1. INFORMATION SYSTEMS IN THE ENTERPRISE ENTERPRISE

2. What are the major types of systems in a business? What role do they play? How do information systems support the major business functions? Why should managers pay attention to business processes? What are the benefits and challenges of using enterprise systems? OBJECTIVES

3. 1.Integration: Different systems serve variety of functions, connecting organizational levels difficult, costly Managers need to determine what level of system integration is required and how much it is worth in money. 2.Enlarging scope of management thinking: Investments in enterprise systems are huge, they must developed over long period of time, and must be guided by common objectives. i.e. Use IS must be flexible to ensure long-term profit MANAGEMENT CHALLENGES

4. Types of Information Systems KEY SYSTEM APPLICATIONS IN THE ORGANIZATION Organization can be divided into strategic, management, knowledge, and operational levels and into five major functional areas: sales & marketing, manufacturing, finance, accounting & Human resources. Information systems serve each of these levels and functions

5. Major Types of Systems Operational-level systems: IS that monitor the elementary activities and transactions of the organization.Operational-level systems: IS that monitor the elementary activities and transactions of the organization. Knowledge-level systems: IS that support knowledge and data workers in an organization.Knowledge-level systems: IS that support knowledge and data workers in an organization. Management-level systems: IS that support the monitoring controlling decision-making, and administrative activities of middle managers.Management-level systems: IS that support the monitoring controlling decision-making, and administrative activities of middle managers. Strategic-level systems: IS that support the long-range planning activities of senior management.Strategic-level systems: IS that support the long-range planning activities of senior management. MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

7. Type of System ESS DSS MIS KWS OAS TPS Information Inputs Aggregate date; external, internal Low-volume data or massive databases optimized for data analysis; analytic models and data analysis tools Summary transaction data; high-volume data; simple models Design specifications; knowledge base Documents; schedules Transactions; events Processing Graphics; simulations; interactive Interactive; simulations, analysis Routine reports; simple models; low-level analysis Modeling; simulations Document manage- ment; scheduling; communication Sorting; listing; merging; updating Information Outputs Projections; responses to queries Special reports; decision analyses; responses to queries Summary and exception reports Models; graphics Documents; schedules; mail Detailed reports; lists; summaries Users Middle managers Operations personnel; supervisors Professionals; staff managers Senior managers Professionals; technical staff Clerical workers Characteristics of Information Processing Systems

8. INTERRELATIONSHIPS AMONG SYSTEMS

9. Business processes Refer to manner (methods) in which work is organized, coordinated, and focused to produce a valuable product or service Are concrete (actual) work flows of material, information, and knowledge- sets of activities Refer to Unique ways to coordinate work, information, and knowledge And the ways in which management chooses to coordinate work Business Processes and Information Systems ENTERPRISE APPLICATIONS

10. Business Processes and Information Systems Information systems help organizations Achieve great efficiencies by automating parts of processes Rethink and streamline (simplify) processes Focus more in customer services ENTERPRISE APPLICATIONS

11. Enterprise Systems or ERP ENTERPRISE APPLICATIONS ERP can integrate the key business processes of an entire firm into a single S/W that allows information to flow seamlessly through out the organization. These systems focus primarily on internal processes but may include transactions with customers and venders

12. Firm structure and organization: One organization (every one use similar process and information) Management Process: Firm-wide knowledge- based management processes (improve management reporting and Decision Making) Technology: Single, unified platform (Data have common, standardized definitions and formats that accept by the entire organization Business Capability: More efficient operations and customer-driven business processes (can respond efficiently to customer requests for requests and information Benefits of Enterprise Systems ENTERPRISE APPLICATIONS

13. Difficult to build: Require fundamental changes in the way the business operates Technology: Require complex pieces of software and large investments of time, money, and expertise (Min $15 Million) Centralized organizational coordination and decision making: May not be the best way for the firms to operate Challenges of Enterprise Systems ENTERPRISE APPLICATIONS

14. Redesigning the Organization with Information Systems Redesigning the Organization with Information Systems

15. Explain how a company can develop information systems that fit its business plan Identify the core activities in the systems development process OBJECTIVES

16. Information systems plan Road map indicating direction of systems development: Rationale Current Situation Management Strategy Implementation Plan Budget SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE Linking Information Systems to the Business Plan

17. How to Develop An Information Systems Plan? Refer to MIS in Action Linking Information Systems to the Business Plan

18. Business Functions: Systems Analysis Business Area: Business Area Analysis Organizations: Enterprise Analysis Top-Down Approach

19. 1. Enterprise Analysis or Business Systems Planning (BSP) Analysis of organization-wide information requirements that: Examines the entire organization in terms of organizational units, function, process and data elements Helps Identify key entities and attributes in the organization's data Establishing Organizational Information Requirements

20. 1. Enterprise Analysis Method Take a large sample of mangers and ask them how they use information….etc The result of survey are aggregated into subunits, functions, process and data materials. Organized the data elements into logical application groups Establishing Organizational Information Requirements

21. Disadvantage Enterprise Analysis Produces an enormous amount of data that is expensive to collect and difficult to analyze. Most of the interviews are conducted with senior or middle managers. Questions focus not on management’s critical objective but rather on what existing information is used. Establishing Organizational Information Requirements

