INFORMATION INFORMATION SYSTEMS IN THE SYSTEMS IN THE ENTERPRISE ENTERPRISE
Jan 03, 2016
INFORMATION INFORMATION
SYSTEMS IN THESYSTEMS IN THE
ENTERPRISEENTERPRISE
• What are the major types of systems in a business? What role do they play?
• How do information systems support the major business functions?
• Why should managers pay attention to business processes?
• What are the benefits and challenges of using enterprise systems?
OBJECTIVES
1. Integration: Different systems serve variety of functions, connecting organizational levels difficult, costly • Managers need to determine what level of system
integration is required and how much it is worth in money.
2. Enlarging scope of management thinking: Investments in enterprise systems are huge, they must developed over long period of time, and must be guided by common objectives. i.e. Use IS must be flexible to ensure long-term profit
MANAGEMENT CHALLENGES
Types of Information Systems
KEY SYSTEM APPLICATIONS IN THE ORGANIZATION
Organization can be divided into
strategic, management,
knowledge, and operational levels
and into
five major functional areas:
sales & marketing, manufacturing,
finance, accounting & Human resources.
Information systems serve each of these levels and
functions
Major Types of Systems
• Operational-level systems: Operational-level systems: IS that monitor the IS that monitor the
elementary activities and transactions of the organization.elementary activities and transactions of the organization.
• Knowledge-level systems: Knowledge-level systems: IS that support knowledge IS that support knowledge
and data workers in an organization.and data workers in an organization.
• Management-level systems: Management-level systems: IS that support the IS that support the
monitoring controlling decision-making, and administrative monitoring controlling decision-making, and administrative
activities of middle managers.activities of middle managers.
• Strategic-level systems: Strategic-level systems: IS that support the long-range IS that support the long-range
planning activities of senior management.planning activities of senior management.
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Type of System
ESS
DSS
MIS
KWS
OAS
TPS
Information Inputs
Aggregate date; external, internal
Low-volume data or massive databases optimized for data analysis; analytic models and data analysis tools
Summary transaction data; high-volume data; simple models
Design specifications; knowledge base
Documents; schedules
Transactions; events
Processing
Graphics; simulations; interactive
Interactive; simulations, analysis
Routine reports; simple models; low-level analysis
Modeling; simulations
Document manage-ment; scheduling; communication
Sorting; listing; merging; updating
Information Outputs
Projections; responses to queries
Special reports; decision analyses; responses to queries
Summary and exception reports
Models; graphics
Documents; schedules; mail
Detailed reports; lists; summaries
Users
Middle managers
Operations personnel; supervisors
Professionals; staff managers
Senior managers
Professionals; technical staff
Clerical workers
Characteristics of Information Processing Systems
INTERRELATIONSHIPS AMONG SYSTEMS
Business processes
• Refer to manner (methods) in which work is organized, coordinated, and focused to produce a valuable product or service
• Are concrete (actual) work flows of material, information, and knowledge- sets of activities
• Refer to Unique ways to coordinate work, information, and knowledge
• And the ways in which management chooses to coordinate work
Business Processes and Information Systems
ENTERPRISE APPLICATIONS
Business Processes and Information Systems
Information systems help organizations
• Achieve great efficiencies by automating parts of processes
• Rethink and streamline (simplify) processes
• Focus more in customer services
ENTERPRISE APPLICATIONS
Enterprise Systems or ERP
ENTERPRISE APPLICATIONS
ERP can integrate the key business processes of an entire firm into a single S/W that allows information to flow seamlessly through out the organization.
These systems focus primarily on internal processes but may include transactions with customers and venders
• Firm structure and organization: One organization (every one use similar process and information)
• Management Process: Firm-wide knowledge-based management processes (improve management reporting and Decision Making)
• Technology: Single, unified platform (Data have common, standardized definitions and formats that accept by the entire organization
• Business Capability: More efficient operations and customer-driven business processes (can respond efficiently to customer requests for requests and information
Benefits of Enterprise Systems
ENTERPRISE APPLICATIONS
• Difficult to build: Require fundamental changes in the way the business operates
• Technology: Require complex pieces of software and large investments of time, money, and expertise (Min $15 Million)
• Centralized organizational coordination and decision making: May not be the best way for the firms to operate
Challenges of Enterprise Systems
ENTERPRISE APPLICATIONS
Redesigning the Organization Redesigning the Organization with with
Information SystemsInformation Systems
Redesigning the Organization Redesigning the Organization with with
Information SystemsInformation Systems
• Explain how a company can develop information systems that fit its business plan
• Identify the core activities in the systems development process
OBJECTIVES
Information systems plan
Road map indicating direction of systems development:
• Rationale• Current Situation• Management Strategy• Implementation Plan• Budget
SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE
Linking Information Systems to the Business Plan
How to Develop An Information Systems Plan?
Refer to MIS in Action
Linking Information Systems to the Business Plan
Linking Information Systems to the Business Plan
Business Functions:
Systems Analysis
Business Area: Business Area Analysis
Organizations:
Enterprise AnalysisTop-Down Approach
1. Enterprise Analysis or Business SystemsPlanning (BSP)
• Analysis of organization-wide information requirements that:• Examines the entire organization in
terms of organizational units, function, process and data elements
• Helps Identify key entities and attributes in the organization's data
Establishing Organizational Information Requirements
1. Enterprise Analysis Method
• Take a large sample of mangers and ask them how they use information….etc
• The result of survey are aggregated into subunits, functions, process and data materials.
• Organized the data elements into logical application groups
Establishing Organizational Information Requirements
Disadvantage Enterprise Analysis
• Produces an enormous amount of data that is expensive to collect and difficult to analyze.
• Most of the interviews are conducted with senior or middle managers.
• Questions focus not on management’s critical objective but rather on what existing information is used.
Establishing Organizational Information Requirements
2. Strategic Analysis or Critical SuccessFactors (CSF)
• Small number of easily identifiable operational goals
• Shaped by industry, firm, manager, and broader environment that are believed to assure the success of an organization.
• Used to determine information requirements of organization
Establishing Organizational Information Requirements
SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE
Example Goals CSF
Profit concern
Earnings/share Automotive industry
Return on investment Styling
Market share Quality dealer system
New product Cost control Energy standards
Nonprofit Excellent healthcare Regional integration with other hospitals
Meeting government regulations
Improved monitoring of regulations
Future health needs Efficient use of resources
Critical Success Factors and Organizational Goals
2. Strategic Analysis or CSF Method
• Interview individual managers to determine CSFs.• Aggregate and analyze individual CSFs to identify
common and separate concerns.• Obtain management consensus on organizational
CSFs• Define ways to measure success in achieving
CSFs • Define data and processing needs• Define IS projects needed to fill needs• Priorities projects
Establishing Organizational Information Requirements
SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE
Using CSFs to Develop Systems
Figure 12-2
Objective
• Determining benefits and costs of a system when they are difficult to quantify
• Dealing with the complexity of large-scale systems projects
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
• Projects with 12-24 month objectives
• Longer periods infrastructure investments
Two kinds of IS investments:
• Improvement in business processes to increase firm efficiency
• Improvements in management decision making
Two ways for producing value:
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
• Analysis of portfolio of potential applications within a firm
• Determines risks and benefits
• Selects among alternatives for information systems
Strategic Considerations Strategic Considerations
Portfolio Analysis: Seeks to develop
A System Portfolio
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
• A quick and sometimes compelling method for arriving at a decision on alternative systems
• The most important outcome of a scoring model is not the score but agreement on the criteria used to judge a system.
• Best practice is to cycle through the scoring model several times, changing the criteria and weights, to see how sensitive the outcome is to reasonable changes in criteria.
Scoring Models:
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
• Models using techniques for valuing financial options to evaluate information technology investments with uncertain returns
• Uses the financial industry concept of options valuation
• An option is the right, but not obligation, to act at a future date.
• An initial expenditure on IS technology creates the right, but not the obligation, to obtain the benefits associated with further development and deployment of the technology.
Real Options Pricing Models (ROPM):
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
• Capital investments cannot be traded on a market and differ in value based on the firm.
• Factors, such as prior expertise, skilled labor force, market conditions, and other factors
Real Options Pricing Models (ROPM): (Continued)
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Value of IT project (real option) is a function of the following:
• Value of underlying IT asset (present value of expected revenues)
• Volatility of value of asset (exercise price)
• Risk-free interest rate
• Option time to maturity (length of project deferment)
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
• Any program that uses information technology to change business processes requires knowledge input
• The value of the knowledge used to produce improved outputs of the new process can be used as a measure of the value added
• Knowledge inputs can be measured in terms of learning time to master a new process, and a return on knowledge can be estimated
• Determines costs and benefits of changes in business processes from new information systems
Knowledge Value-Added Approach:
Feasibility studyFeasibility study
• Determining achievability of solution Determining achievability of solution
Establishing information requirementsEstablishing information requirements
• Stating information needs that new Stating information needs that new system must satisfysystem must satisfy
• Identifying who, when, where and how Identifying who, when, where and how components of informationcomponents of information
OVERVIEW OF SYSTEMS DEVELOPMENT
Overview
• Details how system will meet information Details how system will meet information requirements as determined by systems requirements as determined by systems analysisanalysis
• Specifications for the system solutionSpecifications for the system solution
• Should reflect user business priorities Should reflect user business priorities and information needsand information needs
OVERVIEW OF SYSTEMS DEVELOPMENT
Systems Design
ProgrammingProgramming
• Process of translating system specifications Process of translating system specifications into program codeinto program code
TestingTesting
• Checks whether the system produces Checks whether the system produces desired results under known conditionsdesired results under known conditions
• Unit testing, system testing, acceptance Unit testing, system testing, acceptance testing, test plantesting, test plan
OVERVIEW OF SYSTEMS DEVELOPMENT
Completing the Systems Development Process
Production and maintenanceProduction and maintenance
• Production is stage after new system is Production is stage after new system is installed and the conversion is completeinstalled and the conversion is complete
• Maintenance is changes in hardware, Maintenance is changes in hardware, software, documentation, or procedures of software, documentation, or procedures of production system to correct errors production system to correct errors
OVERVIEW OF SYSTEMS DEVELOPMENT
Completing the Systems Development Process
Application software packagesApplication software packages
• Set of prewritten, precoded application Set of prewritten, precoded application software programs commercially available software programs commercially available for sale or leasefor sale or lease
CustomizationCustomization
• Modification of software package to meet Modification of software package to meet organization’s unique requirements without organization’s unique requirements without destroying the software’s integritydestroying the software’s integrity
ALTERNATIVE SYSTEM-BUILDING APPROACHES
Application Software Packages
Request for Proposal (RFP)Request for Proposal (RFP)
• Detailed list of questions submitted to Detailed list of questions submitted to vendors of software or other servicesvendors of software or other services
• Determines how well vendor’s product Determines how well vendor’s product can meet organization’s specific can meet organization’s specific requirementsrequirements
ALTERNATIVE SYSTEM-BUILDING APPROACHES
Application Software Packages
• Development of information systems by Development of information systems by end users with little or no formal end users with little or no formal assistance from technical specialistsassistance from technical specialists
• Allows users to specify their own Allows users to specify their own business needs business needs
ALTERNATIVE SYSTEM-BUILDING APPROACHES
End-User Development