1. Chapter 6 (Part II) Organizational Information Systems
Robert Riordan, Carleton University

2. Learning Objectives
Review the characteristics that differentiate the operational, managerial, and executive levels of an organization
Different Organizational Systems:
Manufacturing Systems
Marketing Systems
Human Resources Systems

3. Levels of the Organization

4. System Examples: Functional Area Info Systems

5. Review Characteristics of Organizational Systems
Questions:
What kind of tactical information would be useful to a branch manager of a Coca-Cola or Pepsi distributorship?
(sample answer):
Sales:
- by product line
- this year vs last year
- comparative analysis of sales by account for last 5 years

6. Review Characteristics of Organizational Systems
What kind of strategic information would be useful to the president of a four-year liberal arts college?
- demographic data
- no. of 18-year olds who are planning to enter college over the next 10 years
Other:
- age distributions of the overall population
- characteristics of student population
- gender, socio-economic status

7. Review Characteristics of Organizational Systems
 Categorize each decision as strategic planning, tactical or operational
Rejecting credit for a company with an overdue account
(Operational)
Analyzing sales by product line within each geographic region, this year to date vs. last year to date
(Tactical)
Using a simulation model to forecast profitability of a new product, using projected sales data, competitive industry statistics, and economic trends
(Strategic)
Comparing planned vs. actual expenses for department staff
Allocating salespeople's time to the highest potential market prospects

8. Marketing Systems

9. The Marketing Function
Marketing can be defined as “the process of planning and executing the
conception, pricing, promotion, sales and distribution
of ideas, goods and / or services to create exchanges that satisfy individual (customer) and organizational (business ) goals.”

10. Marketing Mix
Product
Price
Promotion
Place (where and when product available to customers)

11. System Co-ordination Needed
To be successful, marketing systems must be coordinated with other organizational systems, e.g.,
Order Entry
Manufacturing
Inventory
Credit management

12. Marketing Information System
Model : Kotler P. (2003)

13. Marketing Information System
Model : Kotler P. (2003)

14. Operational Systems in Marketing
Sales force automation:
Salesperson with laptop can demonstrate benefits of insurance policy alternatives in customer’s home
Information from calls on customer purchasing managers (eg. Quotations, Orders) can be entered on site

15. Sales Force Automation Tools
Operational Systems in Marketing
Sales Force Automation Tools
Sales Process/Activity Management
Include a sequence of sales activities
Guide sales reps through each discrete step in the sales process
Sales process
Opportunity Generated
Opportunity Generated
Lead allocated
Prospect contacted
Prospect qualified
Solution identified
Order placed
Sales activity

16. Operational Systems in Marketing
Customer contact management systems
Provide information on past contacts with specific customers
Output: call report:
No. of sales calls made by a salesperson
No. and dollar amount of sales made by this person

17. Operational Systems in Marketing
Telemarketing systems
Identify customers and automatically call them
Use electronic phone directories
Can make notes about calls
In a LAN-based system, 200 telemarketers can use the same system at the same time
Direct mail advertising systems
Create mailing labels
Delivery tracking and routing systems
Help plan optimal delivery routes

18. Tactical Systems in Marketing
Data from operational systems, which now ‘sits’ in tables in a relational database on disk, is summarized in various ways for extra managerial insight
Considerable ad hoc reporting is available here

19. Tactical Systems in Marketing
Objective of tactical marketing managers:
To reach the sales goals set by top marketing executives
They must make tactical decisions such as:
How sales territories should be shaped
How to allocate salespersons to territories
What products should be offered to what customers
Sales management systems help here

20. Tactical Systems in Marketing
Sales management systems:
Examples of output:
Effectiveness of different salespersons with different segments of the market
Assessment of the productivity of the sales force, and the fertileness of sales territories
Success of products by salesperson, territory and product type

21. Tactical Systems in Marketing
Advertising and promotion systems
Help decide which advertising media and promotion system to use
Can produce tactical reports e.g., on effectiveness of advertising campaigns
Marketing research firms specialize in advertising and promotion data collection and analysis

22. Tactical Systems in Marketing
Pricing systems
Help managers set prices for their products and services
Inputs may be:
Costs of labour and materials
Costs of advertising
Expected competitive prices etc.
May employ pricing models that identify the best price for a product under a variety of conditions

