Using MIS 2e
Chapter 7
Information Systems within
Organizations
David Kroenke
© Pearson Prentice Hall 2009
7-1
Study Questions

Q1 – What are the differences between functional and crossfunctional systems?

Q2 – How do functional systems relate to the value chain?

Q3 – What are the functions of the five basic functional systems?

Q4 – What are the problems of functional systems?

Q5 – What is business process design?

Q6 – What are the functions and characteristics of the three major
cross-functional systems?
© Pearson Prentice Hall 2009
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
Q1 – What are the differences between functional and
cross-functional systems?

Q2 – How do functional systems relate to the value chain?

Q3 – What are the functions of the five basic functional systems?

Q4 – What are the problems of functional systems?

Q5 – What is business process design?

Q6 – What are the functions and characteristics of the three major crossfunctional systems?
© Pearson Prentice Hall 2009
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Q1 – What are the differences between functional and cross-functional systems?

This chart depicts the history of information systems beginning with
calculation systems, moving to functional systems that served a
single department or function, and ending with integrated systems
that span an entire organization.
Fig 7-1 History of IS Within Organizations
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Q1 – What are the differences between functional and cross-functional systems?

Many companies are moving to integrated, cross-functional systems
that integrate activities of an entire business process, like a
customer order. This type of system may also be called a processbased system

Most organizations use a mixture of old-styled functional systems
and newer, integrated systems.
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

Q1 – What are the differences between functional and cross-functional
systems?
Q2 – How do functional systems relate to the value
chain?

Q3 – What are the functions of the five basic functional systems?

Q4 – What are the problems of functional systems?

Q5 – What is business process design?

Q6 – What are the functions and characteristics of the three major crossfunctional systems?
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Q2 – How do functional systems relate to the value chain?

Porter’s value chain model from Chapter 3 is reorganized to show
primary and support activities from a customer’s perspective,
beginning with Marketing and Sales on the left, to Service and
Support on the right.
Fig 7-2 Reorganized Porter Value Chain Model
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Q2 – How do functional systems relate to the value chain?

This view of Porter’s value chain model shows five functional
systems that support the primary and support activities.
Fig 7-3 Reorganized Porter Value Chain Model & Its Relationship to Functional Systems
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


Q1 – What are the differences between functional and cross-functional
systems?
Q2 – How do functional systems relate to the value chain?
Q3 – What are the functions of the five basic functional
systems?

Q4 – What are the problems of functional systems?

Q5 – What is business process design?

Q6 – What are the functions and characteristics of the three major crossfunctional systems?
© Pearson Prentice Hall 2009
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Q3 – What are the functions of the five basic functional systems?

It’s important to understand that a functional application is a
computer program with features and functions to support a
particular business activity.

A functional system, on the other hand, is a complete
information system that uses five components—hardware,
software, data, procedures, and people.
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Q3 – What are the functions of the five basic functional systems?

This figure shows five
functions of a Sales
and Marketing
System:





Lead-generation
Lead-tracking
Customermanagement
Sales forecasting
Product and brand
management
Fig 7-4 Functions of Sales & Marketing Systems
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Q3 – What are the functions of the five basic functional systems?

This figure shows the four functions of an operations information
system—order entry, order management, finished-goods inventory
management, and customer service.
Fig 7-6 Functions of Operations Information Systems
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Q3 – What are the functions of the five basic functional systems?

This figure shows the four functions of a manufacturing information
system—inventory, manufacturing planning, manufacturing
scheduling, and manufacturing operations.
Fig 7-7 Functions of Manufacturing Information Systems
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Q3 – What are the functions of the five basic functional systems?

Radio frequency
identification tags (RFID)
are becoming a popular
way to track inventory
items. RFID tags are
small computer chips
embedded in containers,
products, or equipment.
Data are transmitted from
the tags to sensors that
provide computer
processing support for
inventory management.
Fig 7-8 Examples of RFID Tags
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Q3 – What are the functions of the five basic functional systems?

This figure
shows how a bill
of materials
helps track
various
components
needed to
manufacture a
product.
Fig 7-9 Bill of Materials Example
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Q3 – What are the functions of the five basic functional systems?

The figure below is a sample manufacturing plan that a
manufacturing information system might produce.
Fig 7-10 Sample Manufacturing Plan
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Q3 – What are the functions of the five basic functional systems?

The five human resources information system functions are shown
in this figure—recruiting, compensation, assessment, planning, and
development and training.
Fig 7-11 Functions of Human Resources Information Systems
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Q3 – What are the functions of the five basic functional systems?

Eight functions of a combined accounting and finance information
system are shown below.
Fig 7-12 Functions of Accounting Information Systems
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
Q1 – What are the differences between functional and cross-functional
systems?

Q2 – How do functional systems relate to the value chain?

Q3 – What are the functions of the five basic functional systems?

Q4 – What are the problems of functional systems?

Q5 – What is business process design?

Q6 – What are the functions and characteristics of the three major crossfunctional systems?
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Q4 – What are the problems of functional systems?

