Management Information Systems, 4th Edition 1 Chapter 3 Information Systems in Business

Management Information Systems, 4th Edition 2 Learning Objectives Identify various business functions and the role of ISs in these functions Explain how ISs in the basic business functions relate to each other Show how ISs of different business functions support each other

Management Information Systems, 4th Edition 3 Learning Objectives (Cont.) Explain how information technology is used in the most common business functions to make business processes more effective and more efficient Explain the notion of enterprise resource planning (ERP) systems Identify business areas where information technology facilitates the work of managers and knowledge workers

Management Information Systems, 4th Edition 4 Effectiveness and Efficiency ISs can help companies attain more effective and efficient business processes –Effectiveness The degree to which a task is accomplished The degree to which the company achieves outcomes better than the competitors do “To get the right things done” by Peter F. Drucker –Efficiency Determined by the relationship between resources expended and benefits gained in achieving a goal To do the things right

Management Information Systems, 4th Edition 5 Effectiveness and Efficiency (Cont.)

Management Information Systems, 4th Edition 6 Effectiveness and Efficiency (Cont.)

Management Information Systems, 4th Edition 7 Accounting AISs automatically post transactions in the books and automate generation of reports for management and legal requirements Three types of AISs –Transaction processing systems (TPS) –Cost accounting systems –Managerial accounting systems

Management Information Systems, 4th Edition 8 Accounting (Cont.) Electronic Data Processing (EDP) Audits –Ensure electronic systems comply with standard regulations and acceptable rules –Ensure systems cannot be manipulated to circumvent acceptable principles –To be an EDP auditor ($)

Management Information Systems, 4th Edition 9 Accounting (Cont.)

Management Information Systems, 4th Edition 10 Finance The job of financial managers is to manage money as efficiently as possible by: –Collecting payables as soon as possible –Making payments by the latest time allowed by contract or law –Ensuring sufficient funds are available for day-to- day operations –Taking advantage of opportunities to accrue the highest yield on funds not used for current activities

Management Information Systems, 4th Edition 11 Finance (Cont.)

Management Information Systems, 4th Edition 12 Cash Management Financial ISs help balance the need to accrue interest against the need to have cash available Cash management systems (CMS): –Handle cash transactions specifically Electronic fund transfer (EFT): –Electronic transfer of cash from one bank account to another

Management Information Systems, 4th Edition 13 Investment Analysis and Service Analyze and project prices of a specific stock or bond in real time Transmit buy and sell orders electronically Provide clients with a detailed statement Monitor account information and news online

Management Information Systems, 4th Edition 14 Engineering ISs reduce engineering lead time or time to market –Key to maintaining a competitive edge –Computer-Aided Design (CAD) Systems Help engineers and technicians design new products and quickly modify and store drawings electronically –Rapid Prototyping: Creating one-of-a-kind products to test design in three dimensions Concurrent engineering and communication through Internet Product Data Management (PDM)

Management Information Systems, 4th Edition 15 Engineering (Cont.)

Management Information Systems, 4th Edition 16 IT helps in these manufacturing activities: –Plant activity scheduling –Material Requirement Planning/assessment –Material reallocation between orders –Dynamic inventory management –Grouping work orders by “characteristics” –Resource qualification for task completion Manufacturing & Inventory Control

Management Information Systems, 4th Edition 17 Manufacturing & Inventory Control (Cont.)

Management Information Systems, 4th Edition 18 Take customer demand as initial input –Deployment according to the bill of materials (BOM) –Number of product units needed and when they are needed (Main Production Scheduling) Use long-range forecasts to put long-lead material on order Help reduce inventory cost while ensuring availability –EOQ inventory under a specific lead time and a consumption rate Materials Requirement Planning (MRP)

Management Information Systems, 4th Edition 19 Materials Requirement Planning (MRP) (Cont.)

Management Information Systems, 4th Edition 20 Combines MRP with other manufacturing-related activities to plan the manufacturing process such as: –Shop activity control and purchasing –Source of demand –Customer order entry and forecasting MPS (master production scheduling) –Support functions such as financial management, sales analysis, and data collection Manufacturing Resource Planning (MRP II)

Management Information Systems, 4th Edition 21 7-row MRP table (example)

Management Information Systems, 4th Edition 22 The algorithm of MRP Procedure MRP; 單階 BOM 展開 MPS 之 POR t, 加入其子件成為其 GR t LLC  1; While MPS 有未被處理項 Do –While BOM 中 LLC 有任一項未被處理 Do PAB 0  OH-AL+max(SR 0,0); For t=1 to T Do –IF t=1 then POH 1  PAB 0 +SR 1 -GR 1 -max(GR 0,0) »Else POH t  PAB t-1 +SR t -GR t ; –Endif –IF POH t <SS then NR t  SS-POH t, PORCt=max(NR t,LS); »Else NR t  0, PORC t  0; –Endif

Management Information Systems, 4th Edition 23 The algorithm of MRP (cont.) –PAB t  POH t +PORC t ; –POR t-LT  PORC t ; – 單階 BOM 展開之 PORt, 加入其子件之 GRt; Endfor Print the item MRP report –Endwhile; –LLC  LLC+1; Endwhile; Endprocedure;

