MBSZ02 Enterprise Information Management
Lecture 2
Information Systems in Business
MUST
Dr. Fei HUANG
1
MIS – Week 2
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Last week – Introduction
» Plans for the semester
» Brief of the workload
» What is “M+I+S”
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This week – Overview of Information Systems
» What is an Information System?
» Why use Information Systems?
» Case Studies
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Dr. Fei HUANG
2
Information systems in Business
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Many occupations concerned with the handling
processing, provision or transmission of information
» The business IS information management
» Examples found in insurance, banks, health, police,
government, defence, agriculture
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Most organizations need information systems to
prosper and to survive in the market place
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»
MUST
need to manage risk
handle defensive society
cut costs
gain competitive advantage
Dr. Fei HUANG
3
Relentless Pressure on Business
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Three powerful influences:
» Emergence of the Global Economy
» Transformation of industrial Economies
» Transformation of the Business Environment
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Strong drive to reduce business costs
» Inventory, labour, transaction cost
» One way is through IT
» Use IT to cut out the middle men
without losing the competitiveness they enforced
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Dr. Fei HUANG
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Emergence of the Global Economy
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Communicating with distributors and suppliers
Operating 24 hours a day
Servicing local and international needs
» Example: amazon.com
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Threat to domestic business firms –
customers can now
» shop in a worldwide marketplace
» obtain price and information reliably 24 hours a day
» demand better quality of service
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Ever increasing supply capabilities
» Don’t carry large stocks; buy “just in time”
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Dr. Fei HUANG
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Global Competition
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markets - foreign markets now within reach
labor - cheaper off-shore manufacturing means
extended business premises
24 hours/ 7 days a week
» real-time information operations -- “information float”
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internet - new business opportunities
» requires information management
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Dr. Fei HUANG
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Customer Demand
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more detailed information about products
instant gratification - speedy transactions
hassle-free - easy transactions
if the product does not need to be physically inspected
by the customer prior to purchase: e-commerce
candidate
» requires information management
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Dr. Fei HUANG
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Strategic Information Systems
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provide organizations with strategic advantage:
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to meet org. objectives
to increase market share
to increase leverage with suppliers
to prevent competitors entering market
» requires information management
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Dr. Fei HUANG
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Marketing
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customer focus
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assessing what the market wants
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and - providing it
» requires information management
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Dr. Fei HUANG
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In Business Context
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new frontiers of activity/ behavior
standards and values for judging whether particular
conduct/ behavior is right or wrong
view beyond the current time
view beyond the immediate place
» requires information management
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Dr. Fei HUANG
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Easy to know/Hard to do
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Information management in organizations remains
hardest today.
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Unfortunately, it does often cause common problems
or errors in any business.
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Dr. Fei HUANG
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Transformation of economies
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In traditional industrial economy
» Many people worked in manual or unskilled jobs
» Raw materials were key input
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But now:
» Manufacturing has been moving to low wage countries
– GM, Philips, Rover, Sony
» Falling employment in manufacturing
» Increase in professional & management jobs
» Trend in West is towards knowledge and information based
service economies
» Information and creativity are key inputs
– Google, Apple, Microsoft, Time-Warner-AOL
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Dr. Fei HUANG
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Transformation of Industrial Economies
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Time-based competition
Shorter product life
Turbulent environment
Limited employee knowledge base
Knowledge- and information-based economies
Productivity
New products and services
Knowledge: a central productive and strategic asset
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Dr. Fei HUANG
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Knowledge Businesses
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Sales
Education
Healthcare
Banks
Insurance firms
Publishers
Broadcasters
Software houses
Games developers
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Dr. Fei HUANG
All concerned with
creating, processing &
distributing information
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Transformation of the Enterprise

Third major change in the business environment is the very
nature of organization and management
» Enterprises used to have deep hierarchies
» Many layers of management
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The new style of business is:
» flattened (less hierarchical)
Why?
