9/5: Ch. 2 Strategic Role of IS Key system applications in organizations Strategic role of information systems How information systems promote quality

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






Knowledge Level






Management Level






Strategic Level






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


Major Types of Systems: TPS• Transaction Processing Systems

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


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


Major Types of Systems: OAS• Office Automation Systems

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


Major Types of Systems: KWS• Knowledge Work Systems

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


Major Types of Systems: MIS• Management Information Systems

• Provides reports

• Provides access to current performance

• Aids planning, controlling, & decision making

• Usually inflexible, predefined reports


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


Major Types of Systems: DSS• Decision Support Systems

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

• Interactive, flexible

• “What if” analysis


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






Systems in Sales & Marketing

Sales & Manufacturing Finance Accounting Human

Marketing Resources

Sales trend forecasting

Pricing analysis

Market analysis

Order processing

Systems in Manufacturing


Marketing Resources

Facilities Location Planning

Production Planning

CAD

Machine Control

Systems in Finance & Accounting


Marketing Resources

Profit Planning

Budgeting

Portfolio Analysis

Accounts Receivable

Systems in Human Resources


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

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9/5: Ch. 2 Strategic Role of IS Key system applications in organizations Strategic role of information systems How information systems promote quality