1 Lecture-2- Introduction to Management Information Systems Thepul Ginige

MANAGEMENT CHALLENGES Key system applications Functional perspective of systems Integrating functions & processes 2

MANAGEMENT CHALLENGES 1. INTEGRATION: Different systems serve variety of functions, connecting organizational levels difficult, costly 2. ENLARGING SCOPE OF MANAGEMENT THINKING: Huge system investments, long development time must be guided by common objectives 3

4 TYPES OF INFORMATION SYSTEMS DATA WORKERS KIND OF SYSTEM GROUPS SERVED STRATEGIC LEVEL SENIOR MANAGERS STRATEGIC LEVEL SENIOR MANAGERS MANAGEMENT LEVEL MIDDLE MANAGERS OPERATIONAL OPERATIONAL LEVEL MANAGERS OPERATIONAL OPERATIONAL LEVEL MANAGERS KNOWLEDGE LEVEL KNOWLEDGE & SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN RESOURCESMARKETING

MAJOR TYPES OF SYSTEMS 1.EXECUTIVE SUPPORT SYSTEMS (ESS) 2.DECISION SUPPORT SYSTEMS (DSS) 3.MANAGEMENT INFORMATION SYSTEMS (MIS) 4.KNOWLEDGE WORK SYSTEMS (KWS) 5.OFFICE AUTOMATION SYSTEMS (OAS) 6.TRANSACTION PROCESSING SYSTEMS (TPS) 5

TYPICAL TPS APPLICATIONS Sales & 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 6

TYPICAL TPS APPLICATIONS Manufacturing & 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 7

TYPICAL TPS APPLICATIONS Finance & Accounting Systems MAJOR FUNCTIONS OF SYSTEMS: Budgeting, general ledger, billing, cost accounting MAJOR APPLICATION SYSTEMS: General ledger, accounts receivable, accounts payable, budgeting, funds management systems 8

TYPICAL TPS APPLICATIONS Human Resources Systems MAJOR FUNCTIONS OF SYSTEMS: Personnel records, benefits, compensation, labor relations, training MAJOR APPLICATION SYSTEMS: Payroll, employee records, benefit systems, career path systems, personnel training systems 9

TYPICAL TPS APPLICATIONS Other Types (e.g., University) MAJOR FUNCTIONS OF SYSTEMS: Admissions, grade records, course records, alumni MAJOR APPLICATION SYSTEMS: Registration system, student transcript system, curriculum class control system, alumni benefactor system 10

OFFICE AUTOMATION SYSTEMS (OAS) Toward a “paperless” office Redesign of work flow Integrated software Ergonomic design Bright, cheerful work space EXAMPLE: PRESENTATION GRAPHICS 11

KNOWLEDGE WORK SYSTEMS (KWS) KNOWLEDGE LEVEL INPUTS: DESIGN SPECS PROCESSING: MODELLING OUTPUTS: DESIGNS, GRAPHICS USERS: TECHNICAL STAFF EXAMPLE: ENGINEERING WORK STATION 12

MANAGEMENT INFORMATION SYSTEMS (MIS) MANAGEMENT LEVEL INPUTS: HIGH VOLUME DATA PROCESSING: SIMPLE MODELS OUTPUTS: SUMMARY REPORTS USERS: MIDDLE MANAGERS EXAMPLE: ANNUAL BUDGETING 13

MANAGEMENT INFORMATION SYSTEMS (MIS) Structured & semi-structured decisions Report control oriented Past & present data Internal orientation Lengthy design process 14

15 MIS MIS FILES SALES DATA UNIT PRODUCT COST PRODUCT CHANGE DATA EXPENSE DATA MIS REPORTS MANAGERS TPS Order Processing System Materials Resource Planning System General Ledger System ORDER FILE PRODUCTION MASTER FILE ACCOUNTING FILES TPS DATA FOR MIS APPLICATIONS

DECISION SUPPORT SYSTEMS (DSS) MANAGEMENT LEVEL Inputs: low volume data Processing: interactive Outputs: decision analysis Users: professionals, staff EXAMPLE: CONTRACT COST ANALYSIS 16

DECISION SUPPORT SYSTEMS (DSS) Flexible, adaptable, quick User controls inputs/outputs No professional programming Supports decision process Sophisticated modeling tools 17

EXECUTIVE SUPPORT SYSTEMS (ESS) STRATEGIC LEVEL Inputs: aggregate data Processing: interactive Outputs: projections Users: senior managers EXAMPLE: 5 YEAR OPERATING PLAN 18

EXECUTIVE SUPPORT SYSTEMS (ESS) Top level management Designed to the individual Ties CEO to all levels Very expensive to keep up Extensive support staff 19

INTERRELATIONSHIPS AMONG SYSTEMS 20 ESS TPS KWS OAS DSSMIS

SUPPLY-CHAIN MANAGEMENT 21 SHIPPINGINVENTORY PLANNING & FORECASTING ORDER PROCESSING PRODUCTION PROCUREMENT ACCOUNTING SUPPLIERSCUSTOMERS LOGISTICS SERVICES DISTRIBUTORS INTRANET INTRANET

Supply Chain Management 22 Supply chain management is the streamlining of a business' supply-side activities to maximize customer value and to gain a competitive advantage in the marketplace. Supply chain management (SCM) represents an effort by suppliers to develop and implement supply chains that are as efficient and economical as possible.