» decentralized
» a flexible arrangement of generalists
» who rely on nearly instant information to deliver
mass customized products and services
geared to specific markets and customers
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Dr. Fei HUANG
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Transformation of the Enterprise
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Digitally-enabled relationships with customers,
suppliers, and employees
Core business processes accomplished via digital
networks
Digital management of key corporate assets
Rapid sensing and responding to environmental
changes
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Flattening Organizations
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Re-organize Workflows
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The New Style
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Is still evolving
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Direction is clear – customer orientation
» Must shorten time to market
» Production has to follow demand
(Toyato vs Fords & G-Motors)
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Teams and individuals need to network
» Sharing information without delays
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Information Systems make this possible
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Dr. Fei HUANG
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Strategic Pattern
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Amazon.com
» Virtual bookstore solely internet based
» Started making a profit as late as 2006 but has long
had high utilization and good customer relationship
» growing steadily – and diversifying
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Good in one area– then moved into other areas
» CDs – Popular music, then classical
» Videos and DVDs; Computer software
» Second-hand book-selling and auctions
» Alliances to move into Computer hardware, Toys, Audio-Visual…
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Dr. Fei HUANG
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Where should Amazon go next?
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“Amazon to sell cars online” said NY Times in 2000
» Amazon is investing in good customer relationship
» In practice, decided to go into electronics instead
» Recent survey showed big increase in online book purchases
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New model is not without its risks
but information is all important
» One of the biggest risks is dependence on systems
» If the site is down, the 24-hour bookstore is closed
and I can’t even read the catalogue
» We need to think about robustness and scalability
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Dr. Fei HUANG
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Information Systems in business activities
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Marketing, sales, sales promotion, pre-sales, supply
Commercial transactions:
» ordering
» delivery
» payment
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Product service and maintenance
Transport
Accounting
Human Resources
In Finance and Insurance, the business is IS
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Overview of Business
Information Systems
Enterprise
Collaboration
Systems
Platforms:
•Internet
•Intranets
•Extranets
•Other networks
Customers
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Management – Levels
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Senior managers: make long-range strategic
decisions about products and services
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Middle managers: Carry out the programs and plans
of senior management
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Operational managers: monitor the firm’s daily
activities
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Purposes of Information Systems
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Types of Operations Support Systems
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Transaction Processing Systems
» Record and process business transactions
» Examples: sales processing, inventory systems, accounting
systems
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Process Control Systems
» Monitor and control physical processes
» Example: using sensors to monitor chemical processes in a
petroleum refinery
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Enterprise Collaboration Systems
» Enhance team and workgroup communication
» Examples: email, video conferencing
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Dr. Fei HUANG
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Transaction Processing Systems
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Cross-functional information systems that process
data resulting from the occurrence of business
transactions
» Transactions include sales, purchases, deposits,
withdrawals, refunds, and payments
» Online transaction processing (OLTP) is a realtime system that captures transactions immediately
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Dr. Fei HUANG
27 7-27
Transaction Processing Systems (TPS)
Management level
 Inputs: High-volume data
 Processing: fixed/repetitive models
 Outputs: records
 Users: operational managers
Example: P.O.S or Payroll
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Types of Management Support Systems
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Management Information Systems (MIS)
» Reports and displays
» Example: daily sales analysis reports
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Decision Support Systems (DSS)
» Interactive and ad hoc support
» Example: a what-if analysis to determine where to spend
advertising dollars
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Executive Information Systems (EIS)
» Critical information for executives and managers
» Example: easy access to actions of competitors
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Dr. Fei HUANG
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Management Information Systems (MIS)
Management level
 Inputs: High-volume data
 Processing: Simple models
 Outputs: Summary reports
 Users: Middle managers
Example: Annual budgeting
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Dr. Fei HUANG
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Management Information Systems (MIS)
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Structured and semi-structured decisions
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Report control oriented
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Past and present data
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Internal orientation
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Lengthy design process
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Dr. Fei HUANG
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Dr. Fei HUANG
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Decision Support System (DSS)
