1. Course - DT249/1 Subject - Information Systems in Organisations INFORMATION SYSTEMS AND MODERN APPLICATIONS Semester 1, Week 5

2. 2 Model Content Title From the course document, this week’s lecture refers to: Modern Information Systems applications

3. 3 Textbooks? The Laudon and Laudon book, ‘Management Information Systems’ (Seventh Edition) – Chapter 4: The Digital Firm: Electronic Commerce and Electronic Business’ This chapter matches the theme of this lecture the closest.

4. 4 Management Information System Applications As described in previous lectures, an organisation exists to be charitable or profitable. The organisation functions through a structure such as ‘departmentalisation’ and ‘spreads’ responsibilities and tasks among the individuals and groups of those departments.

5. 5 MIS Applications (2) The functions/tasks usually have a measure of information – or, at least, data – that is/are a very important asset to the organisation. The more the organisation can control the information, the more efficient (and profitable?) it can become.

6. 6 MIS Applications (3) In many cases the information can be used as a ‘dividend’ – a product in its own right – or an enhancement to the employees or customers of the organisation. Central to information control, product or service enhancement are Information Systems and, by implication, Information Technology (IT). Central to Information Systems and IT are computers.

7. 7 MIS Applications (4) If we ‘map’ the functions (perhaps departments) of an organisation to the functions of an Information System, put in place to help manage the organisation, generally, we find that computer-based applications fit many of the information-oriented functions of an organisation. This lecture considers the Information Systems applications of organisations and the issues surrounding them.

8. 8 Business Organisations’ Information Systems Information Systems are placed in business organisations because of: ◦ Business pressures (e.g. to sell more stock…) ◦ Organisational responses to competition and legislation ◦ Information Systems and Information Technology ‘trends’ (A note on ‘Enterprise’ – the context of this word, when used later in the notes, is one that describes the organisation as ‘innovative’ - rising to challenges - rather than just manufacturing and selling.)

9. 9 Business Pressures Market pressures ◦ The new ‘global economy’ that causes strong competition ◦ The changing nature of the workforce ◦ ‘Customer Power’ – they are more demanding

10. 10 Business Pressures (2) Technological pressures ◦ Technological innovation continues ◦ The obsolescence of current systems (belonging to the organisation) ◦ ‘Information overload’ – greater quantities of information require bigger and better systems.

11. 11 Business Pressures (3) Sociological pressures ◦ Social responsibility  Government regulations  Government deregulation  Shrinking budgets and subsidies ◦ Ethical issues – (e.g. are customers’ details secure? Does our product harm anyone/the environment?)

12. 12 Organisational Responses to Challenges Organisations have established ◦ Strategic systems ◦ Continuous improvement efforts ◦ Business Process Reengineering (BPR) ◦ Electronic commerce ◦ Business alliances...and continue to establish these things… will continue to establish these things.

13. 13 Strategic Systems Strategic systems provide organisations with strategic advantages, thus enabling them to; increase their market share, to better negotiate with their suppliers, or to prevent competitors from entering their specialist areas (and taking their customers).

14. 14 Continuous Improvement Efforts These efforts by organisations could be viewed as strategies: ◦ Improved productivity ◦ Just-in-Time (resource management) ◦ Total Quality Management (TQM) ◦ Improved decision making ◦ Managing information and knowledge ◦ Innovation and creativity (e.g. Research and Development) ◦ Change management ◦ Customer service (new or improved)

15. 15 Business Process Reengineering Business Process Reengineering (known to many as BPR) is a fancy term for changing the organisation radically by, for example; ◦ Reducing the ‘cycle time’ (CT) for production, customer service, etcetera. ◦ Taking a ‘customer-focused approach’ ◦ The empowering of employees (giving them more autonomy) ◦ Restructuring the organisation or departments with, for example, a team-based structure

16. 16 Business Alliances The organisation might establish alliances – agreements – with suppliers, customers or even competitors (or a combination of any of these (or yet other parties)). They might employ; ◦ Enterprise Resource Planning (ERP) ◦ Electronic commerce … or something else

17. 17 Reminder! The previous slides describing strategies and responses to challenges/pressures had example functions with them. ◦ Example functions were improved productivity, customer-focus, e-commerce… These can have Information Systems applications designed for them – or be the basis for MIS applications.

