2.1 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu 2 Chapter Information Systems in the Enterprise Enterprise Information Systems in the Enterprise.

Prepared by Mehmet Islamoglu

2.1 © 2006 by Prentice Hall

2Chapter

Information Systems Information Systems

in thein the

EnterpriseEnterprise

Information Systems Information Systems

in thein the

EnterpriseEnterprise



Challenge: monthly changes in fashions, hard to predict what will sell,

how much, in which shop; Mango has 731 stores in 72 countries.

Customer preferences change a lot from one shop to another.

Solutions. Inventory replenishment system can tell not only how much

of a product is sold in total but also how much in each store.

Design teams meet weekly to adjust designs to sales trends.

Distribution system items are bar-coded and sent to specific stores in

specific amounts depending on monthly demand forecast.

Reduces time to market, increases responsiveness, reduces shelf-

time, end-of season sales, and unsold goods.

Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise

Mango Case: Fast Fashion, Hot Systems




MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

1. Transaction Processing Systems (are operational-level

systems, data input is sorted and categorized)

support operational managers, keeping track of the elementary

activities and transactions, e.g. At what day and time will the

express package sent by Mehmet Islamoglu (TRNC) be

delivered to Emre Islamoglu (Cambridge, UK)?

or

Mango sales is recorded as data input into Mango TPS which

categorizes them by product, shop, date, colour, customer

type, etc.





2. Management Information Systems and

3. Decision Support Systems

(are management-level systems, categorized data is taken from

TPS and summary reports (daily, weekly, monthly) are prepared

by MIS, this internal data is then enriched with external data in

DSS to help managers make decisions): serve the monitoring,

controlling, decision-making, and administrative activities e.g.

How many packages did we deliver late, to what addresses,

how late, (internal data) why? What can we do to improve

delivery reliability ? (internal and external data)





In case of Mango,

MIS system will take categorized data from TPS system (e.g. sales according to shop, sales according to product, sales according to dates, sales according to customer type)and will produce summary reports from thesee.g. a bar chart showing sales of each shop for all shops in a given country.

DSS also gathers external info on competitors, gift seasons, weather, etc. for each week, month etc.





4. Executive Support Systems (are strategic-level systems):

help senior management tackle and address strategic issues,

e.g. in the next 5 to 10 years, how much shall we increase our

express package delivery capacity and in which cities and

countries ?

In case of Mango,data from MIS and DSS systems are input to the ESS system to give information to top executives such aschanges in income levels of various age groups over the past decade compared with how much of these customers come to Mango versus competitors





Relationship of Systems to One Another

Figure 2-9





The Four Major Types of Information Systems





Transaction Processing Systems (TPS)

• A computerized system that performs and records the daily routine transactions necessary to serve the operational decisions and enquiries





Typical Applications of TPS

Figure 2-4





Management Information Systems (MIS)

Management level

• Inputs: High volume categorized data from TPS

• Outputs: Summary reports

• Users: Middle managers

Example: Weekly or monthly sales reports





Management Information Systems (MIS) (continued)

Figure 2-6

A sample MIS report





Decision-Support Systems (DSS)

Management level

• Inputs: internal categorized data from TPS and MIS and external data from various sources

• Outputs: Decision analysis, What-if scenarios

• Users: Middle managers

Example:





EXECUTIVE SUPPORT SYSTEMS (ESS):

• Inputs: Aggregate (i.e. summary) data from DSS and MIS

• Outputs: Projections, forecasts

• Users: Senior managers

Example: 5 year operating plan





So far, we learned that there are four major types of

information systems in an orgn, TPS, MIS, DSS, ESS.

Now, we shall look at how each department uses

information systems. These departments areSales and MarketingManufacturing and ProductionFinancing and AccountingHuman ResourcesEach department have their own TPS, MIS, DSS.There is only one ESS.




SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Sales and Marketing Information SystemsHelp in: • Sales management, market research, promotion,

pricing, new products





Sales and Marketing Information Systems

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

Order processing

Enter, process, and track orders Operational

Pricing analysis Determine prices for products and services

Management

Sales trend forecasting

Prepare 5-year sales forecasts Strategic

Table 2-2





Manufacturing and Production Information Systems

Help in: • Materials resource planning (MRP) (i.e.

purchasing, shipping, receiving all coordinated with production), and quality control.






Machine control

Control the actions of machines and equipment (robotics)

Operational

Production planning

Decide when and how many products should be produced (marginal cost etc)

Management

Facilities location

Decide where to locate new production facilities (near suppliers or customers?