Management level
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Inputs: Low-volume data
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Processing: Interactive
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Outputs: Decision analysis
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Users: Professionals, staff
Example: Contract cost analysis
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Dr. Fei HUANG
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Dr. Fei HUANG
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Executive Support System (ESS)
Strategic level
 Inputs: Aggregate data
 Processing: Interactive
 Outputs: Projections
 Users: Senior managers
Example: 5-year operating plan
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Dr. Fei HUANG
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Enterprise Collaboration Systems (ECS)
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EC systems are cross-functional information systems that enhance team
and workgroup
» Communication
» Coordination
» Collaboration
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Systems may include
» Networked PC workstations
» Servers
» Databases
» Groupware and application packages
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Dr. Fei HUANG
39 7-39
ECS Tools
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40 7-40
Other Information Systems
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Expert Systems
» Provide expert advice
» Example: credit application advisor
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Knowledge Management Systems
» Support creation, organization, and dissemination of
business knowledge throughout company
» Example: intranet access to best business practices
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Dr. Fei HUANG
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Functional Business Systems
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A variety of types of information systems
that support the business functions of
» Accounting
» Finance
» Marketing
» Operations management
» Human resource management
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Dr. Fei HUANG
42 7-42
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Marketing Systems
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Marketing systems are concerned with
» Planning, promotion, and sale of existing products in
existing markets
» Development of new products and new markets
» Better attracting and serving present and
potential customers
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Dr. Fei HUANG
44 7-44
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45 7-45
Interactive Marketing
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Interactive Marketing
» A customer-focused marketing process
» Uses the Internet, intranets, and extranets
» Establishes two-way transactions between a business
and its customers or potential customers
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Goal
» Profitably use networks to attract and keep customers
» Get customers to help create, purchase, and improve
products and services
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Dr. Fei HUANG
46 7-46
Targeted Marketing
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An advertising and promotion management concept
with five targeting components
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Dr. Fei HUANG
47 7-47
Targeted Marketing Components
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Community: customized ads to appeal to specific virtual communities
Content: ads placed on a variety of selected websites, aimed at a specific
audience
Context: ads placed on web pages that are relevant to a product or service
Demographic/Psychographic: web marketing aimed at specific types or
classes of people
Online behavior: promotions tailored to each visit to a site by an individual
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Dr. Fei HUANG
48 7-48
Sales Force Automation
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Outfit sales force with notebook computers,
web browsers, and sales contact software
» Connect them to marketing websites and the company
intranet
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Goals
» Increase personal productivity
» Speed up capture and analysis of sales data
» Gain strategic advantage
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Dr. Fei HUANG
49 7-49
Manufacturing Information Systems
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Supports the production/operations functions
» Includes all activities concerned with planning and
control of the processes producing goods
or services
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50 7-50
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51 7-51
CIM Objectives
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Simplify production processes, product designs, and factory
organization
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Automate production processes and the
business functions that support them
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Integrate all production and support
processes using
» Networks
» Cross-functional business software
» Other information technologies
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Dr. Fei HUANG
52 7-52
CIM Systems
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Computer-aided manufacturing (CAM)
» Automate the production process
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Manufacturing execution systems (MES)
» Performance monitoring information systems
for factory floor operations
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Process control
» Control ongoing physical processes
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Machine control
» Controls the actions of machines
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Dr. Fei HUANG
53 7-53
Human Resource Management (HRM)
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Information systems designed to support
» Planning to meet personnel needs
» Development of employees to their full potential
» Control of all personnel policies and programs
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54 7-54
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55 7-55
HRM and the Internet
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Recruiting employees using the corporate website and
commercial recruiting services
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Posting messages in selected Internet newsgroups
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Communicating with job applicants via e-mail
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Dr. Fei HUANG
56 7-56
HRM and Corporate Intranets
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Corporate intranet uses
» Process common HRM transactions
» Allow around-the-clock HRM services
» Disseminate information faster than through previous company
