1. 2.1 CHAPTER 2. THE STRATEGIC ROLE OF INFORMATION SYSTEMS

2. 2.2 LEARNING OBJECTIVES ANALYZE ROLES OF 6 TYPES OF INFORMATION SYSTEMSANALYZE ROLES OF 6 TYPES OF INFORMATION SYSTEMS DESCRIBE TYPES OF INFORMATION SYSTEMSDESCRIBE TYPES OF INFORMATION SYSTEMS EXAMINE COMPETITIVE FORCES, VALUE CHAIN MODELSEXAMINE COMPETITIVE FORCES, VALUE CHAIN MODELS*

3. 2.3 LEARNING OBJECTIVES EXPLAIN DIFFICULTIES OF BUILDING, SUSTAINING STRATEGIC INFORMATION SYSTEMSEXPLAIN DIFFICULTIES OF BUILDING, SUSTAINING STRATEGIC INFORMATION SYSTEMS DESCRIBE HOW INFORMATION SYSTEMS SUPPORT LEVELS OF BUSINESS STRATEGYDESCRIBE HOW INFORMATION SYSTEMS SUPPORT LEVELS OF BUSINESS STRATEGY*

4. 2.4 MANAGEMENT CHALLENGES INTEGRATION:INTEGRATION: –ENTERPRISE RESOURCE MANAGEMENT –CONNECTING ORGANIZATIONAL LEVELS DIFFICULT, COSTLY SUSTAIN COMPETITIVE ADVANTAGE:SUSTAIN COMPETITIVE ADVANTAGE: –INFO SYSTEMS MUST BE FLEXIBLE TO ENSURE LONG-TERM PROFITS*

5. 2.5 TYPES OF INFORMATION SYSTEMS DATA WORKERS KIND OF SYSTEM GROUPS SERVED STRATEGIC LEVEL SENIOR MANAGERS MANAGEMENT LEVEL MIDDLE MANAGERS OPERATIONAL OPERATIONAL LEVEL MANAGERS KNOWLEDGE LEVEL KNOWLEDGE & SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN RESOURCESMARKETING

6. 2.6 MAJOR TYPES OF SYSTEMS EXECUTIVE SUPPORT SYSTEMS (ESS)EXECUTIVE SUPPORT SYSTEMS (ESS) DECISION SUPPORT SYSTEMS (DSS)DECISION SUPPORT SYSTEMS (DSS) MANAGEMENT INFORMATION SYSTEMS (MIS)MANAGEMENT INFORMATION SYSTEMS (MIS) KNOWLEDGE WORK SYSTEMS (KWS)KNOWLEDGE WORK SYSTEMS (KWS) OFFICE AUTOMATION SYSTEMS (OAS)OFFICE AUTOMATION SYSTEMS (OAS) TRANSACTION PROCESSING SYSTEMS (TPS)TRANSACTION PROCESSING SYSTEMS (TPS)*

7. 2.7 TYPICAL TPS APPLICATIONS Sales & Marketing Systems MAJOR FUNCTIONS OF SYSTEMS: Sales Management; Market Research; Promotion; Pricing; New ProductsSales Management; Market Research; Promotion; Pricing; New Products MAJOR APPLICATION SYSTEMS: Sales Order Info System; Market Research System; Pricing SystemSales Order Info System; Market Research System; Pricing System* TPS

8. 2.8 TYPICAL TPS APPLICATIONS Manufacturing & Production Systems MAJOR FUNCTIONS OF SYSTEMS: Scheduling; Purchasing; Shipping / Receiving; Engineering; OperationsScheduling; Purchasing; Shipping / Receiving; Engineering; Operations MAJOR APPLICATION SYSTEMS: Materials Resource Planning Systems; Purchase Order Control Systems; Engineering Systems; Quality Control SystemsMaterials Resource Planning Systems; Purchase Order Control Systems; Engineering Systems; Quality Control Systems* TPS

9. 2.9 TYPICAL TPS APPLICATIONS Finance & Accounting Systems MAJOR FUNCTIONS OF SYSTEMS: Budgeting; General Ledger; Billing: Cost AccountingBudgeting; General Ledger; Billing: Cost Accounting MAJOR APPLICATION SYSTEMS: General Ledger; Accounts Receivable / Payable; Budgeting; Funds Management SystemsGeneral Ledger; Accounts Receivable / Payable; Budgeting; Funds Management Systems* TPS

