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Course DT2491


The Laudon and Laudon book, Management Information Systems' (Seventh ... (Functions = business processes' in some of the books, case studies and web sites. ... – PowerPoint PPT presentation

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Title: Course DT2491

Course - DT249/1
  • Subject - Information Systems in Organisations

Semester 2, Week 5
  • The Laudon and Laudon book, Management
    Information Systems (Seventh Edition) Chapter
  • The Digital Firm Electronic Commerce and
    Electronic Business
  • This chapter matches the theme of this lecture
    the closest.

Management Information System Applications
  • As described in previous lectures, an
    organisation exists to be charitable or
  • The organisation functions through a structure
    such as departmentalisation and spreads
    responsibilities and tasks among the individuals
    and groups of those departments.

MIS Applications (2)
  • The functions/tasks usually have a measure of
    information or, at least, data that is/are a
    very important asset to the organisation.
  • The more the organisation can control the
    information, the more efficient (and profitable?)
    it can become.

MIS Applications (3)
  • In many cases the information can be used as a
    dividend a product in its own right or an
    enhancement to the employees or customers of the
  • Central to information control, product or
    service enhancement are Information Systems and,
    by implication, Information Technology (IT).
  • Central to Information Systems and IT are

MIS Applications (4)
  • If we map the functions (perhaps, departments)
    of an organisation to the functions of an
    Information System, put in place to help manage
    the organisation, generally, we find that
    computer-based applications fit many of the
    information-oriented functions of an
  • This lecture considers the Information Systems
    applications of organisations and the issues
    surrounding them.

Business Organisations Information Systems
  • Information Systems are placed in business
    organisations because of
  • Business pressures (e.g. to sell more stock)
  • Organisational responses to competition and
  • Information Systems and Information Technology
  • (A note on Enterprise the context of this
    word, when used later in the notes, is one that
    describes the organisation as innovative -
    rising to challenges - rather than just
    manufacturing and selling.)

Business Pressures
  • Market pressures
  • The new global economy that causes strong
  • The changing nature of the workforce
  • Customer Power they are more demanding

Business Pressures (2)
  • Technological pressures
  • Technological innovation continues
  • The obsolescence of current systems (belonging to
    the organisation)
  • Information overload greater quantities of
    information require bigger and better systems.

Business Pressures (3)
  • Sociological pressures
  • Social responsibility
  • Government regulations
  • Government deregulation
  • Shrinking budgets and subsidies
  • Ethical issues (e.g. are customers details
    secure? Does our product harm anyone/the

Organisational Responses to Challenges
  • Organisations have established
  • Strategic systems
  • Continuous improvement efforts
  • Business Process Reengineering (BPR)
  • Electronic commerce
  • Business alliances
  • ...and continue to establish these things will
    continue to establish these things.

Strategic Systems
  • Strategic systems provide organisations with
    strategic advantages, thus enabling them to
  • increase their market share,
  • to better negotiate with their suppliers, or
  • to prevent competitors from entering their
    specialist areas (and taking their customers).

Continuous Improvement Efforts
  • These efforts by organisations could be viewed as
  • Improved productivity
  • Just-in-Time (resource management)
  • Total Quality Management (TQM)
  • Improved decision making
  • Managing information and knowledge
  • Innovation and creativity (e.g. Research and
  • Change management
  • Customer service (New or improved)

Business Process Reengineering
  • Business Process Reengineering (known to many as
    BPR) is a fancy term for changing the
    organisation radically by, for example
  • Reducing the cycle time (CT) for production,
    customer service, etcetera.
  • Taking a customer-focused approach
  • The empowering of employees (giving them more
  • Restructuring the organisation or departments
    with, for example, a team-based structure

Business Alliances
  • The organisation might establish alliances
    agreements with suppliers, customers or even
    competitors (or a combination of any of these (or
    yet other parties)). They might employ
  • Enterprise Resource Planning (ERP)
  • Electronic commerce
  • or something else

  • The previous slides describing strategies and
    responses to challenges/pressures had example
    functions with them.
  • Example functions were improved productivity,
    customer-focus, e-commerce
  • These can have Information Systems applications
    designed for them or be the basis for MIS

Applications Within an Organisation
  • An example of functional business systems might
    include, for example, variety of information
    systems (transaction processing, management
    information systems, decision support, etc.) that
    support the business functions of
  • Accounting and Finance,
  • Marketing,
  • Operations Management and
  • Human Resource Management (HRM)

