1. CHAPTER 9 FUNCTIONAL AND ENTERPRISE SYSTEMS

2. Learning Objectives
Describe the role and characteristics of functional information systems
State the objective and operations of transaction processing and how it is supported by IT
Discuss the managerial and strategic applications in the accounting and finance areas that are supported by IT
Understand the marketing and sales applications provided by IT

3. Learning Objectives (continued …)
List the various production and operations management activities and describe how they are supported by IT
Discuss the human resources management activities and how they can be improved by IT
Discuss the need for integrating functional information systems and describe the role of ERP and supported software such as SAP

4. Chapter Overview Information Systems to Support Business Functions
Characteristic of
functional
Information
Systems
Functional
Support for
Managers;
Management
Transaction Processing Information Systems
Tracking Business
Transactions
Objectives of TPS
The Process of TPS
Modernized TPS:
From Online
Processing to Intranet
Typical TPS Tasks and
Modules
Accounting and Finance Systems
Financial
Planning and
Budgeting
Investment
Management
Controls

5. Chapter Overview (continued …)
Marketing and Sales Systems
Customer Service
Telemarketing
Distribution Channels
Management
Marketing Management
Ethical and Societal Issues in
IT-supported Sales Activities
Production and Operations Systems
Supply-Chain Management
Logistics and Materials
Management
Planning Production/Operations
Automatic Design Work and
Manufacturing
Human Resources Management Systems
Recruitment
HRM and Development
HRM and Planning
Intranet Applications in HRS
Integrated Information Systems and Enterprise Resource Planning
Why Integrate?
How to Integrate?
Extreme Integration: Putting it
All Together

6. Case : Colonial Building Supply
The Business Problem
Needed a technology
to monitor inventory and support-related decisions
to provide it with current information about inventory levels and customer buying trends
to show the price of the lumber fluctuates daily
The Solution
integrated system
Point-of-sales (POS) terminals with hand-held automatic identification and data collection devices

7. Case (continued…) The Results What have we learned from this case??
Lower costs for data entry labor
Reduction in inventory and storage space
Fast access to information
Better customer service
Higher employee satisfaction
Stay competitive
Increase its market share and profitability
What have we learned from this case??
The system’s major applications are in logistics
IT can be beneficial to a relatively small company
An integration includes connection to business partners using the Internet

8. Characteristics of Functional Information Systems
Comprises of several smaller information system
Specific IS applications
can be integrated to form a coherent departmental function system
can be completely independent
can be integrated across departmental lines
Interface with each other to form the organization wide information system
Interface with the environment

9. Management Information Systems
Provide routine information to managers in the functional areas
Provide information in exception reports and ad hoc (demand) reports
Business
Transactions
TPS
Databases
Internal,
External
Reports
Scheduled,
Exception,
Demand,
Others
Functional
applications,
DSS
Enterprise
Application
such as
EIS
A Management
Information
System
Data
Warehouse

10. Transaction Processing Information Systems
major business processes
provide the mission-critical activities
transaction may generate additional transaction
simple transactions
large volume and repetitive transactions
Transaction Processing System (TPS)
computerized information system
supports the transaction processes

11. Characteristics of TPS
Large amounts of data are processed
The sources of data are mostly internal, and the output is intended mainly for an internal audience
The TPS processes information on a regular basis
Large storage (database) capacity is required
High processing speed is needed due to the high volume
Input and output data are structured
High level of detail is usually observable
Low computation complexity is usually evident
High level of accuracy, data integrity, and security is needed
High processing reliability is required
Inquiry processing is a must

12. Overview of typical transaction processing
TPS (continued…)
Customer
makes a
purchase
of an item
POS
Terminal
Transaction
File
Payment
Processing 
Queries,
Answers
Inventory
File
Sales
Files
The Items’
Processing
System
Master
Files
Report
Overview of typical transaction processing

13. and entered automatically
The Process of TPS
Data are collected
and entered automatically
Batch Processing
Online
Processing
Hybrid System
Modernized TPS: from OLTP to the Internet
Online Transaction Processing (OLTP)
created on a client/server architecture can save money
Internet (Intranet) transaction Processing
allow multimedia data transfer, fast response time, and storage of large databases of graphics and videos

14. Accounting & Finance Systems
Financial Planning and Budgeting
Financial and Economic Forecasting
much of the interrelated indicators are available on the Internet
many software packages conducting forecasting and planning
Planning for Cash Management
build a decision support model
make decisions about when and how much to refinance
Budgeting
Budget 2000 and Comshare BudgetPlus are available to support budgeting and to facilitate communication among all participants in the preparation process