10. 2.10 TYPICAL TPS APPLICATIONS Human Resources Systems MAJOR FUNCTIONS OF SYSTEMS: Personnel Records; Benefits; Compensation; Labor Relations; TrainingPersonnel Records; Benefits; Compensation; Labor Relations; Training MAJOR APPLICATION SYSTEMS: Payroll; Employee Records; Benefit Systems; Career Path Systems; Personnel Training SystemsPayroll; Employee Records; Benefit Systems; Career Path Systems; Personnel Training Systems* TPS

11. 2.11 TYPICAL TPS APPLICATIONS Other Types (e.g., University) MAJOR FUNCTIONS OF SYSTEMS: Admissions; Grade Records; Course Records; AlumniAdmissions; Grade Records; Course Records; Alumni MAJOR APPLICATION SYSTEMS: Registration System; Student Transcript System; Curriculum Class Control System; Alumni Benefactor SystemRegistration System; Student Transcript System; Curriculum Class Control System; Alumni Benefactor System* TPS

12. 2.12 KNOWLEDGE LEVEL INPUTS: DESIGN SPECSINPUTS: DESIGN SPECS PROCESSING: MODELLINGPROCESSING: MODELLING OUTPUTS: DESIGNS, GRAPHICSOUTPUTS: DESIGNS, GRAPHICS USERS: TECHNICAL STAFFUSERS: TECHNICAL STAFF EXAMPLE: ENGINEERING WORK STATION KNOWLEDGE WORK SYSTEMS (KWS)

13. 2.13 OFFICE AUTOMATION SYSTEMS (OAS) TOWARD A “PAPERLESS” OFFICETOWARD A “PAPERLESS” OFFICE REDESIGN OF WORK FLOWREDESIGN OF WORK FLOW INTEGRATED SOFTWAREINTEGRATED SOFTWARE ERGONOMIC DESIGNERGONOMIC DESIGN BRIGHT, CHEERFUL WORK SPACEBRIGHT, CHEERFUL WORK SPACE EXAMPLE: PRESENTATION GRAPHICS

14. 2.14 MANAGEMENT LEVEL INPUTS: HIGH VOLUME DATAINPUTS: HIGH VOLUME DATA PROCESSING: SIMPLE MODELSPROCESSING: SIMPLE MODELS OUTPUTS: SUMMARY REPORTSOUTPUTS: SUMMARY REPORTS USERS: MIDDLE MANAGERSUSERS: MIDDLE MANAGERS EXAMPLE: ANNUAL BUDGETING MANAGEMENT INFORMATION SYSTEMS (MIS)

15. 2.15 STRUCTURED & SEMI- STRUCTURED DECISIONSSTRUCTURED & SEMI- STRUCTURED DECISIONS REPORT CONTROL ORIENTEDREPORT CONTROL ORIENTED PAST & PRESENT DATAPAST & PRESENT DATA INTERNAL ORIENTATIONINTERNAL ORIENTATION LENGTHY DESIGN PROCESSLENGTHY DESIGN PROCESS* MANAGEMENT INFORMATION SYSTEMS (MIS)

16. 2.16 MIS MIS FILES SALES DATA UNIT PRODUCT COST PRODUCT CHANGE DATA EXPENSE DATA MIS REPORTS MANAGERS TPS Order Processing System Materials Resource Planning System General Ledger System ORDER FILE PRODUCTION MASTER FILE ACCOUNTING FILES TPS DATA FOR MIS APPLICATIONS

17. 2.17 MANAGEMENT LEVEL INPUTS: LOW VOLUME DATAINPUTS: LOW VOLUME DATA PROCESSING: INTERACTIVEPROCESSING: INTERACTIVE OUTPUTS: DECISION ANALYSISOUTPUTS: DECISION ANALYSIS USERS: PROFESSIONALS, STAFFUSERS: PROFESSIONALS, STAFF EXAMPLE: CONTRACT COST ANALYSIS DECISION SUPPORT SYSTEMS (DSS)

18. 2.18 FLEXIBLE, ADAPTABLE, QUICKFLEXIBLE, ADAPTABLE, QUICK USER CONTROLS INPUTS/OUTPUTSUSER CONTROLS INPUTS/OUTPUTS NO PROFESSIONAL PROGRAMMINGNO PROFESSIONAL PROGRAMMING SUPPORTS DECISION PROCESSSUPPORTS DECISION PROCESS SOPHISTICATED MODELING TOOLSSOPHISTICATED MODELING TOOLS* DECISION SUPPORT SYSTEMS (DSS)

19. 2.19 STRATEGIC LEVEL INPUTS: AGGREGATE DATAINPUTS: AGGREGATE DATA PROCESSING: INTERACTIVEPROCESSING: INTERACTIVE OUTPUTS: PROJECTIONSOUTPUTS: PROJECTIONS USERS: SENIOR MANAGERSUSERS: SENIOR MANAGERS EXAMPLE: 5 YEAR OPERATING PLAN EXECUTIVE SUPPORT SYSTEMS (ESS)