Management Information Systems, 4th Edition 24 Track, schedule, and control manufacturing processes Collect data such as: –Hours machine operates every day of the month –Hours the machine is idle and why –Optimization, rationalization Manufacturing Execution Systems (MES)

Management Information Systems, 4th Edition 25 Supply chain management (SCM) –Managers know status of product during manufacturing –Recent IS control/adjustment as well as monitor manufacturing process –System at Ford Motor Company designed to ensure no assemble steps are missed Monitoring and Control

Management Information Systems, 4th Edition 26 Market Research –Statistical (data mining) models help market researchers find the best populations for new and existing products Targeted Marketing –Database management systems (DBMS) help define potential customers as narrowly as possible Marketing, Sales, & Customer Service

Management Information Systems, 4th Edition 27 Marketing, Sales, & Customer Service (Cont.)

Management Information Systems, 4th Edition 28 The Internet as a Marketing and Selling Medium –Web lets companies reach more shoppers and serve them better –Mobile Commerce (M-Commerce) is the newest form of marketing Location-based, timely, impulse-purchasing, killing-time info-tainment –Commercial announcements/Internet advertisements pervade the Web Annoying but effective Marketing, Sales, & Customer Service (Cont.)

Management Information Systems, 4th Edition 29 Equipping salespeople with information technology to facilitate productivity –IT allows salespeople to present different options for products and services on the spot –Instantly mobile dispatching Sales Force Automation

Management Information Systems, 4th Edition 30 Customer Relationship Management (CRM) software for companies to better serve and know customer needs –Track past purchase and payments –Update online answers to frequently asked questions (FAQs) –Analyze customer’s contact with company Web-based Customer Service available 24/7/365 Customer Relationship Management

Management Information Systems, 4th Edition 31 Human Resources

Management Information Systems, 4th Edition 32 Human Resources (Cont.) Employee Record Management –Reduce space needed to store records, time to retrieve them, and costs of both Promotion and Recruitment –Search databases for qualified personnel –Use intranet to post job vacancies –Use the Web to recruit

Management Information Systems, 4th Edition 33 Human Resources (Cont.) Training –Multimedia software training is replacing classrooms and teachers –Training software simulates an actual task or situation and includes evaluation tools Evaluation –Evaluation software helps standardize the evaluation process and adds a certain measure of objectivity and consistency (MBO)

Management Information Systems, 4th Edition 34 Human Resources (Cont.) Compensation and Benefits Management –ISs can help manage compensation efficiently and effectively Calculate salaries, hourly pay, commissions, and taxes Automatically generate paychecks or direct deposits –Special software helps manage benefits, such as health insurance, life insurance, retirement plans, and sick and leave days

Management Information Systems, 4th Edition 35 Enterprise Resource Planning (ERP) All business functions served by one system that supports different activities for internal different departments Support the external-oriented material/information flow of supply chain management upward and downward, the series of main and supporting activities from order to delivery

Management Information Systems, 4th Edition 36 Enterprise Resource Planning (ERP) (Cont.)

Management Information Systems, 4th Edition 37 Groupware and Collaborative Work GroupWare lets workers in different locations communicate ideas, brainstorm, and work together as if they were in the same place, esp., the engineering task Document Control –Users can distribute and track electronic documents without working with outdated information –PDM Collaborative Projects –Users can coordinate work on a single document from many different terminals –Collaborative Production Commerce (CPC)

Management Information Systems, 4th Edition 38 Ethical and Societal Issues Privacy? What Privacy? What is Privacy? –One’s right to control information about oneself –Not a constitutional right per se; secured by laws or convention –Increasing number of organizations may access information via better IT hardware and software –Business and civil rights advocates dispute degree of privacy vs. utility of information access

Management Information Systems, 4th Edition 39 Ethical and Societal Issues Privacy? What Privacy? Business Arguments –Necessary to collect basic financial and personal information as cheaply as possible –Consumers benefit eventually from competitive environment augmented by readily available information –Customization possibility

Management Information Systems, 4th Edition 40 Ethical and Societal Issues Privacy? What Privacy? Consumer Arguments –Resent unsolicited mail and telephone calls –Resent being refused credit because of credit bureau mistakes –Frightened by “dossier phenomenon” –Loss of control over information unfair—information gathered for a particular purpose with permission should remain restricted

Management Information Systems, 4th Edition 41 Ethical and Societal Issues Privacy? What Privacy? Seven Commandments of Personal Data Collection and Maintenance –Purpose: Companies should inform people who provide information of specific, exclusive purpose –Relevance: Companies should record and use only data necessary to fulfill their own purposes –Accuracy: Companies should ensure that their data are accurate

Management Information Systems, 4th Edition 42 Ethical and Societal Issues Privacy? What Privacy? –Currency: Companies should make sure that all data about an individual are current –Security: Companies should limit data access to only those who need to know –Time Limitation: Companies should retain data only for the time period necessary –Scrutiny: Companies should establish procedures to let individuals review their records and correct inaccuracies

Management Information Systems, 4th Edition 43 Summary There are various business functions and ISs have a role in these functions ISs relate to each other in basic business functions IT is used in business functions to make business more effective and more efficient ERP systems help run different functions upon a common platform