15. Accounting & Finance Systems (continued …)
Major activities
STRATEGIC SYSTEMS
a. Strategic Planning b. Ratios and Financial Health
c. Merger and Acquisition Analysis
OPERATIONAL AND
TRANSACTION PROCESSING
SYSTEMS
a. The General Ledger b. Sales Order Processing
c. Accounts Payable and Receivable
d. Receiving and Shipping
e. Payroll f. Inventory Management
g. Periodical Reports & Statements
INTERNAL
ENVIRONMENT
Top Management
Operation/
Production
Marketing
HRM
Engineering
EXTERNAL
IRS
SEC
Vendors
Clients
CPA Companies
Suppliers
Customers
Business Partners
TACTIAL SYSTEMS
a. Budgeting Preparation and Control
b. Investment Management
c. Capital Budgeting d. Cost Analysis and Control
e. Tax Management f. Auditing
g. Financial Planning

16. Accounting & Finance Systems (continued …)
Investment Management
Access to financial and economic reports
hundreds of sources for the financial and economic reports and news
Financial analysis
is executed with a spreadsheet program, or with commercially available, ready-made decision support software

17. Accounting & Finance Systems (continued …)
Financial Controls
Budgetary Controls
more sophisticated software attempts to tie expenditures to program accomplishment
Auditing
auditing software is especially suitable when computerized information systems are audited
Financial Health Analysis
supported by expert systems
Profitability Analysis and Cost Control
profitability analysis software allows accurate computation of profitability for individual products and for entire organizations

18. Marketing & Sales Systems
Distribution Channel
provide the goods or services to the customer, and may extend through various intermediaries such as wholesalers and retailers
Channel Systems
support all marketing linkages, such as after-sales customer support

19. Marketing & Sales Systems (continued ...)
CHANNEL
SYSTEMS
Market Intelligence
Systems
Target Marketing
Sales Systems
Customer Support
Delivery Systems
Dealer Systems
COMPANY
Manufacturing
R & D/Design
Distribution
Accounting/
Finance

20. Marketing & Sales (continued ...)
Customer Service
Customer Profiles and Preference Analysis
IT creates customer database and merges computerized lists
Mass Customization
Dell computers assembles computers according to the specifications of the buyers
J.C. Penny measures you and transfers the data directly to the production floor
Targeted Advertisement on the Web
match appropriate ads with specific groups of customers
Customer Inquiry Systems and Automated Help Desk
expert systems and intelligent agents

21. Marketing & Sales (continued ...)
Telemarketing
Five major activities which are supported by IT :
advertisement and reaching customers
order processing  customer service
sales support  account management
Distribution Channels
Delivery management
DSS models are used to support decisions like use own outlets or distributors, and transportation mode
Improving sales at retail stores
IT reduces the long lines in stores by reengineering the checkout process

22. Marketing & Sales (continued ...)
Marketing Management
Pricing of Products or Services - online analytical processing is supporting pricing decisions
Salesperson Productivity - sales-force automation provides salespeople in the field with portable computers, access to databases, and to the web
Product-Customer Profitability Analysis - a cost-accounting system identifies profitable customers and frequency
Sales Analysis and Trends - geographical information system (GIS) analyzes customers and competitors and examines potential strategies
New Products, Services, and Market Planning - IT evaluates large number of factors and uncertainties and conducts survey

23. Marketing & Sales (continued ...)
Ethical and Social Issues in IT-supported Sales Activities
Example of Privacy Policy : 3M Corp.
Information Collection
personally identifiable information that you voluntarily provide through 3M’s website or correspondence
general information (such as the type of browser you use, the files you request, and the domain name and country from which you submit the request for information)
Use of Information
responding to your inquires
tracking orders you place with 3M
supplying you with requested information on 3M products

24. Production Operations & Logistics
Supply-Chain Management (SCM)
INFORMATION FLOW
Supplier
Manufacturing
Transfer
Distribution
Transfer
Retail Outlet
Retail
Transfer
Consumer
Transfer
SCM plans and controls the flow of information and cash
CASH FLOW

25. Production Operations & Logistics (continues …)
Logistics and Material Management
Inventory Management
determining how much inventory to keep
what to order, from whom, when to order and how much
inventory model : economic order quantity (EOQ)
many low cost commercial inventory software packages
Quality Control
providing information about the quality of incoming material and parts, as well as the quality of in-process semi-finished, and finished products
standard quality control information systems and expert systems

26. Production Operations & Logistics (continues …)
Planning Production/Operations
Material Requirements Planning (MRP) - facilitates the plan for acquiring parts, subassemblies, or material
Manufacturing Resource Planning (MRPII) - connects the regular MRP to other functional areas
Just-in-Time Systems - minimizes waste of all kinds, improves processes and systems, and maintains respect for all workers
Project Management - Program Evaluation and Review Technique (PERT) and Critical Path Method (CPM)
Short-Term Schedules - schedule jobs and employees on a daily or weekly basis