HOW INFORMATION SYSTEMS FACILITATES SUPPLY CHAIN MANAGEMENT 23 Decide when, what to produce, store, move… rapidly communicate orders, track order status, check inventory availability, monitor levels, track shipments, plan production based on actual demand…rapidly communicate product design changes…provide product specifications…share information about defect rates, returns...

TRADITIONALVIEW OF SYSTEMS WITHIN THE BUSINESS: There are functions, each having its uses of information systems OUTSIDE THE ORGANIZATION’S BOUNDARIES: There are customers and vendors FUNCTIONS TEND TO WORK IN ISOLATION 24

BENEFITS OF ENTERPRISE SYSTEMS FIRM STRUCTURE & ORGANIZATION: One organization MANAGEMENT: Firm wide knowledge- based management processes TECHNOLOGY: Unified platform BUSINESS: More efficient operations & customer-driven business processes 25

CHALLENGES OF ENTERPRISE SYSTEMS Daunting implementation High up front costs & future benefits Inflexibility Hard to realize strategic value 26

INDUSTRIAL NETWORKS LINK FIRMS INTO INDUSTRY-WIDE SYSTEM HORIZONTAL: Link firms in same industry, including competitors VERTICAL: Link firm with suppliers in same industry 27

Enterprise Resource Planning systems Enterprise Resource Planning systems(ERP) are software systems for businesses management encompassing modules supporting functional areas such as Manufacturing, Accounting, Finance, Sales & Marketing, Human Resource, ect. 28

ENTERPRISE SYSTEM 29 Sales & Marketing Accounting Finance Manufacturing Human Resources Business Processes Enterprise-wide Business Processes VendorsCustomers

ERP system contd.. ERP is a commodity -- product in the form of software SAP, Oracle Applications, PeopleSoft, JD Edwards, Greatplains etc. are world’s leading ERP packages The market leader is “SAP” 30

Features of an ERP system Architecture of ERP system facilitates transparent integration of modules providing flow of information between all function within enterprise in real time. Many different software are replaced by one integrated system. Reliable information access through common DBMS Eliminates data and operational redundancies (no duplication of work or data entries etc.) 31

Features of an ERP system contd.. Cost reduction through time saving, improved control by organizational wise analysis of organizational decisions. Delivery and cycle time reduction Scalable systems Global outreach through extended modules such as CRM or SCM, E-Business Providing business solutions in support of core processes Process-oriented view cutting across functions of an enterprise Huge potential for customizing 32

Business and Technical Benefits Automation of business transactions Flexibility in changing the system catering to newer business processes. Coordination across business functions Coordination across geographical distances resulting in better Managerial control Consistent information and interface thus easier to understand and work in Single system 33

Prime Reasons for Implementing ERP Need for common platform Process improvement. Data visibility that could be used to improve operating decisions. Operation cost reductions. Increased customer responsiveness. Improved strategic decision making Personal Improvement 34

Knowledge Management Knowledge management is the process of capturing, distributing, and effectively using knowledge. So it’s a discipline that promotes an integrated approach to identifying, capturing, evaluating, retrieving, and sharing all of an enterprise's information assets. These assets may include databases, documents, policies, procedures, and previously un-captured expertise and experience in individual workers. 35

Customer Relationship Management (CRM) Customer relationship management (CRM) refers to the practices, strategies and technologies that companies use to manage, record and evaluate customer interactions in order to drive sales growth by deepening and enriching relationships with their customer bases. 36

The CRM Strategy The CRM strategy allows you to following: Understand the customer Retain customers through better customer experience Attract new customers Win new clients and contracts Increase profitably Decrease customer management costs 37

The Impact of Technology on CRM Technology and the Internet have changed the way companies approach customer relationship strategies. Advances in technology have changed consumer buying behavior, and today there are many ways for companies to communicate with customers and to collect data about them. With each new advance in technology — especially the proliferation of self-service channels like the Web and smartphones — customer relationships are being managed electronically.Web 38

The Benefits of CRM The biggest benefit most businesses realize when moving to a CRM system comes directly from having all your business data stored and accessed from a single location. Before CRM systems, customer data was spread out over office productivity suite documents, systems, mobile phone data and even paper note cards and Rolodex entries 39

Storing all the data from all departments (e.g., sales, marketing, customer service and HR) in a central location gives management and employees immediate access to the most recent data when they need it. Departments can collaborate with ease, and CRM systems help organization to develop efficient automated processes to improve business processes. 40

Other benefits include a 360-degree view of all customer information, knowledge of what customers and the general market want, and integration with your existing applications to consolidate all business information. 41