LEARNING 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
• 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
W.M.C.K.B Wanigasekara
Center for Computer Studies
management solutions
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BUSINESS PROCESSES AND INFORMATION SYSTEMS
BUSINESS PROCESSES AND INFORMATION SYSTEMS
• Business processes:
• Businesses: Can be seen as collection of business
• Manner in which work is organized, coordinated, and
focused to produce a valuable product or service
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processes
• Business processes may be assets or liabilities
• Supported by flows of material, information, knowledge
among the participants
• Unique ways to coordinate work, information, and
knowledge
• Ways in which management chooses to coordinate work
• May be tied to functional area or be cross-functional
• Information systems help organizations achieve great
efficiencies by automating parts of processes
• IS also contributes to completely rethinking processes.
• Business processes typically span several different
functional areas.
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CROSS-FUNCTIONAL BUSINESS PROCESSES
• Transcend boundary between sales, marketing,
manufacturing, and research and development
• Group employees from different functional
specialties to a complete piece of work
• Example: Order Fulfillment Process
The Order Fulfillment Process
cross-functional BP
BUSINESS PROCESSES AND INFORMATION SYSTEMS
cont…
• Information technology enhances business processes by:
• Increasing efficiency of existing processes
• Automating steps that were manual
• Enabling entirely new processes
• Change flow of information
• Replace sequential steps with parallel steps
• Eliminate delays in decision making
FIGURE 2-1
Fulfilling a customer order involves a complex set of steps that requires the close coordination of the sales,
accounting, and manufacturing functions.
• Support new business models
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TYPES OF INFORMATION SYSTEMS
BUSINESS PROCESSES AND INFORMATION SYSTEMS
cont…
A typical business organization has systems
supporting processes for each of the major
business functions
1. Sales and marketing
2. Manufacturing and production
3. Finance and accounting
4. Human resources
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TYPES OF INFORMATION SYSTEMS
DIFFERENT KINDS OF INFORMATON SYSTEMS
• Three main categories of information systems serve
different organizational levels:
• Operational-level systems: support operational
managers, keeping track of the elementary activities and
transactions
• Management-level systems: serve the monitoring,
controlling, decision-making, and administrative activities
• Strategic-level systems: help senior management tackle
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and address strategic issues
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MAJOR TYPES OF INFORMATON SYSTEMS
TYPES OF INFORMATION SYSTEMS
•Operations Support Systems:
•Transaction Processing Systems (TPS)
•TPS(Sales, Inventory, and accounting systems)
•Management Information Systems (MIS)
•PCS(Monitor and control industrial processes)
Petroleum refining, power generation and steel
•Decision-Support Systems (DSS)
production systems.
•Executive Support Systems (ESS)
•Enterprise collaboration systems, such as e-mail,
chat and videoconferencing systems.
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TYPES OF INFORMATION SYSTEMS
TYPES OF OPERATIONS SUPPORT SYSTEMS
• Transaction Processing Systems
• Management Support Systems:
• Record and process business transactions
• MIS(Provide information as reports and displays)
• Examples: sales processing, inventory systems, accounting
systems
• DSS(such as products pricing, profitability
• Process Control Systems
forecasting, and risk analysis.
• Monitor and control physical processes
• EIS(Provides critical information from MIS, DSS such
• Example: using sensors to monitor chemical processes in a
petroleum refinery
as system for easy access to analysis of business
• Enterprise Collaboration Systems
performance, action of competitors, and strategic
• Enhance team and workgroup communication
• Examples: email, video conferencing
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planning
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TYPES OF INFORMATON SYSTEMS
TRANSACTION PROCESSING SYSTEMS(TPS)
• TPS is the important examples of Operations support
systems that record and process data resulting from
business transactions.
• Computerized systems that perform and record the daily
routine transactions necessary to conduct the business;
they serve the organization’s operational level.
• sales order entry, hotel reservations, payroll, employee record
keeping, shipping
• Allow managers to monitor status of operations and
relations with external environment.
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EXAMPLE OF TPS
TRANSACTION PROCESSING SYSTEMS (CONT’D)
• Keep track of the elementary activities and transactions of
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• An inventory control system keeps a file of records about the stock
of goods that a business has on hand (the inventory) which is one
the organization
aspect of the state of the business.
• Sales
• When items are shipped or received, the state of the business is
• Receipts
affected, and the inventory control system makes changes about the
• Cash deposits
inventory in the stored records.
• It also prints a report giving the quantity on hand for each item in
• Payroll
inventory, which is a characteristic of the state of the business.
• Credit decisions
• Finally, when inventory is low, the system produces output that
• and the flow of materials in a factory.
causes more inventory to be ordered, which is another type of
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business transaction.
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TRANSACTION PROCESSING SYSTEMS (CONT’D)
TRANSACTION PROCESSING SYSTEMS (CONT’D)
• Transaction processing systems perform input, output,
• Storage functions include storing data in files and
storage, and processing functions.
databases ,accessing stored data, sorting stored data,
• Input functions include capturing data on a source document,
and updating stored data.
entering the input data into the system, and checking input
• Processing functions involve the manipulation of data,
data for errors, a process called data validation
including computation and decision making
• Output functions include producing screen or paper reports,
such as detail reports, summary reports, and exception
reports.
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TWO WAYS TO PROCESS TRANSACTIONS
TYPES OF TPS SYSTEMS
• Batch Processing:
• Accumulate transactions over time and process
periodically
• Example: a bank processes all checks received in a
batch at night
• Online Processing:
• Process transactions immediately
• Example: a bank processes an ATM withdrawal
immediately
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SYSTEM ARCHITECTURE: TRANSACTION
PROCESSING SYSTEM
TRANSACTION PROCESSING SYSTEM
FUNCTIONS
Input function
Processing function:
Output function:
• Capture input data
• Enter input data
• Validate input data
• perform computation
• make decision
• produce screen output
• print output
Storage function:
• stored data
• Access data
• Update data
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TRANSACTION PROCESSING SYSTEMS
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TPS FOR PAYROLL PROCESSING
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A TPS for payroll processing captures employee payment transaction data (such as a time card).
System outputs include online and hard-copy reports for management and employee paychecks.
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ENTERPRISE COLLABORATION SYSTEMS
SYSTEM EXAMPLE: PAYROLL SYSTEM (TPS)
• Cross-functional e-business systems that enhance communication,
coordination, & collaboration
• Communicate –share information with each other
• Coordinate –coordinate individual work efforts & use of resources
with each other.
• Collaborate –work together cooperatively on joint projects and
assignments
• Tools for Enterprise Collaboration
• Electronic communication
• E-mail, Voice mail, Fax, Web publishing, Bulletin boards,
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ENTERPRISE COLLABORATION SYSTEMS CONT..
• Electronic conferencing
• Data & voice conferencing
• Videoconferencing
• Chat systems
• Discussion forums
• Electronic meeting systems
• Synchronous. Team members can meet at the same time and
place in a “decision room” setting
• Collaborative work management
• Calendaring & scheduling
• Task & project management
• Workflow systems
• Knowledge management
Paging, Internet phone systems
SYSTEMS FOR BUSINESS INTELLIGENCE
• Business intelligence
• Data and software tools for organizing and analyzing
data
• Used to help managers and users make improved
decisions
• Business intelligence systems
• Management information systems
• Decision support systems
• Executive support systems
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MANAGEMENT INFORMATION SYSTEMS
MANAGEMENT INFORMATION SYSTEMS
• MIS provides information in the form of reports and displays
• Management level
to managers and many business professionals. Such as sales
analysis, production performance and cost trend reporting
• Inputs: High volume transaction level data
• Processing: Simple models
systems.
• Provides information to business professionals in a variety of
easy-to-use formats.
• Outputs: Summary reports
• Users: Middle managers
• Examples
• The original type of information system
– Systems that provide managers with reports and online
• Produces many of the products that support day-to-day
real-time access to company performance and historical
decision-making
records.