Strategic

Manufacturing and Production Information Systems





Financing and Accounting Information Systems

Major functions of systems: • Budgeting, general ledger, billing, cost Budgeting, general ledger, billing, cost

accountingaccounting

Major application systems: • General ledger, accounts receivable, accounts General ledger, accounts receivable, accounts

payable, budgeting, funds management systemspayable, budgeting, funds management systems





Financing & Accounting Systems (Continued)

SYSTEM DESCRIPTION ORGANIZATION-AL LEVEL

Accounts receivable

Tracks money owed the firm Operational

Budgeting Prepares short-term budgets Management

Profit planning Plans long-term profits Strategic

Table 2-4





Human Resource Systems

Major functions of systems: • Personnel records, benefits, compensation, labor Personnel records, benefits, compensation, labor

relations, trainingrelations, training

Major application systems: • Payroll, employee records, benefit systems, Payroll, employee records, benefit systems,

career path systems, personnel training systemscareer path systems, personnel training systems





Human Resource Systems (Continued)


Training and development

Tracks employee training, skills, and performance appraisals

Operational

Compensation analysis

Monitors the range and distribution of employee wages, salaries, and benefits

Management

Human resources planning

Plans the long-term labor force needs of the organization

Strategic

Table 2-5




Traditional information systems architecture, i.e. when each department have their own information systems, makes it very difficult for departments to coordinate activities because they cannot see each others’ data.

Example: Ordering a productExample: Ordering a product

Looks simple, but is it ?Looks simple, but is it ?

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications




The Order Fulfillment Process

Figure 2-12





Enterprise Systems

• Enterprise systems, also known as enterprise Enterprise systems, also known as enterprise resource planning (ERP) systems, provide a resource planning (ERP) systems, provide a single information system for the whole of the single information system for the whole of the organization (one TPS, one MIS, one DSS).organization (one TPS, one MIS, one DSS).

• Each functional department (accounting, Each functional department (accounting, marketing, production, human resources) now marketing, production, human resources) now has all the data about everything, instead of has all the data about everything, instead of having just data about their own activities from having just data about their own activities from their own TPS, MIS, and DSS. Saves time and their own TPS, MIS, and DSS. Saves time and effort, no need to wait for data (soft or hard effort, no need to wait for data (soft or hard copies) from other departments.copies) from other departments.





Enterprise Application Architecture

Figure 2-13






An ERP system provides many advantagesDid he pay the deposit? Call accountingInventory employee can see whether payment has been made before allowing shipment of a product,No need to request printouts from accounting dept.How much do they want us to produce?Call productionProduction planning can be done easily since sales data (which previously only marketing department had) can be seen by production department too.Mr.Ali is asking when his order will be deliveredA salesperson can give a customer a realible promise about when the production department will complete manufacturing his/her product.




ERP helps Supply Chain Management (SCM)

in procurement of materials, transformation of raw in procurement of materials, transformation of raw

materials into intermediate and finished productsmaterials into intermediate and finished products

in distribution of the finished products to customersin distribution of the finished products to customers

Includes reverse logistics - returned items flow in the Includes reverse logistics - returned items flow in the

reverse direction from the buyer back to the sellerreverse direction from the buyer back to the seller





ERP helps Supply Chain Management (SCM)

Managers working in SCM use ERP systems to Managers working in SCM use ERP systems to Decide when and what to produce, store, and moveDecide when and what to produce, store, and move

(plan production based on actual customer (plan production based on actual customer demand and if necessary rapidly communicate demand and if necessary rapidly communicate changes in product design to suppliers)changes in product design to suppliers)

Rapidly communicate orders and plan transport to Rapidly communicate orders and plan transport to reduce costsreduce costs

Track the status of orders and other shipmentsTrack the status of orders and other shipments

Check inventory availability and monitor inventory Check inventory availability and monitor inventory levels to reduce inventory costslevels to reduce inventory costs





ERP helps Customer Relationship Management (CRM)

Managers working in CRM use ERP systems toManagers working in CRM use ERP systems to

To share customer data (who he is, what he To share customer data (who he is, what he

wants, what has been done to serve him, what wants, what has been done to serve him, what

still needs to be done for him) with all still needs to be done for him) with all

departments.departments.

To bring together and analyse data from all To bring together and analyse data from all

departments to get a better picture of the departments to get a better picture of the

customer and how to serve him/her better.customer and how to serve him/her better.


2.1 © 2006 by Prentice Hall Prepared by Mehmet Islamoglu 2 Chapter Information Systems in the Enterprise Enterprise Information Systems in the Enterprise.

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