Management Information System

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Management Information System
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• Introduction to
• e-Business Systems

Judi Prajetno Sugiono jpsugiono_at_gmail.com (2008)
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Learning Objectives

• Give examples of how Internet and other
  information technologies support business
  processes within the business functions of ..
• Accounting,
• Finance,
• Human resource management,
• Marketing, and
• Production and operations management.

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Learning Objectives (continued)

• Identify the following cross-functional system
  concepts, and how they can provide significant
  business value to a company
• Cross-functional enterprise systems
• Enterprise application integration
• Transaction processing systems
• Enterprise collaboration systems

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Section I

• Functional Business Systems

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IT in Business

• Business managers are moving from a tradition
  where they could avoid, delegate, or ignore
  decisions about IT to one where they cannot
  create a marketing, product, international,
  organization, or financial plan that does not
  involve such decisions.

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Functional Business Information System
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• Marketing Information System

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Marketing Information Systems

• Marketing Information Systems provide information
  technologies that support major components of the
  marketing function.

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Marketing Information Systems (continued)
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Interactive Marketing

• Customer focused marketing process
• Based on using Internet, intranets, extranets
  to establish two-way communications between
  customers or potential customers and the business
• Customers become involved in product development,
  delivery, service issues

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Targeted marketing

• Five targeting components at advertising and
  promotion management

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Sales Force Automation

• The sales force is connected to marketing
  websites on the Internet, extranets, the
  company intranet
• Increases productivity of sales force
• Speeds up the capture analysis of sales data
• Allows management to provide improved delivery
  information better support of the sales force.

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Sales Force Automation (continued)
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Sales Force Automation (continued)
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• Manufacturing Information System

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Manufacturing Systems

• Support the production/operations function
• Assists firms in planning, monitoring,
  controlling inventories, purchases, the flow of
  goods and services

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Manufacturing Systems (continued)
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Quantitative Forecasting Methods
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Forms of Forecast Movement
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Forecasting Simple Linear Regression
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Example
Month Actual Demand
1 199
2 202
3 199
4 208
5 212
6 194
7 214
8 220
9 219
10 234
11 219
12 233
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Month Forecast
13 232.57
14 235.62
15 238.67
16 241.72
17 244.77
18 247.82
19 250.87
20 253.92
21 256.97
22 260.02
23 263.07
24 266.12
y192.92 3.05 x
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Inventory Control

• Inventory
• raw material
• work in process
• finish goods
• Problems
• Cost Cp Co Cs Ch Csh
• Lead time
• Order Size
• Reorder Point
• Safety Stock
• Etc

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Economic Order Quantity (Eoq)

• Goal minimized total inventory cost

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• Purchasing Cost ? neglected, depend on ordering
  frequency
• Ordering Cost
• (D/Q)Co
• Holding Cost
• (Q/2)Ch
• Total Cost (TC)
• (D/Q)Co (Q/2)Ch
• Reorder point (R)
• L . DL
• Llead time
• DL demand at lead time

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Material Requirement Planning (MRP)

• Goal Determine Requirement and Schedule
• Complexity Factor
• Product Structure (level of Bill of Material
  BOM)
• Lot Size
• FPR (Fixed Period Requirement)
• FOQ (Fixed Order Quantity)
• EOQ (Economic Order Quantity)
• L4L (Lot for Lot)
• Lead Time Change

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MRP steps

• Lot-for-lot (L4L)
• Economic order quantity (EOQ)
• Fixed Order Period (FOP)
• Fixed Order Quantity (FOQ)
• Least total cost (LTC)
• Least unit cost (LUC)
• Part Period Balancing
• Wagner-Whitin Algorithm

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Example
NAME On Hand Inventory Ordering Lead Time (Week)
Kursi 100 1
Rakitan Kaki 50 2
Rakitan Belakang 25 1
Alas Kursi 40 3
Palang 100 1
Kaki 150 1
Bagian Atas 30 2
Penyangga 80 2
Demand at Week 5 500 Week 6 300
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KURSI WEEK WEEK WEEK WEEK WEEK WEEK WEEK
L1 1 2 3 4 4 5 6
GR           500 300
OH 100 100 100 100 100 0 0
NET           400 400
Order Release       400 400 300  

