1. 2.1 © 2006 by Prentice Hall 2 Chapter Information Systems in the Enterprise EnterpriseInformation Systems in the Enterprise Enterprise

2. 2.2 © 2006 by Prentice Hall OBJECTIVES Evaluate the role played by the major types of systems in a business and their relationship to each other Describe the information systems supporting the major business functions: sales and marketing, manufacturing and production, finance and accounting, and human resources Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise

3. 2.3 © 2006 by Prentice Hall Analyze the relationship between organizations, information systems, and business processes Explain how enterprise applications promote business process integration and improve organizational performance Assess the challenges posed by information systems in the enterprise and management solutions Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise OBJECTIVES (continued)

4. 2.4 © 2006 by Prentice Hall Challenge: monthly changes in fashions; Mango has 731 stores in 72 countries Solutions. Inventory replenishment system tracks all sales and matches stores with inventory. Design teams meet weekly to adjust to trends. Distribution system allocates bar-coded items to specific stores based on store/product mix. Reduces time to market, increases agility Increases accuracy of decision making Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Mango Case: Fast Fashion, Hot Systems

5. 2.5 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Types of Information Systems

6. 2.6 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Different Kinds of Systems support operational managers by keeping track of the elementary activities and transactions of the organization, such as sales, receipts, cash deposits, payroll, credit decisions, and the flow of materials in a factory. The principal purpose of systems at this level is to answer routine questions and to track the flow of transactions through the organization. 1.Operational-level systems: support operational managers by keeping track of the elementary activities and transactions of the organization, such as sales, receipts, cash deposits, payroll, credit decisions, and the flow of materials in a factory. The principal purpose of systems at this level is to answer routine questions and to track the flow of transactions through the organization. How many parts are in inventory?How many parts are in inventory? What happened to Mr. Williams's payment?What happened to Mr. Williams's payment? How many hours worked each day by employees on a factory floor.How many hours worked each day by employees on a factory floor. Three main categories of information systems serve different organizational levels:

7. 2.7 © 2006 by Prentice Hall 2. Management-Level Systems: serve the monitoring, controlling, decision-making, and administrative activities of middle managers. The principal question addressed by such systems is: Are things working well? Management-level systems typically provide periodic reports rather than instant information on operations. The principal question addressed by such systems is: Are things working well? Management-level systems typically provide periodic reports rather than instant information on operations. Some management-level systems support no routine decision making. Some management-level systems support no routine decision making. They tend to focus on less-structured decisions for which information requirements are not always clear. These systems often answer "what if" questions:External & Internal Data. They tend to focus on less-structured decisions for which information requirements are not always clear. These systems often answer "what if" questions:External & Internal Data.

8. 2.8 © 2006 by Prentice Hall help senior management TACKLE and ADDRESS STRATEGIC issues and LONG-TERM trends, both in the FIRM and in the EXTERNAL environment. 3.Strategic-level systems: help senior management TACKLE and ADDRESS STRATEGIC issues and LONG-TERM trends, both in the FIRM and in the EXTERNAL environment. Their principal concern is matching changes in the external environment with existing organizational capability.Their principal concern is matching changes in the external environment with existing organizational capability. What will EMPLOYMENT LEVELS be in FIVE YEARS?What will EMPLOYMENT LEVELS be in FIVE YEARS? What are the LONG-TERM INDUSTRY COST trends?What are the LONG-TERM INDUSTRY COST trends? What PRODUCTS should we be making in FIVE YEARS?What PRODUCTS should we be making in FIVE YEARS?

9. 2.9 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Major Types of Systems 1. Transaction Processing Systems (TPS) 2. Management Information Systems (MIS) 3. Decision-Support Systems (DSS) 4. Executive Support Systems (ESS)

10. 2.10 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS The Four Major Types of Information Systems

11. 2.11 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS 1. Transaction Processing Systems (TPS) Basic business systems that serve the operational level A computerized system that performs and records the daily routine transactions necessary to the conduct of the business. TPS are also major producers of information for the other types of systems.TPS are also major producers of information for the other types of systems.

12. 2.12 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS A Symbolic Representation for a Payroll TPS

13. 2.13 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Typical Applications of TPS

14. 2.14 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS 2. Management Information Systems (MIS) serve the management level of the organization, providing managers with reports or with on-line access to the organization's current performance and historical records. Management level: serve the management level of the organization, providing managers with reports or with on-line access to the organization's current performance and historical records. They are oriented almost exclusively to internal, not environmental or external, events.They are oriented almost exclusively to internal, not environmental or external, events. MIS primarily serve the functions of planning, controlling, and decision making at the management level.MIS primarily serve the functions of planning, controlling, and decision making at the management level. They depend on underlying transaction processing systems for their data.They depend on underlying transaction processing systems for their data.

15. 2.15 © 2006 by Prentice Hall Inputs: High volume transaction level data Processing: Simple models Outputs: Summary reports Users: Middle managers Example: Annual budgeting MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS 2. Management Information Systems (MIS)(Continued)

16. 2.16 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS 2. Management Information Systems (MIS) (continued) Figure 2-5

17. 2.17 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS 2. Management Information Systems (MIS) (continued) Figure 2-6 A sample MIS report

18. 2.18 © 2006 by Prentice Hall 3. Decision-Support Systems (DSS) MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS DSS help managers make decisions that are unique, rapidly changing, and not easily specified in advance.DSS help managers make decisions that are unique, rapidly changing, and not easily specified in advance. They address non-routine problems DSS use internal information from TPS and MIS bring in information from external sources, such as product prices of competitors.They address non-routine problems DSS use internal information from TPS and MIS bring in information from external sources, such as product prices of competitors. DSS have more analytical power than other systems.DSS have more analytical power than other systems. They are built explicitly with a variety of models to analyze dataThey are built explicitly with a variety of models to analyze data DSS include user-friendly software.DSS include user-friendly software. DSS are interactive; the user can change assumptions, ask new questionsDSS are interactive; the user can change assumptions, ask new questions