22. 2. Strategic Analysis or Critical Success Factors (CSF) Small number of easily identifiable operational goals Shaped by industry, firm, manager, and broader environment that are believed to assure the success of an organization. Used to determine information requirements of organization Establishing Organizational Information Requirements

23. SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE ExampleGoalsCSF Profit concern Earnings/shareAutomotive industry Return on investmentStyling Market shareQuality dealer system New productCost control Energy standards Nonprofit Excellent healthcareRegional integration with other hospitals Meeting government regulations Improved monitoring of regulations Future health needsEfficient use of resources Critical Success Factors and Organizational Goals

24. 2. Strategic Analysis or CSF Method Interview individual managers to determine CSFs. Aggregate and analyze individual CSFs to identify common and separate concerns. Obtain management consensus on organizational CSFs Define ways to measure success in achieving CSFs Define data and processing needs Define IS projects needed to fill needs Priorities projects Establishing Organizational Information Requirements

25. SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE Using CSFs to Develop Systems Figure 12-2

26. Objective Determining benefits and costs of a system when they are difficult to quantify Dealing with the complexity of large-scale systems projects

27. UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Projects with 12-24 month objectives Longer periods infrastructure investments Two kinds of IS investments: Improvement in business processes to increase firm efficiency Improvements in management decision making Two ways for producing value:

28. UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Analysis of portfolio of potential applications within a firm Determines risks and benefits Selects among alternatives for information systems Strategic Considerations Portfolio Analysis: Seeks to develop

29. A System Portfolio UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS

30. A quick and sometimes compelling method for arriving at a decision on alternative systems The most important outcome of a scoring model is not the score but agreement on the criteria used to judge a system. Best practice is to cycle through the scoring model several times, changing the criteria and weights, to see how sensitive the outcome is to reasonable changes in criteria. Scoring Models:

31. UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Models using techniques for valuing financial options to evaluate information technology investments with uncertain returns Uses the financial industry concept of options valuation An option is the right, but not obligation, to act at a future date. An initial expenditure on IS technology creates the right, but not the obligation, to obtain the benefits associated with further development and deployment of the technology. Real Options Pricing Models (ROPM):

32. UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Capital investments cannot be traded on a market and differ in value based on the firm. Factors, such as prior expertise, skilled labor force, market conditions, and other factors Real Options Pricing Models (ROPM): (Continued)

33. UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Value of IT project (real option) is a function of the following: Value of underlying IT asset (present value of expected revenues) Volatility of value of asset (exercise price) Risk-free interest rate Option time to maturity (length of project deferment)

34. UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Any program that uses information technology to change business processes requires knowledge input The value of the knowledge used to produce improved outputs of the new process can be used as a measure of the value added Knowledge inputs can be measured in terms of learning time to master a new process, and a return on knowledge can be estimated Determines costs and benefits of changes in business processes from new information systems Knowledge Value-Added Approach:

35. Feasibility study Determining achievability of solutionDetermining achievability of solution Establishing information requirements Stating information needs that new system must satisfyStating information needs that new system must satisfy Identifying who, when, where and how components of informationIdentifying who, when, where and how components of information OVERVIEW OF SYSTEMS DEVELOPMENT Overview

36. Details how system will meet information requirements as determined by systems analysisDetails how system will meet information requirements as determined by systems analysis Specifications for the system solutionSpecifications for the system solution Should reflect user business priorities and information needsShould reflect user business priorities and information needs OVERVIEW OF SYSTEMS DEVELOPMENT Systems Design

37. Programming Process of translating system specifications into program codeProcess of translating system specifications into program codeTesting Checks whether the system produces desired results under known conditionsChecks whether the system produces desired results under known conditions Unit testing, system testing, acceptance testing, test planUnit testing, system testing, acceptance testing, test plan OVERVIEW OF SYSTEMS DEVELOPMENT Completing the Systems Development Process

38. Production and maintenance Production is stage after new system is installed and the conversion is completeProduction is stage after new system is installed and the conversion is complete Maintenance is changes in hardware, software, documentation, or procedures of production system to correct errorsMaintenance is changes in hardware, software, documentation, or procedures of production system to correct errors OVERVIEW OF SYSTEMS DEVELOPMENT Completing the Systems Development Process

39. Application software packages Set of prewritten, precoded application software programs commercially available for sale or leaseSet of prewritten, precoded application software programs commercially available for sale or leaseCustomization Modification of software package to meet organization’s unique requirements without destroying the software’s integrityModification of software package to meet organization’s unique requirements without destroying the software’s integrity ALTERNATIVE SYSTEM-BUILDING APPROACHES Application Software Packages

40. Request for Proposal (RFP) Detailed list of questions submitted to vendors of software or other servicesDetailed list of questions submitted to vendors of software or other services Determines how well vendor’s product can meet organization’s specific requirementsDetermines how well vendor’s product can meet organization’s specific requirements ALTERNATIVE SYSTEM-BUILDING APPROACHES Application Software Packages

41. Development of information systems by end users with little or no formal assistance from technical specialistsDevelopment of information systems by end users with little or no formal assistance from technical specialists Allows users to specify their own business needsAllows users to specify their own business needs ALTERNATIVE SYSTEM-BUILDING APPROACHES End-User Development