RAKITAN KAKI WEEK WEEK WEEK WEEK WEEK WEEK WEEK
L2 1 2 3 3 4 5 6
GR         400 300  
OH 50 50 50 50 0    
NET         350 300  
Order Release   350 300 300      

RAKITAN BELAKANG WEEK WEEK WEEK WEEK WEEK WEEK WEEK
L1 1 2 3 3 4 5 6
GR         400 300  
OH 25 25 25 25 0    
NET         375 300  
Order Release     375 375 300    
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ALAS KURSI WEEK WEEK WEEK WEEK WEEK WEEK
L3 1 2 3 4 5 6
GR       400 300  
OH 40 40 40 0 0  
NET       360 300  
Order Release 360 300        

PALANG KAKI WEEK WEEK WEEK WEEK WEEK WEEK
L1 1 2 3 4 5 6
GR   1400 1200      
OH 100 0 0      
NET   1300 1200      
Order Release 1300 1200        

KAKI WEEK WEEK WEEK WEEK WEEK WEEK
L1 1 2 3 4 5 6
GR   1400 1200      
OH 150 0 0      
NET   1250 1200      
Order Release 1250 1200        
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BAGIAN ATAS WEEK WEEK WEEK WEEK WEEK WEEK
L2 1 2 3 4 5 6
GR     375 300    
OH 30 30 0 0    
NET     345 300    
Order Release 345 300        

PENYANGGA WEEK WEEK WEEK WEEK WEEK WEEK
L1 1 2 3 4 5 6
GR     1500 1200    
OH 80 80 0 0    
NET     1420 1200    
Order Release 1420 1200        
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Computer-Integrated Manufacturing (CIM)

• Objectives
• Simplify
• Automate
• Integrate
• Supports the concepts of
• flexible manufacturing systems,
• agile manufacturing,
• total quality management

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Engineering System

• Computer-Aided Engineering (CAE)
• Help engineer to design better products
• Computer-Aided Design (CAD)
• Engineering drawing
• Computer-Aided Manufacturing (CAM)
• Automated production process
• Computer-Aided Process Planning (CAPP)
• creates processing instructions for CAM
• Product Simulation and Prototyping
• Simulate production process

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Manufacturing Execution Systems (MES)

• Performance monitoring systems for factory floor
  operations
• Shop Floor SchedulingCreating schedule of shop
  floor
• Shop Floor ControlControl of Shop floor
• Machine ControlThe use of a computer to control
  the actions of a machine (i.e. numerical control)
• Process ControlThe use of computers to control
  an ongoing physical process
• Robotics ControlProgrammable action of robot

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Manufacturing Resource Planning (MRP II)

• Production ForecastingProcess of predicting a
  future event
• Production SchedulingCreating schedule of
  production
• Material Requirements Planning (MRP)Define
  material required
• Capacity PlanningDefine the capacity of facility
  to produce
• Production Cost ControlControl cost used in
  production
• Quality ControlControl the quality of product
• Integrated in Enterprise Resource Planning, see
  chap. 6

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• Human Resource Systems

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Human Resource Systems

• Planning to meet the personnel needs of the
  business
• Development of employees to their full potential
• Recruitment, selection, hiring
• Job placement
• Performance appraisals
• Employee benefits analysis
• Training and development
• Health, safety, security

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Human Resource Information Systems
Supported by information systems that record and
track human resources to maximize their use
Supported by Information Systems to plan and
monitor employee recruitment, training, and
development programs
Supported by Information Systems to formularize
salary, compensation and control
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HRM and the Internet

• Allows companies to process most common HRM
  applications over their intranets.
• Allows companies to provide around-the-clock
  services to their employees.
• Allows companies to disseminate valuable
  information faster.
• Allows employees to perform HRM tasks online.

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• Accounting Information Systems

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Accounting Systems

• Record and report business transactions and other
  economic events
• Online Accounting Systems

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Accounting Systems (continued)
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Common 6 widely used Accounting Information System
Order ProcessingCaptures and processes customer orders and produces data for inventory control and account receivable
Inventory ControlProcessing data reflecting changes in inventory and provides shipping and reorder information, minimizing investment in inventory inventory carrying costs
Accounts ReceivableRecords amounts owed by customers and produces customer invoices, monthly customer statements, and credit management report
Account PayableRecords purchases from, amounts owed to, and payments to suppliers, and produces cash management reports
PayrollRecords employee work and compensation data and produces paychecks and other payroll documents and reports
General LedgerConsolidates data from other accounting systems and produces the periodic financial statements and reports of the business
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• Financial Information Systems

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Financial Management Systems

• Supports financial managers in decisions
  concerning
• The financing of the business
• The allocation control of financial resources
  within the business.

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Area of Financial Management Systems
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Area of Financial Management Systems (continued)

• Cash Management
• Collects information on all cash receipts and
  disbursements on a real-time or periodic basis

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Area of Financial Management Systems (continued)

• Investment Management
• Helps the financial manager make buy, sell, or
  hold decisions for each type of security
• Helps the financial manager develop the optimum
  mix of securities in order to minimize risk and
  maximize return

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Area of Financial Management Systems (continued)

• Capital Budgeting
• Involves evaluating the profitability and
  financial impact of proposed capital expenditures
• Allows financial managers to analyze long-term
  expenditure proposals for plant and equipment

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Area of Financial Management Systems (continued)

• Financial Forecasting Planning
• Evaluate the present and projected financial
  performance of the company
• Help determine financing needs and analyze
  alternative methods of financing
• Explore what-if and goal-seeking questions

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Financial Management Systems (Hyperion)
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Financial Management System (Scenario)
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Section II

• Cross-Functional Enterprise Systems

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Cross-Functional Enterprise Applications

• Integrated combinations of information subsystems
  that share information resources and support
  business processes across the functional units

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Cross-Functional Enterprise Applications
(continued)
Process required coordination across functional
areas
Marketing
Production Operation
Accounting
Finance
Human Resource Development
Process occurring in all functional areas
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Example New Product Development
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Cross-Functional Enterprise Applications
(continued)

• A strategic way to use IT to share information
  resources improve efficiency effectiveness
• Focused on accomplishing fundamental business
  processes in concert with the companys customer,
  supplier, partner, employee stakeholders

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• Enterprise Application Integration

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Enterprise Application Architecture
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Enterprise Application Integration (EAI)

• Software enables users to model the business
  processes involved in the interactions that
  should occur between business applications.
• Also provides middleware that
• Performs data conversion coordination
• Provides application communication messaging
  services
• Provides access to the application interfaces

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Enterprise Application Integration (continued)
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Enterprise Application Integration (continued)

• Business value
• Integrates front-office and back-office
  applications to allow for quicker, more effective
  response to business events and customer demands
• Improves customer and suppler experience with the
  business because of its responsiveness.

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Example of How EAI Works

1. An order comes in via the call center, mail,
   email, the web of fax
2. Customer information captured in the order
   process is sent to a new customer, information
   to multiple applications and databases
3. Once the order is validated (customer credit,
   items), relevant details are sent to order
   fulfillment which may pick requested items from
   inventory, schedule them for manufacturer, or
   simply forward them
4. Fulfillment returns status and shipment into the
   order entry system
5. and to the call center, which needs to know
   about the outstanding orders.

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• Transaction Processing System

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Transaction Processing Systems

• Cross-functional information systems that process
  data resulting from the occurrence of business
  transactions
• Transactions events that occur as part of doing
  business
• Sales
• Purchases
• Deposits
• Withdrawals
• Refunds
• Payments

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Transaction Processing Systems (continued)

• Online transaction processing (OLTP) systems
• Real-time systems that capture and process
  transactions immediately
• Adds value to product or service through superior
  customer service

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Transaction Processing Cycle
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Transaction Processing Cycle (continued)

• Data entry
• The capture of business data
• Transaction processing
• Two basic ways
• Batch processing where transaction data are
  accumulated processed periodically
• Real-time processing where data are processed
  immediately after a transaction occurs

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Transaction Processing Cycle (continued)

• 3. Database maintenance
• Corporate databases are updated to reflect the
  day-to-day business transactions
• 4. Document and report generation
• A variety of documents and reports are produced