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MANAGEMENT INFORMATION SYSTEMS
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MANAGEMENT INFORMATION SYSTEM (MIS)
• Management reporting alternatives
• Periodic scheduled reports
• Pre-specified format
• Provided on a scheduled basis
• Exception reports
• Produced only when exceptional conditions occur
• Reduces information overload
• Demand reports and responses
• Available when demanded.
• Ad hoc Push reports
• Information is sent to a networked PC over the corporate
intranet.
• Not specifically requested by the recipient
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In the system illustrated by this diagram, three TPS supply summarized transaction data to
the MIS reporting system at the end of the time period. Managers gain access to the
organizational data through the MIS, which provides them with the appropriate reports. 36
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DECISION SUPPORT SYSTEMS (DSS)
SAMPLE MIS REPORT
•
Decision Support Systems are concerned with providing
useful information to support the decision process.
•
Serve middle management
•
A Production Manager may use a DSS to decides how
much product to manufacture based on the expected
sales associated with a future promotion and the
location and availability of the raw materials necessary to
manufacture the product.
This report, showing summarized annual sales data, was produced by the MIS in previous slide.
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DECISION SUPPORT SYSTEMS (DSS)
DECISION SUPPORT SYSTEMS (DSS)
•Support nonroutine decision making
Examples
• May take data from both internal sources (TPS, MIS) but
•Example:
also from external sources (Stock prices or product prices
• What is the impact on production schedule if
of competitors)
December sales doubled?
• Shipping companies use voyage-estimating systems that
• What would happen to our return on
take various shipping information into account and give
investment if a factory schedule were delayed
advice on costs, freight rates for various types of cargo
for six months?
and port expenses etc.
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DECISION SUPPORT SYSTEMS (DSS)
•
DECISION SUPPORT SYSTEMS (DSS)
A DSS provides one or more of the following types of
support to the decision maker:
•
Identification of problems or decision making
opportunities.
•
Identification of possible solutions or decisions.
•
Analysis of possible decisions, or of variables that will
impact a decision. Sometimes this is called ‘what if’
analyses.
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Four types of analytical modeling
• What-if analysis
End user makes changes to variables, or relationships among variables, and
observes the resulting changes in the values of other variables
• Sensitivity analysis
A special case of what-if analysis
The value of only one variable is changed repeatedly, and the resulting changes on
other variables are observed
Typically used when there is uncertainty about the assumptions made in
estimating the value of certain key variables
• Goal-seeking analysis
Instead of observing how changes in a variable affect other variables, goal-seeking
sets a target value (a goal) for a variable, then repeatedly changes other variables
until the target value is achieved
• Optimization analysis
A more complex extension of goal-seeking The goal is to find the optimum value
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for one or more target variables, given certain constraints
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VOYAGE-ESTIMATING DECISION SUPPORT SYSTEM
DECISION SUPPORT SYSTEMS (DSS)
• Needs voyage-estimating system to calculate
• Data Mining for Decision Support
• financial details
• Software analyzes vast amounts of data
• Ship/time costs (fuel, labour, capital)
• Attempts to discover patterns, trends, & correlations
• Freight rates for various types of cargo
• May perform regression, decision tree, neural
• Port expenses
• technical details
network, cluster detection, or market basket analysis
• Ship cargo capacity
• Speed
• Port distances
• Fuel and water consumption
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• Cargo loading patterns
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VOYAGE-ESTIMATING DECISION SUPPORT SYSTEM
EXECUTIVE SUPPORT SYSTEMS(ESS)
• Information Systems at the organizations strategic level
designed to address unstructured decision making
through advanced graphics and communications.
• Support senior management
• Address nonroutine decisions
or large databases
✓ Requiring judgment, evaluation, and insight
This DSS operates on a powerful PC. It is used daily by managers who must develop bids on shipping contracts.
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EXECUTIVE SUPPORT SYSTEMS(ESS)
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EXECUTIVE SUPPORT SYSTEMS(ESS)
Examples:
• Provide critical information from a wide variety of
– Incorporate data about external events such as tax
laws or competitors, but also draw summarized
information from internal MIS and DSS.
internal and external sources in easy-to-use displays to
executives and managers
– Filter, compress and track critical data, emphasizing the
reduction of time and effort required to obtain
information useful to executives.