23. Strategic Systems in Marketing
May contain both strategic and tactical elements
Sales forecasting systems
Forecast sales for entire industry
For entire organization
For each product
For market segments for a product
Employ sophisticated statistical models and may produce considerable graphic output

24. Strategic & Tactical Systems in Marketing
Market research systems
Process results of surveys and interviews
Provide analyses of statistical significance
Use considerable data from outside the company

25. Software used in Marketing
Strategic & Tactical Systems in Marketing
Software used in Marketing
General purpose software:
Database mgt, spreadsheets & graphics, statistical software
Specific marketing systems (such as identified earlier)
Recall also: data mining of data warehouses (to identify undiscovered relationships

26. Strategic & Tactical Systems in Marketing
Customer Relationship Management
using data on previous contacts with a specific customer to enhance future contacts with that customer
Enables customization of products / services
Will be covered later

27. Strategic & Tactical Systems in Marketing
Managing Sales Opportunities

28. Strategic & Tactical Systems in Marketing
Create quick Quotations for each Opportunity

29. Strategic & Tactical Systems in Marketing
Track your activities per opportunity and report on them

30. Strategic & Tactical Systems in Marketing
Reports – In Progress

31. Strategic & Tactical Systems in Marketing
Reports & Charts – In Progress

32. Human Resource Management Systems

33. Human Resource (HR) Systems
Major activities in HR:
Recruiting employees, evaluating applicants
Selecting, placing, promoting, transferring and terminating employees
Training employees
Managing employee wage and benefit plans
Analyzing and designing job positions
Producing job descriptions
Producing government reports
Planning for workforce needs

34. Operational Systems in HR
Historically, payroll was the first
But, we consider it to be part of the AIS
Related to expenditure cycle
Employee information systems
Maintain information on every employee for various reporting purposes
Employee profile: basic personal data, education, previous experience, employment history in org., preferred location for work ….

35. Human Resources Management Systems (HRMS)

36. Operational Systems in HR
Employee Information System
May contain skills inventory component
Employee’s work experience, work preferences, test scores, interests, special skills
How could this be used
Attendance recording systems
May use negative reporting (only when absent)
Include overtime credits etc.

37. Operational Systems in HR
Employee scheduling systems
can get complex with shift work (e.g, nurses)
Must adhere to union regulations
Performance management systems
Appraisal data can be filled out on special screens
Performance measures (no. of purchase orders processed per day) may be included

38. Operational Systems in HR
Performance management systems:
Collect and store textual data e.g., written comments of supervisor
Need careful documentation of employee performance and how performance was measured (e.g., for grievance hearings)
May have tactical components
Which supervisors give high number of poor evals.
Which labour sources provide unacceptable workers

39. Tactical Systems in HR
Position control systems
Keep data on each job position in the org.
E.g. task content
Can be useful for job redesign
Which job positions require data entry?
Which require statistical analysis
Recruiting systems
Provide list of planned retirements
List skills, preferences of current employees
Analyze turnover rates among various classes of employees

40. Tactical Systems in HR
Compensation and benefit systems
“cafeteria style benefits” for employees to choose from
Considerable data storage here
Tactical:
how much to increase compensation plans to attract high quality employees
What kind of benefits are different categories of employees choosing?
May be available on organizational intranet

41. Strategic Systems in HR
Long-term workforce planning
What are the HR needs to meet organization’s strategic plan for next 5-10 years?
Forecasting supply and demand of required workforce
Labour negotiation support systems
Must be timely and have ad hoc capacity
Assist in bargaining sessions with unions

42. HRMS Software
HR systems store much more textual data than other functional systems
There are specific HR systems for sale
Use of HRMS is not as widespread in small to medium businesses

43. Manufacturing Systems

44. Computers in Manufacturing
Computer-aided design (CAD)
Computer-aided engineering (CAE)
3-D representation of car engine on screen
Simulation of engine’s performance
Performance data gathered
Automated control of production machines
Computer control of sawing patterns
Computer control of industrial robots

45. Manufacturing Resource Planning (MRP)
Master Production Scheduling system
Material requirements planning system
Capacity requirements planning system
Detailed Production Schedule
Shop floor control (comp. to schedule)
Quality control (comp. to quality standards)
Cost accounting; inventory control

