Management Information Systems: Chapter 2 Global E-Business: How Businesses Use Information Systems

1/28/2020
Chapter 2
Global E-Business:
How Businesses
Use Information
Systems
2.1
Management Information Systems

Chapter 2 Global E-Business: How Businesses Use Information Systems
Business Processes and Information Systems
• Business processes:
• Workflows of material, information, knowledge
• Sets of activities, steps
• May be tied to functional area or be cross-
functional
• Businesses: Can be seen as collection of
business processes
• Business processes may be assets or liabilities
2.2
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• Examples of functional business processes

– Manufacturing and production
• Assembling the product
– Sales and marketing
• Identifying customers
– Finance and accounting
• Creating financial statements
– Human resources
• Hiring employees
2.3

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 2-1
2.4
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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
2.5

• Sales and marketing systems

– Functional concerns include:
• Sales management, customer identification
market research, advertising and promotion,
pricing, new products
– Examples of systems:
• Order processing (operational level)
• Pricing analysis (middle mgmt)
• Sales trend forecasting (senior mgmt)
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Example of a Sales Information System
This system captures sales data at the moment the sale takes place to help the business monitor sales
transactions and to provide information to help management analyze sales trends and the effectiveness
of marketing campaigns.
Figure 2-2
2.7

• Manufacturing and production

systems
• Managing production facilities, production
goals, production materials, and scheduling
• Machine control (operational mgmt)
• Production planning (middle mgmt)
• Facilities location (senior mgmt)
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Overview of an Inventory System
This system provides information about the number of items available in inventory to
support manufacturing and production activities.
Figure 2-3
2.9

Information Systems Help Kia Solve Its Quality Problems

• Read the Interactive Session: Organizations, and then discuss
the following questions:
• Why was it so difficult for Kia to identify sources of defects in the
cars it produced?
• What was the business impact of Kia not having an information
system to track defects? What other business processes besides
manufacturing and production were affected?
• How did Kia’s new defect-reporting system improve the way it ran
its business?
• What management, organization, and technology issues did Kia
have to address when it adopted its new quality control system?
• What new business processes were enabled by Kia’s new quality
control system?
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• Finance and accounting systems

• Managing financial assets (cash, stocks, etc.)
and capitalization of firm, and managing firm’s
financial records
• Accounts receivable (operational mgmt)
• Budgeting (middle mgmt)
• Profit planning (senior mgmt)
2.11

An Accounts Receivable System
An accounts receivable system tracks and stores important customer data, such as payment history,
credit rating, and billing history.
Figure 2-4
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• Human resource systems

• Identifying potential employees, maintaining
employee records, creating programs to
develop employee talent and skills
• Training and development (operational mgmt)
• Compensation analysis (middle mgmt)
• Human resources planning (senior mgmt)
2.13

An Employee Record Keeping System
This system maintains data on the firm’s employees to support the human resources function.
Figure 2-5
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• Transaction processing systems

– Perform and record daily routine transactions
necessary to conduct business
• E.g. sales order entry, payroll, shipping
– Allow managers to monitor status of operations
and relations with external environment
– Serve operational levels
– Serve predefined, structured goals and decision
making
2.15

• Management information systems

– Serve middle management
– Provide reports on firm’s current
performance, based on data from TPS
– Provide answers to routine questions with
predefined procedure for answering them
– Typically have little analytic capability
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Sample MIS Report
This report, showing summarized annual sales data, was produced by the MIS in Figure 2-6.
Figure 2-7
2.17

• Decision support systems

– Serve middle management
– Support nonroutine decision making
• E.g. What is impact on production schedule if December
sales doubled?
– Often use external information as well from TPS
and MIS
– Model driven DSS
• Voyage-estimating systems
– Data driven DSS
• Intrawest’s marketing analysis systems
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Voyage-Estimating Decision-Support System
This DSS operates on a powerful PC. It is used daily by managers who must develop bids on shipping contracts.
Figure 2-8
2.19

• Executive support systems

– Support senior management
– Address nonroutine decisions requiring judgment,
evaluation, and insight
– Incorporate data about external events (e.g. new
tax laws or competitors) as well as summarized
information from internal MIS and DSS
– E.g. ESS that provides minute-to-minute view of
firm’s financial performance as measured by
working capital, accounts receivable, accounts
payable, cash flow, and inventory.
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2.21
2.22
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Model of an Executive Support System
This system pools data from diverse internal and external sources and makes them available to executives in an
easy-to-use form.
Figure 2-9
2.23

