Lecture - 2
Management
Information Systems
(Business Objectives)
Mohammed Arif Mazumder
Sr. Lecturer
Daffodil International University
7th October, 2013 ( Fall – 2013)
Essentials of Business Information Systems
Chapter 1 Business Information Systems in Your Career
The Role of Information Systems in Business Today
Business Objectives of Information Systems
• Operational excellence
• New products, services, and business models
• Customer and supplier intimacy
• Improved decision making
• Competitive advantage
• Survival
Essentials of Business Information Systems
Chapter 1 Business Information Systems in Your Career
The Role of Information Systems in Business Today
Operational Excellence:
• Improved efficiency results in higher profitability
• Information systems and technologies help to
improve higher levels of efficiency and
productivity
• Wal-Mart is the champion of combining
information systems and best business practices
to achieve operational efficiency—and $485
billion in sales in 2012
• Wal-Mart is the most efficient store in the world
as a result of digital links between its suppliers
and stores
Essentials of Business Information Systems
Chapter 1 Business Information Systems in Your Career
The Role of Information Systems in Business Today
New products, services, and business models:
• Information systems and technologies enable firms
to create new products, services, and business
models
• A business model includes how a company
produces, delivers, and sells its products and
services
• The music industry has seen drastic changes in
business models in recent years
• Apple has been very successful at introducing new
products and adopting a new business model
Essentials of Business Information Systems
Chapter 1 Business Information Systems in Your Career
The Role of Information Systems in Business Today
Customer and supplier intimacy:
• Customers who are served well become repeat
customers who purchase more
• Close relationships with suppliers result in lower
costs
• The Mandarin Oriental in Manhattan uses
information systems and technologies to foster an
intimate relationship with its customers including
keeping track of their preferences
• JCPenney uses information systems to enhance its
relationship with its supplier in Hong Kong
Essentials of Business Information Systems
Chapter 1 Business Information Systems in Your Career
The Role of Information Systems in Business Today
Improved decision making:
• A company’s bottom line can be hurt by managers
being swamped with data that are neither timely nor
helpful, forcing them to use guesswork
• Real-time data have improved the ability of
managers to make decisions
• Verizon uses a Web-based digital dashboard to
update managers with real-time data on customer
complaints, network performance, and line outages
Essentials of Business Information Systems
Chapter 1 Business Information Systems in Your Career
The Role of Information Systems in Business Today
Competitive advantage:
• Achieving the previously mentioned business
objectives often leads to competitive advantage
• Advantages over competitors include charging less
for superior products, better performance, and
better response to suppliers and customers
• Dell Computer is one of the best examples of
establishing competitive advantage as the company
has continued to be profitable during a time when
PC prices have been falling steadily
Essentials of Business Information Systems
Chapter 1 Business Information Systems in Your Career
The Role of Information Systems in Business Today
Survival:
• Businesses may need to invest in information
systems out of necessity
• Necessity arises from keeping up with competitors,
such as when Citibank introduced ATMs
Essentials of Business Information Systems
Chapter 1 Business Information Systems in Your Career
Perspectives on Information Systems and Information Technology
What Is an Information System?
• Data are streams of raw facts representing events
and occurrences
• Information refers to data shaped into a meaningful
and useful form
• Information technology is the hardware and
software a business uses to achieve its objectives
• An information system consists of components
that support decision making and control, and help
with analysis, visualization, and product creation
Essentials of Business Information Systems
Chapter 1 Business Information Systems in Your Career
Perspectives on Information Systems and Information Technology
What Is an Information System?
Activities in an information system that produce information:
•Input
•Processing
•Output
•Feedback
Think of an information system you have experienced
recently. Describe the inputs, processing, outputs, and
feedback in the system.
Essentials of Business Information Systems
Chapter 1 Business Information Systems in Your Career
It Isn’t Simply Technology: The Role of People and Organizations
Dimensions of Information Systems
• Information systems literacy vs. computer literacy
• Organizations; structure, processes, culture, and
politics
• People; training, performance
• Technology; computer hardware, software, and
communication
Essentials of Business Information Systems
Chapter 1 Business Information Systems in Your Career
It Isn’t Simply Technology: The Role of People and Organizations
Information Systems Are More Than Computers
Using information systems effectively requires
an understanding of the organization, people,
and information technology shaping the
systems. An information system provides a
solution to important business problems or
challenges facing the firm.
Figure 1-3
Chapter 2
How Businesses
Use Information
Systems
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
STUDENT OBJECTIVES
• Identify and describe the major features of a
business that are important for understanding the
role of information systems.
• Describe the information systems supporting the
major business functions: sales and marketing,
manufacturing and production, finance and
accounting, and human resources.
• Evaluate the role played by systems serving the
various levels of management in a business and
their relationship to each other.
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
STUDENT OBJECTIVES (Continued)
• Explain how enterprise applications and intranets
promote business process integration and
improve organizational performance.
• Assess the role of the information systems
function in a business.
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Components of a Business
A business is a formal organization that makes products
or provides a service in order to make a profit.
Organizing a Business: Basic Business Functions
• Four basic business functions: manufacturing and
production, sales and marketing, finance and
accounting, and human resources
• Notice how this opinion is different from McLeod
and Schell.
