Management Information Systems, 10/e

1. Management Information Systems, 10/e Raymond McLeod and George Schell Management Information Systems, 10/e Raymond McLeod and George Schell

2. Chapter 8 Information in Action Management Information Systems, 10/e Raymond McLeod and George Schell

3. Learning Objectives • Know that a firm’s ability to develop effective information systems can be a key factor in its success. • Recognize that the transaction processing system processes describes the firm’s basic daily operations. • Be familiar with the processes performed by a transaction processing system for a distribution firm. • Recognize that organizational information systems have been developed for business areas & organizational levels. • Be familiar with architectures of marketing, human resources, manufacturing, & financial information systems. Management Information Systems, 10/e Raymond McLeod and George Schell

4. Learning Objectives (Cont’d) • Know the architecture of an executive information system. • Understand what customer relationship management is & why is requires a large computer storage capability. • Recognize how a data warehouse differs from a database. • Understand the architecture of a data warehouse system. • Know how data are stored in a data warehouse data repository. • Know how a user navigates through the data repository. • Know what on-line analytical processing (OLAP) is. • Know the two basic ways to engage in data mining. Management Information Systems, 10/e Raymond McLeod and George Schell

5. Information as a Critical Success Factor • Critical success factor (CSF) was coined by Ronald Daniel to identify a few key activities that spell success or failure for any type of organization. • Transaction processing system (TPS) is the information system that gathers data describing the firm’s activities, transforms the data into information, & makes the information available to users both inside & outside the firm. • 1st business application to be installed on computers. • Also electronic data processing (EDP) system & accounting information system. Management Information Systems, 10/e Raymond McLeod and George Schell

6. Figure 8.1 Model of a TPS Management Information Systems, 10/e Raymond McLeod and George Schell

7. System Overview • Distribution system is a TPS used by distribution firms. • Distribution firms distribute products or services to their customers. • We will use data flow diagrams, or DFDs, to document the system. • Figure 8.2 represents the highest level. • Figure 8.3 identifies the three major subsystems. Management Information Systems, 10/e Raymond McLeod and George Schell

8. Figure 8.2 Context Diagram of Distribution System Management Information Systems, 10/e Raymond McLeod and George Schell

9. Figure 8.3 Figure 0 Diagram of Distribution System Management Information Systems, 10/e Raymond McLeod and George Schell

10. Major Subsystems of Distribution System • Systems that fill customer orders. • Order entry system enters customer orders into the system. • Inventory system maintains the inventory records. • Billing system prepares the customer invoices. • Accounts receivable system collects the money from the customers. • Systems that order replenishment stock. • Purchasing system issues purchase orders to suppliers for needed stock. • Receiving system receives the stock. • Accounts payable system makes payments. Management Information Systems, 10/e Raymond McLeod and George Schell

11. Figure 8.4 Figure 1 Diagram of Systems that Fills Customers Orders Management Information Systems, 10/e Raymond McLeod and George Schell

12. Figure 8.5 Figure 2 Diagram of Systems that Order Replenishment Stock Management Information Systems, 10/e Raymond McLeod and George Schell

13. Major Subsystems of Distribution System (Cont’d) • Systems that perform general ledger processes. • General ledger system is the accounting system that combines data from other accounting systems for the purpose of presenting a composite financial picture of the firm’s operations. • General ledger is the file that contains the combined accounting data. • Updated general ledger system posts records that describe various actions & transactions to the general ledger. • Prepare management reports system uses the contents of the general ledger to prepare the balance sheet, income statement, & other reports. Management Information Systems, 10/e Raymond McLeod and George Schell

14. Figure 8.6 Figure 3 Diagram of Systems that Perform General Ledger Processes Management Information Systems, 10/e Raymond McLeod and George Schell

15. Organizational Information Systems • Organizational information systems are developed to meet the needs for information relating to those particular parts of the organization. • Marketing information system (MKIS) provides information that relates to the firm’s marketing activities. • Consists of a combination of input & output subsystems connected by a database. Management Information Systems, 10/e Raymond McLeod and George Schell

16. Figure 8.7 Model of MKIS Management Information Systems, 10/e Raymond McLeod and George Schell

17. MKIS • Output subsystems provide information about critical elements in marketing mix. • Marketing mix consists of 4 main ingredients that management manages in order to meet customers’ needs at a profit. • Product subsystem provides information about the firm’s products. • Place subsystem provides information about the firm’s distribution network. • Promotion subsystem provides information about the firm’s advertising & personal selling activities. • Price subsystem helps the manager make pricing decisions. • Integrated-mix subsystem enables the manager to develop strategies that consider the combined effects of the ingredients. Management Information Systems, 10/e Raymond McLeod and George Schell

18. MKIS (Cont’d) • Database is populated with data from the three MKIS input subsystems. • Input subsystems • Transaction processing system gathers data from both internal & environmental sources & enters the data into the database. • Marketing research subsystem gathers internal & environmental data by conducting special studies. • Marketing intelligence subsystem gathers environmental data that serves to keep management informed of activities of the firm’s competitors & customers & other elements that can influence marketing operations. Management Information Systems, 10/e Raymond McLeod and George Schell

19. Other Organizational Information System • Human Resources information system (HRIS) provides information to managers throughout the firm concerning the firm’s human resources. • Manufacturing information system provides information to managers throughout the firm concerning the firm’s manufacturing operations. • Financial information system provides information to managers throughout the firm concerning the firm’s financial activities. Management Information Systems, 10/e Raymond McLeod and George Schell

20. Figure 8.8 Model of HRIS Management Information Systems, 10/e Raymond McLeod and George Schell

21. Figure 8.9 Model of Manufacturing Information System Management Information Systems, 10/e Raymond McLeod and George Schell

22. Figure 8.10 Model of Financial Information System Management Information Systems, 10/e Raymond McLeod and George Schell

23. Executive Information System • Executive information system (EIS) is a system that provides information to upper-level managers on the overall performance of the firm; also called Executive support system (ESS). • Drill-down capability allows for executives to bring up a summary display & then successively display lower levels of detail until executives are satisfied that they have obtained as much detail as is necessary. Management Information Systems, 10/e Raymond McLeod and George Schell

24. Figure 8.11 An EIS Model Management Information Systems, 10/e Raymond McLeod and George Schell

25. Figure 8.12 Drill-down Technique Management Information Systems, 10/e Raymond McLeod and George Schell

26. Customer Relationship Management • Customer relationship management (CRM) is the management of the relationships between the firm & its customers so that both the firm & its customers receive maximum value from the relationship. • CRM system accumulates customer data over a long term – 5 years, 10 years, or more - & uses that data to produce information for users. • Uses a data warehouse. Management Information Systems, 10/e Raymond McLeod and George Schell

27. Data Warehousing • Data warehouse describes data storage that has the following characteristics: • Storage capacity is very large. • Data are accumulated by adding new records, as opposed to being kept current by updating existing records with new information. • Date are easily retrievable. • Date are used solely for decision making, not for use in the firm’s daily operations. • Data mart is a database that contains data describing only a segment of the firm’s operations. Management Information Systems, 10/e Raymond McLeod and George Schell

28. Data Warehousing System • Data warehousing is the creation & use of a data warehouse or data mart. • Primary data sources are TPS & data obtained from other sources, both internal & environmental; any data identified as having potential value in decision making. • Staging area is where the data undergoes extraction, transformation, & loading (abbrev. as ETL process) Management Information Systems, 10/e Raymond McLeod and George Schell

29. Data Warehousing System (Cont’d) • Extraction process combines data from the various sources. • Transformation process cleans the data, puts it into standardized format, & prepares summaries. • Data stored in both detail & summary form. • Loading process involves the entry of the data into the data warehouse repository. • Metadata • “Data about data”. • Data that describes the data in the data repository. • Tracks data as it flows through the data warehouse system. Management Information Systems, 10/e Raymond McLeod and George Schell

30. Figure 8.13 Model of Data Warehousing System Management Information Systems, 10/e Raymond McLeod and George Schell

31. Storing Data in the Warehouse Data Repository • Dimension tables store the identifying & descriptive data. • Dimension provides the basis for viewing the data from various perspectives or dimensions. • Fact tables are separate tables containing the quantitative measures of an entity. • Combined with dimension table data, various analyses can be prepared. • Users can request information that involves any combination of the dimensions & facts. Management Information Systems, 10/e Raymond McLeod and George Schell

32. Figure 8.14 Simple Dimension Table Management Information Systems, 10/e Raymond McLeod and George Schell

33. Figure 8.15 Sample Fact Table Management Information Systems, 10/e Raymond McLeod and George Schell

34. Storing Data … (Cont’d) • Information package identifies all of the dimensions that will be used in analyzing a particular activity. • Star schema - for each dimension, a key identifies the dimension & provides the link to the information package which results in a structure that is similar to the pattern of a star. • The warehouse data repository contains multiple star schemas, one for each type of activity to be analyzed. Management Information Systems, 10/e Raymond McLeod and George Schell

35. Figure 8.16 Information Package Format Management Information Systems, 10/e Raymond McLeod and George Schell

36. Figure 8.17 Sample Information Package Management Information Systems, 10/e Raymond McLeod and George Schell

37. Figure 8.18 Star Schema Format Management Information Systems, 10/e Raymond McLeod and George Schell

38. Figure 8.19 A Sample Star Schema Management Information Systems, 10/e Raymond McLeod and George Schell

39. Information Delivery Management Information Systems, 10/e Raymond McLeod and George Schell

40. Figure 8.20 Navigating the Warehouse Data Repository Management Information Systems, 10/e Raymond McLeod and George Schell

41. Figure 8.21 Drilling Across Hierarchies Produces Multiple Views Management Information Systems, 10/e Raymond McLeod and George Schell

42. OLAP • On-line analytical processing (OLAP) enables the user to communicate with the data warehouse either through a GUI or a Web interface & quickly produce information in a variety of forms, including graphics. • Relational OLAP (ROLAP) uses a standard relational database management system. • ROLAP data exists in detailed form. • Analyses must be performed to produce summaries. • Constrained to a limited number of dimensions. • Multidimensional OLAP (MOLAP) uses a special multidimensional database management system. • MOLAP data are preprocessed to produce summaries at the various levels of detail & arranged by the various dimensions. • Faster summary ability, can use many dimensions – 10 or more. Management Information Systems, 10/e Raymond McLeod and George Schell

43. Figure 8.22 ROLAP & MOLAP Architectures Management Information Systems, 10/e Raymond McLeod and George Schell

44. Figure 8.23 Example Report Produced with ROLAP Management Information Systems, 10/e Raymond McLeod and George Schell

45. Figure 8.24 Example Report Produced with MOLAP Management Information Systems, 10/e Raymond McLeod and George Schell

46. Data Mining • Data mining is the process of finding relationships in data that are unknown to the user. • Hypothesis verification begins with the user’s hypothesis of how data are related. • Retrieval process guided entirely by user. • Selected information can be no better than user’s understanding of the data. • Traditional way to query a database. • Knowledge discovery is when the data warehousing system analyzes the warehouse data repository, looking for groups with common characteristics. Management Information Systems, 10/e Raymond McLeod and George Schell