18. 18 Applications Within an Organisation An example of functional business systems might include, for example, variety of information systems (transaction processing, management information systems, decision support, etc.) that support the business functions of; ◦ Marketing, ◦ Human Resource Management (HRM), ◦ Finance and Accounting, ◦ Operations Management

19. 19 Functional Business Systems Examples of Functional Business Information Systems Production Operations Human Resource Management Accounting Finance Customer relationship management Interactive marketing Sales force automation Cash management Credit management Investment management Capital budgeting Financial forecasting Order processing Inventory control Accounts receivable Accounts payable Payroll General ledger Compensation analysis Employee skills inventory Personnel requirements forecasting Manufacturing resource planning Manufacturing execution systems Process control Functional Business Systems Marketing

20. 20 Functional Business Systems (2) In the diagram of the previous slide the features of: Marketing, Human Resource Management, Finance Accounting and Operations Management could be considered as departments, the descriptions within each box considered as key tasks and those tasks might match applications (and software programs?)

21. 21 Marketing Information Systems The function of marketing can have its own set of applications.

22. 22 Marketing Information Systems (2) Market Information Systems Interactive Marketing Sales Force Automation Customer Relationship Management Sales Management Market Research and Forecasting Advertising and Promotion Product Management

23. 23 Interactive Marketing Interactive marketing: ◦ A customer-focused marketing process using the Internet, intranets and extranets to establish two- way transactions between a company and its customers or potential customers. The goal is to profitably attract and keep customers who will become partners with the business.

24. 24 Targeted Marketing Components Community – with customised advertising to appeal to people of specific virtual communities. Content – with advertising placed on a variety of selected websites aimed at a specific audience. Context – with advertising placed on web pages that are relevant to the content of a product or service. Demographic/Psychographic – web marketing efforts aimed at specific types or classes or people. Online Behaviour – promotion efforts tailored to each visit to a site by an individual, e.g., using ‘cookies’ files. (‘Cookies’? Worth looking up online.)

25. 25 Targeted Marketing This is an advertising and promotion management concept that includes five targeting components

26. 26 Internet Marketing There are numerous examples of (software) applications related to Marketing using the Internet. Attached to the applications are; ◦ E-mail – a communications tool for ‘pushing’ the message to customers. ◦ Web publishing – a page development tool for developing pages that ‘pull’ the customers to the message.

27. 27 Sales Function Automation The Sales Department might provide the sales force with notebook computers, Web connectivity and sales contract management software. They can connect their work to marketing websites and the company intranet. The goal being to: ◦ Increase personal productivity ◦ Speed up capture and analysis of sales data from the field to be passed on to Marketing Managers ◦ Have the effect of gaining strategic advantage

28. 28 Human Resource Management (HRM) HRM often has its own department. As a collection of applications its information systems are designed to support ◦ The planning required to meet the personnel needs of the organisation ◦ The development of employees to their full potential ◦ Control of all personnel policies and programmes

29. 29 Human Resources Systems Will Support… Staffing Training and Development Compensation Administration Strategic Systems Tactical Systems Operational Systems Human resource planning Labor force tracking Labor cost analysis and budgeting Turnover analysis Recruiting Workforce planning/ scheduling Succession planning Performance appraisal planning Training effectiveness Career matching Skill assessment Performance evaluations Contract costing Salary forecasting Compensation effectiveness and equity analysis Benefit preference analysis Payroll control Benefits administration