channels
» Collect information from employees online
» Allow HRM tasks to be performed with little HRM department
intervention
» Training
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Dr. Fei HUANG
57 7-57
Employee Self-Service
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Intranet applications can allow employees to
» View benefits
» Enter travel and expense reports
» Verify employment and salary information
» Access and update personal information
» Enter time-sensitive data
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Dr. Fei HUANG
58 7-58
Accounting Information Systems
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The oldest and most widely used information system
in business
» Records and reports business transactions and
economic events
» Produces financial statements
» Forecasts future conditions
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Dr. Fei HUANG
59 7-59
Accounting Information Systems
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Typically consists of
» Order processing
» Inventory control
» Accounts receivable
» Accounts payable
» Payroll
» General ledger systems
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60 7-60
Accounting Information Systems
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61 7-61
Financial Management Systems
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Supports business managers and professionals
making decisions concerning
» The financing of a business
» The allocation and control of financial
resources within a business
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62 7-62
Financial Management System Example
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63 7-63
Enterprise Business Systems
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E-business means using the Internet, other networks, and IT to
support
» Electronic commerce
» Enterprise communications and collaboration
» Web-enabled business processes
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64 7-64
Toward Digital Firm
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What we can do on the Internet
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Communicate and collaborate
Access information
Participate in discussions
Supply information
Find entertainment
Exchange business transactions
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Cross-Functional Systems
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Cross the boundaries of traditional business
functions
» Used to reengineer and improve vital business
processes all across the enterprise
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66 7-66
Enterprise Application Architecture
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67 7-67
Enterprise Application Architecture
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Provides a conceptual framework
» Helps visualize the basic components, processes, and interfaces
of major e-business applications
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Focuses on accomplishing fundamental
business processes in concert with
» Customers
» Suppliers
» Partners
» Employees
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Dr. Fei HUANG
68 7-68
Enterprise Application Architecture
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Enterprise Resource Planning (ERP)
» Concentrates on the efficiency of internal production,
distribution, and financial processes
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Customer Relationship Management (CRM)
» Focuses on acquiring and retaining profitable customers via
marketing, sales, and services
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Partner Relationship Management (PRM)
» Aims at acquiring and retaining partners who
can enhance the selling and distribution of products and
services
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Dr. Fei HUANG
69 7-69
Enterprise Application Architecture
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Supply Chain Management (SCM)
» Focuses on developing the most efficient and effective
sourcing and procurement processes
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Knowledge Management (KM)
» Focuses on facilitating internal group collaboration and
decision support
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70 7-70
Enterprise Application Integration
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EAI software connects cross-functional systems
Serves as middleware to provide
» Data conversion
» Communication between systems
» Access to system interfaces
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71 7-71
How EAI Works
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72 7-72
Specific business benefits from IS
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Lower advertising costs
» Better focus on potential customers
» New media
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Reduced delivery costs
Design and manufacturing costs reduced
» Faster progress from design to market
» Inventory costs slashed by JIT (just in time) supplies
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Improved marketing and planning
Access to new markets
Customer involvement
» Potential for mass customization (see BBC programme)
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Some Reservations for the Medium
Term
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Use of computers becoming more extensive
» Spending more time, Longer hours
» e-mail overload
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Impact on the family
May be inducing health problems
» Risk to employers if staff don't have enough breaks
» RSI, eye strain, tension
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Threats to systems
» Computer virus (examples?) Denial-of-Service attacks
» Serious if system is business-critical
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Threat to privacy
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Summary
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Information Systems have transformed business
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Cutting communication costs and delays
Eliminating distance as a factor in information flow
Changing management structures
Fostering globalization
Also created new industries
» Typically information rich
» Mainly light on natural resource consumption
» Mobile phones are computers and depend on computers
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Downside
» IT-enabled pursuit of cost-cutting can be dehumanizing
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Dr. Fei HUANG
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Homework of Week
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Individual work – Find two articles authored by
Michael E. Porter
» “How information gives competitive advantage”
» “Strategy and the Internet”
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Dr. Fei HUANG
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