CHAPTER TWO

How
Businesses
Use
Information
Systems
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

LEARNING OBJECTIVES
After reading this chapter, you will be able to
answer the following questions:

1.What are business processes? How are they

related to information systems?
2.How do information systems serve the different
management groups in a business?
3.How do systems that link the enterprise
improve organizational performance?

Continued
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

LEARNING OBJECTIVES (continued)

4. Why are systems for collaboration and teamwork

so important, and what technologies do they
use?

5. What is the role of the information systems

function in a business?
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Business Processes and Information Systems

Examples of functional business processes

Assembling the product

Manufacturing
& Production Checking for quality
Producing bills of material
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Business Processes and Information Systems

Examples of functional business processes

Manufacturing &
Production
Identifying customers
Sales &
Marketing Making customers aware of the
product
Selling the product
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Business Processes and Information Systems

Examples of functional business processes

Manufacturing &
Production
Sales &
Marketing
Finance & Paying creditors
Accounting Creating financial statements
Managing cash accounts
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Business Processes and Information Systems

Examples of functional business processes

Manufacturing &
Production
Sales &
Marketing
Finance &
Accounting
Hiring employees
Human
Resources Evaluating employees job
performance
Enrolling employees in benefit
plan
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Business Processes and Information Systems

 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Business Processes and Information Systems

Information technology enhances business

processes in two main ways:
1. Increasing efficiency of existing processes
Automating steps that were manual
2. Enabling entirely new processes that are
capable of transforming the businesses
Replace sequential steps with parallel steps
Eliminate delays in decision making
Achieve greater efficiency, innovation, and
customer service.
http://theprocessconsultant.com/process-
101/business-process-and-it/
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Types of Information Systems

There are different kinds of systems in an organization.
No single system can provide all the information an
organization needs.
Functional systems that operate independently of each
other are becoming outdated.
Many have been replaced with large-scale cross-
functional systems that integrate the activities of
related business processes and organizational units
There are different systems supporting the decision-
making needs of each of the main management groups.
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Systems for Different Management Groups

Transaction Processing Systems (TPS)

Mosaic people soft
Automates transactions
Systems for Business Intelligence
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Transaction Processing Systems (TPS)

Perform and record daily routine transactions necessary
to conduct business
Examples: sales order entry, payroll, shipping
Principle purpose of systems at this level is to answer
routine questions and track the flow of transactions
through the organization
Allow managers to monitor status of operations and
relations with external environment
Serve predefined, structured goals and decision making
Example:
How many parts are in inventory?
What happened to Mr. Smiths payment?
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Business Intelligence Systems for Decision

Support
Support middle management with monitoring,
controlling, decision making, and
administrative activities
Management Information Systems (MIS)
Report that comes directly from the TPS
Decision Support Systems (DSS)
Executive Support Systems (ESS)
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Management information systems (MIS)

Serve middle management
Provide reports on firms current
performance, based on data from TPS
Provide answers to routine questions
with predefined procedure for
answering them
Predicts future performance
Typically have little analytic capability
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Decision support systems (DSS)

Serve middle management
Support nonroutine decision making
Example: What would be the impact on production schedule if
December sales doubled?
Often use external information as well as
information from TPS and MIS
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Decision support systems (DSS)

Model driven DSS

Stand-alone system that uses some type of model to
perform what if and other kinds of analyses
E.g., Voyage-estimating systems
Example: which vessel should be assigned at what
rate to maximize profits?
Example: What is the optimum speed at which a
particular vessel can optimize its profit and still meet
its delivery schedule?
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Decision support systems (DSS)

Data driven DSS

Focusing on extracting useful information from massive
quantities of data
E.g., Intrawests marketing analysis systems
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Executive support systems (ESS)

Support senior management
Address nonroutine decisions requiring
judgment, evaluation, and insight
Completely unstructured everything is based on
human knowledge
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
firms financial performance as measured by working
capital, accounts receivable, accounts payable, cash
flow, and inventory
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Type of System Information Information Users

Inputs Outputs
Transaction Transactions; daily Detailed reports; Operations
Processing events lists; summaries personnel
Systems (TPS)
Management Summary Summary and Middle managers
Information transaction data; exception reports
Systems (MIS) high-volume data;
simple models
Decision Support Optimized for data simulations; Professionals
Systems (DSS) analysis, analytic analysis
models and data
analysis tools.
Executive Support Aggregate data; Projections; Senior managers
Systems (ESS) external, internal responses to queries
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Systems for Linking the Enterprise

Enterprise applications
Enterprise systems (ERP)
All departments are connected together
through the ERP system
Supply Chain Management Systems (SCM)
Customer Relationship Management Systems
(CRM)
Knowledge Management Systems (KMS)
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Enterprise systems

Also known as enterprise resource planning

(ERP) systems
Collect data from different functions and store
data in single central data repository
Resolve problem of fragmented, redundant data
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Enterprise systems
Enable:
Coordination of daily activities
Efficient response to customer orders
Use of valuable information for improved
management decision making

https://www.youtube.com/watch?v=2sa6lS3APo8
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Supply chain management (SCM) systems

Manage firms relationships with suppliers
Interorganizational systems
Share information about
Orders, production, inventory levels, delivery
of products and services
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Supply chain management (SCM) systems

Goal: Right amount of products to destination

with least amount of time and lowest cost

https://www.youtube.com/watch?v=zE-34Yl-
GQ8&index=3&list=PL4kndXbdE_Gkd8gUIcmJyb
bUsU_y51L7i
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Customer relationship management (CRM) 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
This information helps firms to identify, attract,
and retain the most profitable customers; provide
better service to existing customers; and increase
sales.
https://www.youtube.com/watch?v=XmnPlfJh7zM
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Knowledge management systems (KMS)

Support processes for acquiring, creating, storing,
distributing, applying, integrating knowledge
Collect internal knowledge and make it available
whenever and wherever it is needed to improve
business processes and management decisions
Link the firm to external sources of knowledge
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Intranets and Extranets

Intranet are simply internal company websites
that are accessible only by employees.
Internal networks built with same tools and
standards as Internet
Used for internal distribution of information to
employees
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

Intranets and Extranets

Extranet function similarly, except that they are
accessible to authorized vendors and suppliers
to coordinate the movement of suppliers

Intranet Extranet
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Types of Information Systems

E-business, e-commerce, and e-government

E-business
Use of digital technology and Internet to drive major
business processes
E-commerce
Subset of e-business
Buying and selling goods and services through Internet
E-government
Using Internet technology to deliver information and
services to citizens, employees, and businesses
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

What is Collaboration?

