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Introduction to Information Technology 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

Chapter 8: Functional, Enterprise, and Interorganizational Systems Prepared by: Roberta M. Roth, Ph.D. University of Northern Iowa Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-1

Chapter Preview  In this chapter, we will study:  The role and function of Management Information Systems (MIS) and Transaction Processing Systems (TPS) in organizations  How functional information systems support Accounting & Finance; Sales and Marketing; Production and Operations; and Human Resource Management  How and why information systems should be integrated  The role of interorganizational systems Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

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Functional Information Systems  Characteristics:  Comprised of several small information system focused on specific activities  Specific IS applications can be • completely independent, or • integrated to form a coherent departmental

functional system • also, can be integrated across departmental lines to support a broad business process (crossdepartmental)

 Interface with each other to form the organization wide information system  Interface with the environment Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-3

Functional Information Systems (continued)

Management Information Systems Provide routine information to managers in the functional areas Business Transactions TPS Databases Internal External Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

Reports Management Information System

Scheduled Demand Exception

Data Warehouse

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Transaction Processing Systems What is a transaction? Every business event that occurs during business operations Business events (transactions) can trigger other business events Each event (transaction) can be described by a number of data items Transaction processing systems (TPS) are designed to record and store the data that describes every business event that occurs Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

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Transaction Processing Systems (continued)  TPSs were the first to be automated –

repetitive, consistent, high-volume tasks are ideal candidates for computerization  TPSs provide foundation for all other information systems  Many TPSs are outward-reaching and convey impressions to the customers about the quality of the business Customer makes a purchase

POS system Transaction file

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

Update files

Inventory file Sales file 8-6

Transaction Processing System

(continued)

 Some characteristics of TPSs

 Process large volume of data  Data sources mostly internal, and output intended mainly for internal audience  TPS operate regularly (on demand, daily, weekly, etc.)  Require large storage (database) capacity  Require high processing speed (due to the high volume)  Input and output data known and well-understood (highly structured)  Involves high level of detail but low computation complexity  Requires high level of accuracy, data integrity, and security  Requires high processing reliability; organizations Introduction to Information Technology, 2nd Edition 8-7 Turban, Rainer & Potter function for long without TPSs © 2003 Johncannot Wiley & Sons, Inc.

Methods of Processing Transactions

Batch Processing: simple, inexpensive Employee timecards

Data entry of timecardPayroll transactions data

Employee data: Pay rate Withholdings Etc.

Process payroll

Cash on hand Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

Employee paychecks

Payroll summary 8-8

Methods of Processing Transactions

Online Processing: complex, expensive

Customer makes a purchase

Transaction history file POS system

Inventory file Sales file

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-9

Methods of Processing Transactions

Hybrid Processing: simple, inexpensive, more accurate

Whenever employees Badge reader arrive / leave work collects employee Payroll transactions work data

Employee data: Pay rate Withholdings Etc. Normal payroll schedule: weekly, monthly, etc.

Process payroll

Cash on hand

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

Employee paychecks

Payroll summary

8-10

TPS Today

 Traditionally, TPS were implemented on

mainframe systems using batch processing  Online Transaction Processing (OLTP)  can be built on a client/server architecture  can save money

 Internet (Intranet) Transaction

Processing  allows multimedia data transfer  fast response time  storage of large databases of graphics and videos Introduction to Information Technology, 2nd Edition 8-11 Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

Typical TPS Tasks  Order processing  General ledger  Accounts payable and receivable  Inventory management, shipping, and

receiving  Payroll  Periodic reports and statements

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

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Accounting and Finance Systems Financial Planning and Budgeting Financial and economic forecasting Budgeting Investment Management Access to financial and economic reports Financial analysis

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-13

Accounting and Finance Systems Financial Controls Budgetary Controls Auditing Financial Health Analysis Profitability Analysis and Cost Control