30. 30 HRM and the Internet The Internet is useful to the HRM (Department) for; ◦ Recruiting employees using the corporate website and commercial recruiting services ◦ Posting messages in selected Internet newsgroups ◦ Communicating with job applicants via e-mail

31. HRM and Corporate Intranets An Intranet is useful to HRM for; ◦ Processing common HRM applications ◦ Allowing the HRM department to provide around-the- clock services to employees and applicants ◦ Disseminating valuable information faster than through previous company channels (such as ‘snail mail’) ◦ Collecting information from employees online ◦ Allowing managers and other employees to perform HRM tasks with little intervention by the HRM department ◦ Acting as a training tool

32. 32 Employee Self-Service (ESS) Intranet applications that allow employees to ◦ View benefits ◦ Enter travel and expense reports ◦ Verify employment and salary information ◦ Update their personal information ◦ Enter data that has a time constraint to it can be described as ‘self-service’ and can be included as an application.

33. 33 Financial Management Systems The management systems of a Financial function support business managers and professionals in decisions concerning ◦ the financing of a business ◦ the allocation and control of financial resources within a business.

34. 34 Financial Management System Examples

35. 35 Accounting Information Systems An Accounting Application will typically ◦ Record and report the flow of funds through an organisation ◦ Produce financial statements ◦ Allow forecasts of future conditions to be generated

36. 36 Accounting Information Systems (2) An example of Accounting application processes

37. 37 Accounting Information Systems (3) In the diagram of the previous slide the features of Sales Transaction System, Cash Receipts…System, General Ledger… System, Purchase Transaction… System and payroll… System could be considered as subsystems of the Accounts Department. The descriptions within each box considered as tasks that might match applications (and more software programs?)

38. 38 Accounting IS Processes Order Processing – Captures and processes customer orders and produces data for inventory control and accounts receivable. Inventory Control – Processes data reflecting changes in inventory and provides shipping and reorder information. Accounts Receivable – Records amounts owed by customers and produces customer invoices, monthly customer statements and credit management reports.

39. 39 Accounting IS Processes (2) Accounts Payable – Records purchases from, amounts owed to and payments to suppliers – it also produces cash management reports. Payroll – Records employee work and compensation data and produces paycheques and other payroll documents and reports. General Ledger – Consolidates data from other accounting systems and produces the periodic financial statements and reports of the business.

40. 40 Operations Management As an Operations Management example there follows a view of Manufacturing Information Systems that; ◦ Supports the production/operations part of the Manufacturing function ◦ Includes all activities concerned with planning and control of producing goods or services

41. 41 Computer-Integrated Manufacturing (CIM)

42. 42 CIM Objectives The objectives if Computer Integrated Manufacturing are to typically; ◦ Simplify production processes, product designs and factory organisation as a vital foundation to automation and integration ◦ Automate production processes and the business functions that support them with computers, machines and (possibly) robots ◦ Integrate all production and support processes using computer networks, cross-functional business software and other information technologies These objectives will employ many different applications – some of which may be integrated.

43. 43 CIM Systems Examples of CIM hardware/software systems are; ◦ Computer-Aided Manufacturing (CAM) – that automate the production process ◦ Manufacturing Execution Systems (MES) – performance monitoring information systems for factory floor operations ◦ Process Control (Systems) – that control ongoing physical processes ◦ Machine Control (Systems) – that control the actions of machines Each of these could be viewed as an application or group of applications.

44. 44 Information System Applications for E-Commerce Information Systems applications can be used by an organisation as a basis for trade. It may be the main basis for trade (as it is for E-Bay). Many organisations use IS applications to ‘add value’ to their product.

45. 45 Major E-Business Applications Enterprise Communication Coordination & Collaboration Enterprise Communication Coordination & Collaboration Electronic Business Applications Telecommunications Networks Electronic Commerce Electronic Commerce Internal Business Systems Internal Business Systems Intranets Extranets The Internet (Other networks) Front End Back End

46. 46 Cross-Functional Systems In organisations the boundaries of traditional business functions often intersect, overlap or integrate. This is so that Management can reengineer and improve vital business processes all across the enterprise.

