Challenges

Businesses need different types of

information systems to support decision
Taxonomy of Information making and work activities for various
organizational levels, functions
Systems Although it is necessary to design
different systems serving different levels,
functions, and business processes in the
firm, more and more firms are finding
advantages in integrating systems

Approach to taxonomy
Organizational classification
Functional classification
Process-oriented classification
Organizational

3 4

Organizational taxonomy Operational-level systems

Organisational level Support operational managers by
STRATEGIC LEVEL
keeping track of the elementary
activities and transactions of the
organization
MANAGEMENT LEVEL
Sales, payroll, flow of materials in a
KNOWLEDGE LEVEL factory
Answer routine questions
OPERATIONAL
LEVEL
How many parts are in inventory?
SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN
MARKETING RESOURCES

Business functions
5 6

1
Knowledge-level systems Management-level systems
Help the firm integrate new knowledge Serve the monitoring, controlling,
into the business decision-making, and administrative
Help the organization control the flow activities of middle managers
of paperwork Provide periodic reports rather than
Most widely used applications in instant information on operations
business today Principal questions
Are things working well? (Routine
monitoring)
What if? (Nonroutine decision making)

7 8

Strategic-level systems Major types of systems

Help senior management tackle and
address strategic issues and long-
term planning activities
Sample questions
What will employment levels be in five
years?
What products should we be making in
five years?
Executive support systems (ESS)
Management information systems
(MIS)
Decision support systems (DSS)
Knowledge work systems (KWS)
Office automation systems (OAS)
Transaction processing systems (TPS)

9 10

Major types of systems TPS

Operational level (key system!!!)

Inputs: transactions, events

Processing: sorting, merging, updating
Outputs: detailed reports
Users: operations personnel

Example: package tracking system

11 12

2
Memo - Functions of an IS Typical TPS applications
ENVIRONMENT MAJOR FUNCTIONS OF SYSTEMS:
Customers Suppliers
Suppliers Sales Management; Market Research;
ORGANIZATION Promotion; Pricing; New Products
INFORMATION SYSTEM MAJOR APPLICATION SYSTEMS:
INPUT PROCESS OUTPUT Sales Order Info System; Market Research
System; Pricing System
FEEDBACK

Regulatory Stockholders Competitors Sales & Marketing Systems

Agencies

13 14

Typical TPS applications Typical TPS applications

MAJOR FUNCTIONS OF SYSTEMS: MAJOR FUNCTIONS OF SYSTEMS:
Scheduling; Purchasing; Shipping / Budgeting; General Ledger; Billing: Cost
Receiving; Engineering; Operations Accounting
MAJOR APPLICATION SYSTEMS: MAJOR APPLICATION SYSTEMS:
Materials Resource Planning Systems; General Ledger; Accounts Receivable /
Purchase Order Control Systems; Payable; Budgeting; Funds Management
Engineering Systems; Quality Control Systems
Systems

Manufacturing & Production Systems Finance & Accounting Systems

15 16

Typical TPS applications Typical TPS applications

MAJOR FUNCTIONS OF SYSTEMS: MAJOR FUNCTIONS OF SYSTEMS:
Personnel Records; Benefits; Admissions; Grade Records; Course
Compensation; Labor Relations; Training Records; Alumni
MAJOR APPLICATION SYSTEMS: MAJOR APPLICATION SYSTEMS:
Payroll; Employee Records; Benefit Registration System; Student Transcript
Systems; Career Path Systems; Personnel System; Curriculum Class Control System;
Training Systems Alumni Benefactor System

Human Resources Systems Other Types (e.g., University)

17 18

3
Knowledge work systems Office automation systems
Knowledge level Data workers

Inputs: design specs Toward a paperless office

Word processing, digital imaging, digital filing
Processing: modelling
Scheduling
Outputs: designs, graphics Electronic calendaring
Users: technical staff Communication
Email, videoconferencing
Example: engineering work
station (CAD) Example: presentation graphics

19 20

MIS MIS
Report control oriented (summary and Management Information System
exceptions)
Different meaning from intro
Provide access to current performance and
historical data IS Serving the (middle) management level
Past & present data
Internal orientation Inputs: high volume data (from TPS)
Lengthy design process
Processing: simple models
Example: product unit performance, annual
Outputs: summary reports
budgeting Users: middle managers

21 22

TPS data for MIS applications DSS Decision support systems

Supports decision process (business
TPS MIS intelligence)
Use info from TPS, MIS, and extern
Order Processing SALES
DATA
System

ORDER FILE
Use many models to analyze and condense
Materials Resource UNIT data
PRODUCT MIS
Sophisticated modeling tools
REPORTS
Planning System COST

PRODUCTION MASTER FILE Great analytical power

General Ledger
EXPENSE MANAGERS Interactive
System DATA
Ask new question
ACCOUNTING FILES MIS FILES
Add new data
Change hypotheses

23 24

4
DSS Decision support systems EIS Executive info systems
Management level Support decision making at the
management top level
Non routine decisions
Inputs: low volume data
EIS are not designed primarily to solve
Processing: interactive specific problems
Outputs: decision analysis EIS provide a generalized computing and
Users: professionals, staff communications capacity that can be
applied to a changing array of problems
They filter, compress, and track critical data,
Example: contract cost analysis, production reducing time and effort required to obtain
information useful to executives
scheduling

25 26

EIS Executive info systems EIS Executive support systems

Workstations with menus, interactive Strategic level
graphics, and communications
capabilities
Inputs: aggregate data
Can access historical and competitive
data from internal corporate systems Processing: interactive
and external databases (e.G. Dow Outputs: projections
jones news) Users: senior managers
Designed to the individual
Very expensive to keep up Example: 5 year operating plan

27 28

Sis. di supporto alle decisioni Characteristics of IS

Management Information Systems System Input Processing Output User

(MIS) - valutazione di decisioni ESS Aggregate data

(external, internal)
simulation Projections Senior
managers
strutturate per il livello di controllo DSS Low-volume data (from
optimized DBs),
Simulation,
analysis
Special reports,
decision
Professionals,
staff

Decision Support Systems (DSS) - MIS

analytic models
Transactions Routine reports,
analysis
Summary and
managers
Middle
valutazione di ipotesi e alternative per summaries, high-
volume data
low-level
analysis
exception
reports
managers

decisioni poco strutturate KWS Design spec, Modeling, Models, Professionals,

knowledge base simulation graphics technical staff
Executive Information Systems (EIS o OAS Documents, schedules Document Documents, Data workers
management, schedules, mail
ESS) - elevata interattivit e flessibilit scheduling,
communication
nella produzione dei dati di sintesi TPS Transactions, events Sorting, listing, Detailed Operational
merging reports, lists, managers,
summaries supervisors
29 30

5
Interrelationships

ESS

MIS DSS Functional

KWS
TPS
OAS
31 32

Functional taxonomy Functional taxonomy

Organisational level Sales and Marketing Systems
STRATEGIC LEVEL Manufacturing and Production
Systems
MANAGEMENT LEVEL Finance and Accounting Systems
Human Resources Systems
KNOWLEDGE LEVEL

OPERATIONAL
LEVEL
SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN
MARKETING RESOURCES

Business functions
33 34

Sales and Marketing S&M examples

Marketing is concerned with System Description Level
identifying the customers
Order processing Enter, process and Operational
determining what they need or want
track orders
planning and developing products and services
Market analysis Identify customers Knowledge
to meet their needs using demographics,
advertising and promoting these products and markets, trends
services Pricing analysis Determine price for Management
Sales is concerned with product or service
contacting customers Sales trend Prepare 5-year sales Strategic
selling the products and services forcasting forcast
taking orders
following up on sales

35 36

6
Manufacturing and Production M&P examples
Activities deal with System Description Level
Planning, development, and maintenance of
Machine control Control action of Operational
production facilities machines
The establishment of production goals Computer-aided Design new product Knowledge
The acquisition, storage, and availability of design
production materials Production planning Decide when and Management
how many
Scheduling of equipment, facilities, materials,
and labor required for finished products Facilities location Decide where to Strategic
locate new facilities
Integrate and control the production flow

37 38

Finance and Accounting Finance and Accounting

Finance function System Description Level

Managing the financial assets, such as Account receivable Track money Operational
cash, stocks, bonds, and other
investments, in order to maximize the Portfolio analysis Design portfolio of Knowledge
investments
return
Budgeting Prepare short-term Management
Accounting function budgets
Profit planning Plan long-term Strategic
Maintaining and managing the firms profits
financial records/receipts, disbursements,
payroll, to account for the flow of funds
in a firm

39 40

Human Resources Human Resources

HR function is responsible for System Description Level
Attracting workforce
Training and Track employees Operational
Developing workforce development training, skills and
Maintaining workforce extimate performance
Career pathing Design career paths for Knowledge
Human resources information systems employees
support activities such as Compensation Monitor fairness in Management
Identifying potential employees analysis employees wages and
benefits
Maintaining complete records on employees
HR planning Plan long-term labor Strategic
Creating programs to develop employees skills needs

41 42

7
 Process-oriented taxonomy

Business Process
Set of activities, for each: input, output,
role
Process Input / output: material, information,
knowledge
With objective of producing valuable
product or service

