CHAPTER 8 Information Systems within the Organization Copyright John Wiley & Sons Canada1 Chapter 8: Information Systems within the Organization 8.1 Transaction Processing Systems 8.2 Functional Area Information Systems 8.3 Enterprise Resource Planning Systems 8.4 Reports Copyright John Wiley & Sons Canada 2 LEARNING OBJECTIVES 1. Explain the purposes of transaction processing systems. Provide at least one example of how businesses use these systems. 2. Define functional area information systems. Provide an example of the support they provide for each functional area of the organization. Copyright John Wiley & Sons Canada 3 LEARNING OBJECTIVES (CONTINUED) 3. Explain the purpose of enterprise resource planning systems. Identify four advantages and four drawbacks to implementing an ERP system. 4. Discuss the three major types of reports generated by the functional area information systems and enterprise resource planning systems. Provide an example of each type. Copyright John Wiley & Sons Canada 4 8.1 OPENING CASE: IS BASEBALL A SCIENCE? The Problem – John Dewan, the owner of Baseball Info Solutions (BIS; www2.baseballinfosolutions.com), has made collecting data on fielding statistics his latest mission. The BIS data, however, are not perfect. For example, they do not indicate where a fielder was standing when the ball was hit. In addition, the data are susceptible to human error, and could be off by 15 to 20 feet (4.5 to 6 m) on some plays. Dewan estimated that BIS and its video scouts could measure only 60 percent of a fielder’s ability. Copyright John Wiley & Sons Canada 5 8.1 OPENING CASE: IS BASEBALL A SCIENCE? • The Solution – Sportvision created Fieldf/x, a motion-capture, or optical tracking system that helps eliminate human error and the need to be in the right place at the right time. Fieldf/x uses four cameras placed high above the field to track players and the ball, and to log their movements. The system generates more than 2.5 million records per game, or 2 terabytes of data. Copyright John Wiley & Sons Canada 6 8.1 OPENING CASE: IS BASEBALL A SCIENCE? • The Results – Ultimately, Fieldf/x will generate new baseball metrics, such as degree-of-difficulty fielding ratings. Fieldf/x also will make coaching more precise; for example, coaches will be able to better position their fielders, depending on the hitter and the pitch being thrown (e.g., fast ball versus slow curve ball). Finally, the system will enhance the process by which clubs evaluate— and pay—their players. Copyright John Wiley & Sons Canada 7 8.1 OPENING CASE: IS BASEBALL A SCIENCE? • Discussion – What is the major attribute of Fieldf/x? – What was the significant difference between the 2 systems that mitigated human error? Copyright John Wiley & Sons Canada 8 8.1 IT’S ABOUT [SMALL AND BIG] BUSINESS • Pizza Pizza’s Customer App – – – – – – created an iPhone app for ordering customized pizza app is free and fun won several design awards brings in more sales convenient for customers reduces costs and saves the potential for error Copyright John Wiley & Sons Canada 9 8.1 TRANSACTION PROCESSING SYSTEMS (TPS) • • Grocery store clerks use a bar code scanner that produces data captured by a transaction processing system The TPS collects data continuously, in real time, as soon as the data are generated, and it provides the input data for the corporate databases. Copyright John Wiley & Sons Canada 10 FIGURE 8.1 HOW TPS MANAGE DATA Copyright John Wiley & Sons Canada 11 8.2 FUNCTIONAL AREA INFORMATION SYSTEMS • Functional Area Information Systems (FAIS) provide support for the various functional areas (below) in an organization by increasing each area’s internal efficiency and effectiveness – – – – – Accounting Finance Marketing Operations (POM) Human Resources Management Copyright John Wiley & Sons Canada 12 INFORMATION SYSTEMS FOR ACCOUNTING AND FINANCE • Financial Planning and Budgeting – Financial and economic forecasting – Planning and Budgeting • Managing Financial Transactions – – – – Global stock exchanges Multiple currency management Virtual close Expense management automation Copyright John Wiley & Sons Canada 13 INFORMATION