– Digital dashboard with real-time view of firm’s financial
performance: working capital, accounts receivable,
accounts payable, cash flow, and inventory
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• Examples:
• top executives may use touch-screen terminals to
view instantly text and graphics displays that highlight
key areas of organizational and competitive
performance
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EXECUTIVE SUPPORT SYSTEMS(ESS) CONT….
EXECUTIVE SUPPORT SYSTEM (ESS)
•Applications:
•Executive-level decision making
•Long-range and strategic planning
•Monitoring internal and external events
•Crisis management
•Staffing and labor relations
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EXECUTIVE SUPPORT SYSTEM (ESS)
Dundas Data Visualization’s
digital dashboard delivers
comprehensive and accurate
information for decision
making. The graphical
overview of key performance
indicators helps managers
quickly spot areas that need
attention.
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EXECUTIVE SUPPORT SYSTEM (ESS)
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Systems From a Functional Perspective
HUMAN RESOURCES INFORMATION SYSTEM (HRIS)
“Business managers are moving from a tradition where
they could avoid, delegate, or ignore decisions about IT to
one where they cannot create a marketing, product,
international ,organization, or financial plan that does not
involve such decisions.”
• Marketing Systems
• Manufacturing Systems
• Accounting Systems
• Financial Management Systems
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HUMAN RESOURCES INFORMATION SYSTEM (HRIS)
HUMAN RESOURCES INFORMATION SYSTEM (HRIS)...
• Support
• HRM and the Internet
• Planning to meet the personnel needs of the business
applications over their intranets.
• Development of employees to their full potential
• Allows companies to provide around-the-clock services
Recruitment, selection, & hiring
to their employees.
• Job placement
• Allows companies to disseminate valuable information
• Performance appraisals
faster.
• Employee benefits analysis
• Allows employees to perform HRM tasks online.
• Training and development
• Health, safety, & security
• Allows companies to process most common HRM
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HUMAN RESOURCES INFORMATION SYSTEM (HRIS)..
HUMAN RESOURCE SYSTEMS
• Staffing
• Supported by information systems that record and
track human resources to maximize their use
• Training and Development
• Help human resource managers plan and monitor
employee recruitment, training, and development
programs
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SYSTEMS FOR ENTERPRISE-WIDE PROCESS INTEGRATION
Enterprise applications (EA)
• Integrated combinations of information subsystems that
• Systems for linking the enterprise
share information resources and support business
• Span functional areas
processes across the functional units
• Execute business processes across firm
• A strategic way to use IT to share information resources &
improve efficiency & effectiveness
• Focused on accomplishing fundamental business
processes in concert with the company’s customer,
supplier, partner, & employee stakeholders
• Help businesses become more flexible and productive -
coordinating their business processes more closely and
integrating groups of processes
• Focus on efficient management of resources and customer
service.
• Include all levels of management
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Enterprise applications (EA)
Enterprise Application Architecture
• An enterprise application (EA) is a large software system platform
designed to operate in a corporate environment such as business
or government. EAs are complex, scalable, component-based,
distributed and mission critical. EA software consists of a group
of programs with shared business applications and organizational
modeling utilities designed for unparalleled functionalities. EAs
are developed using enterprise architecture.
• EA software is a critical component of any computer-based
information system. EA software ultimately enhances efficiency
and productivity through business level support functionality.
Enterprise applications cont.…..
• Four major applications:
Enterprise applications cont.…..
• Some of the more common types of enterprise applications:
• automated billing systems
• Enterprise systems
• payment processing
• Supply chain management systems
• email marketing systems
• Customer relationship management systems
• Knowledge management systems
• Integrates a related set of functions and business
• content management
• call center and customer support
• Business Intelligence
• Business Continuity Planning (BCP)
• HR Management
processes to enhance the performance of the
• Enterprise Application Integration (EAI)
organization as a whole.
• enterprise search
• messaging and collaboration systems.
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Enterprise applications cont.…..