Here are some of the problems caused by functional information
systems that, by their nature, don’t integrate business processes
and data throughout an organization.
Fig 7-14 Example of System
Integration Problem
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Fig 7-13 Major Problems of Isolated Functional Systems
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
Q1 – What are the differences between functional and cross-functional
systems?

Q2 – How do functional systems relate to the value chain?

Q3 – What are the functions of the five basic functional systems?

Q4 – What are the problems of functional systems?

Q5 – What is business process design?

Q6 – What are the functions and characteristics of the three major crossfunctional systems?
© Pearson Prentice Hall 2009
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Q5 – What is business process design?

Companies are redesigning their business processes to take
advantage of cross-functional information systems. They are taking
advantage of activity linkages and integrating activities in what’s
called business process design, sometimes called redesign.

There are a lot of challenges in designing and redesigning business
processes.



It’s expensive, time consuming, and difficult to keep up with normal
business activities.
Employees resist the changes in work responsibilities and normal habits.
The ultimate outcome is always uncertain. Will the new processes work
better than the old ones?
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Q5 – What is business process design?


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Inherent processes built
into business process
design software require
an organization to
conform its activities to
the program. That can
save a company
substantial design costs.
Inherent processes can
also cause disruptions to
operations and
employees.
This figure provides an
example of inherent
processes in an ordering
process.
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Fig 7-15 Example of SAP R/3 Ordering Process
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
Q1 – What are the differences between functional and cross-functional
systems?

Q2 – How do functional systems relate to the value chain?

Q3 – What are the functions of the five basic functional systems?

Q4 – What are the problems of functional systems?

Q5 – What is business process design?

Q6 – What are the functions and characteristics
of the three major cross-functional systems?
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Q6 – What are the functions and characteristics of the three major crossfunctional systems?

There are three major cross-functional systems: customer
relationship management, enterprise resource planning, and
enterprise application integration.
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A Customer Relationship Management (CRM) system offers these
benefits:
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Integration of primary business activities
Tracking of all customer interactions
Storage of customer data in single a database
Support of customer life cycle.
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Q6 – What are the functions and characteristics of the three major crossfunctional systems?

Figure 7-16, to the top
right, shows how a CRM
system integrates the
primary business activities
in the value chain model.

Figure 7-17, to the bottom
right, depicts the four
phases of the customer
life cycle and shows how
a CRM system integrates
them into three major
processes: solicitation,
lead-tracking, and
relationship management.
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Q6 – What are the functions and characteristics of the three major crossfunctional systems?

The chart below shows the major components of a Customer
Relationship Management (CRM) system: solicitation, lead tracking
(presale), and relationship management (post sale).
Fig 7-18 CRM Components
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Q6 – What are the functions and characteristics of the three major crossfunctional systems?

Customer Relationship Management (CRM) systems store data in a
single database and link CRM processes to one another.
Fig 7-19 CRM Centered on Integrated Customer Database
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Q6 – What are the functions and characteristics of the three major crossfunctional systems?

The second type of cross-functional system is an Enterprise
Resource Planning (ERP) System that provides more integration
than a CRM by integrating primary value chain activities with human
resources and accounting support activities across the enterprise.
Fig 7-20 ERP Systems and the Value Chain
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Q6 – What are the functions and characteristics of the three major crossfunctional systems?

The characteristics of
an ERP system are
presented in figure 7-21
to the right.

The benefits of an ERP
are presented in figure
7-22 below.
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Q6 – What are the functions and characteristics of the three major crossfunctional systems?

Here are the required tasks to implement an ERP system:



determine current and ERP models
remove inconsistencies
implement the ERP system.
Fig 7-23 ERP Implementation
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Q6 – What are the functions and characteristics of the three major crossfunctional systems?

An Enterprise Application Integration (EAI) System is the third type
of cross-functional system.
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

When an ERP system is inappropriate for an organization, it can still
integrate its existing systems through layers of software that connect
applications together.
EAI systems enable a business’s existing applications to communicate
and share data, providing many of the benefits of a cross-functional
system without some of the disadvantages.
A business can leverage its existing systems while enabling a gradual
move to a more complicated ERP system.
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Q6 – What are the functions and characteristics of the three major crossfunctional systems?

An EAI system doesn’t have a central database but uses metadata
to provide the organization with a virtual integrated database as this
figure shows.
Fig 7-24 Enterprise Application Integration (EAI) Architecture
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Q6 – What are the functions and characteristics of the three major crossfunctional systems?

The benefits an EAI offers to an organization include:
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Lower costs to implement than a full ERP.
Less disruption to operations and employees.
Integration of selected parts of the organization.
A step-wise implementation process that allows the business
eventually to achieve the full benefits of an ERP.
The steps for an EAI system implementation include:
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Identifying sources of major isolation problems.
Specifying the scope of the EAI implementation.
Developing and implementing selected EAI systems.
Assessing the benefits of EAI.
Stopping further EAI development, expanding EAI efforts, or
switching to ERP.
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