2.1 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu 2 Chapter Information Systems in the Enterprise Enterprise Information Systems in the Enterprise Enterprise

2.2 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Challenge: monthly changes in fashions, hard to predict what will sell, how much, in which shop; Mango has 731 stores in 72 countries. Customer preferences change a lot from one shop to another. Solutions. Inventory replenishment system can tell not only how much of a product is sold in total but also how much in each store. Design teams meet weekly to adjust designs to sales trends. Distribution system items are bar-coded and sent to specific stores in specific amounts depending on monthly demand forecast. Reduces time to market, increases responsiveness, reduces shelf- time, end-of season sales, and unsold goods. Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Mango Case: Fast Fashion, Hot Systems

2.3 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS 1.Transaction Processing Systems (are operational-level systems, data input is sorted and categorized) support operational managers, keeping track of the elementary activities and transactions, e.g. At what day and time will the express package sent by Mehmet Islamoglu (TRNC) be delivered to Emre Islamoglu (Cambridge, UK)? or Mango sales is recorded as data input into Mango TPS which categorizes them by product, shop, date, colour, customer type, etc.

2.4 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS 2.Management Information Systems and 3.Decision Support Systems (are management-level systems, categorized data is taken from TPS and summary reports (daily, weekly, monthly) are prepared by MIS, this internal data is then enriched with external data in DSS to help managers make decisions): serve the monitoring, controlling, decision-making, and administrative activities e.g. How many packages did we deliver late, to what addresses, how late, (internal data) why? What can we do to improve delivery reliability ? (internal and external data)

2.5 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS In case of Mango, MIS system will take categorized data from TPS system (e.g. sales according to shop, sales according to product, sales according to dates, sales according to customer type) and will produce summary reports from these e.g. a bar chart showing sales of each shop for all shops in a given country. DSS also gathers external info on competitors, gift seasons, weather, etc. for each week, month etc.

2.6 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS 4.Executive Support Systems (are strategic-level systems): help senior management tackle and address strategic issues, e.g. in the next 5 to 10 years, how much shall we increase our express package delivery capacity and in which cities and countries ? In case of Mango, data from MIS and DSS systems are input to the ESS system to give information to top executives such as changes in income levels of various age groups over the past decade compared with how much of these customers come to Mango versus competitors

2.7 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Relationship of Systems to One Another Figure 2-9

2.8 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS The Four Major Types of Information Systems Figure 2-2

2.9 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Transaction Processing Systems (TPS) A computerized system that performs and records the daily routine transactions necessary to serve the operational decisions and enquiries

2.10 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Typical Applications of TPS Figure 2-4

2.11 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Management Information Systems (MIS) Management level Inputs: High volume categorized data from TPS Outputs: Summary reports Users: Middle managers Example: Weekly or monthly sales reports

2.12 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Management Information Systems (MIS) (continued) Figure 2-6 A sample MIS report

2.13 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Decision-Support Systems (DSS) Management level Inputs: internal categorized data from TPS and MIS and external data from various sources Outputs: Decision analysis, What-if scenarios Users: Middle managers Example:

2.14 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS EXECUTIVE SUPPORT SYSTEMS (ESS): Inputs: Aggregate (i.e. summary) data from DSS and MIS Outputs: Projections, forecasts Users: Senior managers Example: 5 year operating plan

2.15 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS So far, we learned that there are four major types of information systems in an orgn, TPS, MIS, DSS, ESS. Now, we shall look at how each department uses information systems. These departments are  Sales and Marketing  Manufacturing and Production  Financing and Accounting  Human Resources Each department have their own TPS, MIS, DSS. There is only one ESS.

2.16 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Sales and Marketing Information Systems Help in: Sales management, market research, promotion, pricing, new products

2.17 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Sales and Marketing Information 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

2.18 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Manufacturing and Production Information Systems Help in: Materials resource planning (MRP) (i.e. purchasing, shipping, receiving all coordinated with production), and quality control.

2.19 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE SYSTEMDESCRIPTIONORGANIZATIONAL LEVEL Machine control Control the actions of machines and equipment (robotics) Operational Production planning Decide when and how many products should be produced (marginal cost etc) Management Facilities location Decide where to locate new production facilities (near suppliers or customers? Strategic Manufacturing and Production Information Systems

2.20 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Financing and Accounting Information 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

2.21 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise 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

2.22 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise 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

2.23 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise 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

2.24 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Traditional information systems architecture, i.e. when each department have their own information systems, makes it very difficult for departments to coordinate activities because they cannot see each others’ data. Example: Ordering a product Looks simple, but is it ? INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.25 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise The Order Fulfillment Process Figure 2-12 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.26 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Enterprise Systems Enterprise systems, also known as enterprise resource planning (ERP) systems, provide a single information system for the whole of the organization (one TPS, one MIS, one DSS).Enterprise systems, also known as enterprise resource planning (ERP) systems, provide a single information system for the whole of the organization (one TPS, one MIS, one DSS). Each functional department (accounting, marketing, production, human resources) now has all the data about everything, instead of having just data about their own activities from their own TPS, MIS, and DSS. Saves time and effort, no need to wait for data (soft or hard copies) from other departments.Each functional department (accounting, marketing, production, human resources) now has all the data about everything, instead of having just data about their own activities from their own TPS, MIS, and DSS. Saves time and effort, no need to wait for data (soft or hard copies) from other departments. INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.27 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Enterprise Application Architecture Figure 2-13 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.28 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS An ERP system provides many advantages Did he pay the deposit? Call accounting Inventory employee can see whether payment has been made before allowing shipment of a product, No need to request printouts from accounting dept. How much do they want us to produce?Call production Production planning can be done easily since sales data (which previously only marketing department had) can be seen by production department too. Mr.Ali is asking when his order will be delivered A salesperson can give a customer a realible promise about when the production department will complete manufacturing his/her product.

2.29 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise ERP helps Supply Chain Management (SCM)  in procurement of materials, transformation of raw materials into intermediate and finished products  in distribution of the finished products to customers  Includes reverse logistics - returned items flow in the reverse direction from the buyer back to the seller INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.30 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise ERP helps Supply Chain Management (SCM) Managers working in SCM use ERP systems to Decide when and what to produce, store, and move (plan production based on actual customer demand and if necessary rapidly communicate changes in product design to suppliers)  Rapidly communicate orders and plan transport to reduce costs  Track the status of orders and other shipments  Check inventory availability and monitor inventory levels to reduce inventory costs INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications

2.31 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise ERP helps Customer Relationship Management (CRM) Managers working in CRM use ERP systems to  To share customer data (who he is, what he wants, what has been done to serve him, what still needs to be done for him) with all departments.  To bring together and analyse data from all departments to get a better picture of the customer and how to serve him/her better. INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications