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How Businesses use Info Systems
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Business Processes and Information
Systems What are Business processes?
Business Processes refer to the manner inwhich work is organized, coordinated andfocused to produce a valuable product orservice.
They are the unique way in which
organizations coordinate work , informationand knowledge and the ways in whichmanagement chooses to coordinate work.
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Every business is a collection of processes.
How well a business firm does depends on
how well its business processes are organizedand coordinated.
While some business processes are tied to a
specific functional area of an organization,
others transcend different functional areas
and require coordination across departments.
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How information technology enhances
business processes?
They enhance business processes in two ways- 1. They increase the efficiency of the existing
processes.
2. They enable entirely new processes that arecapable of transforming the business.
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Types of Business Information Systems
Since a business has many different processes ,different specialists performing different functions anddifferent levels of operation, no single system can
provide all the information an organization requires. The types of information systems in business can be
viewed in two different perspectives:
1. From a functional Perspective: i.e from theperspective of functions these systems aid
2. Constituency perspective: i.e from the perspective ofthe major organizational groups they serve.
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Systems from a functional perspective:
1. Sales and Marketing Systems
2. Manufacturing and Production Systems 3. Finance and accounting systems
4.Human resource systems
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Systems from a Constituency
Perspective
This examines systems in terms of the variouslevels of management and types of decisionsthat they support.
An organization is made up of different levelsof management who have differentinformation need.
Senior management requires summaryinformation that can quickly inform aboutthe overall performance of the organization
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Middle management requires more specificinformation about the performance of thedifferent functional areas
Operational level management requirestransaction level information like the amountof raw material used in production used eachday.
Knowledge workers may require informationfrom some external source.
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Transaction Process Systems
A transaction processing system is a computerisedsystem that performs and records the daily routinetransactions necessary to conduct the business.
This system provides answers to questions related toroutine tasks, and goals which are predefined andhighly structured.
TPS helps managers to monitor the status of internaloperations and also the firms relation with externalenvironment.
TPS are also producers of major information for othertypes of system.
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Management Information Systems and
Decision Support Systems
These are the systems which are used by the
middle management.
MIS provides middle management withreports on organizations current
performance.
This information is used to monitor and
control the business and predict future
performance.
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MIS uses data and information supplied byTPS to summarize and report on the basicoperations of the organization.
The reports prepared by MIS are on a regularschedule daily, weekly, monthly, yearly.
MIS also answers questions that are routine
and have been pre defined. These systems are generally not flexible and
have little analytical capability.
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Decision Support Systems: They are also usedby the middle management, but support thenon routine decision making.
They focus on problems that are unique andare rapidly changing and the solution of theproblem may not be pre defined.
They use information generated by TPS andMIS along with information from externalsources.
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Executive Support Systems
These are the systems which help senior
managers in issues that address strategy, long
term trends both in the firm and the external
environment.
They help the managers take non routine
decisions that require judgment, evaluation
and insight as there is no agreed on solution
for arriving at the solution.
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They use information generated by MIS, DSS
and filter, compress and track critical data and
also present the data of greatest importance
to the senior managers.
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Systems that span the Enterprise
Although useful for the enterprise, maintaining
different functional systems is very costly.
Since an organization is an interdependent
system of different functions, these systems also
need to share information with each other in
order to be useful for the organization.
This problem is overcome with the help of manysystems and one of the most important system is
called Enterprise applications.
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Enterprise applications
In a large organization, there are manydifferent information systems built arounddifferent functional areas of the organization.
In order to get an overall picture of theorganizations operations, data andinformation from these different systems needto be gathered .
This information in different pieces degradesorganizational efficiency and performance.
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This problem is overcome using the Enterprise
system which is also known as Enterprise
Resource Planning ( ERP ).
ERP collects data from the various functional
systems and stores them in a central data
repository.
This stored data then is shared across the
organization.
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Enterprise Systems speed up the communication ofinformation through out the company making it easierfor the businesses to coordinate their operations.
They give flexibility to the company to respond rapidly
to the queries of the customers. This helps the companies to stock only with what is
needed thereby reducing the operational costs.
They provide valuable information for improving
management decision making. They provide company wide information to help
managers analyze the overall product profitability orcost structures.
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Supply Chain Management Systems
These systems help management to manage theirrelationship with their suppliers.
Information regarding order, production, inventory levelsare made available so that suppliers, producers, distributors
can source, produce and distribute goods efficiently. The ultimate objective of these systems is to create
efficiency in the supplies of material so that the rightamount of material is reached from the source to thedestination with the least possible cost and time.
With the help of these systems the businesses are notsaddled with excess inventory thereby reducing theoperational costs.
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Supply chain management systems are one type ofinterorganizational systems because they facilitate the flowof information across organizational boundaries.
Information from supply chain management systems help
firms to : - Decide when and what to produce, store and move.
-Rapidly communicate orders.
- Track the status of orders.
- Check inventory availability and check inventory levels.
- Reduce logistic costs.
-Plan production based on actual customer demand.
- Rapidly communicate changes in product design.
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Customer Relationship Management
Systems
They help firms manage their relationshipwith their customers.
They provide information to coordinate the
activities of all the processes that deal withthe customers in sales marketing and service.
The information provided by this system helps
a firm to identify, attract and retain the mostprofitable customers as also to provide betterservice to the existing customers.
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Knowledge Management Systems
These systems help organizations to bettermanage processes for capturing and applyingknowledge and expertise.
These systems collect all the relevantknowledge and experience in the firm andmake it available whenever and whereverrequired.
They also link the firm to external sources ofknowledge.
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Apart from supporting acquiring, storing,
distributing and applying knowledge, these
systems also help processes to create new
knowledge and integrate it with the ongoing
processes of the organization.
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Intranets and Extranets
Intranets are the internal networks built with
the same tools and communication standards
as the internet and are used for internal
distribution of information to employees.
Extranets are intranets extended to authorised
users outside the company.