PART I
Foundations of
Information Systems in Business
Session 3 Understanding IS from
Business Perspective
HUANG Lihua, Fudan University
Case study：
Challenge Faced by FORD Management
in 1985
• How to do cost saving
• How to do downsizing
• How to increase profitability by downsizing
HUANG Lihua, Fudan University
Feb., - July., 2006
FORD change in Procurement Process
1）Old business process
When purchasing department wrote a purchase order, it sent a
Purchasing copy to accounts payables.
Vendor
The vendor sent an invoice to accounts payables when they
delivered goods.
Receiving
When material control received the goods, it sent a copy of
the receiving document.
Account
Payables
Thus, the account payables received three documents from various
senders：Purchasing order, invoice and receiving document. It was
up to account payables to match the purchasing against the receiving
document and the invoice. If they matched, the department issued
payment. Otherwise, an accounts payable clerk would investigate the
discrepancy, hold up payment, generate documents and all in all gum
HUANG Lihua, Fudan University
up the works.
Feb., - July., 2006
Case study：FORD change in
Procurement Process
• What is the solution to increase profitability
by downsizing?
HUANG Lihua, Fudan University
Feb., - July., 2006
FORD change in Procurement Process
2）Business process IS enabled
Receiving Goods
Purchasing
（1）
（1）When the
purchasing
department initiates
an order, it enters the
information into an
information system；
（2）
IS
(3)
The account payables dept. pay
according to the rule.
HUANG Lihua, Fudan University
Feb., - July., 2006
（2）When the goods
arrive at the receiving
dock,the clerk checks the
DB to see if they correspond
to an outstanding purchase
order. If so, he or she
accepts them and enters the
transaction into the
computer system. If
receiving can’t find an
entry for the received goods,
it simply returns the goods。
FORD change in Procurement Process
3） effectiveness after use of information system
After Ford instituted this new process, since
there are no discrepancies between the
financial record and the physical record,
material control is simpler and financial
information is more accurate. Ford has achieve
a 75% reduction in head count (from more than
400 to 125 head counts).
HUANG Lihua, Fudan University
Feb., - July., 2006
FORD change in Procurement
Process
Question?
• What function is the information system?
• What solution to organizational and
management in implementation such
information system?
HUANG Lihua, Fudan University
Feb., - July., 2006
Wrap-up from cases
•
Understanding of Information Systems ：
–
An Information System is an organizational and
management solution , based on information
technology, to a challenge posed by the
environment.
HUANG Lihua, Fudan University
Feb., - July., 2006
Information Systems
Business Processes
Supply
Enterprise
Customer
Knowledge
Chain
Management Management Management
Management
Data
Collection
and
Storage
Transformation Dissemination
Into
Business
Systems
Planning
Information Processing Activities
Coordinating Controlling
Modeling and
Decision Making
Management Activities
Business Value
HUANG Lihua, Fudan University
Feb., - July., 2006
Firm
Profitability
and
Strategic
Position
Information Systems: From
Business Perspective
ORGANIZATIONS
INFORMATION
TECHNOLOGY
SYSTEMS
MANAGEMENT
HUANG Lihua, Fudan University
Feb., - July., 2006
An Information
System is an
organizational and
management
solution , based on
information
technology, to a
challenge posed by
the environment.
ORGANIZATIONS
• PEOPLE: Managers, knowledge workers,
data workers, production or service workers
• STRUCTURE: Organization
chart,
groups of specialists, products, geography
*
HUANG Lihua, Fudan University
Feb., - July., 2006
ORGANIZATIONS
• OPERATING PROCEDURES: Standard
Operating Procedures (SOP), rules for
action
• POLITICS: Power to persuade, get things
done
• CULTURE: Behavior of staff, employee
*
HUANG Lihua, Fudan University
Feb., - July., 2006
MAJOR
BUSINESS FUNCTIONS
•
•
•
•
•
•
SALES & MARKETING
MANUFACTURING
FINANCE
ACCOUNTING
HUMAN RESOURCES
……
*
HUANG Lihua, Fudan University
Feb., - July., 2006
COMPUTER TECHNOLOGY
•
•
•
•
•
HARDWARE
SOFTWARE
DATA STORAGE
COMMUNICATIONS
NETWORKS
*
HUANG Lihua, Fudan University
Feb., - July., 2006
SOCIOTECHNICAL PERSPECTIVE
OPTIMIZE SYSTEM PERFORMANCE:
Technology & Organization Mutually Adjust
to One Another Until Fit Is Satisfactory
*
SOURCE: Liker, et al, 1987
HUANG Lihua, Fudan University
Feb., - July., 2006
SYSTEM INTERDEPENDENCE
INTERDEPENDENCE
HARDWARE
BUSINESS
SOFTWARE
DATABASE
Strategy
Rules
TELECOMMUNICATIONS
Procedures
ORGANIZATION
INFORMATION SYSTEM
HUANG Lihua, Fudan University
Feb., - July., 2006
Learning from Cisco
HUANG Lihua, Fudan University
Feb., - July., 2006
IS Application in Cisco
•
•
•
•
•
•
ERP: Enterprise Resource Planning
SCM: Supply Chain Management
CRM: Customer Relationship Management
E-Business/e-Commerce
EIS/DSS
………
HUANG Lihua, Fudan University
Feb., - July., 2006
IS App. Framework in Business
Suppliers and Other Business Partners
Extranet
Company
Boundary
Supply Chain Management:
Procurement, Distribution, and Logistics
Intranet
Engineering and
Research
Manufacturing,
Production,
Operation
Accounting
& Finance
Customer Relationship Management:
Marketing, Sale, and Customer service
The Internet
HUANG Lihua, Fudan University
Consumer
and Business Customers
Feb., - July., 2006
IS App. Framework in Business
Suppliers and Other Business Partners
Extranet
Company
Boundary
Supply Chain Management:
Procurement, Distribution, and Logistics
Intranet
Engineering and
Research
Purchase Order
Manufacturing,
Production,
Operation
ERP
Accounting
& Finance
Sell Order
Customer Relationship Management:
Marketing, Sale, and Customer service
The Internet
HUANG Lihua, Fudan University
Consumer
and Business Customers
Feb., - July., 2006
Wrap Up
• Re-conceptualizing IS from Business
Perspective
• IS Application Framework in Business
HUANG Lihua, Fudan University
Feb., - July., 2006
Assignment for Session 3
•
Individual Assignment and submit
–
•
Please suggest to Mr. Wang which IS
application will be adopted by his company in
coming future?
Preparation for session 4
–
Reading Materials
•
–
Textbook: chapter 2
Group Case study: Moen, Incorporated. (P51)
•
Preparing the case study questions on P.51
HUANG Lihua, Fudan University
Feb., - July., 2006