1. How businesses use information systems (Part 1)
By: Zeeshan A. Bhatti

2. Intro.. Business Processes & MIS
In order to operate, businesses must deal with different pieces of information abt. Suppliers, customers, employees, invoices and payments etc.
Info must be organized
E.g., Student enrollment in University
Business Processes
The manner in which work is organized, coordinated, and focused to produce a valuable product/service
Concrete workflows of material, information, and knowledge – set of activities
Performance of a firm largely depends upon how well the business processes are designed and coordinated
They can be a competitive advantage if they enable it to innovate or execute better than rivals
They can also be liabilities as well if they are based on outdated ways of working

3. Every business is a collection of business processes

4. Example
Process: Manual Customer Order can be complicated – can cross many different functional areas:
Step 1: Sales dept receives sales order
Step 2: Check availability
Step 3: Order passes to accounting to ensure customer can pay: Credit or Immediate payment
Step 4: Production dept. pulls the product from inventory
Step 5: Shipping (Logistics such as UPS or FedEx)
Step 6: Invoice generation and notifying the customer
The process requires a lot Information and this information should be managed

5. How IT enhances Business Performance
Ordering a book from Amazon or ITunes store are completely different models not possible without IT

6. Types of Information Systems
Organizations can have hundreds of different processes
Each process requires different types of systems
No single system can provide all the info. an organization needs
Functional systems that operated independently of each other are obsolete now

7. 1) Transaction Processing Systems (TPS)
TPS provide info about basic activities such as sales, receipts, cash deposits, payroll etc.
A computerized system that performs and records the daily routine transactions to conduct business
Answers questions such as:
How many parts are in inventory?
What happened to Mr. X’s payment?
Operated by the Operation Level staff
Since tasks, resources and goals are predefined and highly structured
E.g., decision to grant credit to a customer is made by lower-level supervisor

8. Ex: A Payroll TPS
Figure 2-2 illustrates a TPS for payroll processing. A payroll system keeps
track of money paid to employees. An employee time sheet with the
employee’s name, social security number, and number of hours worked per
week represents a single transaction for this system. Once this transaction is
input into the system, it updates the system’s master file (or database—see
Chapter 6) that permanently maintains employee information for the organization.
The data in the system are combined in different ways to create reports of
interest to management and government agencies and to send paychecks to
employees.
Managers need TPS to monitor the status of internal operations and the
firm’s relations with the external environment. TPS are also major producers of
information for the other systems and business functions. For example, the
payroll system illustrated in Figure 2-2, along with other accounting TPS, supplies data to the company’s general ledger system, which is responsible for
maintaining records of the firm’s income and expenses and for producing
reports such as income statements and balance sheets. It also supplies
employee payment history data for insurance, pension, and other benefits calculations
to the firm’s human resources function and employee payment data
to government agencies such as the U.S. Internal Revenue Service and Social
Security Administration.
Transaction processing systems are often so central to a business that TPS
failure for a few hours can lead to a firm’s demise and perhaps that of other
firms linked to it. Imagine what would happen to UPS if its package tracking
system were not working! What would the airlines do without their computerized
reservation systems?

9. 2) Business Intelligence Systems for Decision Support
Middle mgmt needs systems to help with monitoring, controlling, decision-making & administrative tasks
MIS provide middle managers with reports on organization’s current performance
MIS summarize and report on the company’s operations using data supplied by TPS
Basic data from TPS are compressed and usually represented in the form of reports on regular basis

11. Decision Support Systems support non-routine decision making for middle management
Focus on problems that are unique and rapidly changing
E.g., What would be the impact on production schedules if we were to double the sales in the month of December?
Inventory DSS
Example of an online Decision Support System (For Car Purchase)

12. Executive Support Systems (ESS)
Designed for senior management to make decisions
Non routine decisions requiring judgment, evaluation and insight because there is no agreed-on procedure for arriving at a solution
E.g., CEO of Leiner Health products has an ESS that provides a minute-to-minute update of its firm’s financial performance in the stock market, inventory, A/Cs receivables etc.
Executive Dashboard Systems