Enterprise Application Architecture
organization
business functions
Enterprise applications automate
processes that span multiple business
functions and organizational levels and
may extend outside the organization.
FIGURE 2-6
• Enterprise systems/ enterprise resource planning (ERP)
systems
• Collects data from different firm functions and stores data
in single central data repository
• Enterprise systems/ enterprise resource planning (ERP)
systems
• examples of business processes supported by ERP
• cross- functional information system
software include accounts payable, general ledger, cash
• Resolves problem of fragmented data
management and forecasting, personnel administration,
• helps in planning the resources of an organization
payroll, time management, inventory management,
Enable:
• Coordination of daily activities
• Efficient response to customer orders (production,
inventory)
product pricing, billing,etc
• designed for automating a firm’s internal ‘back-office’
business processes
• Help managers make decisions about daily operations
and longer-term planning
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• Enterprise systems/ enterprise resource planning (ERP)
systems
BENEFITS OF ENTERPRISE SYSTEMS
• Help to unify the firm’s structure and organization:
One organization
• Management: Firm wide knowledge-based
management processes
• Technology: Unified platform
• Business: More efficient operations & customer-driven
business processes
CHALLENGES OF ENTERPRISE SYSTEMS
• Difficult to build: Require fundamental changes in the
way the business operates
• Technology: Require complex pieces of software and
Supply Chain Management (CSM) Systems
• Manage firm’s relationships with suppliers
• Close linkage and coordination of activities involved in
buying, making, and moving a product
• Integrates supplier, manufacturer, distributor, and
customer logistics time
large investments of time, money, and expertise
• Centralized organizational coordination and decision
making: Not the best way for the firms to operate
• Reduces time, redundant effort, and inventory costs
• Network of organizations and business processes
• Helps in procurement of materials, transformation of raw
materials into intermediate and finished products
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Supply Chain Management (CSM) Systems
Haworth’s Supply Chain Management Systems
• Helps in distribution of the finished products to customers
• Includes reverse logistics -returned items flow in the
reverse direction from the buyer back to the seller
• Share information about:
• Orders, production, inventory levels, delivery of
products and services
Goal:
• Right amount of products to destination with least
amount of time and lowest cost
Information from Supply Chain Management Systems
Helps Firms;
• Decide when and what to produce, store, and move
• Rapidly communicate orders
• Track the status of orders
• Check inventory availability and monitor inventory levels
• Reduce inventory, transportation, and warehousing costs
• Track shipments
• Plan production based on actual customer demand
• Rapidly communicate changes in product design
Customer Relationship Management (CRM)
• Manages all ways used by firms to deal with existing and
potential new customers
• Business and technology discipline
• Uses information system to coordinate entire business
processes of a firm
• Provides end-to-end customer care
• Provides a unified view of customer across the company
• Consolidates customer data from multiple sources and
provides analytical tools for answering questions
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Customer Relationship Management (CRM)
• Provide information to coordinate all of the business
processes that deal with customers
• Sales
• Marketing
• Customer service
• Helps firms identify, attract, and retain most profitable
customers
Knowledge Management Systems (KMS)
• IT that helps gather, organize, and share business
knowledge within an organization
• Hypermedia databases that store and disseminate
business knowledge. May also be called knowledge
bases
• Best practices, policies, business solutions
• Entered through the enterprise knowledge portal
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Knowledge Management Systems (KMS)
INTERRELATIONSHIPS AMONG SYSTEMS
• Support processes for capturing and applying knowledge
and expertise
• How to create, produce, deliver products and
services
• Collect internal knowledge and experience within firm
and make it available to employees
• Link to external sources of knowledge
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• Also used to increase integration and expedite the flow of
• E-business
information
• Use of digital technology and Internet to drive major
• Intranets:
business processes
• Internal company Web sites accessible only by
• E-commerce
employees
• Subset of e-business
• Extranets:
• Buying and selling goods and services through Internet
• Company Web sites accessible externally only to
• E-government:
vendors and suppliers
• Using Internet technology to deliver information and
• Often used to coordinate supply chain
services to citizens, employees, and businesses
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