47. 47 Cross-Functional Systems (2) Below the diagram describes a sequence of events that matches the early part of a product’s life cycle. The functions of Marketing, Engineering and Manufacturing will have tasks (therefore applications) that overlap. New Product Development Process

48. 48 Enterprise Business Systems Enterprise Application Architecture Suppliers Customers Employees Partners Supply Chain Management Sourcing - Procurement Enterprise Resource Planning Internal Business Processes Customer Relationship Management Marketing – Sales - Service Knowledge Management Collaboration – Decision Support Partner Relationship Management Selling – Distribution

49. 49 Customer Relationship Management (CRM) CRM uses technology to: ◦ Create a cross-functional enterprise system that integrates and automates many of the processes in sales, marketing and customer service that interact with customers ◦ Create a framework of web-enabled software and databases that integrate these processes with the rest of the company’s processes.

50. 50 CRM Uses IT to Create a Cross-Functional Enterprise System Marketing and Fulfillment Customer Service and Support Retention and Loyalty Programs Contact and Account Management Sales Cross-Sell Up-Sell = Employee or Prospective Customer Fax e-Mail Telephone Web Customer Relationship Management

51. 51 Contract and Account Management; ◦ Helps sales, marketing and service professionals capture and track data about past/planned contacts with customers/prospects Sales ◦ Provides Sales Representatives (reps) with the software tools and data they need to support and manage sales activities ◦ ‘Cross-selling’ is trying to sell a customer of one product with a related product ◦ ‘Up-selling’ is trying to sell customer a better product than they are currently seeking CRM Applications

52. 52 CRM Applications (2) Marketing and Fulfillment help marketing professionals accomplish direct marketing campaigns by tasks such as: ◦ Qualifying leads for targeted marketing and scheduling and tracking direct marketing mailings.

53. 53 CRM Applications (3) Customer Service and Support ◦ Provides sales reps with software tools and database access to customer database shared by sales and marketing professions ◦ Helps create, assign and manage requests for service ◦ Call centre software that routes sales calls to customer support agents based upon their skills and type of call ◦ Help desk software that provides relevant service data and suggestions for resolving problems for customer service reps helping customers with problems

54. 54 CRM Applications (4) Retention and Loyalty Programmes ◦ Try to help a company identify, reward, and market to their most loyal and profitable customers Seen as a function, Retention and Loyalty might use data mining tools and analytical software that extracts information about customers and prospective customers from a ‘Customer Data Warehouse’.

55. 55 CRM: The Business Focus Customer Life Cycle CRM Functional Solutions CRM Integrated Solution The Internet AcquireEnhanceRetain Direct MarketingCross-sell and Up-sellProactive Service Sales Force Automation Customer Support Collaborative Service Shared Customer Data PartnerCompanyCustomer Customer Relationship Management supports integrated and collaborative relationship between a business and it’s customers.

56. 56 Benefits and Challenges of CRM Customer Relationship Management benefits are; ◦ Identify and target the best customers ◦ Customisation and personalisation of products and services ◦ Track customer contacts ◦ Provide consistent customer experience and superior service/support CRM failures identified in a case study; ◦ 50% of applications fail to meet expectations ◦ 20% of the time CRM damaged, rather than enhanced, customer relationships ◦ A lack of understanding of customer expectation and preparation for customer service is blamed

57. 57 Enterprise Resource Planning (ERP) ERP: a cross-functional enterprise system with an integrated suite of software modules that support the basic internal functions of an organisation. (Functions = ‘business processes’ in some of the books, case studies and web sites.)

