HUANG Lihua, Fudan University Session 3 Understanding IS from Business Perspective PART I Foundations of Information Systems in Business

HUANG Lihua, Fudan University Feb., - July., 2006 Challenge Faced by FORD Management in 1985 How to do cost saving How to do downsizing How to increase profitability by downsizing Case study ：

HUANG Lihua, Fudan University Feb., - July., 2006 FORD change in Procurement Process 1 ） Old business process Purchasing When purchasing department wrote a purchase order, it sent a copy to accounts payables. Vendor The vendor sent an invoice to accounts payables when they delivered goods. Receiving When material control received the goods, it sent a copy of the receiving document. Account Payables Thus, the account payables received three documents from various senders ： Purchasing order, invoice and receiving document. It was up to account payables to match the purchasing against the receiving document and the invoice. If they matched, the department issued payment. Otherwise, an accounts payable clerk would investigate the discrepancy, hold up payment, generate documents and all in all gum up the works.

HUANG Lihua, Fudan University Feb., - July., 2006 What is the solution to increase profitability by downsizing? Case study ： FORD change in Procurement Process

HUANG Lihua, Fudan University Feb., - July., ） Business process IS enabled Purchasing Receiving Goods IS （ 1 ） When the purchasing department initiates an order, it enters the information into an information system ； （1）（1） （2）（2） （ 2 ） When the goods arrive at the receiving dock,the clerk checks the DB to see if they correspond to an outstanding purchase order. If so, he or she accepts them and enters the transaction into the computer system. If receiving can’t find an entry for the received goods, it simply returns the goods 。 FORD change in Procurement Process The account payables dept. pay according to the rule. (3)

HUANG Lihua, Fudan University Feb., - July., ） effectiveness after use of information system After Ford instituted this new process, since there are no discrepancies between the financial record and the physical record, material control is simpler and financial information is more accurate. Ford has achieve a 75% reduction in head count (from more than 400 to 125 head counts). FORD change in Procurement Process

HUANG Lihua, Fudan University Feb., - July., 2006 FORD change in Procurement Process Question? What function is the information system? What solution to organizational and management in implementation such information system?

HUANG Lihua, Fudan University Feb., - July., 2006 Wrap-up from cases Understanding of Information Systems ： –An Information System is an organizational and management solution, based on information technology, to a challenge posed by the environment.

HUANG Lihua, Fudan University Feb., - July., 2006 Information Systems Business Processes Information Processing Activities Business Value Management Activities Supply Chain Management Enterprise Management Customer Management Knowledge Management Data Collection and Storage Transformation Into Business Systems Dissemination PlanningCoordinatingControlling Modeling and DecisionMaking Firm Profitability and Strategic Position

HUANG Lihua, Fudan University Feb., - July., 2006 Information Systems: From Business Perspective ORGANIZA- TIONS TECHNOLOGY MANAGEMENT INFORMATION SYSTEMS SYSTEMS An Information System is an organizational and management solution, based on information technology, to a challenge posed by the environment.

HUANG Lihua, Fudan University Feb., - July., 2006 ORGANIZATIONS PEOPLE: Managers, knowledge workers, data workers, production or service workers STRUCTURE: Organization chart, groups of specialists, products, geography *

HUANG Lihua, Fudan University Feb., - July., 2006 ORGANIZATIONS OPERATING PROCEDURES: Standard Operating Procedures (SOP), rules for action POLITICS: Power to persuade, get things done CULTURE: Behavior of staff, employee *

HUANG Lihua, Fudan University Feb., - July., 2006 MAJOR BUSINESS FUNCTIONS SALES & MARKETING MANUFACTURING FINANCE ACCOUNTING HUMAN RESOURCES …… *

HUANG Lihua, Fudan University Feb., - July., 2006 COMPUTER TECHNOLOGY HARDWARE SOFTWARE DATA STORAGE COMMUNICATIONS NETWORKS *

HUANG Lihua, Fudan University Feb., - July., 2006 SOCIOTECHNICAL PERSPECTIVE OPTIMIZE SYSTEM PERFORMANCE: Technology & Organization Mutually Adjust to One Another Until Fit Is Satisfactory * SOURCE: Liker, et al, 1987

HUANG Lihua, Fudan University Feb., - July., 2006 SYSTEM INTERDEPENDENCE BUSINESS Strategy Strategy Rules Rules Procedures Procedures ORGANIZATION INFORMATION SYSTEM HARDWARE SOFTWAREDATABASE TELE- COMMUNICATIONS INTERDEPENDENCE

HUANG Lihua, Fudan University Feb., - July., 2006 Learning from Cisco

HUANG Lihua, Fudan University Feb., - July., 2006 IS Application in Cisco ERP: Enterprise Resource Planning SCM: Supply Chain Management CRM: Customer Relationship Management E-Business/e-Commerce EIS/DSS ………

HUANG Lihua, Fudan University Feb., - July., 2006 Company Boundary IS App. Framework in Business Manufacturing, Production, Operation Supply Chain Management: Procurement, Distribution, and Logistics Customer Relationship Management: Marketing, Sale, and Customer service Accounting & Finance Engineering and Research Consumer and Business Customers Suppliers and Other Business Partners Intranet The Internet Extranet

HUANG Lihua, Fudan University Feb., - July., 2006 Company Boundary IS App. Framework in Business Manufacturing, Production, Operation Supply Chain Management: Procurement, Distribution, and Logistics Customer Relationship Management: Marketing, Sale, and Customer service Accounting & Finance Engineering and Research Consumer and Business Customers Suppliers and Other Business Partners Intranet The Internet Extranet ERP Purchase Order Sell Order

HUANG Lihua, Fudan University Feb., - July., 2006 Wrap Up Re-conceptualizing IS from Business Perspective IS Application Framework in Business

HUANG Lihua, Fudan University Feb., - July., 2006 Assignment for Session 3 Individual Assignment and submit –Please suggest to Mr. Wang which IS application will be adopted by his company in coming future? Preparation for session 4 –Reading Materials Textbook: chapter 2 –Group Case study: Moen, Incorporated. (P51) Preparing the case study questions on P.51