2.1 © 2007 by Prentice Hall 2 Chapter Global E-Business: How Businesses Use Information Systems

2.2 © 2007 by Prentice Hall LEARNING OBJECTIVES Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Define and describe business processes and their relationship to information systems. Describe the information systems supporting the major business functions: sales and marketing, manufacturing and production, finance and accounting, and human resources. Evaluate the role played by systems serving the various levels of management in a business and their relationship to each other.

2.3 © 2007 by Prentice Hall Explain how enterprise applications and intranets promote business process integration and improve organizational performance. Assess the role of the information systems function in a business. LEARNING OBJECTIVES (Continued) Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems

2.4 © 2007 by Prentice Hall Information Systems Join the Tupperware Party Problem: Continuing expansion and transition to multilevel compensation structure. Solutions: Revised ordering processes and monitoring service levels and sales increase sales. Oracle Collaboration Suite and Portal enable order entry via Web interface, access to integrated corporate systems, and personal e-commerce sites. Demonstrates IT’s role in designing compensation structure and system integration. Illustrates the benefits of revising internal and customer- related business processes. Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems

2.5 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Business Processes and Information Systems Business processes: Manner in which work is organized, coordinated, and focused to produce a valuable product or serviceManner in which work is organized, coordinated, and focused to produce a valuable product or service Concrete work flows of material, information, and knowledge—sets of activitiesConcrete work flows of material, information, and knowledge—sets of activities Unique ways to coordinate work, information, and knowledgeUnique ways to coordinate work, information, and knowledge Ways in which management chooses to coordinate workWays in which management chooses to coordinate work INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.6 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Business Processes and Information Systems (Continued) Information systems help organizations achieve great efficiencies by automating parts of processesInformation systems help organizations achieve great efficiencies by automating parts of processes IS also contributes to completely rethinking processes.IS also contributes to completely rethinking processes. Business processes typically span several different functional areas.Business processes typically span several different functional areas. INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.7 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Examples of Business Processes Manufacturing and production: Assembling product, checking quality, producing bills of materials Sales and marketing: Identifying customers, creating customer awareness, selling INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications Table 2.6

2.8 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Finance & accounting Finance & accounting: Paying creditors, creating financial statements, managing cash accountsPaying creditors, creating financial statements, managing cash accounts Human resources Human resources: Hiring employees, evaluating performance, enrolling employees in benefits plansHiring employees, evaluating performance, enrolling employees in benefits plans INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications Examples of Business Processes (Continued) Table 2.6 continued

2.9 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Business Processes and Information Systems Cross-Functional Business Processes: Transcend boundary between sales, marketing, manufacturing, and research and developmentTranscend boundary between sales, marketing, manufacturing, and research and development Group employees from different functional specialties to a complete piece of workGroup employees from different functional specialties to a complete piece of work Example: Order Fulfillment Process INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.10 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems The Order Fulfillment Process Figure 2-1 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.11 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use 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

2.12 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Sales and Marketing Systems SYSTEMDESCRIPTIONORGANIZATIONAL LEVEL Order processing Enter, process, and track ordersOperational Pricing analysisDetermine prices for products and services Management Sales trend forecasting Prepare 5-year sales forecastsStrategic Table 2-2

2.13 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems SYSTEMS FROM A FUNCTIONAL PERSPECTIVE 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

2.14 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems SYSTEMS FROM A FUNCTIONAL PERSPECTIVE SYSTEMDESCRIPTIONORGANIZATIONAL LEVEL Machine control Control the actions of machines and equipment Operational Production planning Decide when and how many products should be produced Management Facilities location Decide where to locate new production facilities Strategic Manufacturing and Production Systems

2.15 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Overview of an Inventory System Figure 2-3 SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

2.16 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Financing and Accounting Systems Major functions of systems: Budgeting, general ledger, billing, cost accountingBudgeting, general ledger, billing, cost accounting Major application systems: General ledger, accounts receivable, accounts payable, budgeting, funds management systemsGeneral ledger, accounts receivable, accounts payable, budgeting, funds management systems

2.17 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Financing & Accounting Systems (Continued) SYSTEMDESCRIPTIONORGANIZATION- AL LEVEL Accounts receivable Tracks money owed the firmOperational BudgetingPrepares short-term budgetsManagement Profit planning Plans long-term profitsStrategic Table 2-4

2.18 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Human Resource Systems Major functions of systems: Personnel records, benefits, compensation, labor relations, trainingPersonnel records, benefits, compensation, labor relations, training Major application systems: Payroll, employee records, benefit systems, career path systems, personnel training systemsPayroll, employee records, benefit systems, career path systems, personnel training systems

2.19 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Human Resource Systems (Continued) SYSTEMDESCRIPTIONORGANIZATIONAL LEVEL Training and development Tracks employee training, skills, and performance appraisals Operational Compensation analysis Monitors the range and distribution of employee wages, salaries, and benefits Management Human resources planning Plans the long-term labor force needs of the organization Strategic Table 2-5

2.20 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Human Resource Systems (Continued) An Employee Recordkeeping System Figure 2-5 SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

2.21 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Different Kinds of Systems 1.Operational-level systems: support operational managers, keeping track of the elementary activities and transactions 2.Management-level systems: serve the monitoring, controlling, decision-making, and administrative activities 3.Strategic-level systems: help senior management tackle and address strategic issues Three main categories of information systems serve different organizational levels:

2.22 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Major Types of Systems Transaction Processing Systems (TPS) Management Information Systems (MIS) Decision-Support Systems (DSS) Executive Support Systems (ESS)

2.23 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems 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

2.24 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS A Symbolic Representation for a Payroll TPS

2.25 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Management Information Systems (MIS) Management level Inputs: High volume transaction level data Processing: Simple models Outputs: Summary reports Users: Middle managers Example: Annual budgeting

2.26 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Management Information Systems (MIS) (continued) Figure 2-6

2.27 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Management Information Systems (MIS) (continued) Figure 2-7 A sample MIS report

2.28 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Decision-Support Systems (DSS) Management level Inputs: Transaction level data Processing: Interactive Outputs: Decision analysis Users: Professionals, staff Example: Contract cost analysis

2.29 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS EXECUTIVE SUPPORT SYSTEMS (ESS): Inputs: Aggregate data Processing: Interactive Outputs: Projections Users: Senior managers Example: 5 year operating plan

2.30 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued) Top Level Management Designed to the individual senior manager Ties CEO to all levels Very expensive to keep up Extensive support staff

2.31 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Relationship of Systems to One Another Interrelationships among systems Figure 2-10

2.32 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Relationship of Systems to One Another In contemporary 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

2.33 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Systems for Enterprise-Wide Process Integration Enterprise applications: Designed to support organization-wide process coordination and integrationDesigned to support organization-wide process coordination and integration INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.34 © 2007 by Prentice Hall Consist of Consist of : Enterprise systems Supply chain management systems Customer relationship management systems Knowledge management systems Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Systems for Enterprise-Wide Process Integration (Continued) INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.35 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems 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.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.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. INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.36 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Enterprise Application Architecture Figure 2-11 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.37 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Traditional “Silo” View of Information Systems Within the business: There are functions, each having its uses of information systemsThere are functions, each having its uses of information systems Outside the organization’s boundaries: There are customers and vendorsThere are customers and vendors Functions tend to work in isolation INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.38 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Traditional View of Systems INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.39 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Enterprise Systems Figure 2-12 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.40 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Benefits of Enterprise Systems Help to unify the firm’s structure and organization: One organizationHelp to unify the firm’s structure and organization: One organization Management: Firm wide knowledge-based management processesManagement: Firm wide knowledge-based management processes Technology: Unified platformTechnology: Unified platform Business: More efficient operations & customer- driven business processesBusiness: More efficient operations & customer- driven business processes INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.41 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Challenges of Enterprise Systems Difficult to build: Require fundamental changes in the way the business operatesDifficult to build: Require fundamental changes in the way the business operates Technology: Require complex pieces of software and large investments of time, money, and expertiseTechnology: Require complex pieces of software and large investments of time, money, and expertise Centralized organizational coordination and decision making: Not the best way for the firms to operateCentralized organizational coordination and decision making: Not the best way for the firms to operate INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.42 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Supply Chain Management (SCM) Close linkage and coordination of activities involved in buying, making, and moving a productClose linkage and coordination of activities involved in buying, making, and moving a product Integrates supplier, manufacturer, distributor, and customer logistics timeIntegrates supplier, manufacturer, distributor, and customer logistics time Reduces time, redundant effort, and inventory costsReduces time, redundant effort, and inventory costs Network of organizations and business processesNetwork of organizations and business processes INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.43 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Helps in procurement of materials, transformation of raw materials into intermediate and finished productsHelps in procurement of materials, transformation of raw materials into intermediate and finished products Helps in distribution of the finished products to customersHelps in distribution of the finished products to customers Includes reverse logistics - returned items flow in the reverse direction from the buyer back to the sellerIncludes reverse logistics - returned items flow in the reverse direction from the buyer back to the seller Supply Chain Management (SCM) INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.44 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Information from Supply Chain Management Systems helps firms: Decide when and what to produce, store, and moveDecide when and what to produce, store, and move Rapidly communicate ordersRapidly communicate orders Track the status of ordersTrack the status of orders Check inventory availability and monitor inventory levelsCheck inventory availability and monitor inventory levels INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.45 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Information from Supply Chain Management Systems helps firms: (Continued) Reduce inventory, transportation, and warehousing costsReduce inventory, transportation, and warehousing costs Track shipmentsTrack shipments Plan production based on actual customer demandPlan production based on actual customer demand Rapidly communicate changes in product designRapidly communicate changes in product design INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.46 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Customer Relationship Management (CRM) Manages all ways used by firms to deal with existing and potential new customersManages all ways used by firms to deal with existing and potential new customers Business and technology disciplineBusiness and technology discipline Uses information system to coordinate entire business processes of a firmUses information system to coordinate entire business processes of a firm INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.47 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Customer Relationship Management (CRM) (Continued) Provides end- to- end customer careProvides end- to- end customer care Provides a unified view of customer across the companyProvides a unified view of customer across the company Consolidates customer data from multiple sources and provides analytical tools for answering questionsConsolidates customer data from multiple sources and provides analytical tools for answering questions INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.48 © 2007 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Knowledge Management Systems Collects relevant knowledge and make it available wherever and whenever it is neededCollects relevant knowledge and make it available wherever and whenever it is needed Support business processes and management decisionsSupport business processes and management decisions Also link the firm to external sources of knowledgeAlso link the firm to external sources of knowledge Support processes for acquiring, storing, distributing, and applying knowledgeSupport processes for acquiring, storing, distributing, and applying knowledge INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications