Course DT2491

1
Course - DT249/1

• Subject - Information Systems in Organisations

Semester 2, Week 5
MODERN INFORMATION SYSTEMS APPLICATIONS
2
Textbooks?

• The Laudon and Laudon book, Management
  Information Systems (Seventh Edition) Chapter
  4
• The Digital Firm Electronic Commerce and
  Electronic Business
• This chapter matches the theme of this lecture
  the closest.

3
Management Information System Applications

• As described in previous lectures, an
  organisation exists to be charitable or
  profitable.
• The organisation functions through a structure
  such as departmentalisation and spreads
  responsibilities and tasks among the individuals
  and groups of those departments.

4
MIS Applications (2)

• The functions/tasks usually have a measure of
  information or, at least, data that is/are a
  very important asset to the organisation.
• The more the organisation can control the
  information, the more efficient (and profitable?)
  it can become.

5
MIS Applications (3)

• In many cases the information can be used as a
  dividend a product in its own right or an
  enhancement to the employees or customers of the
  organisation.
• Central to information control, product or
  service enhancement are Information Systems and,
  by implication, Information Technology (IT).
• Central to Information Systems and IT are
  computers.

6
MIS Applications (4)

• If we map the functions (perhaps, departments)
  of an organisation to the functions of an
  Information System, put in place to help manage
  the organisation, generally, we find that
  computer-based applications fit many of the
  information-oriented functions of an
  organisation.
• This lecture considers the Information Systems
  applications of organisations and the issues
  surrounding them.

7
Business Organisations Information Systems

• Information Systems are placed in business
  organisations because of
• Business pressures (e.g. to sell more stock)
• Organisational responses to competition and
  legislation
• Information Systems and Information Technology
  trends
• (A note on Enterprise the context of this
  word, when used later in the notes, is one that
  describes the organisation as innovative -
  rising to challenges - rather than just
  manufacturing and selling.)

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Business Pressures

• Market pressures
• The new global economy that causes strong
  competition
• The changing nature of the workforce
• Customer Power they are more demanding

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Business Pressures (2)

• Technological pressures
• Technological innovation continues
• The obsolescence of current systems (belonging to
  the organisation)
• Information overload greater quantities of
  information require bigger and better systems.

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Business Pressures (3)

• Sociological pressures
• Social responsibility
• Government regulations
• Government deregulation
• Shrinking budgets and subsidies
• Ethical issues (e.g. are customers details
  secure? Does our product harm anyone/the
  environment?)

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Organisational Responses to Challenges

• Organisations have established
• Strategic systems
• Continuous improvement efforts
• Business Process Reengineering (BPR)
• Electronic commerce
• Business alliances
• ...and continue to establish these things will
  continue to establish these things.

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Strategic Systems

• Strategic systems provide organisations with
  strategic advantages, thus enabling them to
• increase their market share,
• to better negotiate with their suppliers, or
• to prevent competitors from entering their
  specialist areas (and taking their customers).

13
Continuous Improvement Efforts

• These efforts by organisations could be viewed as
  strategies
• Improved productivity
• Just-in-Time (resource management)
• Total Quality Management (TQM)
• Improved decision making
• Managing information and knowledge
• Innovation and creativity (e.g. Research and
  Development)
• Change management
• Customer service (New or improved)

14
Business Process Reengineering

• Business Process Reengineering (known to many as
  BPR) is a fancy term for changing the
  organisation radically by, for example
• Reducing the cycle time (CT) for production,
  customer service, etcetera.
• Taking a customer-focused approach
• The empowering of employees (giving them more
  autonomy)
• Restructuring the organisation or departments
  with, for example, a team-based structure

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Business Alliances

• The organisation might establish alliances
  agreements with suppliers, customers or even
  competitors (or a combination of any of these (or
  yet other parties)). They might employ
• Enterprise Resource Planning (ERP)
• Electronic commerce
• or something else

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Reminder!

• The previous slides describing strategies and
  responses to challenges/pressures had example
  functions with them.
• Example functions were improved productivity,
  customer-focus, e-commerce
• These can have Information Systems applications
  designed for them or be the basis for MIS
  applications.