SYSTEMS FOR ACCOUNTING AND FINANCE (CONTINUED) • • Investment Management Control and Auditing – Budgetary control – Internal auditing – Financial ratio analysis Copyright John Wiley & Sons Canada 14 INFORMATION SYSTEMS FOR MARKETING • • • Customer relations Customer profiles and preferences Sales force automation Copyright John Wiley & Sons Canada 15 INFORMATION SYSTEMS FOR PRODUCTION AND OPERATIONS MANAGEMENT • In-House Logistics and Materials Management – Inventory Management – Quality Control • • • Planning Production and Operations Computer-Integrated Manufacturing Product Life Cycle Management Copyright John Wiley & Sons Canada 16 INFORMATION SYSTEMS FOR HUMAN RESOURCES • • • Recruitment HR Maintenance and Development HR Planning and Management – Payroll and employees’ records – Benefits administration – Employee relationship management Copyright John Wiley & Sons Canada 17 FIGURE 8.2 EXAMPLES OF INFORMATION SYSTEMS SUPPORTING THE FUNCTIONAL AREAS Copyright John Wiley & Sons Canada 18 8.3 ENTERPRISE RESOURCE PLANNING SYSTEMS (ERP) • Enterprise Resource Planning (ERP) system adopts a business process view of the overall organization to integrate the planning, management, and use of all of an organization’s resources, employing a common software platform and database. Copyright John Wiley & Sons Canada 19 ERP SOFTWARE VENDORS • Most organizations use commercially available ERP software from major vendors including: – SAP – Oracle – PeopleSoft • Click here for up-to-date information on ERP software Copyright John Wiley & Sons Canada 20 8.2 IT’S ABOUT BUSINESS • Airgas switched over its hard-goods supply chain operation to SAP in July 2010: – affects nearly every area of Airgas – 70 percent of its information systems functional on SAP as of March 2013 – expected to have saved up to $125 million by the end of 2013 – improved sales, better price management, and leaner operating costs Copyright John Wiley & Sons Canada 21 ERP II SYSTEMS Copyright John Wiley & Sons Canada 22 ERP MODULES • Core ERP Modules • Extended ERP Modules – Financial Management – Operations Management – Human resource management Copyright John Wiley & Sons Canada – Customer relationship management – Supply Chain Management – Business intelligence – E-business 23 BENEFITS OF ERP SYSTEMS • • • Organizational flexibility and agility Decision support Quality and efficiency Copyright John Wiley & Sons Canada 24 LIMITATIONS OF ERP SYSTEMS • • • Companies may need to change existing business processes to fit the predefined business processes of the software (best practices) Complex, expensive, and time consuming to implement Underestimating the complexity of the planning, development, and training required to prepare for a new ERP system Copyright John Wiley & Sons Canada 25 8.4 REPORTS • • Routine reports are produced at scheduled intervals (hourly quality control report, daily reports on absenteeism rates) Non-routine or Ad hoc (on demand) reports: – – – • Drill-down reports Key-indicator reports Comparative reports Exception reports include only information that falls outside certain threshold standards Copyright John Wiley & Sons Canada 26 TYPES OF REPORTS • • • • • • Summary Report Detailed report Drill-down report Key-indicator report Comparative report Exception Report Copyright John Wiley & Sons Canada 27 CHAPTER CLOSING • • • • TPSs monitor, store, collect, and process data generated from all business transactions. Major business functional areas are production/operations management, marketing, accounting/finance, and human resources management. Enterprise resource planning (ERP) systems integrate the planning, management, and use of all of the organization’s resources. Three major types of reports generated by FAIS and ERP systems are: Routine, Nonroutine or ad hoc (ondemand) and Exception. Copyright John Wiley & Sons Canada 28 Copyright Copyright © 2014 John Wiley & Sons Canada, Ltd. All rights reserved. Reproduction or translation of this work beyond that permitted by Access Copyright (the Canadian copyright licensing agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. 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