20. 2.20 TOP LEVEL MANAGEMENTTOP LEVEL MANAGEMENT DESIGNED TO THE INDIVIDUALDESIGNED TO THE INDIVIDUAL TIES CEO TO ALL LEVELSTIES CEO TO ALL LEVELS VERY EXPENSIVE TO KEEP UPVERY EXPENSIVE TO KEEP UP EXTENSIVE SUPPORT STAFFEXTENSIVE SUPPORT STAFF* EXECUTIVE SUPPORT SYSTEMS (ESS)

21. 2.21 INTERRELATIONSHIPS AMONG SYSTEMS ESS TPS KWS OAS DSSMIS

22. 2.22 SYSTEMS FROM A FUNCTIONAL PERSPECTIVE SALES & MARKETING SYSTEMSSALES & MARKETING SYSTEMS MANUFACTURING & PRODUCTION SYSTEMSMANUFACTURING & PRODUCTION SYSTEMS FINANCE & ACCOUNTING SYSTEMSFINANCE & ACCOUNTING SYSTEMS HUMAN RESOURCES SYSTEMSHUMAN RESOURCES SYSTEMS*

23. 2.23 STRATEGIC ROLE OF INFORMATION SYSTEMS STRATEGIC INFO SYSTEM: CAN CHANGE GOALS, OPERATIONS PRODUCTS, SERVICES ENVIRONMENT TO GAIN COMPETITIVE ADVANTAGE

24. 2.24 COMPETITIVE FORCES MODEL THE FIRM TRADITIONAL COMPETITION NEW MARKET ENTRANTS SUPPLIERS CUSTOMERS SUBSTITUTE PRODUCTS & SERVICES

25. 2.25 PRODUCT DIFFERENTIATIONPRODUCT DIFFERENTIATION FOCUSED DIFFERENTIATIONFOCUSED DIFFERENTIATION DATAMININGDATAMINING LINKING CUSTOMERS & SUPPLIERSLINKING CUSTOMERS & SUPPLIERS BECOMING LOW COST PRODUCERBECOMING LOW COST PRODUCER* COUNTERING COMPETITIVE FORCES

26. 2.26 VALUE CHAIN MODEL HIGHLIGHTS PRIMARY & SUPPORT ACTIVITIES THAT ADD VALUE TO PRODUCTS, SERVICES PRIMARY: DIRECTLY RELATED TO PRODUCTION, DISTRIBUTIONPRIMARY: DIRECTLY RELATED TO PRODUCTION, DISTRIBUTION SUPPORT: INFRASTRUCTURE, HUMAN RESOURCES, TECHNOLOGY, PROCUREMENTSUPPORT: INFRASTRUCTURE, HUMAN RESOURCES, TECHNOLOGY, PROCUREMENT*

27. 2.27 IMPLICATIONS FOR MANAGERS & ORGANIZATIONS STRATEGIC ALLIANCES, INFORMATION PARTNERSHIPSSTRATEGIC ALLIANCES, INFORMATION PARTNERSHIPS INDUSTRY LEVEL STRATEGIC SYSTEMSINDUSTRY LEVEL STRATEGIC SYSTEMS MANAGING STRATEGIC TRANSITIONSMANAGING STRATEGIC TRANSITIONS IMPACT OF THE INTERNETIMPACT OF THE INTERNET*

28. 2.28 INFORMATION SYSTEMS & QUALITY QUALITY: Conformance to specifications, customer satisfactionQUALITY: Conformance to specifications, customer satisfaction SIMPLIFY PRODUCT, PROCESSSIMPLIFY PRODUCT, PROCESS BENCHMARKINGBENCHMARKING CUSTOMER DEMAND AS GUIDECUSTOMER DEMAND AS GUIDE REDUCE CYCLE TIMEREDUCE CYCLE TIME IMPROVE QUALITY & PRECISIONIMPROVE QUALITY & PRECISION*

29. 2.29 Connect to the INTERNET Laudon/Laudon Web site: http://www.prenhall.com/laudon Additional Internet Resources related to this chapter: http://tools.org/EI/ICEIMT http://www.brint.com http://www.datawarehousing.com http://www.erpassist.com http://www.sap.com http://www.mysap.com © 2001 Laudon & Laudon, Essentials of Management Information Systems 4/e

30. 2.30 CHAPTER 2. THE STRATEGIC ROLE OF INFORMATION SYSTEMS