2.

1 Business Processes and Information Systems

In order to operate, business must deal with many different pieces of information, they must organize
work activities that use this information to operate efficiently and enhance the overall peformance of
the firm. Information systems make it possible for firms to manage all their information, make better
decisions and improve the execution of their business processes.

BUSINESS PROCESSES

 Manner in which work is organized, coordinated, and focused to produce a valuable product or
service
 Concrete work flows of material, information, and knowledge—sets of activities
 Unique ways to coordinate work, information, and knowledge
 Ways in which management chooses to coordinate work
 Information systems help organization achieve great efficiencies by automating parts of
processes
 Contributes to completely rethinking processes
 Business processes typically span several different functional areas

Functional Area Business Processes

Assembling the Product

Manufacturing and Production Checking for Quality
Producing Bills of Materials

Identifying Customers
Sales and Marketing Making Customers Aware of the Product
Selling the Product

Paying Creditors
Finance and Accounting Creating Financial Statements
Managing Cash Accounts

Hiring Employees
Human Resources Evaluating Employee's Job Performance
Enrolling Employees in Benefits Plans
Table 2-1 Examples of Functional Business Processes
How Information Technology Enhances Business Processes?

Information systems automate many steps in business processes that were formerly performed
manually. But today, information technology actually can change the flow of information even the way
the business works and drive to a new business models.

Figure 2-1 The Order Fulfillment Process

Sales Generate Order Submit Order

Accoun- Generate
Check Credit Approve Credit
ting Invoice

Manufact- Assemble
Ship Product
uring and Product
Productio

 Information technology enhances business processes in two

main ways:
o Increasing efficiency of existing processes
 Automating steps that were manual

o 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
2.2 Types of Information Systems

 Transaction Processing Systems (TPS)

o Basic business systems that serve operational level
o A computerized system that performs and records the daily routine transactions
necessary to conduct of the business
 Management Information Systems
o Inputs : High Volume Transaction Level Data
o Processing : Simple Models
o Outputs : Summary Reports
o Users : Middle Managers
 Decision-Support Systems (DSS)
o Inputs : Transaction Level Data
o Processing : Interactive
o Outputs : Decision Analysis
o Users : Profesionals, Staff

 Executive Support Systems (ESS)

o Inputs : Agregate Data
o Processing : Interactive
o Outputs : Projections
o Users : Senior Managers