chapter1

Information Systems in Global Business Today : 

Information Systems in Global Business Today

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2 The Interdependence Between Organizations and Information Technology In contemporary systems there is a growing interdependence between a firm’s information systems and its business capabilities. Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications. Often, what the organization would like to do depends on what its systems will permit it to do.

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3 Information system: Set of interrelated components Collect, process, store, and distribute information Support decision making, coordination, and control Information vs. data Data are streams of raw facts Information is data shaped into meaningful form Perspectives on Information Systems

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4 Raw data from a supermarket checkout counter can be processed and organized to produce meaningful information, such as the total unit sales of dish detergent or the total sales revenue from dish detergent for a specific store or sales territory. Data and Information

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5 Information system: Three activities produce information organizations need Input: Captures raw data from organization or external environment Processing: Converts raw data into meaningful form Output: Transfers processed information to people or activities that use it Perspectives on Information Systems

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6 An information system contains information about an organization and its surrounding environment. Three basic activities—input, processing, and output—produce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its information systems. Functions of an Information System

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7 Using information systems effectively requires an understanding of the organization, management, and information technology shaping the systems. An information system creates value for the firm as an organizational and management solution to challenges posed by the environment. Information Systems Are More Than Computers

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8 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. Levels in a Firm

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9 From a business perspective, information systems are part of a series of value-adding activities for acquiring, transforming, and distributing information that managers can use to improve decision making, enhance organizational performance, and, ultimately, increase firm profitability. The Business Information Value Chain

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10 Although, on average, investments in information technology produce returns far above those returned by other investments, there is considerable variation across firms. Variation in Returns on Information Technology Investment

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11 The study of information systems deals with issues and insights contributed from technical and behavioral disciplines. Contemporary Approaches to Information Systems

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12 Technical approach Emphasizes mathematically based models Computer science, management science, operations research Behavioral approach Behavioral issues (strategic business integration, implementation, etc.) Psychology, economics, sociology Contemporary Approaches to Information Systems

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13 Management Information Systems Combines computer science, management science, operations research and practical orientation with behavioral issues Four main actors Suppliers of hardware and software Business firms Managers and employees Firm’s environment (legal, social, cultural context) Contemporary Approaches to Information Systems

How Businesses Use Information Systems : 

How Businesses Use Information Systems

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15 The Order Fulfillment Process Fulfilling a customer order involves a complex set of steps that requires the close coordination of the sales, accounting, and manufacturing functions.

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16 Information technology enhances business processes in two main ways: Increasing efficiency of existing processes Automating steps that were manual Enabling entirely new processes that are capable of transforming the businesses Change flow of information Replace sequential steps with parallel steps Eliminate delays in decision making Business Processes and Information Systems

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17 Transaction processing systems Perform and record daily routine transactions necessary to conduct business Examples: sales order entry, payroll, shipping Allow managers to monitor status of operations and relations with external environment Serve operational levels Serve predefined, structured goals and decision making Types of Business Information Systems

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18 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.

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19 Management information systems Serve middle management Provide reports on firm’s current performance, based on data from TPS Provide answers to routine questions with predefined procedure for answering them Typically have little analytic capability Types of Business Information Systems

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20 Decision support systems Serve middle management Support nonroutine decision making Example: What is impact on production schedule if December sales doubled? Often use external information as well from TPS and MIS Model driven DSS Data driven DSS Types of Business Information Systems

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21 How Management Information Systems Obtain Their Data from the Organization’s TPS 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. Managers gain access to the organizational data through the MIS, which provides them with the appropriate reports.

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22 Sample MIS Report This report shows summarized annual sales data

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23 Voyage-Estimating Decision Support System This DSS operates on a powerful PC. It is used daily by managers who must develop bids on shipping contracts.

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24 Executive support systems Support senior management Address nonroutine 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: ESS that provides minute-to-minute view of firm’s financial performance as measured by working capital, accounts receivable, accounts payable, cash flow, and inventory Types of Business Information Systems

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25 Model of an Executive Support System This system pools data from diverse internal and external sources and makes them available to executives in easy-to-use form.

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26 Systems from a constituency perspective Transaction processing systems: supporting operational level employees Management information systems and decision-support systems: supporting managers Executive support systems: supporting executives Types of Business Information Systems

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27 Relationship of systems to one another TPS: Major source of data for other systems ESS: Recipient of data from lower-level systems Data may be exchanged between systems In reality, most businesses’ systems only loosely integrated Types of Business Information Systems

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28 Enterprise applications Span functional areas Execute business processes across firm Include all levels of management Four major applications: Enterprise systems Supply chain management systems Customer relationship management systems Knowledge management systems Systems That Span the Enterprise

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29 Enterprise Application Architecture Enterprise applications automate processes that span multiple business functions and organizational levels and may extend outside the organization.

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30 Enterprise systems Collects data from different firm functions and stores data in single central data repository Resolves problem of fragmented, redundant data sets and systems Enable: Coordination of daily activities Efficient response to customer orders (production, inventory) Provide valuable information for improving management decision making Systems That Span the Enterprise

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31 Enterprise Systems Enterprise systems integrate the key business processes of an entire firm into a single software system that enables information to flow seamlessly throughout the organization. These systems focus primarily on internal processes but may include transactions with customers and vendors.

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32 Supply chain management systems Manage firm’s relationships with suppliers 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 Systems That Span the Enterprise

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33 Example of a Supply Chain Management System Customer orders, shipping notifications, optimized shipping plans, and other supply chain information flow among Haworth’s Warehouse Management System (WMS), Transportation Management System (TMS), and its back-end corporate systems.

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34 Customer relationship management systems: Provide information to coordinate all of the business processes that deal with customers in sales, marketing, and service to optimize revenue, customer satisfaction, and customer retention Integrate firm’s customer-related processes and consolidate customer information from multiple communication channels Systems That Span the Enterprise

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35 Salesforce.com Executive Team Dashboard Illustrated here are some of the capabilities of Salesforce.com, a market-leading provider of on-demand customer relationship management (CRM) software. CRM systems integrate information from sales, marketing, and customer service.

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36 Knowledge management systems Support processes for acquiring, creating, storing, distributing, applying, integrating knowledge Collect internal knowledge and link to external knowledge Include enterprise-wide systems for: Managing documents, graphics and other digital knowledge objects Directories of employees with expertise Systems That Span the Enterprise

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37 Intranets: Internal networks built with same tools and standards as Internet Used for internal distribution of information to employees Typically utilize private portal providing single point of access to several systems May connect to company’s transaction systems Systems That Span the Enterprise

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38 Extranets: Intranets extended to authorized users outside the company Expedite flow of information between firm and its suppliers and customers Can be used to allow different firms to collaborate on product design, marketing, and production Systems That Span the Enterprise

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39 There are alternative ways of organizing the information systems function within the business: within each functional area (A), as a separate department under central control (B), or represented in each division of a large multidivisional company but under centralized control (C). Organization of the Information Systems Function

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40 B: A separate department under central control Organization of the Information Systems Function

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41 C: Represented in each division of a large multidivisional company but under centralized control Organization of the Information Systems Function

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42 May I help you with any clarifications? Thank You, Friends