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Transaction Processing Cycle (continued)

• 5. Inquiry processing
• Inquiries and responses concerning the results of
  transaction processing activity

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• Enterprise Collaboration System

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Enterprise Collaboration Systems

• Cross-functional e-business systems that enhance
  communication, coordination, collaboration
• Communicateshare information with each other
• Coordinatecoordinate individual work efforts
  use of resources with each other.
• Collaboratework together cooperatively on joint
  projects and assignments

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Tools for Enterprise Collaboration

• Calendaring and Scheduling
• Task and Project Management
• Workflow Systems
• Document Sharing
• Knowledge Management

• E-mail
• Voice mail
• Faxing
• Web Publishing
• Internet Phone, Paging, etc.

• Data Conferencing.
• Voice Conferencing
• Video Conferencing
• Discussion Forums
• Chat Systems
• Electronic Meeting Systems

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Example QuickPlace-Virtual work space
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Discussion Questions

• Why is there a trend toward cross-functional
  integrated enterprise systems in business?
• Referring to the example on Dell Computer, what
  other solutions could there be for the problem of
  information system incompatibility in business
  besides EAI systems?

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Discussion Questions (continued)

• Referring to the Charles Schwab Co. example,
  what are the most important HR applications a
  company could offer to its employees via a
  Web-based system?
• How do you think sales force automation affects
  salesperson productivity, marketing management,
  and competitive advantage?

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Discussion Questions (continued)

• How can Internet technologies be involved in
  improving a process in one of the functions of
  business?
• What are several e-business applications that you
  might recommend to a small company to help it
  survive and succeed in challenging economic times?

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Discussion Questions (continued)

• Which of the 14 tools for enterprise
  collaboration do you feel are essential for any
  business to have today? Which do you feel are
  optional?
• Referring to the General Electric example, how do
  enterprise collaboration systems contribute to
  bottom-line profits for a business?

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Real World Case 1 Cypress Semiconductor
FleetBoston

• How does the use of Internet technologies to
  support the marketing function at Cypress
  Semiconductor improve business and customer
  value?
• What are the benefits and potential challenges of
  FleetBostons use of IT to support their targeted
  marketing programs?

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Real World Case 1 (continued)

• Why do IT-based targeted marketing programs
  sometimes produce negative business results?
• How can negative business results be avoided?

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Real World Case 1 (continued)

• How can customer segmentation and targeted
  marketing programs that focus on customer
  profitability avoid ignoring customers with low
  current returns but high potential?

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Real World Case 2 Johnson Controls

• Why is the exchange of tribal knowledge
  important in product design?
• How do Web-based systems support such
  collaborations?

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Real World Case 2 (continued)

• Why is it important to provide visibility
  throughout a supply chain?
• How is JCI attempting to provide this visibility?

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Real World Case 2 (continued)

• What is the business value of JCIs B2B portal?
• Can collaboration systems improve the quality of
  the products that are designed, as well as
  reducing the cost and time of the design process?

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Real World Case 3 Union Pacific, Corporate
Express, Best Buy

• How could an enterprise application integration
  system help a firm to better serve its customers?
• How could enterprise application systems improve
  a companys business interactions with its
  suppliers?

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Real World Case 3 (continued)

• What major challenges are faced by businesses
  that implement EAI initiatives?
• How can companies meet those challenges?

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Real World Case 4 Baxter International

• What key HR applications are provided by Baxters
  Web-based HR system?
• What are some other Web-based HR applications
  they might implement?

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Real World Case 4 (continued)

• What business value does Baxter derive from their
  Web-based HR approach?
• What value do their employees receive from such
  HR systems?

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Real World Case 4 (continued)

• How could viewing employees as customers or
  clients change how HR services are provided to
  employees by Web-based HR systems?

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Real World Case 5 IBM Corporation

• Why have many companies been reluctant to support
  instant messaging in the workplace?
• What are the advantages of instant messaging over
  e-mail and voice mail for enterprise
  collaboration?

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Real World Case 5 (continued)

• What do you see as the major disadvantages of
  using instant messenger instead of e-mail or
  voice mail?
• Do you recommend that companies encourage and
  support the use of IM tools for enterprise
  collaboration?