1. Global E-Business: How Businesses Use Information Systems
Chapter 2
Global E-Business: How Businesses Use Information Systems

2. Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
LEARNING OBJECTIVES
Define and describe business processes and their relationship to information systems.
Evaluate the role played by systems serving the various levels of management in a business and their relationship to each other.
Explain how enterprise applications, collaboration and communication systems, and intranets improve organizational performance.
This chapter is designed to provide students quick overview of the kinds of systems found in a typical corporation. Some of the concepts were introduced in Chapter 1. You could ask students to recall and describe the different levels of management in a business, intranets, and business processes using information from the previous chapter. Some are new – like enterprise wide systems.

3. Assess the role of the information systems function in a business.
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
LEARNING OBJECTIVES (Continued)
Explain the difference between e-business, e-commerce, and e-government.
Assess the role of the information systems function in a business.
Ask students what their impressions are of e-business, e-commerce, and e-government, and how they might be different.

4. Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
The Tata Nano Makes History Using Digital Manufacturing
Problem: Outdated manufacturing processes, time-consuming manual labor.
Solutions: Digital manufacturing systems allowed Tata to create a $2,500 car without sacrificing safety or value.
Dassault Systems’ Digital Enterprise Lean Manufacturing Interactive Application drastically reduced development cycle.
Demonstrates IT’s role in fostering innovation and improving efficiency.
Illustrates the benefits of updating manufacturing-related business processes.
Prior to introducing this case, you could ask students whether they think it might be possible to buy a car for only $2,500. Then, after reviewing the Tata Nano case, emphasize the role of information systems in making such a car possible. What kind of market do students think this type of car would have? Consider the “product development cycle” as a business process and ask the students how this cycle was improved using the Dassault system.

5. Workflows of material, information, knowledge
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Business Processes and Information Systems
Business processes:
Workflows of material, information, knowledge
Sets of activities, steps
May be tied to functional area or be cross-functional
Businesses: Can be seen as collection of business processes
Business processes may be assets or liabilities
Business processes are at the heart of every business. Ask students if they can give any examples of business processes that they come in contact with everyday. This could include anything from ordering a hamburger at McDonalds, to applying for a driver’s license at the DMV. Emphasize that studying a firm’s business processes is an excellent way to learn a great deal about how that business actually works. How could a business process be a liability? Think of some dysfunctional business processes or ask the students to come up with some really poor business process.

6. Examples of functional business processes
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Business Processes and Information Systems
Examples of functional business processes
Manufacturing and production
Assembling the product
Sales and marketing
Identifying customers
Finance and accounting
Creating financial statements
Human resources
Hiring employees
Other examples include checking the product for quality (manufacturing and production), selling the product (sales and marketing), paying creditors (finance and accounting), and evaluating job performance (human resources). You could ask students to contribute other examples of business processes and describe which of the four types they are.

7. The Order Fulfillment Process
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Business Processes and Information Systems
The Order Fulfillment Process
Emphasize that each rectangle represents one part of the larger business process of order fulfillment. Notice that this business process spans more than one type mentioned on the previous slide.
Fulfilling a customer order involves a complex set of steps that requires the close coordination of the sales, accounting, and manufacturing functions.
Figure 2-1

8. Information technology enhances business processes in two main ways:
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Business Processes and Information Systems
Information technology enhances business processes in two main ways:
Increasing efficiency of existing processes
Automating steps that were manual
Enabling entirely new processes that are capable of transforming the businesses
Change flow of information
Replace sequential steps with parallel steps
Eliminate delays in decision making
Examples of entirely new business processes made possible by information technology are downloading a song from iTunes or buying a book from Amazon. You might also mention the Amazon book reader Kindle which is continuously connected to the Internet and allows customers to download books and pay for them using Amazon’s one click purchase method. Ask students if they can name any other similar processes.

9. Transaction processing systems
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Transaction processing systems
Perform and record daily routine transactions necessary to conduct business
Examples: sales order entry, payroll, shipping
Allow managers to monitor status of operations and relations with external environment
Serve operational levels
Serve predefined, structured goals and decision making
The purpose of these systems is to answer routine questions about the flow of transactions through the organization. These systems are a necessity for any business.

10. A Payroll TPS Management Information Systems Figure 2-2
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
A Payroll TPS
Note that the outputs of the payroll system are useful not only within the company to managers, but also to regulatory agencies and other entities relying on the accuracy of the reported data.
A TPS for payroll processing captures employee payment transaction data (such as a time card). System outputs include online and hard-copy reports for management and employee paychecks.
Figure 2-2

11. Management information systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Management information systems
Serve middle management
Provide reports on firm’s current performance, based on data from TPS
Provide answers to routine questions with predefined procedure for answering them
Typically have little analytic capability
Emphasize to students that management information systems is a specific category of information systems for middle management. It has the same name, but a very different meaning from the term introduced in Chapter 1 (the study of information systems in business and management). In other words, the study of management information systems involves looking at all the systems used in business. An MIS system is a specific type of an IS. It’s easy to get the two confused.

12. Decision support systems
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Decision support systems
Serve middle management
Support nonroutine decision making
Example: What is impact on production schedule if December sales doubled?
Often use external information as well from TPS and MIS
Model driven DSS
Voyage-estimating systems
Data driven DSS
Intrawest’s marketing analysis systems
You could ask whether or not students understand what is meant by nonroutine decision making, as opposed to routine decision making, and why DSS are specifically designed to assist managers in making that type of decision. Ask students for examples of non-routine decisions they make.

13. Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
How Management Information Systems Obtain Their Data from the Organization’s TPS
Emphasize the relationship between TPS and MIS here. MIS receive data from an organization’s TPS systems and create outputs that management can use to make strategic decisions.
In the system illustrated by this diagram, three TPS supply summarized transaction data to the MIS reporting system at the end of the time period. Managers gain access to the organizational data through the MIS, which provides them with the appropriate reports.
Figure 2-3

14. Sample MIS Report Management Information Systems Figure 2-4
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Sample MIS Report
This graphic represents the “reports” portion of the previous figure, 2-3. Emphasize this to students, perhaps referencing that slide again to drive home that point. Students may not understand the decimals in the “ACTUAL versus PLANNED” category, where anything above 1.00 represents more sales than planned and anything less represents a disappointing result of fewer sales than planned.
This report, showing summarized annual sales data, was produced by the MIS in Figure 2-3.
Figure 2-4

15. Voyage-Estimating Decision Support System
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Voyage-Estimating Decision Support System
DSS can rely on either analytical models or large databases to provide valuable information. You could ask which of these two types the above figure best resembles (analytical models). You could also ask them what types of decisions does this system help its users make? Examples include what vessels to send to particular destinations to maximize profit, the optimal rate at which vessels should travel to maximize efficiency while still meeting their schedules, and so forth.
This DSS operates on a powerful PC. It is used daily by managers who must develop bids on shipping contracts.
Figure 2-5

16. Air Canada Takes off with Maintenix
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Air Canada Takes off with Maintenix
Read the Interactive Session: Technology, and then discuss the following questions:
What problems does Air Canada hope that Maintenix will solve?
How does Maintenix improve operational efficiency and decision-making?
Give examples of three decisions supported by the Maintenix system. What information do the Maintenix modules provide to support each of these decisions?
This case describes a piece of software that is critical to Air Canada’s business. You could ask students what types of systems best characterize each module. Most Maintenix modules provide decision support for Air Canada. Ask students to come up with examples based on their own air travel experiences, and suggest ways their experience might have been better with a system like Maintenix.

17. Executive support systems
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Executive support systems
Support senior management
Address nonroutine decisions requiring judgment, evaluation, and insight
Incorporate data about external events (e.g. new tax laws or competitors) as well as summarized information from internal MIS and DSS
Example: ESS that provides minute-to-minute view of firm’s financial performance as measured by working capital, accounts receivable, accounts payable, cash flow, and inventory
Emphasize the connection between ESS, MIS, and DSS. ESS rely on accurate inputs from a firm’s MIS and DSS to provide useful information to executives. These systems should not exist in isolation from one another. If they are isolated from each other, it is a kind of organizational dysfunction, probably inherited from the past.

18. Model of an Executive Support System
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Model of an Executive Support System
The digital dashboard is a common feature of modern-day ESS. Emphasize that a critical feature of ESS is ease of use and simplicity of display. Executives using an ESS want quick access to the most critical data affecting their firm.
This system pools data from diverse internal and external sources and makes them available to executives in easy-to-use form.
Figure 2-6

19. Systems from a constituency perspective
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Systems from a constituency perspective
Transaction processing systems: supporting operational level employees
Management information systems and decision-support systems: supporting managers
Executive support systems: supporting executives
This slide is a recap of the previous slides describing these types of systems. In a constituency perspective, systems are distinguished on the basis of who uses the system– operational managers, middle management, senior management. Systems are often designed to fit the specific needs of each of these groups in a firm. These groups form “constituencies” that CIOs must appeal to for support.

20. Relationship of systems to one another
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Relationship of systems to one another
TPS: Major source of data for other systems
ESS: Recipient of data from lower-level systems
Data may be exchanged between systems
In reality, most businesses’ systems only loosely integrated
This slide once again emphasizes the relationship between different types of systems, but explain that actually achieving such a high level of integration is rare. You could ask students to offer reasons why it might be difficult to do this.

21. Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
“Fresh, Hot, Fast” – Can Information Systems Help Johnny’s Lunch Go National?
Read the Interactive Session: Organizations, and then discuss the following questions:
Describe Johnny’s Lunch’s business model and business strategy. What challenges does Johnny’s Lunch face as it begins its expansion?
What systems has the company used or planned to use to overcome these challenge? What types of systems are they? What role will each play in helping Johnny’s Lunch overcome these challenge?
What other kinds of systems described in this chapter might help Johnny’s Lunch as it expands?
Do you believe Johnny’s Lunch will be successful in its attempts to expand nationally? Why or why not?
Other points of discussion could be the following: How would disorganized or insufficient information technology threaten Johnny’s Lunch’s prospects for growth? Have students heard of Johnny’s Lunch before? What suggestions do students have for the company as it tries to expand and market its brand?

22. Enterprise applications Span functional areas
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Enterprise applications
Span functional areas
Execute business processes across firm
Include all levels of management
Four major applications:
Enterprise systems
Supply chain management systems
Customer relationship management systems
Knowledge management systems
Enterprise applications are used to manage the information used in the systems discussed previously. In other words, enterprise applications are used to ensure that TPS, MIS, DSS, and ESS work together smoothly.

23. Enterprise Application Architecture
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Enterprise Application Architecture
Representing an integrated enterprise system in a single graphic is very difficult. The basic point is that enterprise systems are very large and diverse databases that pull information from many parts of the firm, and many systems, and then dispense that information to a very wide variety of groups. This is precisely their advantage: one system, one company, one world.
The multi-colored triangle represents an organization – the ovals represent the business functions and organizational levels affected by enterprise applications. The horizontal oval extends outside of the triangle because even business functions involving outside entities may be automated by enterprise applications.
Enterprise applications automate processes that span multiple business functions and organizational levels and may extend outside the organization.
Figure 2-7

24. Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Enterprise systems
Collects data from different firm functions and stores data in single central data repository
Resolves problem of fragmented, redundant data sets and systems
Enable:
Coordination of daily activities
Efficient response to customer orders (production, inventory)
Provide valuable information for improving management decision making
This slide emphasizes the singularity of enterprise systems (one system) that does everything – or most everything– and serves a wide variety of groups and purposes in the firm.

25. Enterprise Systems Management Information Systems Figure 2-8
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Enterprise Systems
Emphasize the central repository used in enterprise systems for all types of information collected and used by the business. Ask students what the difficulties of creating such a system might be (standardization across many business units, size of the system).
Enterprise systems integrate the key business processes of an entire firm into a single software system that enables information to flow seamlessly throughout the organization. These systems focus primarily on internal processes but may include transactions with customers and vendors.
Figure 2-8

26. Supply chain management systems
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Supply chain management systems
Manage firm’s relationships with suppliers
Share information about
Orders, production, inventory levels, delivery of products and services
Goal: Right amount of products to destination with least amount of time and lowest cost
Emphasize that SCM systems are interorganizational systems, automating the flow of information across organizational boundaries. This distinction is important because SCM systems must be designed with the business processes of potential partners and suppliers in mind.

27. Example of a Supply Chain Management System
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Example of a Supply Chain Management System
This example of Haworths supply chain management system features ‘middleware’ that connects company warehouses to its distributors. That way, both groups are able to get up-to-the-minute information about the stock of particular goods in their own warehouses as well as their partner’s.
Customer orders, shipping notifications, optimized shipping plans, and other supply chain information flow among Haworth’s Warehouse Management System (WMS), Transportation Management System (TMS), and its back-end corporate systems.
Figure 2-9

28. Customer relationship management systems:
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Customer relationship management systems:
Provide information to coordinate all of the business processes that deal with customers in sales, marketing, and service to optimize revenue, customer satisfaction, and customer retention
Integrate firm’s customer-related processes and consolidate customer information from multiple communication channels
CRM systems are extremely important for both marketing and customer service. You could ask students if they’ve ever filled out a survey for a company. Then connect that to information systems, perhaps explaining that the information they entered was provided as input to a CRM system for analysis.

29. Salesforce.com Executive Team Dashboard
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Salesforce.com Executive Team Dashboard
Salesforce is a pioneer of the software-as-a-service business model, under which they provide their CRM services online to companies without proprietary CRM systems or companies looking to acquire useful marketing information at a reduced cost. Ask students if they can think of other Saas applications. How about iTunes? Photobucket.com, or a social network like MySpace. What kinds of applications can they find at these consumer sites?
Illustrated here are some of the capabilities of Salesforce.com, a market-leading provider of on-demand customer relationship management (CRM) software. CRM systems integrate information from sales, marketing, and customer service.

30. Knowledge management systems
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Knowledge management systems
Support processes for acquiring, creating, storing, distributing, applying, integrating knowledge
Collect internal knowledge and link to external knowledge
Include enterprise-wide systems for:
Managing documents, graphics and other digital knowledge objects
Directories of employees with expertise
The idea that business firms are repositories of knowledge may be new to many students. Ask students for examples of firm knowledge, for instance, the knowledge required to run a fast food restaurant, or the knowledge required to operate a Web site like Amazon.
Explain that knowledge management systems are useful for helping a firm’s employees understand how to perform certain business processes or how to solve problems. What might the consequences be for a firm with poor knowledge management systems?

31. Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Intranets:
Internal networks built with same tools and standards as Internet
Used for internal distribution of information to employees
Typically utilize private portal providing single point of access to several systems
May connect to company’s transaction systems
Intranets and extranets are technology platforms more so than applications, but they are critical to the function of all enterprise applications. Emphasize the ability of intranets to connect to a company’s TPS and related systems.

32. Extranets: Intranets extended to authorized users outside the company
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Extranets:
Intranets extended to authorized users outside the company
Expedite flow of information between firm and its suppliers and customers
Can be used to allow different firms to collaborate on product design, marketing, and production
What are some of the unique benefits of extranets compared to intranets?

33. Collaboration and communication systems
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Collaboration and communication systems
‘Interaction’ jobs a major part of global economy
Methods include:
Internet-based collaboration environments
and instant messaging (IM)
Cell phones and smartphones
Social networking
Wikis
Virtual worlds
‘Interaction’ jobs refer to jobs in which talking, ing, presenting, or persuading other people is the primary value-adding activity. Each of the listed systems make interaction with others easier in some way. Students are bound to be familiar with each of these methods, so ask them to give some examples of each. Do students see themselves as headed for an interaction job?

34. E-business (Electronic business):
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
E-business (Electronic business):
Use of digital technology and Internet to execute major business processes in the enterprise
Includes e-commerce (electronic commerce):
Buying and selling of goods over Internet
E-government:
The application of Internet and networking technologies to digitally enable government and public sector agencies’ relationships with citizens, businesses, and other arms of government
You could ask students to describe some common business processes conducted or made possible using the Internet. Examples include advertising, customer support, and payment.
E-government is the ability of government to provide information and services via the Internet to individuals and businesses. Ask students for examples or use your podium computer to illustrate a state or local government Web site.

35. Information systems department:
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
The Information Systems Function in Business
Information systems department:
Formal organizational unit responsible for information technology services
Includes programmers, systems analysts, project leaders, information systems managers
Often headed by chief information officer (CIO), also includes chief security officer (CSO) and chief knowledge officer (CKO)
End-users:
Representatives of other departments, for whom applications are developed
Defined simply, the information systems department of a firm is responsible for coordinating all of the systems previously mentioned in this chapter. You could also mention to users that end users play a prominent role in how information systems are designed as well as the role that the information systems department plays in a firm.

36. Small firm may not have formal information systems group
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
The Information Systems Function in Business
Small firm may not have formal information systems group
Larger companies typically have separate department which may be organized along one of several different lines:
Decentralized (within each functional area)
Separate department under central control
Each division has separate group but all under central control
You could ask students why small firms might be less likely to simply have smaller information systems groups as opposed to none at all. As a company gets larger and larger, the information systems get progressively more complicated and require more effort to maintain. Students may be interested to learn that this is why extremely large companies (“Fortune 1000”) might even have multiple information systems departments that deal with individual segments of the firm.

37. Organization of the Information Systems Function
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Organization of the Information Systems Function
This slide and the next two slides depict different methods of organizing the information systems function. In this organization each functional area of the business is monitored by distinct information systems departments.
There are alternative ways of organizing the information systems function within the business: within each functional area (A), as a separate department under central control (B), or represented in each division of a large multidivisional company but under centralized control (C).
Figure 2-10

38. Organization of the Information Systems Function
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Organization of the Information Systems Function
Under this organization, the information systems department is a unified department (shown here furthest to the right as VP CIO Information Systems) under the control of the CEO and Board of Directors.
B: A separate department under central control
Figure 2-10 (cont)

39. Organization of the Information Systems Function
Management Information Systems
Chapter 2 Global E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Organization of the Information Systems Function
In this organization, usually found in very large companies, separate divisions each have their own information systems department dedicated to that division alone. These divisional groups are still centrally controlled. Ask students to explain what type of firm is best suited to each configuration.
C: Represented in each division of a large multidivisional company but under centralized control
Figure 2-10 (cont)

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