Chapter 1:

The Importance of MIS

- Future business professionals need to be able to assess, evaluate, and apply
emerging technology to business
- Helps us develop strong non-routine cognitive skills  Helps us attain
job security

Marketable Skills:
- Abstract Reasoning: Ability to construct a representation/model
- Systems Thinking: Ability to illustrate, interpret, and apply diff. systems to
diff. situations
- Collaboration: Ability to work with others to achieve a common goal
o Receive/provide feedback
- Experimentation: Ability to identify opportunities and test them (with use
of available resources)

System: A group of components that interact to achieve some purpose

IS: Group of components that interact to produce information

5 Component Framework:

Management IS
• Use IS to help businesses achieve their strategies
• Role: Develop & maintain an effective IS
• To adapt to new requirement

Information Technology (IT): Products, methods, standards, and inventions used

to produce information + to develop a new IS
- Drives the developments of a new IS
- IT components = Hardware + Software + Data

Differentiating between IS & IT

- Cannot buy an IS
- Can buy, rent, lease hardware, software and databases, and predesigned
procedures
 - People execute procedures to employ new IT

IS Security:
Use Strong Passwords
• 10+ characters
• Does not contain your user name, real name, or company name
• Does not contain a complete dictionary word in any language
• Different from previous passwords used
• Contains both upper- and lowercase letters, numbers, and special characters

Chapter 2:
Business Processes, I.S., & Info

Business Process: A network of activities for accomplishing a business function

- Constructed using symbols of Business Process Modeling Notation
(BPMN)
- Organized in a Swimlane Format: Graphical arrangement, in which all of the
activities for a given role (job type) are shown in a single vertical lane
- Each swimlane has a set of activities
Activity – Specific tasks to be accomplished in a process
Decision – Question to be answered Yes/No
Role – Sets of procedures
Actor – Person, group, department, organization, or information system
Resource – People, or facilities, or computer programs assigned to roles
Repository – Collection of business records
Data Flows: Movement of data from 1 activity to another
Sequence Flows: Solid line that indicates what the next action is

How I.S. Improves Process Quality

- An effective business process is one that enables the org. to accomplish its
strategy
- Efficiency: Ratio of benefits to costs  Ex. IS that provides same benefit but
at lower cost
o 2 repositories may create process inefficiencies  Single repository is
less costly, generate fewer errors, and as effective
Store Vendor Data
- Buyer would have a faster and more reliable means of finding relevant data
- Saves time/costs = Efficiency
Store Vendor Product & Performance Data in a Database
- View past vendor performance to help choose b/w vendors
o Ex. Stay away from vendors that frequently ship fewer/more items than
requested + in bad condition

Process Costs
- BPMN do not display costs directly
- Costs are associated with labor & infrastructure
o Computer network, email, or other systems needed to support data flows

Information: Value you add to information systems

1. Knowledge derived from data, where data are recorded facts or figures
2. Processed data presented in a meaningful context
3. A difference that makes a difference

Graph is not, itself, information

o Graph is data used to conceive information  Through cognitive skills
o People perceive different information from same data

Data Characteristics for Quality Info

1. Accurate
2. Timely: Produced in time for intended use
3. Relevant
4. Just Barely Sufficient: Right amount of information vs. extraneous info
5. Worth its cost (cost-efficient)
 Chapter 3:
Organizational Strategy, I.S., & Competitive Advantage

A) Porter’s 5 Competitive Forces: Helps businesses determine characteristics of

an industry to assess potential profitability  Low vs. High

1. Threat of New Competitors  How easy it is for new businesses to enter

the industry
2. Threat of Substitutes  How easy it is for customers to switch to
substitutes (caused by income, price changes, trends, preferences)
 Do you offer higher/lower prices?
 Do you offer the same/different perceived benefit?
3. Threat of Existing Rivals  Customer loyalty
4. Bargaining Power of Suppliers
 Availability of substitutes
 Size of firm in relation to supplier
5. Bargaining Power of Customers
 Availability of substitutes
 Reputation/size of firm

B) Competitive Strategy
o To be effective: Org’s objectives, goals, culture, and activities must be
consistent with the overall strategy.

1. Cost Leadership
a. Focused: Lowest cost within industry segment
b. Industry-wide: Lowest cost across the industry
2. Differentiation
a. Focused: Better product/service offering within industry segment
b. Industry-wide

C) Value-Chain: Network of value-creating activities

o Each activity at each step needs value or it should not be part of the chain

Value: Amount of money that customer is willing to pay for a product, service, or
resource.

Marginal Value/Margin = Value – Costs

Primary Activities  Business functions that relate directly to the production of

product/service  Tangible  Easier to measure value
 1. Inbound Logistics: Accumulating/storing materials for production
a. Unassembled parts are still valuable to customer
b. Maintain business relationships with vendors
2. Operations/manufacturing: Transfer inputs to outputs
3. Outbound Logistics: Deliver finished product to customer
4. Sales & Marketing: Identify/attract target customers
5. Customer Service: Keeps the customer linked to the firm  Also enhancing
the product’s value

Support Activities  Assist/facilitate primary activities  Contribute indirectly to

production  Intangible costs/benefits  Margin is an estimate
1. Procurement
a. Finding vendors
b. Setting up contracts
c. Negotiating prices
2. Technology: Research & Development
3. HR:
a. Training
b. Recruiting
c. Compensation
4. Firm Infrastructure: Different branches/departments within the firm

Value-Chain Linkages: Interactions across value chains  Saves time/costs

D) Business Processes: Implementing the value-chain in ways that are consistent

with its competitive strategy
o Ex. Low cost vendor  Uses minimal/quick processes to support its value
chain
o High cost vendor  Creates more elaborate & unique business processes
to differentiate

E) Information System: Applying the 5 components to implement the B.P. 

