Introduction to Information Technology Turban, Rainer and Potter

Introduction to Information TechnologyTurban, Rainer and Potter

Chapter 9 Functional and Enterprise Systems

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CHAPTER 9FUNCTIONAL AND

ENTERPRISE SYSTEMS



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Learning Objectives

Describe the role and characteristics of functional information systems

State the objective and operations of transaction processing and how it is supported by IT

Discuss the managerial and strategic applications in the accounting and finance areas that are supported by IT

Understand the marketing and sales applications provided by IT



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List the various production and operations management activities and describe how they are supported by IT

Discuss the human resources management activities and how they can be improved by IT

Discuss the need for integrating functional information systems and describe the role of ERP and supported software such as SAP

Learning Objectives(continued …)



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Chapter OverviewInformation Systems to Support Business Functions

•Characteristic of• functional• Information• Systems•Functional Support for Managers; Management Information Systems

Transaction Processing Information Systems

• Tracking Business Transactions•Objectives of TPS•The Process of TPS•Modernized TPS: From Online Processing to Intranet•Typical TPS Tasks and Modules

Accounting and Finance Systems

•Financial Planning and Budgeting•Investment Management•Financial Controls



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Chapter Overview (continued …)Marketing and Sales Systems•Customer Service•Telemarketing•Distribution Channels Management•Marketing Management•Ethical and Societal Issues in IT-supported Sales Activities

Production and Operations Systems•Supply-Chain Management•Logistics and Materials Management•Planning Production/Operations•Automatic Design Work and Manufacturing

Human Resources Management Systems•Recruitment•HRM and Development•HRM and Planning•Intranet Applications in HRS

Integrated Information Systems and Enterprise Resource Planning•Why Integrate?•How to Integrate?•Extreme Integration: Putting it All Together



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Case : Colonial Building Supply The Business Problem

Needed a technology to monitor inventory and support-related decisions to provide it with current information about inventory levels and customer buying trends to show the price of the lumber fluctuates daily

The Solution integrated system Point-of-sales (POS) terminals with hand-held

automatic identification and data collection devices



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The Results

Case (continued…)

Lower costs for data entry labor Reduction in inventory and storage space Fast access to information Better customer service Higher employee satisfaction Stay competitive Increase its market share and profitability

What have we learned from this case?? The system’s major applications are in logistics IT can be beneficial to a relatively small company An integration includes connection to business partners

using the Internet



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Characteristics ofFunctional Information Systems

Comprises of several smaller information system Specific IS applications

can be integrated to form a coherent departmental function system

can be completely independent can be integrated across departmental lines

Interface with each other to form the organization wide information system

Interface with the environment



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Management Information Systems Provide routine information to managers in

the functional areas Provide information in exception reports

and ad hoc (demand) reports

A ManagementInformation

System

DataWarehouse

ReportsScheduled,Exception,Demand,Others

Functionalapplications,

DSS

BusinessTransactions

TPS

DatabasesInternal,External

Enterprise Application

such as EIS



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Transaction Processing Information Systems

Transaction Processing major business processes provide the mission-critical activities transaction may generate additional transaction simple transactions large volume and repetitive transactions

Transaction Processing System (TPS) computerized information system supports the transaction processes



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Characteristics of TPS Large amounts of data are processed The sources of data are mostly internal, and the output is intended mainly

for an internal audience The TPS processes information on a regular basis Large storage (database) capacity is required High processing speed is needed due to the high volume Input and output data are structured High level of detail is usually observable Low computation complexity is usually evident High level of accuracy, data integrity, and security is needed High processing reliability is required Inquiry processing is a must



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Overview of typical transaction processing

The Items’Processing

System

InventoryFile

SalesFiles

Customermakes a purchase

of an item

POSTerminal

TransactionFile

PaymentProcessing Queries,

Answers

MasterFiles

Report

TPS (continued…)



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The Process of TPS

Data are collectedand entered automatically

BatchProcessing

OnlineProcessing

Hybrid System

Online Transaction Processing (OLTP) created on a client/server architecture can save money

Internet (Intranet) transaction Processing allow multimedia data transfer, fast response time,

and storage of large databases of graphics and videos

Modernized TPS: from OLTP to the Internet



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Accounting & Finance Systems Financial Planning and Budgeting

Financial and Economic Forecasting much of the interrelated indicators are available on the Internet many software packages conducting forecasting and planning

Planning for Cash Management build a decision support model make decisions about when and how much to refinance

Budgeting Budget 2000 and Comshare BudgetPlus are available to support

budgeting and to facilitate communication among all participants in the preparation process



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Accounting & Finance Systems (continued …)

Major activities

TACTIAL SYSTEMSa. Budgeting Preparation and Controlb. Investment Managementc. Capital Budgeting d. Cost Analysis and Controle. Tax Management f. Auditingg. Financial Planning

INTERNAL ENVIRONMENTTop ManagementOperation/ProductionMarketingHRMEngineering

EXTERNAL ENVIRONMENT

IRSSECVendorsClientsCPA CompaniesSuppliersCustomersBusiness Partners

STRATEGIC SYSTEMSa. Strategic Planning b. Ratios and Financial Healthc. Merger and Acquisition Analysis

OPERATIONAL ANDTRANSACTION PROCESSING

SYSTEMSa. The General Ledger b. Sales Order Processingc. Accounts Payable and Receivabled. Receiving and Shipping e. Payroll f. Inventory Management g. Periodical Reports & Statements



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Accounting & Finance Systems(continued …)

Investment Management Access to financial and economic reports

hundreds of sources for the financial and economic reports and news

Financial analysis is executed with a spreadsheet program, or with

commercially available, ready-made decision support software



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Financial Controls Budgetary Controls

more sophisticated software attempts to tie expenditures to program accomplishment

Auditing auditing software is especially suitable when

computerized information systems are audited Financial Health Analysis

supported by expert systems Profitability Analysis and Cost Control

profitability analysis software allows accurate computation of profitability for individual products and for entire organizations

Accounting & Finance Systems(continued …)



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Marketing & Sales Systems

Distribution Channel provide the goods or services to the

customer, and may extend through various intermediaries such as wholesalers and retailers

Channel Systems support all marketing linkages, such as

after-sales customer support



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Marketing & Sales Systems (continued ...)

CHANNELSYSTEMS

Market IntelligenceSystems

Target MarketingSystems

Sales SystemsCustomer Support

Systems

Delivery Systems

Dealer Systems

COMPANY

Manufacturing R & D/Design

DistributionAccounting/

Finance



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Marketing & Sales (continued ...) Customer Service

Customer Profiles and Preference Analysis IT creates customer database and merges computerized lists

Mass Customization Dell computers assembles computers according to the specifications of the buyers J.C. Penny measures you and transfers the data directly to the production floor

Targeted Advertisement on the Web match appropriate ads with specific groups of customers

Customer Inquiry Systems and Automated Help Desk expert systems and intelligent agents



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Telemarketing

Marketing & Sales (continued ...)

Five major activities which are supported by IT : advertisement and reaching customers order processing customer service sales support account management

Distribution Channels Delivery management

DSS models are used to support decisions like use own outlets or distributors, and transportation mode

Improving sales at retail stores IT reduces the long lines in stores by reengineering the checkout process



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Marketing Management


Pricing of Products or Services - online analytical processing is supporting pricing decisions

Salesperson Productivity - sales-force automation provides salespeople in the field with portable computers, access to databases, and to the web

Product-Customer Profitability Analysis - a cost-accounting system identifies profitable customers and frequency

Sales Analysis and Trends - geographical information system (GIS) analyzes customers and competitors and examines potential strategies

New Products, Services, and Market Planning - IT evaluates large number of factors and uncertainties and conducts survey



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Ethical and Social Issues in IT-supported Sales Activities


Example of Privacy Policy : 3M Corp. Information Collection

» personally identifiable information that you voluntarily provide through 3M’s website or e-mail correspondence

» general information (such as the type of browser you use, the files you request, and the domain name and country from which you submit the request for information)

Use of Information» responding to your inquires

» tracking orders you place with 3M

» supplying you with requested information on 3M products



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Supply-Chain Management (SCM)

Production Operations & Logistics

Supplier

Manufacturing

Transfer

Distribution

Transfer

Retail Outlet

RetailTransfer

Consumer

Transfer

INFORMATION FLOW

CASH FLOW

SCM plans and controls the flow of information and cash



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Logistics and Material Management

Production Operations & Logistics (continues …)

Inventory Management determining how much inventory to keep what to order, from whom, when to order and how much inventory model : economic order quantity (EOQ) many low cost commercial inventory software packages

Quality Control providing information about the quality of incoming material

and parts, as well as the quality of in-process semi-finished, and finished products

standard quality control information systems and expert systems



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Planning Production/Operations

Production Operations & Logistics (continues …)

Material Requirements Planning (MRP) - facilitates the plan for acquiring parts, subassemblies, or material

Manufacturing Resource Planning (MRPII) - connects the regular MRP to other functional areas

Just-in-Time Systems - minimizes waste of all kinds, improves processes and systems, and maintains respect for all workers