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Components of a Business
Business Processes
What tasks does each employee perform, in what
order, and on what schedule?
• Examples:
• How are raw materials transformed into
products?
• How are orders fulfilled?
• How are bills paid?
• How are products marketed?
• How are employees hired?
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Components of a Business
The Order Fulfillment Process
Fulfilling a customer order involves a complex
set of steps that requires the close coordination
of the sales, accounting, and manufacturing
functions.
Figure 2-2
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Components of a Business
The Role of Information Systems in a Business
• Information systems relate to the following
business objectives:
• Achieving operational excellence
• Developing new products and services
• Attaining customer intimacy and service
• Improving decision making
• Promoting competitive advantage
• Ensuring survival
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Systems from a Functional Perspective
• Sales and marketing systems
• Manufacturing and production systems
• Finance and accounting systems
• Human resources systems
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Systems from a Functional Perspective
• Sales and marketing systems
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Systems from a Functional Perspective
• Manufacturing and production systems
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Systems from a Functional Perspective
• Finance and accounting systems
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Systems from a Functional Perspective
• Human resources systems
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Systems from a Constituency Perspective
Each functional area has three distinct management levels :senior, middle, and operational.
Each level has different information requirements. There are four different types of systems
to help out.
• Transaction processing systems (TPS)
• Management information systems (MIS) and
decision-support systems (DSS)
• Executive support systems (ESS)
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Interrelationships Among Systems
The various types of systems in the
organization have interdependencies. TPS are
major producers of information that is required
by many other systems in the firm, which, in
turn, produce information for other systems.
These different types of systems have been
loosely coupled in most organizations.
Figure 2-13
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Systems from a Constituency Perspective
• Transaction processing systems (TPS)
The operational level of the organization is responsible for daily operations.
The information systems used in this level of the organization are
Transaction processing systems(TPS) .
Characteristics of TPS:
----------------------------------1. Record the routine transactions that take place in everyday operations.
2. Very rich with data and the data is very detailed.
3. Typically helps with structured decisions.
4. Relies heavily on Data Management Technology (database technology).
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Systems from a Constituency Perspective
• Management information systems (MIS) and
decision-support systems (DSS)
Think about the functions of managers that you may have learned about in other classes:
directing, controlling, communicating, planning, and decision-making. Each manager
takes on these roles countless times a day.
Management Information Systems (MIS) require information on a
periodic basis instead of on a daily recurring basis like those using a
transaction processing system.
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems from a Constituency Perspective
• Management information systems (MIS) and
decision-support systems (DSS)
The MIS will draw data from the transaction processing system to help managers answer
Structured questions such as:
“How much more sugar must we purchase if we increase production from5,000 bars to
7,000?”
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Enterprise Applications
• Enterprise applications are systems that span
functional areas and automate processes for
multiple business functions and organizational
areas; they include:
• Enterprise systems
• Supply chain management systems
• Customer relationship management systems
• Knowledge management systems
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Enterprise Systems
• Also known as enterprise resource planning (ERP)
systems
• Integrate key business processes of an entire firm
into a single system enabling managers of large
firms to assemble an overall view of operations
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Supply Chain Management Systems
• Aim to move the correct amount of product from
source to point of consumption as quickly as
possible and at the lowest cost
• Used by firms to manage relationships with
suppliers, purchasing firms, distributors, and
logistics companies through shared information
about orders, production, inventory levels, and
more
• Automate the flow of information across
organizational boundaries
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Customer Relationship Management Systems
• Coordinate all of the business processes that deal
with customers to optimize revenue and customer
satisfaction, and increase sales
• Sales, marketing, and service record data from
multiple communication channels can be
combined
• Saab implemented CRM applications from Siebel
Systems to achieve a 360º view of customers,
resulting in a greater follow-up rate on sales leads
and increased customer satisfaction
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Knowledge Management Systems
• Intangible knowledge assets provide value to firms
• Knowledge management systems manage the
capture, storage, distribution, and application of
knowledge so that it can be leveraged for strategic
benefit
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Intranets and Extranets
• Technology platforms that increase integration
and expedite the flow of information
• Intranets: internal networks based on Internet
standards
• Extranets: intranets that are extended for
authorized use outside the company
• Intranets often utilize a portal
• Extranets facilitate collaboration
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
E-Business, E-Commerce, and E-Government
• E-business refers to the use of digital technology
and the Internet to drive major business
processes
• E-commerce is a subset of E-Business that
involves buying and selling goods and services
through the Internet.
• E-government refers to using Internet technology
to deliver information and services to citizens,
employees, and businesses
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
The Information System’s Function in Business
The Information Systems Department
• Programmers
• Systems analysts
• Information systems managers
• Chief information officer (CIO)
• End users
Essentials of Business Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
The Information System’s Function in Business
Organizing the Information Systems Function
• Small companies often rely on a single person for
information technology services rather than an
information systems department
• Some large firms with IS departments
decentralize them so that each functional area of
the business has its own information systems
• Other large firms may depend on a central
department that makes technology decisions for
the entire company