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Applications Within an Organisation

• An example of functional business systems might
  include, for example, variety of information
  systems (transaction processing, management
  information systems, decision support, etc.) that
  support the business functions of
• Accounting and Finance,
• Marketing,
• Operations Management and
• Human Resource Management (HRM)

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Functional Business Systems
Marketing

• Examples of Functional Business Information
  Systems

• Customer relationship management
• Interactive marketing
• Sales force automation

Production Operations
Human Resource Management

• Compensation analysis
• Employee skills inventory
• Personnel requirements forecasting

• Manufacturing resource planning
• Manufacturing execution systems
• Process control

Functional Business Systems

• Cash management
• Credit management
• Investment management
• Capital budgeting
• Financial forecasting

• Order processing
• Inventory control
• Accounts receivable
• Accounts payable
• Payroll
• General ledger

Finance
Accounting
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Functional Business Systems (2)

• In the diagram of the previous slide the features
  of Operations Management, Marketing, Human
  Resource Management, Accounting and Finance could
  be considered as departments, the descriptions
  within each box considered as key tasks and those
  tasks might match applications (and software
  programs?)

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Accounting Information Systems

• An Accounting Application will typically
• Record and report the flow of funds through an
  organisation
• Produce financial statements
• Allow forecasts of future conditions to be
  generated

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Accounting Information Systems (2)
An example of Accounting application processes
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Accounting Information Systems (3)

• In the diagram of the previous slide the features
  of Sales Transaction System, Cash
  ReceiptsSystem, General Ledger System, Purchase
  Transaction System and payroll System could be
  considered as subsystems of the Accounts
  Department. The descriptions within each box
  considered as tasks that might match applications
  (and more software programs?)

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Accounting IS Processes

• Order Processing
• Captures and processes customer orders and
  produces data for inventory control and accounts
  receivable.
• Inventory Control
• Processes data reflecting changes in inventory
  and provides shipping and reorder information.
• Accounts Receivable
• Records amounts owed by customers and produces
  customer invoices, monthly customer statements
  and credit management reports.

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Accounting IS Processes (2)

• Accounts Payable
• Records purchases from, amounts owed to and
  payments to suppliers it also produces cash
  management reports.
• Payroll
• Records employee work and compensation data and
  produces paycheques and other payroll documents
  and reports.
• General Ledger
• Consolidates data from other accounting systems
  and produces the periodic financial statements
  and reports of the business.

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Financial Management Systems

• The management systems of a Financial function
  support business managers and professionals in
  decisions concerning
• the financing of a business
• the allocation and control of financial resources
  within a business.

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Financial Management System Examples
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Marketing Information Systems

• The function of marketing can have its own set of
  applications.

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Marketing Information Systems (2)
Market Information Systems
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Interactive Marketing

• Interactive marketing
• A customer-focused marketing process using the
  Internet, intranets and extranets to establish
  two-way transactions between a company and its
  customers or potential customers.
• The goal is to profitably attract and keep
  customers who will become partners with the
  business.

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Targeted Marketing Components

• Community with customised advertising to appeal
  to people of specific virtual communities.
• Content with advertising placed on a variety of
  selected websites aimed at a specific audience.
• Context with advertising placed on web pages
  that are relevant to the content of a product or
  service.
• Demographic/Psychographic web marketing efforts
  aimed at specific types or classes or people.
• Online Behaviour promotion efforts tailored to
  each visit to a site by an individual, e.g.,
  using cookies files. (Cookies? Long story,
  look it up.)

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Targeted Marketing

• This is an advertising and promotion management
  concept that includes five targeting components

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Internet Marketing

• There are numerous examples of (software)
  applications related to Marketing using the
  Internet. Attached to the applications are
• E-mail a communications tool for pushing the
  message to customers.
• Web publishing a page development tool for
  developing pages that pull the customers to the
  message.

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Sales Function Automation

• The Sales Department might provide the sales
  force with notebook computers, Web connectivity
  and sales contract management software.
• They can connect their work to marketing websites
  and the company intranet.
• The goal being to
• Increase personal productivity
• Speed up capture and analysis of sales data from
  the field to be passed on to Marketing Managers
• Have the effect of gaining strategic advantage

34
Operations Management

• As an Operations Management example there follows
  a view of Manufacturing Information Systems that
• Supports the production/operations part of the
  Manufacturing function
• Includes all activities concerned with planning
  and control of producing goods or services

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Computer-Integrated Manufacturing (CIM)
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CIM Objectives

• The objectives if Computer Integrated
  Manufacturing are to typically
• Simplify production processes, product designs
  and factory organisation as a vital foundation to
  automation and integration
• Automate production processes and the business
  functions that support them with computers,
  machines and (possibly) robots
• Integrate all production and support processes
  using computer networks, cross-functional
  business software and other information
  technologies.
• These objectives will employ many different
  applications some of which may be integrated.