Providing a competitive advantage

Product Implementations
o Create, enhance, differentiate products/services
Process implementations
o Lock in customers: Making it complex/difficult to switch to another product
o Maintain customer data
 Saves customers from having to re-enter data  Reduces
errors
o Make it complex/expensive to switch to a substitute
o Lock in suppliers:
o Make it easier for suppliers to work/connect with you
o Raise barriers to market entry:
o New entrants would have to possess a differentiated I.S. to be able to
compete
o Establish Alliances
o Reduce Costs

Amazon’s Online Retailing

 Primary product offerings:
- Online retail store
- Order fulfillment services
 Involved in all aspects of online retailing
- Associates a program to sell its own inventory
- Sell inventory of others: Sellers ship goods to Amazon warehouses for
stocking, order packaging, and shipment. FBA customers pay a fee for
service and inventory space

Chapter 9:
Enterprise Resource Planning Systems

ERP application programs  Also called Modules.

Purpose of ERP Systems:

1. Integration through a centralized ERP database: Allowing the left hand of

the organization to know what the right hand is doing.
a. Whatever happens in 1 department – the other departments will be
notified instantly
2. Allows real time updates, globally – whenever & wherever the transaction
takes place.
3. Decisions made on a timely basis – using the latest data
4. Able to better meet requirements

Challenges:
 To write these application programs + to design a database that stores all
the integrated data
 Many decisions to be made on who does what – this means procedures
should be well thought-out
  These are difficult, daunting process required to implement + requires
high-skilled personnel

 Today almost no organization develops its own ERP system  Buy licensed
ERP systems from vendors
 Conversion from separated databases to ERP systems is still expensive + long
process

A true ERP system must include applications that integrate the following:

 Supply Chain:
o Procurement, sales order processing, inventory management, supplier
management.
 Manufacturing:
o Scheduling, capacity planning, quality control, bill of materials.
 CRM:
o Sales prospecting, CM, marketing, customer support.
 HR:
o Time/attendance, HR management, commission calculations.
 Accounting:
o General ledger, AR, AP, cash management.

ERP is still an IS  Contains all 5 Components:

Hardware
Cloud-based hosting:
 PaaS (platform as a service): Replace existing hardware infrastructure with
hardware in a cloud
o Used by larger ERP systems
 SaaS (software as a service): Aquire a cloud-based ERP solution provided by
vendors who offer ERP software (SAP, oracle, Microsoft, etc.)
o Used by smaller/newer ERP systems
Software
Application Programs:
 Designed using program coding by ERP vendors  Altered by
development teams to meet customer requirements
o Set configuration parameters and specify how each ERP application
will operate
o Configuration decision are difficult & require critical skills to develop
 Require long-term maintenance costs
 Should choose an ERP solution that has applications that function close to
the organizations requirements.
Data  ERP Databases:
Computer programs stored within the database:
1. Triggers: Keeps data consistent when certain conditions arise
2. Stored Procedure: Used to enforce business rules, which are configured by
developers & business professionals
a. Ex. To never set certain items at discount

Procedures  Implement standard business processes to accomplish different

functions
 Provided by the vendor along with the applications, for the org. to
understand how these applications operate
o Must alter or design new procedures if not quite fitting to the
organization
 Process Blueprints: The inherent processes/procedures

People
Training & Consulting
 Training curriculum developed by vendors to prepare employees for:
o Implementation
o Usage
 Super Users: Selected employees to be trained by the vendors to become in-
house trainers in training session called Train the Trainer
 On-site Consulting

Steps for Implementation & Upgrading (All while still running the business)

1. Review ERP system that is being adopted  Is it appropriate?

2. Develop an As-is Model: Model of current business processes & procedures
3. Compare as-is model to ERP process blueprints
4. 2 ways to eliminate differences/remove inconsistencies:
a. Changing existing business process to match ERP’s
b. Altering ERP system
5. Train users
6. Conduct a simulation test to identify problems/glitches
7. Implement: Convert previous model to new ERP syste,

ERP by Industry Type

o First major ERP customers were large manufacturers.
o Industry-specific solutions have become popular ever since SAP constructed an
auto-manufacturing-specific ERP solution as a product offering.
o It became easy for ERP vendors to go up the supply chain + sell ERP solutions to
distributors, etc.
o ERP use by industry in manufacturing, distribution, mining, materials, extraction
petroleum, medical care, utilities, retail, and education.
ERP by Organization Size
ERP was used by huge organizations that had resources + skilled personnel needed to
manage/accomplish and ERP implementation.
 Today: the ERP use spread downward from large companies to medium and now is
used by small organizations.

 Small: Employ 1 or 2 IT specialists who manage the ERP system + the entire IS
department  Pressured during periods of ERP implementation.
Mid-sized: Expand IT from 1 person to a small staff
o This staff is separated from senior management  Leads to
misunderstanding + distrust.
o Thus the senior management must be committed to ERP solution.

 Large: Large IT staff  Headed by a chief info officer (business + IT professional)

o When IT management is isolated, the commitment is hard to receive

International ERP
Most large companies are present all over the world thus the ERP application programs
must:
1. Contain several languages
2. Adapt to different cultures
3. Support different currencies
4. Manage international transfers of goods in inventories
5. Work effectively with international supply chains
6. Provide worldwide consolidation of financial statements