Can be inter or intra function

43 44

Processes intra function Processes inter function

Order fulfillment

45 46

SI per il supporto di processi

SI possono automatizzare I processi e CRM
aumentare lefficienza, ma non Customer relationship management
necessariamente lefficacia SCM
Supply chain management
Focus: Enterprise systems
Capire quali processi devono essere
migliorati
E non automatizzare I processi di per se

47 48

8
CRM CRM
Business and technology discipline to
coordinate all of the business processes for
dealing with customers
from receipt of an order acquisition through
product delivery
From existing customer to new ones

Old approach: customer information spread

among different functions
More recently: spread among different
channels
Web site, call centers, counters

49 50

CRM should answer to SCM

What is the value of a particular customer to Coordination of all the activities and
the firm over his or her lifetime?
information flows involved in buying,
Who are our most loyal customers? making, and moving a product
(It costs six times more to sell to a new customer
than to an existing customer.) (Kalakota and
Robinson, 2001).
Who are our most profitable customers? Old approach: no (little) integration of
(Typically 8090% of a firms profits are IS of different companies, functions
generated by 1020% of its customers.)
What do these profitable customers want to
buy?

51 52

SCM Functions

53 54

9
ERP EIS Examples
Enterprise Information System, Enterprise sales personnel might not be able to
Resource Planning
tell at the time they placed an order
Organizations often have several IS whether the items that were ordered
that do not talk to each other were in inventory;
customers could not track their
orders;
manufacturing could not communicate
easily with finance to plan for new
production

55 56

ERP Example
A sales representative in Brussels enters a customer order
The factory in Hong Kong receives the order and begins
production.
The warehouse checks its progress on-line and schedules the
shipment date.
customer service representatives can track the progress of the
order through every step of the manufacturing process.
Updated sales and production data automatically flow to the
accounting department.
The system transmits information for calculating the
salespersons commission to the payroll department.
The system also automatically recalculates the companys
balance sheets, accounts receivable and payable ledgers, cost
center accounts, and available cash

57 58

Exercise Exercise - 2
Draw a diagram of the production
Management at your agricultural chemicals corporation has been dissatisfied
with production planning. Production plans are created using best guesses of
demand for each product which are based on how much of each product has
been ordered in the past. If a customer places an unexpected order or
requests a change to an existing order after it has been placed, there is no planning process.
way to adjust the production plans. The company may have to tell customers
it cant fill their orders or may run up extra costs maintaining additional
inventory to prevent stock-outs. At the end of each month, orders are totaled
and manually keyed into the companys production planning system. Data
from the past months production and inventory systems are manually
entered into the firms order management system. Analysts from the sales
department and from the production department analyze the data from their
respective systems to determine what the sales targets and what the Analyze the problems this process
production targets should be for the next month. These estimates are
usually different. The analysts then get together at a high-level planning
meeting to revise the production and sales targets to take into account senior
creates for the company.
managements goals for market share, revenues, and profits. The outcome of
the meeting is a finalized production master schedule. The entire production
planning process takes 17 business days to complete. Nine of these days are
required to enter and validate the data. The remaining days are spent
developing and reconciling the production and sales targets and finalizing
the production master schedule.
Define new process

59 60

10
Case Study Processi o funzioni
SI Politecnico per gestione studenti Nuova Iscrizione studente
Iscrizioni, esami, statini, piani studio, Calcolo carico didattico e piano di
orari .. studio
Registrazione esame
Funzioni? Iscrizione esame
Processi? Pagamento tasse
Orari
Livelli di SI? (strategico, etc) Allocazione aule

61 62

Divisioni Divisioni
Sales and marketing Amministrazione centrale
Accounting Segreteria studenti
Pagamento tasse Pagamento tasse
Nuova Iscrizione studente Nuova Iscrizione studente
Calcolo carico didattico e piano di studio
Calcolo carico didattico e piano di studio
Manufacturing (logistics) Registrazioni esami, statini
Iscrizione esame, registrazione esame
Facolta
Allocazione aule
Human resources Allocazione aule, orari
Calcolo ore docenti
Finance
Dipartimenti

63 64

Livelli
TPS segreteria centrale
Iscrizione studente, registrazione esame
IBM360+Oracle
MIS segreteria centrale
studenti iscritti per esame
studenti iscritti per corso di laurea
tasso di superi
ESS (strategia)
Attivare corso di laurea in XY?
Quanti studenti di ultimi 3 anni accademici hanno profilo
di esami tale da suggerire che si sarebbero iscritti al nuovo
corso di laurea? (soglia minima per attivazione = 50
studenti/anno)

65

11