27. Production Operations & Logistics (Continues …)
Automatic Design Work and Manufacturing
Computer-Aided Design (CAD)
enables drawings to be constructed on a computer screen and subsequently stored, manipulated, and updated electronically
Computer-Aided Manufacturing (CAM)
facilitates planning, operation, and control of production jobs
Computer-Integrated Manufacturing (CIM)
concept or philosophy about the implementation of various integrated computer systems in factory automation

28. Human Resources Management Systems
Recruitment
finding, testing, and deciding which employees to hire
Positions inventory
matching open positions with available personnel
allowing data to be viewed by an employee over the intranet
Employee Selection
conducting interviews by video teleconferencing
expediting the testing and evaluation process, assuring consistency in selection by using expert systems
Using the Internet
advertising position openings on the Internet

29. Human Resources Management Systems (continued …)
Human Resources Maintenance and Development
Training and Human Resources Development
digital video-editing system - produces training videotapes
Performance Evaluation
online evaluations - supports many decisions, ranging from rewards to transfer to layoffs
expert systems - provide an unbiased and systematic interpretation of performance over time
paperless wage system (PWS) - tracks employee review dates and automatically initiates the wage review process
Turnover, Tardiness, and Absenteeism Analyses
DSS models - identifies causes and patterns

30. Human Resources Management Systems (continued …)
Human Resources Management and Planning
Personal files and skills inventory - computerized personnel files identify qualified employees within the company for open positions, promotion, transfer, special training programs, and layoffs
Benefits administration - Networks and voice technology, or the intranets, specifying the value of each benefit and the available benefits balance of each employee
Government reports - Availability of computerized personnel records greatly eases the reporting process
Personnel planning - IT is used to collect, update, and process the information
Succession planning and implementation - expert systems and personnel databases supporting and implementing planning
Labor-Management Negotiations - DSS improve the negotiation climate and considerably reduce the time needed for reaching an agreement

31. Human Resources Management Systems (continued …)
Intranet Applications in HRM
Edify Corp.’s employee service system
Oracle Corp.’s flexible benefits enrollment program on the intranet
Aetna health Plan’s online directory of primary care physicians, hospitals, medical services, and health information
Apple Computers’ extensive education and development activities on the intranet
Merck Inc.’s intranet for HR transactions

32. Integrated Information Systems
Reasons for Integration
using twentieth-century computer technology, which is functionally oriented :
cannot give employees all the information they need
do not let different departments communicate effectively with each other in the same language
crucial sales, inventory, and production data often have to be painstakingly entered manually into separate computer systems every time a person who is not a member of a specific department needs ac hoc information related to the specific department

33. How to Integrated Information Systems
Connect existing systems
maximize the use of existing systems and minimize the changes in them
allows the addition of new applications to existing ones and the connection of systems to intranets and the Internet
Using supply chain management software
use one integrated package in one or several functional areas
overcomes the isolation of the traditional departmental structure where the functional areas are separated from one another

34. How to Integrated Information Systems (continued …)
Enterprise resource planning (ERP)
control all major business processes with a single software architecture in real time
increased efficiency to improved quality, productivity, and profitability
SAP software (R|3; my SAP.com)
crosses functional departments and can be extended along the supply chain to both suppliers and customers
composed of four major parts : accounting, manufacturing, sales and human resources

35. ERP SAP concept Sales Offices Central SAP Database & Servers
The factory automati-
cally receives the
sales order and can
begin production.
FACTORY
The warehouse is si-
multaneously informed
about the order and
can schedule shipping.
WAREHOUSE
Accounting gets up-
dated sales and pro-
duction data at every
step of the process
ACCOUNTING
Headquarters can tap
into up-to-the-minute
data on sales, inven-
tory, and production
HEAD QUARTERS
Central SAP
Database &
Servers

36. What’s in IT for Me? For Accounting For Finance For Marketing
Executing TPS effectively is a major concern of any accountant
For Finance
The use of IT helps financial analysts and managers perform their difficult tasks better
For Marketing
By understanding how ERP software operates, marketing people can greatly improve the software utilization by developing challenging corporate applications

37. What’s in IT for Me? (continued …)
For Production/Operations Management
Supply chain management and ERP are critical today for any medium and large manufacturing company, and for service organizations such as banks
For Human Resources Management
IT can improve the efficiency and effectiveness of the HRM activities
conducting training on the intranet

38. What’s in IT for Me? (continued …)
For Human Resource Management
Human resource managers utilize their corporate networks extensively for posting job openings, and use internal corporate networks to publish corporate policies, company newsletters and job openings