Management Information Systems Global Edition Chapter 2 Global

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration The Company Organization and Functions All companies can be viewed as having four basic functions 1. Sales and Marketing 2. Manufacturing and Production 3. Finance and Accounting 4. Human Resources Plus execs, senior & middle management, operatives In a start up you have to do all these things yourself! 2. 1 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Business Processes and Information Systems • A Business processes: – Flows of material, information, knowledge – Sets of activities, steps. The sequence of activities and steps is called a business process – May be tied to functional area or be cross-functional – Each company will be unique • Businesses: Can be seen as collection of business processes • Business processes – in ‘the old days’ were done without computers being involved – e. g. general ledger in a bank • Even today sometimes best not to use technology – e. g. ? Lost on a mountain – GPS or map ? 2. 2 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Business Processes and Information Systems • Examples of business processes (any examples from EMU? ) – Manufacturing and production • How to assembling the product • How to replace a part • Can we think of any more? – Sales and marketing • Identifying customers • Shipment of product • Any more? – Finance and accounting • Creating financial statements • Accounts payable run – Human resources • Hiring employees • Evaluation of performance / Promotion • education 2. 3 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration e. g. The Order Fulfillment Process (cross-function) FIGURE 2 -1 2. 4 Fulfilling a customer order involves a complex set of steps that requires the close coordination of the sales, accounting, and manufacturing functions. Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Business Processes and Information Systems • Information technology enhances business processes by: – Increasing efficiency of existing processes • Automating steps that were manual • Making things happen a lot quicker • Reducing inaccuracies – Enabling entirely new processes • Change flow of information e. g. individualize product • More people can access information • Eliminate delays in decision making • Support new business models e. g. buying over the internet! • Analytics to help get deeper understanding of customers 2. 5 Copyright © 2014 Pearson Education

Levels in a Firm Business Processes have to be coordinated and controlled by a hierarchy of managers Business organizations are hierarchies consisting of three principal levels: senior management, middle management, and operational management. Information systems serve each of these levels. Scientists and knowledge workers often work with middle management.

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Business Processes and Information Systems • Types of Information Systems – Performing business processes requires different skills and actions from different levels within the organization • Each of the above reasons involves business processes • There are different types of systems which specialize in supporting different functions within the organization and the business processes associated with the functions • Senior managers need summary information which can quickly inform them about the overall performance of the company • Middle managers need more detailed information about specific functional areas such as sales contacts by the sales force or production statistics • Operational managers may need transaction level information such as number of parts in inventory each day • Production or maintenance workers may need very specific information about a customer or a particular machine • We will now take a quick look at some of these different types of systems which focus on helping these different types of people make decisions 2. 7 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Decision Making Systems: Type 1: TPS • Transaction processing systems (simple decision making systems) – Serve operational managers and staff – TPS perform and record daily routine transactions necessary to conduct business • Examples: sales order entry, payroll, shipping • Ensures accurate and reliable information for operatives – Allow managers to monitor status of operations and relations with external environment – Track flow of information; Predefined reports, structured goals and simple decision making • E. g. how many parts in the store, how many tins of beans on the shelf • Simple transactional based queries • Summary reports – how many tins of beans sold today • How many bags gone through this check-in desk • Room reservations in a hotel 2. 8 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration e. g. A Payroll TPS A TPS for payroll processing captures employee payment transaction data (such as a time card). System outputs include online and hard-copy reports for management and employee paychecks. TPS systems have large numbers of records Failure can be critical to operations e. g. Parcel Tracking or Bank 2. 9 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration e. g. A Baggage Handling TPS – What might baggage handling reports look like ? • • Throughput per hour % near to capacity Average time for a bag to reach gate % of delayed bags % of lost bags Summary of bags by check-in Summary of bags by gate All provides accurate and reliable information for operative/supervisor – US Airways: 2. 5 m bags lost or delayed per year • • 2. 10 Were losing 9 bags per 1000 passengers Each delayed/lost bag cost airline on average $1000 i. e. $2. 5 B/year Implemented new system with sensors, actuators, mechanical devices, RFID New figure of 3 bags/1000 passengers Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Decision Making Systems: BIS Systems • Three more types of DMS known collectively as : • Business intelligence systems (BIS) – Management Information Systems (MIS) – Decision support systems (DSS) – Executive support systems (ESS) 2. 11 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Decision Making Systems: Type 2: Management Information Systems • Management Information Systems – Serve middle management – Typically provide reports on dept or firm’s current performance, based on data from TPS (often more than one TPS input) – Provide answers to routine questions with predefined procedure for answering them e. g. Burgers sold this quarter; number of rooms free tomorrow night – Typically have little analytic capability 2. 12 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration How MIS Obtain Their Data from the Organization’s TPS FIGURE 2 -3 2. 13 In the system illustrated by this diagram, three TPS supply summarized transaction data to the MIS reporting system at the end of the time period. In the above scenario we might ask if we need to apply for additional bank funding to buy more materials if orders are exceeding expectation and payment is on 3 month terms Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Decision Making Systems: Type 3: Decision Support Systems • Decision support systems – Serve middle management – Support non-routine decision making • Example: What is the impact on production schedule if December sales doubled? – May use external information as well TPS / MIS data – E. g. model driven DSS (Optimization) • Voyage-estimating systems; many ships; many contracts to bid for – which ships to use? Must calculate financial and technical voyage details such as speed, capacity, fuel efficiency, labor, port expenses, loading pattern; optimization. • What other examples can we think of regarding the need for optimization? (Internet traffic, parcel delivery, furniture maker with 3 different types of wood – oak, pine and cherry – could make chest of drawers, dressers or table and chairs. Each has different profit – what is optimum combination? ) 2. 14 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Decision Support Systems: E. g. Voyage Estimating FIGURE 2 -5 2. 15 This DSS operates on a powerful PC. It is used daily by managers who must develop bids on shipping contracts. Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration DMS Type 3: Decision Support Systems: E. g. 2 supermarket • Supermarket promotion or not ? – Marketing department want to increase sales over festive season by 20% • Price reductions, special offers, extra loyalty card points, advertising campaign for awareness of offers, introductory loyalty card points – Operations Manager must consider: • Can supply chain handle additional re-stock orders • Are there enough staff to handle check-out, customer service, shelf stocking • Will there be a need for overtime payments – how much • Additional cash collection to meet insurance requirements – DSS support these type of more complex decisions 2. 16 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration DMS Type 4: Executive Support Systems (ESS) • Executive support systems – Support senior management – Address non-routine 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 – Example: Digital dashboard (a portal!) with real-time view of firm’s financial performance: working capital, accounts receivable, accounts payable, cash flow, and inventory – – Often incorporate data about external events - investment decision for new manufacturing plant – interest rate now and long term, tax incentives, projected product demand, expected lifetime of machinery, political stability – This is an example of the term “Information Driven Management” 2. 17 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Enterprise Applications • Enterprise applications – Where we need different systems to talk and share data – Systems for linking the enterprise – Span functional areas – Execute business processes across firm – Include all levels of management – Four major types: • Enterprise systems – a. k. a. ERP systems (do what we have been looking at but single applications) • Supply chain management systems (go external to help manage/support supply chain) • Customer relationship management systems (extend externally to manage customer) • Knowledge management systems – focused on company collaboration 2. 18 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Enterprise Application Architecture Enterprise applications automate processes that span multiple business functions and organizational levels and may extend outside the organization. FIGURE 2 -6 2. 19 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Types of Information Systems • Enterprise systems (ERP Systems) – Collects data from different firm functions and stores data in single central data repository – Resolves problem of fragmented data – Enable: • Coordination of daily activities • Efficient response to customer orders (production, inventory) • Help managers make decisions about daily operations and longer-term planning • Examples – Oracle e-Business Suite, SAP, Microsoft Dynamics. These can be expensive to implement (license costs, re-training, data conversion) • Useful way to bring together companies after acquisition (multiple business processes need consolidating to realize economies of scale) • Encapsulate business best practices (many years of investment in the product) • Order->warehouse->shipment->accounting->customer service 2. 20 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Types of Information Systems • Supply chain management (SCM) systems (interorganizational system – automate flow of information between organizations) – Manage firm’s relationships with suppliers • Link suppliers, purchasing dept, distribution, logistics – 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 – Example – Nike: contract manufacturers, component suppliers, raw materials suppliers (more later in the course) 2. 21 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Types of Information Systems • Customer relationship management systems: – Provide information to coordinate all of the business processes that deal with customers • Sales • Marketing • Customer service – Helps firms identify, attract, and retain most profitable customers • Optimize customer revenue, service and retention • Identify most profitable customers • Supermarket loyalty card forms part of a CRM system – it helps to gather the data • Identify which customers you don’t want ! E. g. call centre ! 2. 22 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Types of Information Systems • Knowledge management systems (KMS) – Support processes for capturing and applying knowledge and expertise about how the company operates • How to create, produce, deliver products and services (often this information is specific to the company) – Collect internal knowledge and experience within firm and make it available to employees – Link to external sources of knowledge – More in chapter 11 2. 23 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Types of Information Systems • Internet Standards based systems – Intranets: • A cheaper alternative for integration • Internal company Web sites accessible only by employees – Extranets: • Company Web sites accessible externally only to vendors and suppliers • Often used to coordinate supply chain • EMU Student Portal ? 2. 24 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Types of Information Systems • E-business – Use of digital technology and Internet to drive major business processes (more in chapter 10) • E-commerce – Subset of e-business – Buying and selling goods and services through Internet (more in chapter 10) • E-government: – Using Internet technology to deliver information and services to citizens, employees, and businesses 2. 25 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Systems for Collaboration and Teamwork • Collaboration: – Short-lived or long-term – Informal or formal (teams) • Growing importance of collaboration: – – – 2. 26 Changing nature of work Growth of professional work—“interaction jobs” Changing organization of the firm Changing scope of the firm Emphasis on innovation Changing culture of work Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Systems for Collaboration and Teamwork • Social business (company social sites e. g Facebook, Linked. In) – Use of social networking platforms, internal and external – Engage employees, customers, and suppliers – Goal is to deepen interactions and expedite information sharing • Product development • Product feedback • Customer support – “Conversations” – Requires information transparency • Driving the exchange of information without intervention from executives or others 2. 27 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Systems for Collaboration and Teamwork • Business benefits of collaboration and teamwork – Investments in collaboration technology can bring organization improvements, returning high ROI – Benefits: • Productivity • Quality • Innovation • Customer service • Financial performance – Profitability, sales growth • E. g. software development (IBM and others) – Development teams can be global – ‘virtual teams’ – Draw upon global expertise to have ideas and solve problems 2. 28 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Requirements for Collaboration Successful collaboration requires an appropriate organizational structure and culture, along with appropriate collaboration technology. FIGURE 2 -7 2. 29 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Systems for Collaboration and Teamwork • Building a collaborative culture and business processes has challenges: – “Command control” organizations • No value placed on teamwork or lower-level participation in decisions – Collaborative business culture • Senior managers rely on teams of employees. • Policies, products, designs, processes, and systems rely on teams. • The managers purpose is to build teams. • Manager’s purpose is to serve and assist employees rather than control • Need a reward system which encourages team rather than individualistic behavior 2. 30 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration Systems for Collaboration and Teamwork • Tools for collaboration and teamwork – E-mail and instant messaging – Wikipeadia (c. f. old model of Encyclopedia Britannica – central point of control of information) – Virtual worlds – Collaboration and social business platforms • Virtual meeting systems (telepresence) • Google Apps/Google sites (introductory) • Cyberlockers • Microsoft Share. Point (mid market) • Lotus Notes (IBM) (Large companies) 2. 31 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration The Information Systems Function in Business • Information systems department: • Formal organizational unit responsible for information technology services • Often headed by chief information officer (CIO) (none technical role – information focused) • Other senior positions include chief security officer (CSO), chief knowledge officer (CKO), chief privacy officer (CPO), chief technology officer (CTO) • • • Programmers Systems analysts Information systems managers Project Managers IS Dept provides (typically) Information Technology infrastructure (hardware and software); Telco comms; data management and backup and retention policies; application development and support; IT Planning and Education; IT security; support for mobile platforms; IT helpdesk • More and more IT is now outsourced to third party specialist companies (Cloud, Software as a Service) 2. 32 Copyright © 2014 Pearson Education

Management Information Systems, Global Edition Chapter 2: Global E-business and Collaboration The Information Systems Function in Business • End users – Representatives of other departments for whom applications are developed – Increasing role in system design, development • IT Governance: – – 2. 33 Strategies and policies for using IT in the organization Decision rights Accountability Organization of information systems function • Centralized, decentralized, and so on Copyright © 2014 Pearson Education