Functional Business Systems
  • Examples of Functional Business Information
  • Customer relationship management
  • Interactive marketing
  • Sales force automation

Production Operations
Human Resource Management
  • Compensation analysis
  • Employee skills inventory
  • Personnel requirements forecasting
  • Manufacturing resource planning
  • Manufacturing execution systems
  • Process control

Functional Business Systems
  • Cash management
  • Credit management
  • Investment management
  • Capital budgeting
  • Financial forecasting
  • Order processing
  • Inventory control
  • Accounts receivable
  • Accounts payable
  • Payroll
  • General ledger

Functional Business Systems (2)
  • In the diagram of the previous slide the features
    of Operations Management, Marketing, Human
    Resource Management, Accounting and Finance could
    be considered as departments, the descriptions
    within each box considered as key tasks and those
    tasks might match applications (and software

Accounting Information Systems
  • An Accounting Application will typically
  • Record and report the flow of funds through an
  • Produce financial statements
  • Allow forecasts of future conditions to be

Accounting Information Systems (2)
An example of Accounting application processes
Accounting Information Systems (3)
  • In the diagram of the previous slide the features
    of Sales Transaction System, Cash
    ReceiptsSystem, General Ledger System, Purchase
    Transaction System and payroll System could be
    considered as subsystems of the Accounts
    Department. The descriptions within each box
    considered as tasks that might match applications
    (and more software programs?)

Accounting IS Processes
  • Order Processing
  • Captures and processes customer orders and
    produces data for inventory control and accounts
  • Inventory Control
  • Processes data reflecting changes in inventory
    and provides shipping and reorder information.
  • Accounts Receivable
  • Records amounts owed by customers and produces
    customer invoices, monthly customer statements
    and credit management reports.

Accounting IS Processes (2)
  • Accounts Payable
  • Records purchases from, amounts owed to and
    payments to suppliers it also produces cash
    management reports.
  • Payroll
  • Records employee work and compensation data and
    produces paycheques and other payroll documents
    and reports.
  • General Ledger
  • Consolidates data from other accounting systems
    and produces the periodic financial statements
    and reports of the business.

Financial Management Systems
  • The management systems of a Financial function
    support business managers and professionals in
    decisions concerning
  • the financing of a business
  • the allocation and control of financial resources
    within a business.

Financial Management System Examples
Marketing Information Systems
  • The function of marketing can have its own set of

Marketing Information Systems (2)
Market Information Systems
Interactive Marketing
  • Interactive marketing
  • A customer-focused marketing process using the
    Internet, intranets and extranets to establish
    two-way transactions between a company and its
    customers or potential customers.
  • The goal is to profitably attract and keep
    customers who will become partners with the

Targeted Marketing Components
  • Community with customised advertising to appeal
    to people of specific virtual communities.
  • Content with advertising placed on a variety of
    selected websites aimed at a specific audience.
  • Context with advertising placed on web pages
    that are relevant to the content of a product or
  • Demographic/Psychographic web marketing efforts
    aimed at specific types or classes or people.
  • Online Behaviour promotion efforts tailored to
    each visit to a site by an individual, e.g.,
    using cookies files. (Cookies? Long story,
    look it up.)

Targeted Marketing
  • This is an advertising and promotion management
    concept that includes five targeting components

Internet Marketing
  • There are numerous examples of (software)
    applications related to Marketing using the
    Internet. Attached to the applications are
  • E-mail a communications tool for pushing the
    message to customers.
  • Web publishing a page development tool for
    developing pages that pull the customers to the

Sales Function Automation
  • The Sales Department might provide the sales
    force with notebook computers, Web connectivity
    and sales contract management software.
  • They can connect their work to marketing websites
    and the company intranet.
  • The goal being to
  • Increase personal productivity
  • Speed up capture and analysis of sales data from
    the field to be passed on to Marketing Managers
  • Have the effect of gaining strategic advantage

Operations Management
  • As an Operations Management example there follows
    a view of Manufacturing Information Systems that
  • Supports the production/operations part of the
    Manufacturing function
  • Includes all activities concerned with planning
    and control of producing goods or services

Computer-Integrated Manufacturing (CIM)
CIM Objectives
  • The objectives if Computer Integrated
    Manufacturing are to typically
  • Simplify production processes, product designs
    and factory organisation as a vital foundation to
    automation and integration
  • Automate production processes and the business
    functions that support them with computers,
    machines and (possibly) robots
  • Integrate all production and support processes
    using computer networks, cross-functional
    business software and other information
  • These objectives will employ many different
    applications some of which may be integrated.

CIM Systems
  • Examples of CIM hardware/software systems are
  • Computer-Aided Manufacturing (CAM) that
    automate the production process
  • Manufacturing Execution Systems (MES)
    performance monitoring information systems for
    factory floor operations
  • Process Control (Systems) that control ongoing
    physical processes
  • Machine Control (Systems) that control the
    actions of machines.
  • Each of these could be viewed as an application
    or group of applications.

Human Resource Management (HRM)
  • HRM often has its own department. As a collection
    of applications its information systems are
    designed to support
  • The planning required to meet the personnel needs
    of the organisation
  • The development of employees to their full
  • Control of all personnel policies and programmes

Human Resources Systems Will Support
HRM and the Internet
  • The Internet is useful to the HRM (Department)
  • Recruiting employees using the corporate website
    and commercial recruiting services
  • Posting messages in selected Internet newsgroups
  • Communicating with job applicants via e-mail

HRM and Corporate Intranets
  • An Intranet is useful to HRM for
  • Processing common HRM applications
  • Allowing the HRM department to provide
    around-the-clock services to employees and
  • Disseminating valuable information faster than
    through previous company channels (such as snail
  • Collecting information from employees online
  • Allowing managers and other employees to perform
    HRM tasks with little intervention by the HRM
  • Acting as a training tool

Employee Self-Service (ESS)
  • Intranet applications that allow employees to
  • View benefits
  • Enter travel and expense reports
  • Verify employment and salary information
  • Update their personal information
  • Enter data that has a time constraint to it
  • can be described as self-service and can be
    included as an application.

Information System Applications for E-Commerce
  • Information Systems applications can be used by
    an organisation as a basis for trade. It may be
    the main basis for trade (as it is for E-Bay).
  • Many organisations use IS applications to add
    value to their product.

Major E-Business Applications
Front End Back End
Cross-Functional Systems
  • In organisations the boundaries of traditional
    business functions often intersect, overlap or
  • This is so that Management can reengineer and
    improve vital business processes all across the

Cross-Functional Systems (2)
  • Below the diagram describes a sequence of events
    that matches the early part of a products life
    cycle. The functions of Marketing, Engineering
    and Manufacturing will have tasks (therefore
    applications) that overlap.

New Product Development Process
Enterprise Business Systems
Enterprise Application Architecture
Customer Relationship Management (CRM)
  • CRM uses technology to
  • Create a cross-functional enterprise system that
    integrates and automates many of the processes in
    sales, marketing and customer service that
    interact with customers and to
  • Create a framework of web-enabled software and
    databases that integrate these processes with the
    rest of the companys processes.

Customer Relationship Management
  • CRM Uses IT to Create a Cross-Functional
    Enterprise System

Marketing and Fulfillment
Customer Service and Support
Employee or Prospective Customer
  • Sales
  • Cross-Sell
  • Up-Sell

Retention and Loyalty Programs
Contact and Account Management
CRM Applications
  • Contract and Account Management
  • Helps sales, marketing and service professionals
    capture and track data about past/planned
    contacts with customers/prospects
  • Sales
  • Provides Sales Representatives (reps) with the
    software tools and data they need to support and
    manage sales activities
  • Cross-selling is trying to sell a customer of
    one product with a related product
  • Up-selling is trying to sell customer a better
    product than they are currently seeking

CRM Applications
  • Marketing and Fulfillment help marketing
    professionals accomplish direct marketing
    campaigns by tasks such as
  • Qualifying leads for targeted marketing and
    scheduling and tracking direct marketing

CRM Applications (2)
  • Customer Service and Support
  • Provides sales reps with software tools and
    database access to customer database shared by
    sales and marketing professions
  • Helps create, assign and manage requests for
  • Call centre software that routes sales calls to
    customer support agents based upon their skills
    and type of call
  • Help desk software that provides relevant service
    data and suggestions for resolving problems for
    customer service reps helping customers with

CRM Applications (3)
  • Retention and Loyalty Programmes
  • Try to help a company identify, reward, and
    market to their most loyal and profitable
  • Seen as a function, Retention and Loyalty might
    use data mining tools and analytical software
    that extracts information about customers and
    prospective customers from a Customer Data

CRM The Business Focus
Customer Relationship Management supports
integrated and collaborative relationship between
a business and its customers.
Customer Life Cycle
CRMFunctional Solutions
The Internet
Collaborative Service
Shared Customer Data
CRMIntegrated Solution
Benefits and Challenges of CRM
  • Customer Relationship Management benefits are
  • Identify and target the best customers
  • Customisation and personalisation of products and
  • Track customer contacts
  • Provide consistent customer experience and
    superior service/support
  • CRM failures identified in a case study
  • 50 of applications fail to meet expectations
  • 20 of the time CRM damaged, rather than
    enhanced, customer relationships
  • A lack of understanding of customer expectation
    and preparation for customer service is blamed.

Enterprise Resource Planning (ERP)
  • ERP a cross-functional enterprise system with an
    integrated suite of software modules that support
    the basic internal functions of an organisation.
  • (Functions business processes in some of the
    books, case studies and web sites.)

Enterprise Resource Planning
Integrated Logistics
Production Planning
Sales Distribution, Order Management
Customer/ Employee
Accounting and Finance
Human Resources
Enterprise Resource Planning the Benefits
  • ERP is often established in organisations with
    large numbers of employees, numerous or complex
    departments and/or large numbers of customers
    because of a perceived value of
  • Quality and efficiency in products and operations
  • Decreased costs in production and operations
  • Decision support for Management
  • Enterprise agility the ability to change
    strategies and/or methods in response to
    outside changes.

Costs of Implementing a New ERP
Percentages identified in a case study
Enterprise Resource Planning Failures
  • Case study findings
  • A company had software installation problems of
    ERP Integrated Suite into its retail environment.
  • Two retail outlets blamed ERP software for poor
    financial performance.
  • A grocery had problems with number of
  • Another large retailer replaced the entire ERP

Enterprise Resource Planning Failures (2)
  • Causes of ERP failure
  • Underestimating the complexity of the planning,
    development and training needed
  • Failure to involve affected employees
  • Trying to do too much too fast
  • Insufficient training in new work tasks
  • Failure to do enough data conversion and testing
  • Over reliance by the company on claims of the ERP
    sellers or consultants

Supply Chain Management (SCM)
  • Supply Chain Management is a cross-functional
    inter-enterprise system to help support and
    manage the links between a companys key business
    processes and those of its suppliers, customers
    and business partners.
  • (Processes? Functions!)

Supply Chain Management (2)
  • Supply Chain Management (SCM) an application to
    match strategic objectives for many firms -
  • The right products
  • The right place
  • The right time
  • In the proper quantity
  • At an acceptable cost

Supply Chain Management (3)
The Role of SCM
Supply Chain Management (4)
  • SCM Software helps organisations reengineer and
    integrate the functional SCM processes

Supply Chain Life Cycle
Forecast and Demand Planning
Strategic Sourcing and Procurement
SCMFunctional Processes
Customer Order Fulfillment Service
Distribution Network and Warehouse Operations
Transportation and Shipment Management
Production Logistics
The Internet
Collaborative Fulfillment
Shared Market Data
SCMIntegrated Solution
Supply Chain Management (5)
  • The goals of SCM is to establish fast, efficient,
    low-cost network of business relationships or a
    supply chain to get a companys products from
    concept to market.
  • A supply chain is made up of interrelationships
    with suppliers, customers, distributors, and
    other businesses that are needed to design, build
    and sell a product.

Supply Chain Management (6)
  • Causes of problems with SCM
  • Lack of proper demand-planning knowledge, tools
    and guidelines
  • Inaccurate or over-optimistic demand forecasts
  • Inaccurate production, inventory and other data
  • Lack of adequate collaboration within the company
    and between partners
  • SCM software considered immature, incomplete and
    hard to implement

Enterprise Application Integration (EAI)
  • EAI connects cross-functional system and serves
    as middleware to provide data conversion,
    communication between systems and access to
    system interfaces.

Enterprise Collaboration Systems (ECS)
  • Enterprise Collaboration Systems (ECS)
    cross-functional Information Systems that enhance
    communication, coordination and collaboration
    among the members of business teams and

Enterprise Collaboration Systems (2)
  • Enterprise Collaboration Systems goals are to
  • Communicate - share information with teams and
    work groups
  • Coordinate - coordinate individual work efforts
    and use of resources with teams and work groups
  • Collaborate - work together cooperatively on
    joint projects and assignments

ECS Tools
Why Collaborate?
  • Workgroups and project teams work together
    efficiently and effectively regardless of
    location, they share information, coordinate work
    efforts and resources. They work together

What Next?
  • Next Week
  • Selection and acquisition of Information Systems