Ch08

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.

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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.

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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.

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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

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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

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