58. 58 Enterprise Resource Planning Sales Distribution, Order Management Accounting and Finance Production Planning Human Resources Integrated Logistics Customer/ Employee

59. 59 Enterprise Resource Planning – the Benefits ERP is often established in organisations with large numbers of employees, numerous or complex departments and/or large numbers of customers because of a perceived value of; ◦ Quality and efficiency in products and operations ◦ Decreased costs in production and operations ◦ Decision support for Management ◦ Enterprise agility – the ability to change strategies and/or methods in response to ‘outside’ changes

60. 60 Costs of Implementing a New ERP Percentages identified in a case study

61. 61 Enterprise Resource Planning Failures Case study findings; ◦ A company had software installation problems of ERP Integrated Suite into its retail environment. ◦ Two retail outlets blamed ERP software for poor financial performance. ◦ A grocery had problems with number of transactions. ◦ Another large retailer replaced the entire ERP system.

62. 62 Enterprise Resource Planning Failures (2) Causes of ERP failure: ◦ Underestimating the complexity of the planning, development and training needed ◦ Failure to involve affected employees ◦ Trying to do too much too fast ◦ Insufficient training in new work tasks ◦ Failure to do enough data conversion and testing ◦ Over reliance by the company on claims of the ERP sellers or consultants

63. 63 Supply Chain Management (SCM) Supply Chain Management is a cross-functional inter-enterprise system to help support and manage the links between a company’s key business processes and those of its suppliers, customers and business partners. (Processes? Functions!)

64. 64 Supply Chain Management (2) Supply Chain Management (SCM): an application to match strategic objectives for many firms - ◦ the right products ◦ the right place ◦ the right time ◦ in the proper quantity ◦ at an acceptable cost

65. 65 Supply Chain Management (3) Commit Schedule Make Deliver Transportation Planning Demand Planning Demand Planning Manufacturing Planning Manufacturing Planning Distribution Planning Distribution Planning Supply Chain Life Cycle SCM Functional Processes SCM Integrated Solution Order Commitment Order Commitment Advance Scheduling Advance Scheduling Internetworked Supply Chain Management

66. 66 The Role of SCM

67. 67 Supply Chain Management (4) Supply Chain Life Cycle SCM Functional Processes SCM Integrated Solution SupplierManufacturerCustomerRetailer The Internet Collaborative Fulfillment Shared Market Data CommitScheduleMakeDeliver Strategic Sourcing and Procurement Forecast and Demand Planning Customer Order Fulfillment Service Distribution Network and Warehouse Operations Transportation and Shipment Management Production Logistics SCM Software helps organisations reengineer and integrate the functional SCM processes

68. 68 Supply Chain Management (5) The goals of SCM is to establish fast, efficient, low-cost network of business relationships or a supply chain to get a company’s products from concept to market. A supply chain is made up of interrelationships with suppliers, customers, distributors, and other businesses that are needed to design, build and sell a product.

69. 69 Supply Chain Management (6) Causes of problems with SCM: ◦ Lack of proper demand-planning knowledge, tools and guidelines ◦ Inaccurate or over-optimistic demand forecasts ◦ Inaccurate production, inventory and other data ◦ Lack of adequate collaboration within the company and between partners ◦ SCM software considered immature, incomplete and hard to implement

70. 70 Enterprise Application Integration (EAI) EAI connects cross-functional system and serves as middleware to provide data conversion, communication between systems and access to system interfaces.

71. 71 Enterprise Collaboration Systems (ECS) Enterprise Collaboration Systems (ECS): cross- functional Information Systems that enhance communication, coordination and collaboration among the members of business teams and workgroups.

72. 72 Enterprise Collaboration Systems (2) Enterprise Collaboration Systems goals are to: ◦ Communicate - share information with teams and work groups ◦ Coordinate - coordinate individual work efforts and use of resources with teams and work groups ◦ Collaborate - work together cooperatively on joint projects and assignments

73. 73 ECS Tools

74. 74 Why Collaborate? Workgroups and project teams work together efficiently and effectively regardless of location, they share information, coordinate work efforts and resources. They work together cooperatively.

75. 75 What Next? Next Week: Selection and acquisition of information systems