9/5: Ch. 2 Strategic Role of IS Key system applications in organizations Strategic role of information systems How information systems promote quality

Key System Apps in Orgs: Groups Strategic Level: Senior Managers Management Level: Middle Managers Knowledge Level: Knowledge & Data Workers Operational Level: Operational Managers Sales & Manufacturing Finance Accounting Human Marketing Resources

Operational Level Strategic Level: Senior Managers Management Level: Middle Managers Knowledge Level: Knowledge & Data Workers Operational Level: Operational Managers Sales & Manufacturing Finance Accounting Human Marketing Resources

Knowledge Level Strategic Level: Senior Managers Management Level: Middle Managers Knowledge Level: Knowledge & Data Workers Operational Level: Operational Managers Sales & Manufacturing Finance Accounting Human Marketing Resources

Management Level Strategic Level: Senior Managers Management Level: Middle Managers Knowledge Level: Knowledge & Data Workers Operational Level: Operational Managers Sales & Manufacturing Finance Accounting Human Marketing Resources

Strategic Level Strategic Level: Senior Managers Management Level: Middle Managers Knowledge Level: Knowledge & Data Workers Operational Level: Operational Managers Sales & Manufacturing Finance Accounting Human Marketing Resources

Six Major Types of Systems ESS: Executive Support System MIS: Management Information System DSS: Decision Support System KWS: Knowledge Work Systems OAS: Office Automation Systems TPS: Transaction Processing Systems

Sales & Manufacturing Finance Accounting Human Marketing Resources Major Types of Systems: TPS Transaction Processing Systems Processing routine activities of the organization –Hotel reservations –Grade submissions –Employee records

Sales & Manufacturing Finance Accounting Human Marketing Resources Transaction Processing Systems Operational Level –Sales: order processing & tracking –Manufacturing: machine control, inventory control –Finance: securities trading, cash management –Accounting: payroll, A/R, A/P –Human Resources: compensation, employee records

Sales & Manufacturing Finance Accounting Human Marketing Resources Major Types of Systems: OAS Office Automation Systems Knowledge Level –Scheduling meetings –Desktop publishing –Document imaging systems –Presentation graphics development

Sales & Manufacturing Finance Accounting Human Marketing Resources Major Types of Systems: KWS Knowledge Work Systems Knowledge Level –CAD: Computer Aided Design –Modeling –Graphics development

Sales & Manufacturing Finance Accounting Human Marketing Resources Major Types of Systems: MIS Management Information Systems Provides reports Provides access to current performance Aids planning, controlling, & decision making Usually inflexible, predefined reports

Sales & Manufacturing Finance Accounting Human Marketing Resources Management Information Systems Management Level –Sales & Marketing: Sales management, region analysis –Manufacturing: Long-range inventory control & planning, production scheduling –Finance & Accounting: budgeting, capital investment analysis, profitibility analysis –Human Resources: relocation analysis, contract cost analysis

Sales & Manufacturing Finance Accounting Human Marketing Resources Major Types of Systems: DSS Decision Support Systems Combine data & modeling tools to aid non- routine decision-making Interactive, flexible “What if” analysis

Sales & Manufacturing Finance Accounting Human Marketing Resources Major Types of Systems: ESS Executive Support Systems Incorporates external data with internal data Creates projections Designed to help answer questions like, “What business should we be in? Which business units should we sell off?” Strategic Level

How the systems relate to each other ESS DSSMIS TPSKWS & OAS

Key System Apps in Orgs: Functions Strategic Level: Senior Managers Management Level: Middle Managers Knowledge Level: Knowledge & Data Workers Operational Level: Operational Managers Sales & Manufacturing Finance Accounting Human Marketing Resources

Systems in Sales & Marketing Sales & Manufacturing Finance Accounting Human Marketing Resources Sales trend forecasting Pricing analysis Market analysis Order processing

Systems in Manufacturing Sales & Manufacturing Finance Accounting Human Marketing Resources Facilities Location Planning Production Planning CAD Machine Control

Systems in Finance & Accounting Sales & Manufacturing Finance Accounting Human Marketing Resources Profit Planning Budgeting Portfolio Analysis Accounts Receivable

Systems in Human Resources Sales & Manufacturing Finance Accounting Human Marketing Resources Human Resources Planning Compensation Analysis Designing Career Paths Tracking Training & Development

Strategic Role of IS What makes an IS strategic? –An IS is strategic if it changes goals, operations, products, services, or environmental relationships to help the organization gain a competitive advantage. –A strategic IS keeps an organization ahead of the competition.

4 Paths to Competitive Advantage Product differentiation Focused differentiation Linking tightly to suppliers & customers Becoming the low-cost producer

Product Differentiation Creating new products that are not easily duplicated by others Citibank created ATMs

Focused Differentiation Developing new market niches for specialized products Datamining can aid here –Analysis of large amounts of data to find patterns and rules that can predict future behavior.

Linking to Customers & Suppliers Providing greater service to customers Integrating inventory management practices with suppliers Lower costs, increase loyalty

Becoming the Low-Cost Producer Lower internal costs Reduce inventories Walmart

How IS Promote Quality Definition of quality: conformance to producer specifications and customer satisfaction. Information Systems contribute to TQM –TQM: Total Quality Management The entire organization is responsible for quality

How IS contribute to TQM Simplifying the product & the process Benchmarking Using customer demands to improve products Reducing cycle time Improving quality & precision of the design Increasing precision of production.

Next Time Chapter 3 pg Information Systems, Organizations, and Management