46. MRP Market Demand Production plan Yes No Finance Marketing
Problems?
Rough-cut
capacity planning
Yes No
Finance
Marketing
Manufacturing
Adjust
production plan
Master
production schedule
MRP
Capacity
planning
Requirements
schedules
Adjust master schedule

47. Production Planning & Control
Raw materials acquisition (when, how much)
Machine and worker requirements
Detailed production schedules
Gathering evaluation statistics
Sensors, scanners, shop floor terminals
Quality control
Comparing performance data to plans
Cost accounting for mfg. goods

48. In More Detail
Master Production Schedule
Based on - accepted sales orders
Sales forecast
Current finished goods inventory
Lists #units to be produced each week

49. Bill of Materials
A list of raw materials needed to produce one unit of finished product and the quantity of each material
Material Requirements Planning (MRP)
With the MPS and BOM, a system can produce time-phased purchase orders for raw materials (main output of MRP)

50. Capacity Requirements Planning (CRP)
What MRP is to materials required
CRP is to machines time and worker time required
What the bill of materials is to MRP,
the Route Sheet is to CRP
- shows sequence of required operations and the standard time allowed for each operation (usually person + machine)

51. Capacity
How much machine time and worker time do we have?
May need to rent more floor space and / or machines
May need to hire temp workers
CRP generates a detailed production schedule
It releases manufacturing orders to the production floor

52. Inventory Control
In manufacturing, we have:
Raw materials inventory
Work-in-process inventory
Finished goods inventory
Systems keep track of quantities and costs of each

53. Just-In-Time (JIT) Manufacturing
Raw materials arrive just when they are needed on the production floor
Minimizes inventory
Requires complex information systems (operational)
May have vendor managed inventory
(supplier’s computers tap into our inv. systems)

54. MRP in Services
Service applications such as:
Professional services
Postal services
Retail
Banking
Healthcare
Higher education
Engineering
Logistical services
Real estate

55. ERP
Enterprise resource planning (ERP):
Next step in an evolution that began with MPR and evolved into MRPII
Integration of financial, manufacturing, and human resources on a single computer system.

56. ERP Software
ERP software provides a system to capture and make data available in real time to decision makers and other users in the organization
Provides tools for planning and monitoring various business processes
Includes
Production planning and scheduling
Inventory management
Product costing
Distribution

57. ERP Strategy Considerations
High initial cost
High cost to maintain
Future upgrades
Training

58. Supply Chain Management (SCM) Systems

59. Supply Chain Management Software (SCM)
Supply chain: flow of materials, services and information from suppliers of merchandise and raw materials through to the organization’s customers
Now: supply network
Supply chain management: processes and procedures used to ensure the delivery of goods and services to customers at the lowest cost while providing highest value to the customers

60. Supply Chain Management Software (SCM)
Supply chain: flow of materials, services and information from suppliers of merchandise and raw materials through to the organization’s customers
Now: supply network
Supply chain management: processes and procedures used to ensure the delivery of goods and services to customers at the lowest cost while providing highest value to the customers

61. Supply Chain Management Software (SCM)
Suppliers are gaining access to an organization’s production planning schedules to assure an ability to fulfill orders
Producing organization is opening its systems to the customer to allow the customer to view inventory and production levels before placing orders

62. Supply Chain Management Software (SCM)

63. Supply Chain Management Software (SCM)
Dell uses Ariba SCM to automate its purchasing process
SCM system is connected to its broad supplier network
System provides Dell with data to id inefficiencies within its supply network; and to negotiate key contracts for goods and services

64. Supply Chain Management Software (SCM)

65. Supply Chain Management Software (SCM)

66. Supply Chain Management Software (SCM)
Although we studied systems supporting each functional area separately, there is a dire need for connectivity among these systems
How can systems “talk” to each other?
E.g. can share common database
How might order entry, accounts receivable, finance, manufacturing systems need to be connected? How would this help?

67. Supply Chain Management Software (SCM)
Various systems were developed at different times, in different languages, using different data sources and maybe different hardware technologies
Legacy systems: “inherited” from the “good old days” of COBOL or RPG
Read p. 237, 239
Is it worth revamping such old systems?

68. Supply Chain Management Software (SCM)
An option for system integration throughout most of the organization is to implement an enterprise resource planning system (ERP)