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Introduction to Management Information Systems Chapter 7 IS within Organization

Learn about the evolution of Information Systems, types of IS, challenges of functional systems, benefits of integrated applications, and the significance of CRM, ERP, & EAI. Explore the Porter’s Value Chain Model, Business Process Redesign, and the role of integrated IS in enhancing business processes.

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Introduction to Management Information Systems Chapter 7 IS within Organization

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  1. Introduction to Management Information SystemsChapter 7 IS within Organization HTM 304 Fall 07

  2. Learning Objectives • Understand the history of Information Systems and three types of Information Systems • Functional Information Systems: -- Features and Problems • Integrated Applications • Why Integrate? (Value Chain Model) • Three major integrated systems: CRM, ERP, & EAI

  3. Three Types of Information Systems

  4. Calculation Systems • First Kind of IS (1950-1980) • Perform tedious, repetitive Calculation • Balanced accounting records • Computed payroll • Applied debits & credits to general ledger • Track inventory, etc… • Provide specifically designed, small volume, numeric information

  5. Functional Systems • As the technology evolve, every department develops their own Information Systems • “Single Function” -- independent • Payroll system • Student registration systems • Computer inventory management systems • Automate the process for each functional area (Maintaining the same process, streamlining it…) • Sales and marketing • Manufacturing • Human Resources • Finance, • Etc.

  6. Example: Human Resources Systems • Support recruitment, compensation, evaluation, and development of organization’s employees • Recruiting methods may be simple or complex • Compensation includes payroll, processing and tracking vacation, sick leave, health care, other benefits • Employee evaluation includes publication of job and skill descriptions and performance evaluations • Development and training activities vary • HR system concerns every employee in the organization. You should check the website before you accept the job offer… • CSUSM HR Webpage: http://www.csusm.edu/HR/

  7. Accounting and Finance Systems

  8. Sales and Marketing Systems

  9. Operations Systems

  10. IS supported Manufacturing Activities Will talk more later in ERP system

  11. Problem of Functional Systems (inconsistent coding)

  12. Integrated Systems • Combining functional areas to better support business goals and objectives • Porter’s Value Chain Model:

  13. Customer places order Product is manufactured Product is delivered to customer 1+1>2 Simplified Value Chain • Linkages – interactions across value activities • Linkages important source of efficiencies and readily supported by IS • Emphasis on the linkages triggered the movement of Business Process Redesign • -- Dell, Toyota, etc…

  14. Business Process Redesign • Value chain – network of value-creating activities is foundation business process design, or business process redesign (BPR) • Organizations should not automate or improve existing functional systems • Organizations should instead PLUNGE • Create new, more efficient, business processes • Integrate activities of all departments involved in value chain

  15. The Challenges of Business Process Redesign • Projects expensive and difficult • Highly trained systems analysts interview key personnel from many departments and document existing system and alternatives • Managers review results and try to develop new, improved processes • New information systems developed to implement new business processes • Employee resistance to change • Cannot know ahead of time how effective the new processes are • Few successes, and many others failed…

  16. Inherent Processes • Built-in processes provided by software application (Oracle and SAP) Benefits • “Bests Practices” Save substantial amount of money and time in developing new process and system • Proved benefits from other organization. Disadvantage • May require substantial organizational change • Change can be disruptive to ongoing operations • Disturbing to employees • Homogenous processes may not be good for differentiation

  17. Business Process Application Vendors • Page 210, MIS in Use 7-1 • Largest market share: Oracle/SAP.

  18. Three Examples of Integrated IS • CRM – Customer Relationship Management • ERP – Enterprise Resource Planning • EAI – Enterprise Application Integration Note: Different vendors define their own version of the above terms to better support their own products.

  19. Customer Relationship Management Systems • Set of business processes for attracting, selling, managing & supporting customers • Provides single data repository about all customer interactions • Stores all customer data in one place and enables access to people with permissions • CRM components • Solicitation • Lead Tracking (presale) • Relationship management (post-sale)

  20. 3 New Processes Creates Customer Life Cycle

  21. Enterprise Resource Planning • Enterprise resource planning (ERP) integrates all of organization’s principal processes • Outgrowth of MRP II manufacturing systems • Primary ERP users are manufacturing companies • SAP first & most successful ERP software vendor

  22. MRP  MRPII  ERP • MRP (material requirements planning) • An Information System that plans the need for materials and inventories of materials used in the manufacturing process • Does not include the planning of personnel, equipment, or facilities requirements. • BOM (Bill-of-Material) List of product materials and subassemblies. (see figure 7-8, page 203) • MRP II (manufacturing resource planning) • Follow-on to MRP that includes the planning of materials, personnel, and machinery. • limited cross-functional..Push • ERP: • All the resources in the entire company • Defined processes to link the resources. (see page 212)

  23. Characteristics of ERP

  24. Potential Benefits of ERP Note: However, you need to trade off between the cost and benefit. Not all the business are suitable for change.

  25. Implementing ERP System • CEO needs to be cautious in deciding whether to implement. • Once decided, it may take years to complete. • 3rd party consultant may need to come in to facilitate the process Task 1: Model current business processes Task 2: Managers and analysts compare these processes to ERP blueprint processes and note differences Task 3: Eliminate differences by either • Changing existing business process to match ERP process • Altering ERP system to match business process

  26. Manufacturing Inventory Marketing other Human Resource EAI IT infrastructure Enterprise Application Integration (EAI) • ERP systems are not for every organization • Too manufacture-oriented • Too daunting • Alternative: EAI • Connects system “islands” via a new layer of software/system • Enables existing applications to communicate and share data (“virtual” database) • Provides integrated information • Leverages existing systems • Enables a gradual move towards ERP.

  27. Key Terms and Concepts • Bill of materials (BOM) • Business process design • Calculation systems • Cross-departmental systems / Cross-functional systems • Customer relationship management (CRM) • Customer Life Cycle • Enterprise application integration (EAI) • Enterprise resource planning (ERP) • Functional systems (examples) • Inherent processes • Integrated systems • Linkages • MRP/MRP II • Value chain

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