9/5: Ch. 2 Strategic Role of IS Key system applications in organizations Strategic role of...

9/5: Ch. 2 Strategic Role of IS• Key system applications in organizations

• Strategic role of information systems

• How information systems promote quality

Key System Apps in Orgs: Groups

Strategic Level: Senior Managers

Management Level: Middle Managers

Knowledge Level: Knowledge & Data Workers

Operational Level: Operational Managers

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Operational Level

Strategic Level: Senior Managers

Management Level: Middle Managers

Knowledge Level: Knowledge & Data Workers

Operational Level: Operational Managers

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Knowledge Level

Strategic Level: Senior Managers

Management Level: Middle Managers

Knowledge Level: Knowledge & Data Workers

Operational Level: Operational Managers

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Management Level

Strategic Level: Senior Managers

Management Level: Middle Managers

Knowledge Level: Knowledge & Data Workers

Operational Level: Operational Managers

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Strategic Level

Strategic Level: Senior Managers

Management Level: Middle Managers

Knowledge Level: Knowledge & Data Workers

Operational Level: Operational Managers

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Six Major Types of Systems• ESS: Executive Support System

• MIS: Management Information System

• DSS: Decision Support System

• KWS: Knowledge Work Systems

• OAS: Office Automation Systems

• TPS: Transaction Processing Systems

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Major Types of Systems: TPS• Transaction Processing Systems

• Processing routine activities of the organization– Hotel reservations– Grade submissions– Employee records

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Transaction Processing Systems• Operational Level

– Sales: order processing & tracking– Manufacturing: machine control, inventory control– Finance: securities trading, cash management– Accounting: payroll, A/R, A/P– Human Resources: compensation, employee records

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Major Types of Systems: OAS• Office Automation Systems

• Knowledge Level– Scheduling meetings– Desktop publishing – Document imaging systems– Presentation graphics development

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Major Types of Systems: KWS• Knowledge Work Systems

• Knowledge Level– CAD: Computer Aided Design– Modeling– Graphics development

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Major Types of Systems: MIS• Management Information Systems

• Provides reports

• Provides access to current performance

• Aids planning, controlling, & decision making

• Usually inflexible, predefined reports

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Management Information Systems• Management Level

– Sales & Marketing: Sales management, region analysis

– Manufacturing: Long-range inventory control & planning, production scheduling

– Finance & Accounting: budgeting, capital investment analysis, profitibility analysis

– Human Resources: relocation analysis, contract cost analysis

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Major Types of Systems: DSS• Decision Support Systems

• Combine data & modeling tools to aid non-routine decision-making

• Interactive, flexible

• “What if” analysis

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Major Types of Systems: ESS• Executive Support Systems

• Incorporates external data with internal data

• Creates projections

• Designed to help answer questions like, “What business should we be in? Which business units should we sell off?”

• Strategic Level

How the systems relate to each other

ESS

DSSMIS

TPSKWS & OAS

Key System Apps in Orgs: Functions

Strategic Level: Senior Managers

Management Level: Middle Managers

Knowledge Level: Knowledge & Data Workers

Operational Level: Operational Managers

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Systems in Sales & Marketing

Sales & Manufacturing Finance Accounting Human

Marketing Resources

Sales trend forecasting

Pricing analysis

Market analysis

Order processing

Systems in Manufacturing

Sales & Manufacturing Finance Accounting Human

Marketing Resources

Facilities Location Planning

Production Planning

CAD

Machine Control

Systems in Finance & Accounting

Sales & Manufacturing Finance Accounting Human

Marketing Resources

Profit Planning

Budgeting

Portfolio Analysis

Accounts Receivable

Systems in Human Resources

Sales & Manufacturing Finance Accounting Human

Marketing Resources

Human Resources Planning

Compensation Analysis

Designing Career Paths

Tracking Training & Development

Strategic Role of IS• What makes an IS strategic?

– An IS is strategic if it changes goals, operations, products, services, or environmental relationships to help the organization gain a competitive advantage.

– A strategic IS keeps an organization ahead of the competition.

4 Paths to Competitive Advantage• Product differentiation

• Focused differentiation

• Linking tightly to suppliers & customers

• Becoming the low-cost producer

Product Differentiation• Creating new products that are not easily

duplicated by others

• Citibank created ATMs

Focused Differentiation• Developing new market niches for specialized

products

• Datamining can aid here– Analysis of large amounts of data to find patterns

and rules that can predict future behavior.

Linking to Customers & Suppliers• Providing greater service to customers

• Integrating inventory management practices with suppliers

• Lower costs, increase loyalty

Becoming the Low-Cost Producer• Lower internal costs

• Reduce inventories

• Walmart

How IS Promote Quality• Definition of quality: conformance to producer

specifications and customer satisfaction.

• Information Systems contribute to TQM– TQM: Total Quality

Management• The entire organization is

responsible for quality

How IS contribute to TQM• Simplifying the product & the process

• Benchmarking

• Using customer demands to improve products

• Reducing cycle time

• Improving quality & precision of the design

• Increasing precision of production.

Next Time• Chapter 3 pg. 72 - 107

• Information Systems, Organizations, and Management