Session II

Management
Information System
ADL – 11
05/13/10
System Concepts
“System is a set of interacting or interdependent

entities forming an integrated whole.”
Characteristics
• Systems have structure defined by their parts
and their composition.
• Systems have behavior which involves input,
processing and outputs of information
• Systems have interconnectivity :the various
parts of System have functional as well as
structural relationship each other
Systems Concepts
• Definition
• Example various systems
• Systems concepts in Business
– System Boundaries
– Systems and Sub Systems
– Subsystem Interface
– System and its Environment
– System Feedback
Systems concepts in
Business
Information System as a Sub
System
Types of Information
Systems
• Classification by mode of processing

– Batch processing systems
– On-line batch systems
– On-line Real-time systems
• Classification by System Objectives
– Transaction Processing Systems
– Decision Support Systems
– Expert Systems
Management Information Systems
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Types of Information Systems
Figure 2-1
Different Kinds of Systems

Three main categories of information systems serve
different organizational levels:
1. Operational-level systems: support operational managers,

keeping track of the elementary activities and
transactions
2. Management-level systems: serve the monitoring,

controlling, decision-making, and administrative activities
3. Strategic-level systems: help senior management tackle

and address strategic issues
Major Types of Systems
• Transaction Processing Systems (TPS)
• Management Information Systems (MIS)
• Decision-Support Systems (DSS)
• Executive Support Systems (ESS)

The Four Major Types of Information Systems
Figure 2-2
Transaction Processing Systems (TPS)
• Basic business systems that serve the

operational level
• A computerized system that performs and

records the daily routine transactions necessary
to the conduct of the business
A Symbolic Representation for a Payroll TPS
Figure 2-3
Typical Applications of TPS
Figure 2-4
Management Information Systems (MIS)

Management level
• Inputs: High volume transaction level data
• Processing: Simple models
• Outputs: Summary reports
• Users: Middle managers
Example: Annual budgeting

Management Information Systems (MIS) (continued)
Figure 2-5
Management Information Systems (MIS) (continued)

A sample MIS report
Figure 2-6
Decision-Support Systems (DSS)

Management level
• Inputs: Transaction level data
• Processing: Interactive
• Outputs: Decision analysis
• Users: Professionals, staff
Example: Contract cost analysis

Decision-Support Systems (DSS) (Continued)

Voyage-estimating decision-support system
Figure 2-7
EXECUTIVE SUPPORT SYSTEMS (ESS):
• Inputs: Aggregate data
• Processing: Interactive
• Outputs: Projections
• Users: Senior managers
Example: 5 year operating plan

Model of a Typical Executive Support System
Figure 2-8
EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued)
• Top Level Management
• Designed to the individual senior manager
• Ties CEO to all levels
• Very expensive to keep up
• Extensive support staff

Relationship of Systems to One Another

Interrelationships among systems
Figure 2-9
Relationship of Systems to One Another
In contemporary digital firms, the different types of

systems are closely linked to one another. This is
the ideal. In traditional firms these systems tend to
be isolated from one another, and information does
not flow seamlessly from one end of the organization
to the other. Efficiency and business value tend to
suffer greatly in these traditional firms
INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:

Introduction to Enterprise Applications
Systems for Enterprise-Wide Process Integration
Enterprise applications:
• Designed to support organization-wide process
coordination and integration

Systems for Enterprise-Wide Process Integration

(Continued)
Consist of :
• Enterprise systems
• Supply chain management systems
• Customer relationship management systems
• Knowledge management systems

Enterprise Systems
• Enterprise systems, also known as enterprise

resource planning (ERP) systems, provide a
single information system for organization-wide
coordination and integration of key business
processes.
• Information that was previously fragmented in

different systems can seamlessly flow
throughout the firm so that it can be shared by
business processes in manufacturing,
accounting, human resources, and other areas.

Enterprise Application Architecture
Figure 2-13

Traditional View of Systems
Figure 2-14

Enterprise Systems
Figure 2-15

Benefits of Enterprise Systems
• Help to unify the firm’s structure and

organization: One organization
• Management: Firm wide knowledge-based

management processes
• Technology: Unified platform
• Business: More efficient operations & customer-

driven business processes

Challenges of Enterprise Systems
• Difficult to build: Require fundamental changes in

the way the business operates
• Technology: Require complex pieces of software

and large investments of time, money, and
expertise
• Centralized organizational coordination and

decision making: Not the best way for the firms to
operate

Supply Chain Management (SCM)

• Close linkage and coordination of activities
involved in buying, making, and moving a
product
• Integrates supplier, manufacturer, distributor,

and customer logistics time
• Reduces time, redundant effort, and inventory

costs
• Network of organizations and business

processes

Supply Chain Management (SCM)

