Uma Gupta
Introduction to Information Systems
Chapter
2
How Businesses
Use
Information
Systems
 2000 by Prentice Hall.
2-1
Learning Objectives
After studying this chapter, you will be able to:
 Describe basic business structures and
functional areas
 Identify four types of information systems
 Explain the role and function of marketing
information systems
 Summarize the purpose of manufacturing and
service information systems
 Outline the purpose of financial and accounting
information systems and how they support a
business
 2000 by Prentice Hall.
2-2
Learning Objectives (cont.)
 Explain the role and function of human resource
information systems
 Discuss the purpose and effects of crossfunctional systems
 Define and describe global information systems
 2000 by Prentice Hall.
2-3
A Business Structured by
Cross-Functional Teams
Accounting
Finance
Human Resources
PRODUCT
OR SERVICE
DEVELOPMENT
Information Systems
Manufacturing
Marketing
 2000 by Prentice Hall.
2-4
The Functional Product Design
and Development Process
Accounting
Manufacturing
Human
Resources
Finance
Product
or Service
Development
Marketing
 2000 by Prentice Hall.
2-5
Four Types of Information
Systems
 Personal, Work-Group, EnterpriseWide Systems
 Sometimes information systems are
grouped into categories based on the
number of individuals who use them:
personal systems (one user), work-group
systems (a group of users), or enterprisewide systems (the entire organization).
 2000 by Prentice Hall.
2-6
Four Types of Information
Systems (cont.)
 Systems Based on Type of Decision
 Decisions can be classified as operational,
tactical, and strategic.
 Strategic Information Systems
 Information systems that give a company a
significant strategic advantage over its market
competitors. These can be transaction
processing systems, management information
systems, decision support systems, or any
combination of these systems.
 2000 by Prentice Hall.
2-7
Four Types of Information
Systems (cont.)
 Function-Oriented Information Systems
 Systems classified according to their
business function: marketing information
systems, manufacturing information
systems, financial information systems,
etc.
 2000 by Prentice Hall.
2-8
Comparison of Types of
Decisions
Types of Decisions
Description
Operational
Structured decisions. Routine, require
minimal judgment, focus on day-to-day
operations.
Tactical
Semistructured decisions that support
tactical goals. Often made by middle
managers.
Strategic
Unstructured. Rely heavily on intuition,
judgment, and experience. Usually made by
top-level managers and executives.
 2000 by Prentice Hall.
2-9
Information Systems Based
on Type of Decisions
 Systems that support operational,
tactical, and strategic decision are
broadly classified into the following
categories:
 Transaction processing systems (TPS)
 Management information systems (MIS)
 Intelligent support systems (ISS), which include
decision support systems (DSS), executive
information systems (EIS), and expert systems
(ES)
 2000 by Prentice Hall.
2-10
Information Systems Based
on Type of Decisions (cont.)
 Intelligent support systems (ISS) refer
to a group of systems that support
decisions requiring the use of
knowledge, intuition, experience, and
expertise
 Decision support systems (DSS)
 Executive information systems (EIS)
 Artificial intelligence (AI) and expert
systems (ES)
 2000 by Prentice Hall.
2-11
Functional Information
Systems
 Information systems can also be
classified according to function in these
four areas:




Marketing
Manufacturing and service
Accounting and finance
Human resources
 2000 by Prentice Hall.
2-12
Marketing Information
Systems
 Information systems that meet the
information needs of an organization
in the areas of sales, distribution,
advertising and promotion, market
analysis, market intelligence,
product research, service
management, and other marketing
functions.
 2000 by Prentice Hall.
2-13
Developing the Strategic
Marketing Information Systems
Plan
Company Mission, Goals, Objectives
Strategic Marketing Plan
Strategic Marketing Information Plan
Marketing Information Systems
Examples:
•Databases to improve customer service
•Point-of-sale systems
•Kiosks
 2000 by Prentice Hall.
