Types of Information Systems

2 Major Types of Systems Executive Support Systems (ESS)Executive Support Systems (ESS) Decision Support Systems (DSS)Decision Support Systems (DSS) Management Information Systems (MIS)Management Information Systems (MIS) Knowledge Work Systems (KWS)Knowledge Work Systems (KWS) Office Automation Systems (OAS)Office Automation Systems (OAS) Transaction Processing Systems (TPS)Transaction Processing Systems (TPS)

3 Fig 2-2: The six major types of information systems.

4 Fig 2-4: Typical applications of 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 Fig. 2-4 See Fig. 2-4 ( p.43 )

6 TPS – Transaction Processing Systems Manufacturing  Plant scheduling  Material movement control  Machine control Finance  Securities trading  Cash management 2.1

7 Accounting  Payroll  Account payable  Account receivable Human Resources  Compensation  Training & development  Employee record keeping TPS – Transaction Processing Systems 2.1

8 Fig 2-3: A symbolic representation for a payroll TPS. Payroll TPS 2.1 ◆

9 Information systems that aid knowledge workers in the creation and integration of new knowledge in the organization. KWS – knowledge work systems Six Major Types of Systems Six Major Types of Systems 2.1 Example: Engineering work station

10 OAS – office automation systems Computer systems, such as word processing, electronic mail systems, and scheduling systems, that are designed to increase the productivity of data workers in the office. Six Major Types of Systems Six Major Types of Systems 2.1

11 Information systems at the management level of organization that serve the functions of planning, controlling, and decision making by providing routine summary and exception reports. MIS – Management Information Systems Six Major Types of Systems Six Major Types of Systems 2.1 Example: Annual budgeting

12 Structured and semi-structured decisions Structured and semi-structured decisions Report control oriented Report control oriented Past and present data Past and present data Internal orientation Internal orientation MIS 2.1

13 TPS DATA FOR MIS APPLICATIONS Fig 2-5: How management information systems obtain their data the from the organization’s TPS.

14 Information systems at the management level of an organization that combine data and sophisticated analytical models to support non- routine decision making. DSS – Decision Support Systems Six Major Types of Systems Six Major Types of Systems 2.1 Example: Contract cost analysis

15 Fig 2-7: Voyage estimating decision-support system. Decision Support System (DSS) ◆

16 Sales and marketing  Sales management  Sales region analysis Manufacturing  Inventory control  Production scheduling MIS & DSS 2.1

17 Finance  Annual budgeting  Cost analysis Accounting  Capital investment analysis  Pricing / profitability analysis Human Resource  Relocation analysis  Contract cost analysis MIS & DSS 2.1

18 Information system at the organization’s strategic level designed to address unstructured decision making through advanced graphics and communications. ESS – Executive Support Systems Six Major Types of Systems Six Major Types of Systems 2.1 Example: 5-year operating plan

19 Top level management Top level management Designed to the individual Designed to the individual Ties CEO to all levels Ties CEO to all levels Very expensive to keep up Very expensive to keep up Extensive support staff Extensive support staff ESS 2.1

20 Fig 2-8: Model of a typical executive support system. Executive Support System (ESS) Figure 2-8

21 Sales and marketing  Sales trend forecasting Manufacturing  Operating plan Finance  Budget forecasting Accounting  Profit planning Human Resource  Personnel planning ESS 2.1

22 Characteristics of Different Types of Information Systems Information inputs Processing Information outputs Users Table 2-1 See Table 2-1 ( p.41 ) 2.1

23 Fig 2-9: Interrelationships among systems 2.2 Systems from a Functional Perspective

24 SALES & MARKETING SYSTEMS MANUFACTURING & PRODUCTION SYSTEMS FINANCE & ACCOUNTING SYSTEMS HUMAN RESOURCES SYSTEMS 2.2 Systems from a Functional Perspective

Systems from a Functional Perspective Major functions of systems: Sales management, market research, promotion, pricing, new products Sales management, market research, promotion, pricing, new products Major application systems: Sales order info system, market research system, pricing system Sales order info system, market research system, pricing system Sales and Marketing Systems

26 Sales and Marketing Systems

Systems from a Functional Perspective Major functions of systems: Scheduling, purchasing, shipping, receiving, engineering, operations Scheduling, purchasing, shipping, receiving, engineering, operations Major application systems: Materials resource planning systems, purchase order control systems, engineering systems, quality control systems Materials resource planning systems, purchase order control systems, engineering systems, quality control systems Manufacturing and Production Systems

28 Manufacturing and Production Systems

Systems from a Functional Perspective Major functions of systems: Budgeting, general ledger, billing, cost accounting Budgeting, general ledger, billing, cost accounting Major application systems: General ledger, accounts receivable, accounts payable, budgeting, funds management systems General ledger, accounts receivable, accounts payable, budgeting, funds management systems Financing and Accounting Systems