• Helps in procurement of materials,
transformation of raw materials into intermediate
and finished products
• Helps in distribution of the finished products to

customers
• Includes reverse logistics - returned items flow in

the reverse direction from the buyer back to the
seller

Information from Supply Chain Management

Systems helps firms:
• Decide when and what to produce, store,

and move
• Rapidly communicate orders
• Track the status of orders
• Check inventory availability and monitor

inventory levels

Information from Supply Chain Management

Systems helps firms: (Continued)
• Reduce inventory, transportation, and
warehousing costs
• Track shipments
• Plan production based on actual customer

demand
• Rapidly communicate changes in product design


Customer Relationship Management (CRM)
• Manages all ways used by firms to deal with

existing and potential new customers
• Business and technology discipline
• Uses information system to coordinate entire

business processes of a firm


(Continued)
• Provides end- to- end customer care
• Provides a unified view of customer across the

company
• Consolidates customer data from multiple

sources and provides analytical tools for
answering questions

Figure 2-17

Knowledge Management Systems
• Collects relevant knowledge and make it available

wherever and whenever it is needed
• Support business processes and management
decisions
• Also link the firm to external sources of
knowledge
• Support processes for acquiring, storing,
distributing, and applying knowledge
MANAGEMENT OPPORTUNITIES, CHALLENGES, AND

SOLUTIONS
Management Opportunities:
• There are extraordinary opportunities to use

information systems to achieve business value,
and increase profitability

SOLUTIONS
Management Challenges:
• Integration and the whole firm view: Given the

different interests and perspectives within a firm,
it is difficult to achieve consensus about the need
for the "whole firm" viewpoint.
• Management and employee training: Training a

large number of employees on many systems in a
large organization involves commensurately
large investments.

SOLUTIONS
Management Challenges: (Continued)
• Accounting for the cost of systems and

managing demands for systems: Given the large
number of different types of systems in a firm,
and the large number of people involved with
using them, it is a complex task to understand
which systems are truly necessary and
productive with high returns on investment
Video Case Study
UPS
• United Parcel Service's operations are driven by its information
systems technology. Beginning as a local delivery service in
1907, UPS expanded on the West coast initially, reached New
York in the 1930s, and went international in the 1970s. Today,
UPS delivers over 14 million packages daily to 200 countries and
territories. A $1.5 billion technology investment in the 1980s
buoyed the growth of UPS. The investment enabled the
development of the International Shipments Processing System
(ISPS), which is the key to the company's overseas operations.
The technology infrastructure enables UPS to offer its customers
services in addition to the basic shipment of packages. UPS
drivers play an important role in the company's services by
capturing information at the endpoints of each delivery
segment. Volume, cultural differences, and hardware readiness
all impact the development and continued growth of UPS.
• Click here to view the video in RealMedia format.
How To analyze a case
study
• Identify the most important facts

surrounding the case.
• Identify the key issue or issues.
• Specify alternative courses of
action.
• Evaluate each course of action.
• Recommend the best course of
action.
Questions
• What external factors affect
international operations at UPS?
• How do these factors cause UPS to
adjust its operations?
• Explain how ISPS facilitates the ability
of UPS to ship packages internationally.
• Describe the role that the DIAD plays in
UPS business processes.
• How important is information to the
global expansion of UPS? What
advantages does UPS gain by carefully
capturing information?
• Discuss the role of volume in the
business activities of UPS.

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Management

“System is a set of interacting or interdependent

• Classification by mode of processing

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Types of Information Systems

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Different Kinds of Systems

1. Operational-level systems: support operational managers,

2. Management-level systems: serve the monitoring,

3. Strategic-level systems: help senior management tackle

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Major Types of Systems

• Transaction Processing Systems (TPS)

• Management Information Systems (MIS)

• Decision-Support Systems (DSS)

• Executive Support Systems (ESS)

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

The Four Major Types of Information Systems

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Transaction Processing Systems (TPS)

• Basic business systems that serve the

• A computerized system that performs and

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

A Symbolic Representation for a Payroll TPS

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Typical Applications of TPS

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Management Information Systems (MIS)

• Inputs: High volume transaction level data

• Processing: Simple models

• Outputs: Summary reports

• Users: Middle managers

Example: Annual budgeting

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Management Information Systems (MIS) (continued)

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Management Information Systems (MIS) (continued)

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Decision-Support Systems (DSS)

• Inputs: Transaction level data

• Outputs: Decision analysis

• Users: Professionals, staff

Example: Contract cost analysis

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Decision-Support Systems (DSS) (Continued)

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

EXECUTIVE SUPPORT SYSTEMS (ESS):

• Inputs: Aggregate data

• Users: Senior managers

Example: 5 year operating plan

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Model of a Typical Executive Support System

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued)

• Top Level Management

• Designed to the individual senior manager

• Ties CEO to all levels

• Very expensive to keep up

• Extensive support staff