2-14
Manufacturing Information
Systems
 A set of systems that support the
manufacturing and service functions
of purchasing, receiving, quality
control, inventory management,
material requirements planning,
capacity planning, production
scheduling, and plant design.
 2000 by Prentice Hall.
2-15
Developing a Manufacturing
Information System Plan for
Manufacturing and Service Businesses
Company Mission, Goals, Objectives
Strategic Manufacturing and Service Plan
Strategic Manufacturing and Service Information Plan
Manufacturing Information Systems
Examples:
• Automation systems
• Logistics systems
• Material requirements planning software
• Manufacturing resource planning software
• Agile manufacturing environments
• ERP
 2000 by Prentice Hall.
2-16
Financial and Accounting
Information Systems
Computerized systems that
provide accounting and
financial information to improve
decision making.
 2000 by Prentice Hall.
2-17
Developing the Strategic Financial and
Accounting Information Systems Plan
Company Mission, Goals, Objectives
Strategic Financial and Accounting Plan
Strategic Financial and Accounting Information Systems Plan
Financial and Accounting Information Systems
Examples:
General ledger systems
Asset management systems
Order-entry systems
Cash management systems
Accounts receivable and accounts payable systems
Inventory control systems
Payroll systems
Capital budgeting systems
 2000 by Prentice Hall.
2-18
Human Resource
Information Systems (HRIS)
Computerized systems that
support the planning, control,
coordination, administration,
and management of the human
resource assets in an
organization.
 2000 by Prentice Hall.
2-19
Developing the Strategic Human
Resource Information Systems
Plan
Company Mission, Goals, Objectives
Strategic Human Resources Plan
Strategic Human Resources Information Systems Plan
Human Resources Information Systems
Examples:
Personnel databases
Payroll systems
Benefits administration
Performance appraisal
Personnel action systems (hiring, firing, recruiting)
Labor law compliance system Compensation systems
Workforce scheduling systems
 2000 by Prentice Hall.
2-20
Putting the Functions Together:
Cross-Functional Systems
 Systems that integrate functional
systems give end users more complete
information for decision making
 The case for cross-functional
information systems is even stronger in
global companies
 A strong and consistent flow of information
is essential to project a uniform “face” to
all people who have a stake in the
business
 2000 by Prentice Hall.
2-21
Global Information Systems
 A system that links people, systems,
and business units located around
the world through the use of
telecommunications (hardware and
software that links two or more
electronic devices that are
geographically separated).
 2000 by Prentice Hall.
2-22
Ten Critical Points for
Global Success
 Incorporate diversity into your
organization
 Build trust
 Create team identity
 Build consensus
 Teach sensitivity
 Establish ground rules
 Be fair
 Communicate progress
 Designate responsibilities
 Go face to face
 2000 by Prentice Hall.
2-23
Guidelines for Business
Information Systems Success
 Give Employees Information Access for
Improved Decision Making
 Many companies that use information systems
successfully do so because they trust employees
enough to give them access to information so
they can make decision that affect their jobs.
 Problems Won’t Go Away. Opportunities Will.
Be Prepared to Act on Both.
 Opportunities to apply technology to achieve
competitive advantage slip away quickly.
 2000 by Prentice Hall.
2-24
Guidelines for Business Information
Systems Success (cont.)
 Use Information Systems to Improve
Customer Satisfaction
 The key question when approving an
information system project should be
“How will this help our company better
serve our customers?”
 Integration Leads to Success
 Companies that invest in systems that are
isolated from other internal systems often
create complex problems
 2000 by Prentice Hall.
2-25
Guidelines for Business Information
Systems Success (cont.)
 Take Calculated Risks
 Many new and innovative information systems
are also risky investments
 RISK
– “R” is for return: Are we achieving an appropriate return
for the risks we take?
– “I” is for immunization: Do we have the controls and
limits in place to manage risk?
– “S” is for systems: Do we have the systems to measure
and report risk?
– “K” is for knowledge: Do we have the right people, skills,
culture, and incentives for effective risk management?
 2000 by Prentice Hall.
2-26