Introduction to Information Technology 2 nd Edition Turban
Introduction to Information Technology 2 nd 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, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -1
Chapter Preview v In this chapter, we will study: Ø The role and function of Management Information Systems (MIS) and Transaction Processing Systems (TPS) in organizations Ø How functional information systems support Accounting & Finance; Sales and Marketing; Production and Operations; and Human Resource Management Ø How and why information systems should be integrated Ø The role of Inter-organizational systems Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -2
Functional Information Systems v Characteristics: Ø Comprised of several small information system focused on specific activities Ø 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 (cross-departmental) Ø Interface with each other to form the organization wide information system Ø Interface with the environment Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -3
Functional Information Systems (continued) v Management Information Systems ØProvide routine information to managers in the functional areas Business Transactions TPS Databases Internal External Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. Reports Management Information System Scheduled Demand Exception Data Warehouse 8 -4
Transaction Processing Systems v What is a transaction? ØEvery business event that occurs during business operations ØBusiness events (transactions) can trigger other business events ØEach event (transaction) can be described by a number of data items ØTransaction processing systems (TPS) are designed to record and store the data that describes every business event that occurs Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -5
Transaction Processing Systems (continued) v TPSs were the first to be automated – repetitive, consistent, high-volume tasks are ideal candidates for computerization v TPSs provide foundation for all other information systems v 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, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. Update files Inventory file Sales file 8 -6
Transaction Processing System (continued) v Some characteristics of TPSs Ø Process large volume of data Ø Data sources mostly internal, and output intended mainly for internal audience Ø TPS operate regularly (on demand, daily, weekly, etc. ) Ø Require large storage (database) capacity Ø Require high processing speed (due to the high volume) Ø Input and output data known and well-understood (highly structured) Ø Involves high level of detail but low computation complexity Ø Requires high level of accuracy, data integrity, and security Ø Requires high processing reliability; organizations cannot function for long without TPSs Ø Inquiry processing supported Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -7
Methods of Processing Transactions Batch Processing: simple, inexpensive Employee timecards Data entry of timecard Payroll transactions data Employee data: Pay rate Withholdings Etc. Process payroll Cash on hand Introduction to Information Technology, 2 nd 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, 2 nd 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 collects employee. Payroll transactions arrive / leave work data Employee data: Pay rate Withholdings Etc. Normal payroll schedule: weekly, monthly, etc. Process payroll Cash on hand Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. Employee paychecks Payroll summary 8 -10
TPS Today v Traditionally, TPS were implemented on mainframe systems using batch processing v Online Transaction Processing (OLTP) Ø can be built on a client/server architecture Ø can save money v Internet (Intranet) Transaction Processing Ø allows multimedia data transfer Ø fast response time Ø storage of large databases of graphics and videos Ø real time Ø low cost Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -11
Typical TPS Tasks v Order processing v General ledger v Accounts payable and receivable v Inventory management, shipping, and receiving v Payroll v Periodic reports and statements Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -12
Accounting and Finance Systems v Financial Planning and Budgeting ØFinancial and economic forecasting ØBudgeting v Investment Management ØAccess to financial and economic reports ØFinancial analysis Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -13
Accounting and Finance Systems v Financial Controls ØBudgetary Controls ØAuditing ØFinancial Health Analysis ØProfitability Analysis and Cost Control Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -14
Marketing & Sales Systems v Distribution Channel (definition) Ø providing the goods or services to the customer; may extend through various intermediaries such as wholesalers and retailers Manufacturing Company Distribution v Other Channel Systems R&D/Design Accounting/Finance Ø support all marketing linkages, such as after-sales customer support Market Intelligence Systems Target Marketing Systems Channel Systems Sales Systems Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. Dealer Systems Delivery Systems Customer Support Systems 8 -15
Marketing & Sales Systems (continued) v Customer Service Ø customer profiles and preference analysis Ø mass customization – high volume production of specialized product Ø targeted advertising Ø customer inquiry systems and automated Help Desk v Telemarketing Ø advertisement and reaching customers Ø order processing Ø customer service Ø sales support Ø account management Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -16
Marketing & Sales Systems (continued) v Distribution Channels Ø Delivery and shipping management Ø Improve retail stores v Marketing Management Ø Set and monitor prices of products or services Ø Monitor and evaluate salesperson productivity Ø Evaluate profitability of products / customers Ø Assess sales trends Ø Analyze new products, services, and markets Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -17
Marketing & Sales Systems (continued) v Ethical and Social Issues in IT-supported Sales Activities Ø Information collection and usage Ø Privacy concerns v Current trend – Customer Relationship Management (CRM) Ø Focus is on developing a one-to-one relationship with customers Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -18
Production & Operations Management Systems v Logistics and Material Management ØLogistics Management • Ordering, purchasing, and inbound and outbound shipping ØInventory Management • Determine how much inventory to carry ØQuality Control • Monitor and report quality of materials, work in process, and finished goods Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -19
Production & Operations Management Systems (continued) v Planning Production/Operations Ø Material Requirements Planning; MRP II Ø Just-In-Time Ø Project Management Ø Short-term scheduling v Automatic Design Work and Manufacturing Ø Computer Aided Design (CAD) Ø Computer Aided Manufacturing (CAM) Ø Computer Integrated Manufacturing (CIM) Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -20
Human Resources Management Systems v Recruitment Ø Keep track of all open positions Ø Advertise positions via Internet Ø Employee selection v Human Resources Maintenance and Development Ø Training and retraining employees Ø Performance assessment Ø Turnover, tardiness, and absenteeism analysis Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -21
Human Resources Management Systems v Human Resources Management and Planning ØMaintain personnel files and skills inventory ØAdminister benefits ØComply with government reporting ØPersonnel planning ØSuccession planning ØLabor negotiations Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -22
Integrated Information Systems v Reasons for Integration ØExisting, 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, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -23
Integrated Information Systems v How to Integrate Information Systems ØConnect existing systems • maximize the use of existing systems and allows the addition of new applications ØUsing supply chain management software • Overcomes the isolation of traditional departmental structure by integrating processing across several functional areas ØUse Enterprise Resource Planning software • control all major business processes with a single software architecture in real time • increased efficiency to improve quality, productivity, and profitability Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -24
Inter-organizational Information Systems (IOS) v Electronic systems involving information flow among two or more organizations in an ongoing relationship v Objective – efficient transaction processing v Many large businesses require suppliers to be linked to them though IOS applications v IOSs may be implemented with Ø Private, third-party networks (value-added networks) Ø Publicly accessible networks (Internet) Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -25
Inter-organizational Systems (continued) v Types of Inter-organizational Systems Ø Global systems Ø Electronic data interchange (EDI) Ø Electronic funds transfer (EFT) Ø Extranets Ø Shared databases Ø Integrated messaging Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -26
Issues in IOS / Global IS Design v Cultural differences v Economic and political differences v Cross-border data transfer concerns Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -27
Chapter Summary v Role and function of TPSs v Role and function of MISs v In-depth review of how ISs support various business functional areas v Need and methods for integrating functional information systems v Inter-organizational and global information systems provide great opportunities but also great complexity Introduction to Information Technology, 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 8 -28
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