19. 2.19 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Decision-Support Systems (DSS) Management level Inputs: Transaction level data Processing: Interactive Outputs: Decision analysis Users: Professionals, staff Example: Contract cost analysis

20. 2.20 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Decision-Support Systems (DSS) (Continued) Voyage-estimating decision-support system Figure 2-7

21. 2.21 © 2006 by Prentice Hall ESS serve the strategic level of the organization.ESS serve the strategic level of the organization. They address long term non-routine decisions requiring judgment, evaluation, and insight because there is no agreed-on procedure for arriving at a solution.They address long term non-routine decisions requiring judgment, evaluation, and insight because there is no agreed-on procedure for arriving at a solution. ESS are designed to incorporate data about external events such as new tax laws or competitors, but they also draw summarized information from internal MIS and DSS.ESS are designed to incorporate data about external events such as new tax laws or competitors, but they also draw summarized information from internal MIS and DSS. 4. EXECUTIVE SUPPORT SYSTEMS (ESS): MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

22. 2.22 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS EXECUTIVE SUPPORT SYSTEMS (ESS): Inputs: Aggregate data Processing: Interactive Outputs: Projections Users: Senior managers Example: 5 year operating plan

23. 2.23 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Model of a Typical Executive Support System Figure 2-8

24. 2.24 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued) Top Level Management Designed to the individual senior manager Ties CEO to all levels Very expensive to keep up Extensive support staff

25. 2.25 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Relationship of Systems to One Another Interrelationships among systems Figure 2-9

26. 2.26 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Relationship of Systems to One Another Systems serving different levels in the organization are related to one another.Systems serving different levels in the organization are related to one another. TPS are typically a major source of data for other systems.TPS are typically a major source of data for other systems. ESS are primarily a recipient of data from lower-level systems.ESS are primarily a recipient of data from lower-level systems. The other types of systems may exchange data with each other as well.The other types of systems may exchange data with each other as well. Data may also be exchanged among systems serving different functional areas For example, an order captured by a sales system may be transmitted to a manufacturing system as a transaction for producing or delivering the product specified in the order.Data may also be exchanged among systems serving different functional areas For example, an order captured by a sales system may be transmitted to a manufacturing system as a transaction for producing or delivering the product specified in the order.

27. 2.27 © 2006 by Prentice Hall Selling the organization's products or services.Selling the organization's products or services. Marketing is concerned with:Sales& Marketing is concerned with: – Identifying the customers for the firm's products or services – Determining what they need or want –Advertising and promoting these products and services. –Sales is concerned with: – Contacting customers –Selling the products and services –Taking orders, and following up on sales. Sales and Marketing Systems SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

28. 2.28 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Sales and 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

29. 2.29 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Sales and Marketing Systems SYSTEMDESCRIPTIONORGANIZATIONAL LEVEL Order processing Enter, process, and track ordersOperational Pricing analysisDetermine prices for products and services Management Sales trend forecasting Prepare 5-year sales forecastsStrategic Table 2-2

30. 2.30 © 2006 by Prentice Hall SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Manufacturing and Production Systems Producing the firm's goods and services.Producing the firm's goods and services. Manufacturing and production activities deal with:Manufacturing and production activities deal with: 1.The planning, development, and maintenance of production facilities 2.The acquisition, storage, and availability of production materials 3.The scheduling of equipment, facilities, materials, and labor required to fashion finished products.

31. 2.31 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Manufacturing and 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

32. 2.32 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE SYSTEMDESCRIPTIONORGANIZATIONAL LEVEL Machine control Control the actions of machines and equipment Operational Production planning Decide when and how many products should be produced Management Facilities location Decide where to locate new production facilities Strategic Manufacturing and Production Systems

33. 2.33 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise Overview of an Inventory System Figure 2-10 SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

34. 2.34 © 2006 by Prentice Hall SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Financing and Accounting Systems The finance function is responsible for: Managing the firm's financial assets, such as cash, stocks, bonds, and other investments, in order to maximize the return on these financial assets.Managing the firm's financial assets, such as cash, stocks, bonds, and other investments, in order to maximize the return on these financial assets. Managing the capitalization of the firm (finding new financial assets in stocks, bonds, or other forms of debt). In order to determine whether the firm is getting the best return on its investments.Managing the capitalization of the firm (finding new financial assets in stocks, bonds, or other forms of debt). In order to determine whether the firm is getting the best return on its investments. The accounting function is responsible for:The accounting function is responsible for: Maintaining and managing the firm's financial records– receipts,expenses, payrollMaintaining and managing the firm's financial records– receipts,expenses, payroll Accounting account for the flow of funds in a firm.Accounting account for the flow of funds in a firm.

35. 2.35 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Financing and Accounting Systems Major functions of systems: Budgeting, general ledger, billing, cost accountingBudgeting, general ledger, billing, cost accounting Major application systems: General ledger, accounts receivable, accounts payable, budgeting, funds management systemsGeneral ledger, accounts receivable, accounts payable, budgeting, funds management systems

36. 2.36 © 2006 by Prentice Hall Management Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise SYSTEMS FROM A FUNCTIONAL PERSPECTIVE Financing & Accounting Systems (Continued) SYSTEMDESCRIPTIONORGANIZATION- AL LEVEL Accounts receivable Tracks money owed the firmOperational BudgetingPrepares short-term budgetsManagement Profit planning Plans long-term profitsStrategic Table 2-4