Collaboration is working with others to achieve shared

and explicit goals. Collaboration focuses on task or
mission accomplishment and usually takes place in a
business or other organizations and between
businesses.

Teams have a specific mission that someone in the

business assigned to them
They are normally short lived, depending on the
problems they tackle and the length of time needed
to find a solution and accomplish the mission
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Collaboration is more important than ever

Changing Nature of Job require much closer coordination and

Work interaction among employees involve in producing
the service or product
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Collaboration is more important than ever

Changing Nature of Job require much closer coordination and

Work interaction among employees involve in producing
the service or product
Growth of Professional jobs require substantial education
Professional work and the sharing of information and opinions
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Collaboration is more important than ever
Job require much closer coordination and
Changing Nature of interaction among employees involve in producing
Work the service or product

Growth of Professional Professional jobs require substantial education

work and the sharing of information and opinions

Changing organization Today, work is organized into groups and teams

of the firm
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Collaboration is more important than ever
Job require much closer coordination and
Changing Nature of interaction among employees involve in producing
Work the service or product

Growth of Professional Professional jobs require substantial education

work and the sharing of information and opinions

Changing organization Today, work is organized into groups and teams

of the firm
Changing scope of the The work of the firms has changed from a single
firm location to multiple locations
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Collaboration is more important than ever
Job require much closer coordination and
Changing Nature of interaction among employees involve in producing
Work the service or product

Growth of Professional Professional jobs require substantial education

work and the sharing of information and opinions

Changing organization Today, work is organized into groups and teams

of the firm
Changing scope of the The work of the firms has changed from a single
firm location to multiple locations

Emphasis on Innovations derive from close collaboration with

innovation colleagues and partners
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Collaboration is more important than ever
Job require much closer coordination and
Changing Nature of interaction among employees involve in producing
Work the service or product

Growth of Professional Professional jobs require substantial education

work and the sharing of information and opinions

Changing organization Today, work is organized into groups and teams

of the firm
Changing scope of the The work of the firms has changed from a single
firm location to multiple locations

Emphasis on Innovations derive from close collaboration with

innovation colleagues and partners

Changing culture of Divers teams to produce better outputs faster than

work and business individuals working on their own
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

What is Social Business?

The goal of social business is to deepen

interactions with groups inside and outside the firm
to expedite and enhance information-sharing,
innovation, and decision making.

https://www.youtube.com/watch
?v=Af-y81e-i6U
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Business benefits of collaboration and teamwork
Investments in collaboration technology can produce
organizational improvements returning high ROI
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Building a collaborative culture and business

processes
Command and control organizations
No value placed on teamwork or lower-level
participation in decisions
All vertical communication management
control the process
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Building a collaborative culture and business

processes
Collaborative business culture
Senior managers rely on teams of employees
Policies, products, designs, processes,
systems rely on teams to create and to build.
Middle managers purpose is to build teams,
coordinate their work and monitor their
performance
Teams are vital to the organization
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Tools and Technologies for Collaboration and Social
Business
Email and instant
messaging
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Tools and Technologies for Collaboration and Social
Business
Email and instant
messaging

Wiki
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Tools and Technologies for Collaboration and Social
Business
Email and instant
messaging

Wiki

Virtual world
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Tools and Technologies for Collaboration and Social
Business
Email and instant
messaging

Wiki

Virtual world

Collaboration and Virtual Meetings

Social Business Google Apps/ Google Sites and Cloud
Platforms Collaboration
Microsoft SharePoint
Lotus Notes
Enterprise Social Networking Tools (e.g.,
Salesforce Chatter, IBM connections)
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

Two dimensions of collaboration technologies

Space (or location) remote or co-located
Time synchronous or asynchronous
Six steps in evaluating software tools
1. What are your firms collaboration challenges?
2. What kinds of solutions are available?
3. Analyze available products cost and benefits
4. Evaluate security risks
5. Consult users for implementation and
training issues
6. Make you selection of candidate tools
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

Systems for Collaboration and Teamwork

 Management Information Systems
Chapter 2 How Businesses Use Information Systems

The Information Systems Function in Business

Information systems department:
Formal organizational unit responsible for information
technology services
Often headed by chief information officer (CIO)
Other senior positions include chief security officer
(CSO), chief knowledge officer (CKO), chief privacy
officer (CPO)
Programmers: highly trained technical specialists who write the
software instructions for computers
Systems analysts: constitute the principal liaisons between the
information systems groups and the rest of organization
Job to translate business problems and requirement into
information requirements and system
Information systems managers
Managing data entry staff
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

The Information Systems Function in Business

End users

Representatives of other departments for

whom applications are developed
Playing an increasing role in system
design and development
 Management Information Systems
Chapter 2 How Businesses Use Information Systems

The Information Systems Function in Business

IT Governance:
Strategies and policies for using IT in the
organization
Decision rights
Accountability
Organization of information systems function
Centralized, decentralized, etc.