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-14

Marketing & Sales Systems  Distribution Channel (definition)  providing the goods or services to the customer; may extend through various intermediaries such as wholesalers and retailers Manufacturing

Company

Distribution

 Other Channel Systems

R&D/Design Accounting/Finance

 support all marketing linkages, such as after-sales customer support Market Intelligence Systems Target Marketing Systems

Channel Systems Sales Systems

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

Dealer Systems Delivery Systems Customer Support Systems 8-15

Marketing & Sales Systems (continued)  Customer Service

 customer profiles and preference analysis  mass customization – high volume production of specialized product  targeted advertising  customer inquiry systems and automated Help Desk

 Telemarketing  advertisement and reaching customers  order processing  customer service  sales support  account management Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-16

Marketing & Sales Systems (continued)  Distribution Channels  Delivery and shipping management  Improve retail stores

 Marketing Management  Set and monitor prices of products or services  Monitor and evaluate salesperson productivity  Evaluate profitability of products / customers  Assess sales trends  Analyze new products, services, and markets

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-17

Marketing & Sales Systems (continued)  Ethical and Social Issues in IT-supported Sales Activities  Information collection and usage  Privacy concerns

 Current trend – Customer Relationship

Management (CRM)  Focus is on developing a one-to-one relationship with customers

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-18

Production & Operations Management Systems Logistics and Material Management Logistics Management • Ordering, purchasing, and inbound and

outbound shipping

Inventory Management • Determine how much inventory to carry

Quality Control • Monitor and report quality of materials,

work in process, and finished goods

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-19

Production & Operations Management Systems (continued) Planning Production/Operations  Material Requirements Planning; MRP II  Just-In-Time  Project Management (PERT & CPM)  Short-term scheduling

Automatic Design Work and

Manufacturing  Computer Aided Design (CAD)  Computer Aided Manufacturing (CAM)  Computer Integrated Manufacturing (CIM) Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-20

Human Resources Management Systems  Recruitment  Keep track of all open positions  Advertise positions via Internet  Employee selection  Human Resources Maintenance and

Development  Training and retraining employees  Performance assessment  Turnover, tardiness, and absenteeism analysis Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-21

Human Resources Management Systems Human Resources Management and Planning Maintain personnel files and skills inventory Administer benefits Comply with government reporting Personnel planning Succession planning Labor negotiations Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-22

Integrated Information Systems Reasons for Integration Existing, functionally oriented information systems are deficient: • cannot give employees all the information

they need • do not let different departments communicate effectively • crucial sales, inventory, and production data often entered manually into separate computer systems Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-23

Integrated Information Systems

How to Integrate Information

Systems Connect existing systems • maximize the use of existing systems and

allows the addition of new applications

Using supply chain management software • Overcomes the isolation of traditional

departmental structure by integrating processing across several functional areas

Use Enterprise Resource Planning software • control all major business processes with a 8-24 single software architecture in real time

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

Interorganizational Information Systems (IOS)  Electronic systems involving information

flow among two or more organizations in an on-going relationship  Objective – efficient transaction processing  Many large businesses require suppliers to be linked to them though IOS applications  IOSs may be implemented with  Private, third-party networks (value-added networks) Introduction to Information Technology, 2nd Edition 8-25 Turban, Rainer & Potter  Publicly accessible networks (Internet) © 2003 John Wiley & Sons, Inc.

Interorganizational Systems (continued)

 Types of Interorganizational

Systems      

Global systems Electronic data interchange (EDI) Electronic funds transfer (EFT) Extranets Shared databases Integrated messaging

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-26

Issues in IOS / Global IS Design  Cultural differences  Economic and political differences  Cross-border data transfer

concerns

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-27

Chapter Summary  Role and function of TPSs  Role and function of MISs  In-depth review of how Iss support

various business functional areas  Need and methods for integrating functional information systems  Interorganizational and global information systems provide great opportunities but also great complexity Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

8-28

Copyright © 2003 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United Stated Copyright Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information herein.

Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.

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