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 are loosely coupled in most business firms, but increasingly firms are using new
technologies to integrate information that resides in many different systems.
Figure 2-10
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Systems That Span the Enterprise
• Enterprise applications
• Span functional areas
• Execute business processes across firm
• Include all levels of management
• Four major applications:
• Enterprise systems
• Supply chain management systems
• Customer relationship management systems
• Knowledge management systems
2.25

Enterprise Application Architecture
Enterprise applications automate processes

that span multiple business functions and
organizational levels and may extend outside
the organization.
Figure 2-11
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• Enterprise systems
• Collects data from different firm functions and stores
data in single central data repository
• Resolves problem of fragmented, redundant data
sets and systems
• Enable:
• Coordination of daily activities
• Efficient response to customer orders (production,
inventory)
• Provide valuable information for improving
management decision making
2.27

Enterprise Systems
Enterprise systems integrate the key business processes of an entire firm into a single software system that
enables information to flow seamlessly throughout the organization. These systems focus primarily on internal
processes but may include transactions with customers and vendors.
Figure 2-12
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• Supply chain management systems

• Manage firm’s relationships with suppliers
• Share information about
• Orders, production, inventory levels, delivery
of products and services
• Goal: Right amount of products to destination
with least amount of time and lowest cost
2.29

Example of a Supply Chain Management System
Customer orders, shipping notifications, optimized shipping plans, and other supply chain information flow
among Haworth’s Warehouse Management System (WMS), Transportation Management System (TMS), and its
back-end corporate systems.
Figure 2-13
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• Customer relationship management systems:

• Provide information to coordinate all of the business
processes that deal with customers in sales,
marketing, and service to optimize revenue,
customer satisfaction, and customer retention.
• Integrate firm’s customer-related processes and

consolidate customer information from multiple
communication channels
2.31

Salesforce.com Executive Team Dashboard
Some of the capabilities of salesforce.com, a market-leading provider of on-demand customer relationship

management (CRM) software. CRM systems integrate information from sales, marketing, and customer service.
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• Knowledge management systems

• Support processes for acquiring, creating, storing,
distributing, applying, integrating knowledge
• Collect internal knowledge and link to external
knowledge
• Include enterprise-wide systems for:
• Managing documents, graphics and other digital
knowledge objects
• Directories of employees with expertise
2.33

• Intranets:
• Internal networks built with same tools and
standards as Internet
• Used for internal distribution of information to
employees
• Typically utilize private portal providing single
point of access to several systems
• May connect to company’s transaction
systems
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• Extranets:
• Intranets extended to authorized users
outside the company
• Expedite flow of information between firm
and its suppliers and customers
• Can be used to allow different firms to
collaborate on product design, marketing,
and production
2.35

• E-business (Electronic business):

• Use of digital technology and Internet to execute
major business processes in the enterprise
• Includes e-commerce (electronic commerce):
• Buying and selling of goods over Internet
• E-government:
• The application of Internet and networking
technologies to digitally enable government and
public sector agencies’ relationships with citizens,
businesses, and other arms of government
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The Information Systems Function in Business
• Information systems department:

• Formal organizational unit responsible for
information technology services
• Includes programmers, systems analysts, project
leaders, information systems managers
• Often headed by chief information officer (CIO)
• End-users:
• Representatives of other departments, for whom
applications are developed
2.37
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1/28/2020

Management Information Systems

Business Processes and Information Systems

Management Information Systems

Business Processes and Information Systems

• Examples of functional business processes

Management Information Systems

Business Processes and Information Systems

The Order Fulfillment Process

Management Information Systems

Types of Business Information Systems

• Systems from a functional

Management Information Systems

Types of Business Information Systems

• Sales and marketing systems

Management Information Systems

Types of Business Information Systems

Example of a Sales Information System

Management Information Systems

Types of Business Information Systems

• Manufacturing and production

Management Information Systems

Types of Business Information Systems

Overview of an Inventory System

Management Information Systems

Types of Business Information Systems

Information Systems Help Kia Solve Its Quality Problems

Management Information Systems

Types of Business Information Systems

• Finance and accounting systems

Management Information Systems

Types of Business Information Systems

An Accounts Receivable System

Management Information Systems

Types of Business Information Systems

• Human resource systems

Management Information Systems

Types of Business Information Systems

An Employee Record Keeping System

Management Information Systems

Types of Business Information Systems

• Transaction processing systems

Management Information Systems

Types of Business Information Systems

• Management information systems

Management Information Systems

Types of Business Information Systems

Sample MIS Report

Management Information Systems

Types of Business Information Systems

• Decision support systems

Management Information Systems

Types of Business Information Systems

Voyage-Estimating Decision-Support System

Management Information Systems

Types of Business Information Systems

• Executive support systems

Management Information Systems

Types of Business Information Systems