horizontally

Management Levels Top managers: involved with long-range planning; responsible for strategic planning; need highly summarized information; also need information from outside sources Middle managers: Flow is horizontal and vertical across functions; control and planning; responsible for tactical planning; need summarized weekly or monthly information Supervisors: Information flow is primarily vertical; responsible for operational matters; control matters; detailed, day-to-day information

Information Flow Top managerial-level Middle managerial level Vertical, horizontal & external Middle managerial level Vertical & horizontal Supervisory-level Vertical only Most organizations have three levels of management; may see some overlap between supervisor and middle management Top management almost always requires information from the “below”; therefore, information is vertical Middle and supervisory will have information from both directions with supervisors getting information laterally also.

Computer-Based Information Systems Four types of computer-based information systems that help track and keep information flowing in the amount and direction organization needs to stay on track: TPS -- Records day-to-day transactions; Foundation for other information systems MIS -- Summary of detail from TPS; Produces standard reports for management DSS -- Data source: TPS; Flexible analytical tool; Assists managers with unstructured problems ESS -- Highly summarized information presentations; Gives senior management a broad company view, assists with strategic planning; Sourced internally from TPS and MIS, and from external sources

Transaction Processing Systems Tracks operations Creates databases Also called data processing systems (DPS) Records routine, day-to-day operations in a database Foundation for other information systems within organization Associated with sales, order processing, inventory, purchasing, AP, AR, payroll – other accounting functions.

Accounting Activities TPS Sales order processing Accounts receivable Inventory control Accounts payable Payroll General ledger A transaction processing system helps an organization to keep track of routine operations Records information in a database Users have access to the information via queries and/or reports The accounting area is one of the most essential areas in an organization Sales order processing – this usually starts the flow of information Accounts receivables – collecting money owed for goods Inventory - parts and finished goods that the company has in stock Inventory control system Purchasing is the buying of materials and services Purchase order is a form used Accounts payables refers to money the company owes its suppliers for materials and services it has received Payroll – concerned with paying employees for service performed

Management Information Systems MIS Produces standardized reports Periodic Exception Demand Uses databases Integrates data across areas A computer-based information system that produces standardized reports in summarized, structured form Periodic - regular intervals, predetermined format, consistent content Exception - highlight unusual events Demand - as opposed to periodic, only upon request MIS use databases; DBMS required to integrate data across functional areas

Decision Support Systems DSS Enables managers to get answers to problems Group decision support system (GDSS) Supports DSS Addresses large problems Analyzes data Managers often must contend with unanticipated questions; DSS help provide answers to unexpected, non-recurring problems DSS helps user (management or otherwise) make decisions

DSS Parts User System software Data Decision models Someone who makes decisions Could be you System software Operating system Easy to use Data Internal & external Decision models DSS is quite different from transaction processing system Gives a summary of the data Helps decision makers analyze unanticipated situations DSS consists of four parts User System software Data Decision model

Decision Models Strategic models Tactical models Operational models Assists top-level management Long range planning Tactical Assists middle-management Financial planning Sales promotion planning Operational – helps lover level managers accomplish the organization’s day-to-day activities

Executive Support Systems ESS Designed for top management Consists of sophisticated software Access about a company's performance ESS is a type of DSS that is specifically designed for top management Emphasis on ease of use so that executives may operate without extensive training Easy, direct access about the company’s performance; Highly summarized information to help make decisions; Combines internal data from TPS and MIS with external data;

Other Information Systems Information workers Data workers Secretaries Clerks Knowledge workers Engineers Scientist Office automation systems Project managers Videoconferencing systems Knowledge work systems Use specialized systems CAD/CAM Typically information workers create, distribute and communicate information. Includes but not limited to secretaries, clerks, engineers, and scientists Communication and distribution - data workers Creation - knowledge workers Office automation systems support the activities of information workers by managing documents, communications and scheduling Knowledge work systems (CAD/CAM, Video conferencing) support knowledge workers creating information in their areas of expertise CAD/CAM – used by design and manufacturing engineers Video Conferencing – used by individuals to see and share information through TV or over the Internet

A Look to the Future Information Overload Could have a negative effect on getting work done How to handle e-mail Be selective Remove Protect Be brief Stop spam Don't respond Question the value of technology? Has it helped or just caused more stress? Email and cell phones allow communication in nearly any location. Also can be main source of too much information. Be selective; -- With emails, put important information in the first three lines of your message. Remove messages no longer needed. If you phone has the ability to save messages, you don’t keep all of them. You delete as you deal with the information. Do the same with emails. Protect – give your email address out like your telephone number. You generally don’t send a “blanket” phone message to numerous people so they can call you at random with useless information. Be brief – their time is as valuable as yours. Some people receive so many emails in a day that they tend to ignore long messages. Stop spam – not everyone wants to receive those chain letters. Not everyone wants to receive all those “great” jokes you receive or find. Don’t respond – unless you have something to add that will make a difference, end the conversation whether on the phone or through email.

Key Terms accounting (302) accounts payable (308) accounts receivable (308) balance sheet (309) computer aided design/computer aided manufacturing (CAD/CAM) (314) data (311) data processing system (DPS) (308) data worker (313) decision model (311) decision support system (DSS) (307) demand report (310) exception report (310) executive information system (EIS) (307) executive support system (ESS) (307)

Key Terms external data (311) general ledger (309) group decision support system (GDSS) (310) human resources (304) income statement (309) information system (306) information worker (313) internal data (311) inventory (308) inventory control system (308) knowledge worker (313) knowledge work system (KWS) (314) management information system (MIS) (307) marketing (304)

Key Terms middle management (304) office automation system (OAS) (314) operational model (311) payroll (308) periodic report (310) production (304) project manager (314) purchase order (308) purchasing (308) research (304) sales order processing (308) strategic model (311) supervisor (304) system software (311) tactical model (311)

Key Terms top management (304) transaction processing system (TPS) (307) user (311) videoconferencing system (314)

FAQs List the five basic functions of an organization. Name the three management levels. Which information system produces summarized, structured reports? Which system would be used by a company CEO?

Discussion Questions Define the following terms - TPS, MIS, DSS, and ESS. What is the purpose of a Transaction processing system? Describe one of the information systems listed above.