30 Financing and Accounting Systems

Systems from a Functional Perspective Major functions of systems: Personnel records, benefits, compensation, labor relations, training Personnel records, benefits, compensation, labor relations, training Major application systems: Payroll, employee records, benefit systems, career path systems, personnel training systems Payroll, employee records, benefit systems, career path systems, personnel training systems Human Resource Systems

32 Human Resource Systems

33 Business processes Manner in which work is organized, coordinated, and focused to produce a valuable product or service Manner in which work is organized, coordinated, and focused to produce a valuable product or service Concrete work flows of material, information, and knowledge— sets of activities Concrete work flows of material, information, and knowledge— sets of activities Unique ways to coordinate work, information, and knowledge Unique ways to coordinate work, information, and knowledge Ways in which management chooses to coordinate work Ways in which management chooses to coordinate work 2.3 Business Processes and Information Systems

34 Cross-Functional Business Processes 2.3 Business Processes and Information Systems Fig The Order Fulfillment Process

35 Information systems help organizations Achieve great efficiencies by automating parts of processes Achieve great efficiencies by automating parts of processes Rethink and streamline processes Rethink and streamline processes 2.3 Business Processes and Information Systems

INTRODUCTION But what is a process and how does it tie into information systems? And in what ways do processes have a role in business? We have all heard the term process before, but what exactly does it mean? A process is a series of tasks that are completed in order to accomplish a goal. A business process, therefore, is a process that is focused on achieving a goal for a business. If you have worked in a business setting, you have participated in a business process. Anything from a simple process for making a sandwich at Subway to building a space shuttle utilizes one or more business processes.

Every day, each of us will conduct many processes without even thinking about them: getting ready for work, using an ATM, reading our , etc. But as processes grow more complex, they need to be documented. For businesses, it is essential to do this, because it allows them to ensure control over how activities are undertaken in their organization. It also allows for standardization: McDonald’s has the same process for building a Big Mac in all of its restaurants. The processes when mapped with a singular database is called an ERP enterprise resource management.

With a centralized database: All data in an ERP system is stored in a single, central database. This centralization is key to the success of an ERP – data entered in one part of the company can be immediately available to other parts of the company. A software application: The system is a software application, which means that it has been developed with specific logic and rules behind it. It has to be installed and configured to work specifically for an individual organization. That can be used to run an entire company: An ERP can be used to manage an entire organization’s operations. If they so wish, companies can purchase modules for an ERP that represent different functions within the organization, such as finance, manufacturing, and sales. Some companies choose to purchase many modules, others choose a subset of the modules.

When an ERP vendor designs a module, it has to implement the rules for the associated business processes. A selling point of an ERP system is that it has best practices built right into it. In other words, when an organization implements an ERP, it also gets improved best practices as part of the deal! BPM is more than just automating some simple steps. While automation can make a business more efficient, it cannot be used to provide a competitive advantage. BPM, on the other hand, can be an integral part of creating that advantage.

If done properly, business process management will provide several key benefits to an organization, which can be used to contribute to competitive advantage. These benefits include: 1)Empowering employees. When a business process is designed correctly and supported with information technology, employees will be able to implement it on their own authority. In our returns-policy example, an employee would be able to accept returns made before fourteen days or use the system to make determinations on what returns would be allowed after fourteen days. 2)Built-in reporting. By building measurement into the programming, the organization can keep up to date on key metrics regarding their processes. In our example, these can be used to improve the returns process and also, ideally, to reduce returns. 3)Enforcing best practices. As an organization implements processes supported by information systems, it can work to implement the best practices for that class of business process. In our example, the organization may want to require that all customers returning a product without a receipt show a legal ID. This requirement can be built into the system so that the return will not be processed unless a valid ID number is entered. 4)Enforcing consistency. By creating a process and enforcing it with information technology, it is possible to create a consistency across the entire organization. In our example, all stores in the retail chain can enforce the same returns policy. And if the returns policy changes, the change can be instantly enforced across the entire chain.

42 Customer Relationship Management (CRM) Manages all ways used by firms to deal withexisting and potential new customers Uses information system to coordinate entire business processes of a firm Provides end-to-end customer care Provides a unified view of customer across the company Consolidates customer data from multiple sources and provides analytical tools for answering questions 2.3 Business Processes and Information Systems

Business Processes and Information Systems Customer Relationship Management (CRM) Figure 2-13

Business Processes and Information Systems Supply Chain Management (SCM) Close linkage and coordination of activities involved in buying, making, and moving a product Integrates supplier, manufacturer, distributor, and customer, logistics, time Reduces time, redundant effort, and inventory costs Network of organizations and business processes Helps in procurement of materials, transformation of raw materials into finished products Helps 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

Business Processes and Information Systems Supply Chain Management Figure 2-14