Project Management - Program Evaluation and Review Technique (PERT) and Critical Path Method (CPM)

Short-Term Schedules - schedule jobs and employees on a daily or weekly basis



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Automatic Design Work and Manufacturing

Production Operations & Logistics (Continues …)

Computer-Aided Design (CAD) enables drawings to be constructed on a computer screen and

subsequently stored, manipulated, and updated electronically

Computer-Aided Manufacturing (CAM) facilitates planning, operation, and control of production jobs

Computer-Integrated Manufacturing (CIM) concept or philosophy about the implementation of various

integrated computer systems in factory automation



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Human Resources Management Systems

Recruitment finding, testing, and deciding which employees to hire Positions inventory

matching open positions with available personnel allowing data to be viewed by an employee over the intranet

Employee Selection conducting interviews by video teleconferencing expediting the testing and evaluation process, assuring consistency

in selection by using expert systems

Using the Internet advertising position openings on the Internet



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Performance Evaluation online evaluations - supports many decisions, ranging from

rewards to transfer to layoffs expert systems - provide an unbiased and systematic

interpretation of performance over time paperless wage system (PWS) - tracks employee review dates

and automatically initiates the wage review process

Human Resources Management Systems (continued …)

Training and Human Resources Development digital video-editing system - produces training videotapes

Turnover, Tardiness, and Absenteeism Analyses DSS models - identifies causes and patterns

Human Resources Maintenance and Development



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Human Resources Management and Planning


Personal files and skills inventory - computerized personnel files identify qualified employees within the company for open positions, promotion, transfer, special training programs, and layoffs

Benefits administration - Networks and voice technology, or the intranets, specifying the value of each benefit and the available benefits balance of each employee

Government reports - Availability of computerized personnel records greatly eases the reporting process

Personnel planning - IT is used to collect, update, and process the information

Succession planning and implementation - expert systems and personnel databases supporting and implementing planning

Labor-Management Negotiations - DSS improve the negotiation climate and considerably reduce the time needed for reaching an agreement



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Intranet Applications in HRM


Edify Corp.’s employee service system Oracle Corp.’s flexible benefits enrollment

program on the intranet Aetna health Plan’s online directory of primary

care physicians, hospitals, medical services, and health information

Apple Computers’ extensive education and development activities on the intranet

Merck Inc.’s intranet for HR transactions



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Integrated Information Systems

Reasons for Integration using twentieth-century computer technology,

which is functionally oriented : cannot give employees all the information they need do not let different departments communicate

effectively with each other in the same language crucial sales, inventory, and production data often

have to be painstakingly entered manually into separate computer systems every time a person who is not a member of a specific department needs ac hoc information related to the specific department



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How to Integrated Information Systems

Connect existing systems maximize the use of existing systems and minimize the

changes in them allows the addition of new applications to existing ones

and the connection of systems to intranets and the Internet Using supply chain management software

use one integrated package in one or several functional areas

overcomes the isolation of the traditional departmental structure where the functional areas are separated from one another



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How to Integrated Information Systems (continued …)

Enterprise resource planning (ERP) control all major business processes with a single

software architecture in real time increased efficiency to improved quality, productivity,

and profitability SAP software (R|3; my SAP.com)

crosses functional departments and can be extended along the supply chain to both suppliers and customers

composed of four major parts : accounting, manufacturing, sales and human resources



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SAP concept

ERP

Central SAPDatabase &

Servers

Central SAPDatabase &

Servers

SalesOffices

The factory automati-cally receives thesales order and canbegin production.

FACTORYThe warehouse is si-multaneously informedabout the order and can schedule shipping.

WAREHOUSEAccounting gets up-dated sales and pro-duction data at everystep of the process

ACCOUNTINGHeadquarters can tapinto up-to-the-minutedata on sales, inven-tory, and production

HEAD QUARTERS



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For Accounting Executing TPS effectively is a major concern of any

accountant

For Finance The use of IT helps financial analysts and managers

perform their difficult tasks better

For Marketing By understanding how ERP software operates,

marketing people can greatly improve the software utilization by developing challenging corporate applications

What’s in IT for Me?



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What’s in IT for Me? (continued …)

For Production/Operations Management Supply chain management and ERP are critical

today for any medium and large manufacturing company, and for service organizations such as banks

For Human Resources Management IT can improve the efficiency and effectiveness of

the HRM activities conducting training on the intranet



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What’s in IT for Me? (continued …)

For Human Resource Management Human resource managers utilize their

corporate networks extensively for posting job openings, and use internal corporate networks to publish corporate policies, company newsletters and job openings

Documents

Introduction to Information Technology Turban, Rainer and Potter