37
CIM Systems

• Examples of CIM hardware/software systems are
• Computer-Aided Manufacturing (CAM) that
  automate the production process
• Manufacturing Execution Systems (MES)
  performance monitoring information systems for
  factory floor operations
• Process Control (Systems) that control ongoing
  physical processes
• Machine Control (Systems) that control the
  actions of machines.
• Each of these could be viewed as an application
  or group of applications.

38
Human Resource Management (HRM)

• HRM often has its own department. As a collection
  of applications its information systems are
  designed to support
• The planning required to meet the personnel needs
  of the organisation
• The development of employees to their full
  potential
• Control of all personnel policies and programmes

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Human Resources Systems Will Support
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HRM and the Internet

• The Internet is useful to the HRM (Department)
  for
• Recruiting employees using the corporate website
  and commercial recruiting services
• Posting messages in selected Internet newsgroups
• Communicating with job applicants via e-mail

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HRM and Corporate Intranets

• An Intranet is useful to HRM for
• Processing common HRM applications
• Allowing the HRM department to provide
  around-the-clock services to employees and
  applicants
• Disseminating valuable information faster than
  through previous company channels (such as snail
  mail)
• Collecting information from employees online
• Allowing managers and other employees to perform
  HRM tasks with little intervention by the HRM
  department
• Acting as a training tool

42
Employee Self-Service (ESS)

• Intranet applications that allow employees to
• View benefits
• Enter travel and expense reports
• Verify employment and salary information
• Update their personal information
• Enter data that has a time constraint to it
• can be described as self-service and can be
  included as an application.

43
Information System Applications for E-Commerce

• Information Systems applications can be used by
  an organisation as a basis for trade. It may be
  the main basis for trade (as it is for E-Bay).
• Many organisations use IS applications to add
  value to their product.

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Major E-Business Applications
Front End Back End
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Cross-Functional Systems

• In organisations the boundaries of traditional
  business functions often intersect, overlap or
  integrate.
• This is so that Management can reengineer and
  improve vital business processes all across the
  enterprise.

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Cross-Functional Systems (2)

• Below the diagram describes a sequence of events
  that matches the early part of a products life
  cycle. The functions of Marketing, Engineering
  and Manufacturing will have tasks (therefore
  applications) that overlap.

New Product Development Process
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Enterprise Business Systems
Enterprise Application Architecture
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Customer Relationship Management (CRM)

• CRM uses technology to
• Create a cross-functional enterprise system that
  integrates and automates many of the processes in
  sales, marketing and customer service that
  interact with customers and to
• Create a framework of web-enabled software and
  databases that integrate these processes with the
  rest of the companys processes.

49
Customer Relationship Management

• CRM Uses IT to Create a Cross-Functional
  Enterprise System

Marketing and Fulfillment
Customer Service and Support
e-Mail
Fax
Employee or Prospective Customer

• Sales
• Cross-Sell
• Up-Sell

Web
Telephone
Retention and Loyalty Programs
Contact and Account Management
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CRM Applications

• Contract and Account Management
• Helps sales, marketing and service professionals
  capture and track data about past/planned
  contacts with customers/prospects
• Sales
• Provides Sales Representatives (reps) with the
  software tools and data they need to support and
  manage sales activities
• Cross-selling is trying to sell a customer of
  one product with a related product
• Up-selling is trying to sell customer a better
  product than they are currently seeking

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CRM Applications

• Marketing and Fulfillment help marketing
  professionals accomplish direct marketing
  campaigns by tasks such as
• Qualifying leads for targeted marketing and
  scheduling and tracking direct marketing
  mailings.

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CRM Applications (2)

• Customer Service and Support
• Provides sales reps with software tools and
  database access to customer database shared by
  sales and marketing professions
• Helps create, assign and manage requests for
  service
• Call centre software that routes sales calls to
  customer support agents based upon their skills
  and type of call
• Help desk software that provides relevant service
  data and suggestions for resolving problems for
  customer service reps helping customers with
  problems

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CRM Applications (3)

• Retention and Loyalty Programmes
• Try to help a company identify, reward, and
  market to their most loyal and profitable
  customers
• Seen as a function, Retention and Loyalty might
  use data mining tools and analytical software
  that extracts information about customers and
  prospective customers from a Customer Data
  Warehouse.

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CRM The Business Focus
Customer Relationship Management supports
integrated and collaborative relationship between
a business and its customers.
Customer Life Cycle
CRMFunctional Solutions
The Internet
Collaborative Service
Shared Customer Data
CRMIntegrated Solution
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Benefits and Challenges of CRM

• Customer Relationship Management benefits are
• Identify and target the best customers
• Customisation and personalisation of products and
  services
• Track customer contacts
• Provide consistent customer experience and
  superior service/support
• CRM failures identified in a case study
• 50 of applications fail to meet expectations
• 20 of the time CRM damaged, rather than
  enhanced, customer relationships
• A lack of understanding of customer expectation
  and preparation for customer service is blamed.

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Enterprise Resource Planning (ERP)

• ERP a cross-functional enterprise system with an
  integrated suite of software modules that support
  the basic internal functions of an organisation.
• (Functions business processes in some of the
  books, case studies and web sites.)

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Enterprise Resource Planning
Integrated Logistics
Production Planning
Sales Distribution, Order Management
Customer/ Employee
Accounting and Finance
Human Resources
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Enterprise Resource Planning the Benefits

• ERP is often established in organisations with
  large numbers of employees, numerous or complex
  departments and/or large numbers of customers
  because of a perceived value of
• Quality and efficiency in products and operations
• Decreased costs in production and operations
• Decision support for Management
• Enterprise agility the ability to change
  strategies and/or methods in response to
  outside changes.

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Costs of Implementing a New ERP
Percentages identified in a case study
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Enterprise Resource Planning Failures

• Case study findings
• A company had software installation problems of
  ERP Integrated Suite into its retail environment.
• Two retail outlets blamed ERP software for poor
  financial performance.
• A grocery had problems with number of
  transactions.
• Another large retailer replaced the entire ERP
  system.

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Enterprise Resource Planning Failures (2)

• Causes of ERP failure
• Underestimating the complexity of the planning,
  development and training needed
• Failure to involve affected employees
• Trying to do too much too fast
• Insufficient training in new work tasks
• Failure to do enough data conversion and testing
• Over reliance by the company on claims of the ERP
  sellers or consultants

62
Supply Chain Management (SCM)

• Supply Chain Management is a cross-functional
  inter-enterprise system to help support and
  manage the links between a companys key business
  processes and those of its suppliers, customers
  and business partners.
• (Processes? Functions!)

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Supply Chain Management (2)

• Supply Chain Management (SCM) an application to
  match strategic objectives for many firms -
• The right products
• The right place
• The right time
• In the proper quantity
• At an acceptable cost

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Supply Chain Management (3)
Commit
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The Role of SCM
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Supply Chain Management (4)

• SCM Software helps organisations reengineer and
  integrate the functional SCM processes

Supply Chain Life Cycle
Forecast and Demand Planning
Strategic Sourcing and Procurement
SCMFunctional Processes
Customer Order Fulfillment Service
Distribution Network and Warehouse Operations
Transportation and Shipment Management
Production Logistics
The Internet
Collaborative Fulfillment
Shared Market Data
SCMIntegrated Solution
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Supply Chain Management (5)

• The goals of SCM is to establish fast, efficient,
  low-cost network of business relationships or a
  supply chain to get a companys products from
  concept to market.
• A supply chain is made up of interrelationships
  with suppliers, customers, distributors, and
  other businesses that are needed to design, build
  and sell a product.

68
Supply Chain Management (6)

• Causes of problems with SCM
• Lack of proper demand-planning knowledge, tools
  and guidelines
• Inaccurate or over-optimistic demand forecasts
• Inaccurate production, inventory and other data
• Lack of adequate collaboration within the company
  and between partners
• SCM software considered immature, incomplete and
  hard to implement

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Enterprise Application Integration (EAI)

• EAI connects cross-functional system and serves
  as middleware to provide data conversion,
  communication between systems and access to
  system interfaces.

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Enterprise Collaboration Systems (ECS)

• Enterprise Collaboration Systems (ECS)
  cross-functional Information Systems that enhance
  communication, coordination and collaboration
  among the members of business teams and
  workgroups.

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Enterprise Collaboration Systems (2)

• Enterprise Collaboration Systems goals are to
• Communicate - share information with teams and
  work groups
• Coordinate - coordinate individual work efforts
  and use of resources with teams and work groups
• Collaborate - work together cooperatively on
  joint projects and assignments

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ECS Tools
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Why Collaborate?

• Workgroups and project teams work together
  efficiently and effectively regardless of
  location, they share information, coordinate work
  efforts and resources. They work together
  cooperatively.

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What Next?

• Next Week
• Selection and acquisition of Information Systems