Information Systems – Week 2

1. Information Systems – Week 2 • Last week – Introduction • What is an Information System? • Why use Information Systems? • Reading and Preparation for Case studies • This week • Discussion of Assignment – any teams yet? • Strategic Role of Information Systems • Types of system and how they fit in • Case Studies

2. Strategic Role “Understanding Information Technology (IT) is vital to every manager simply because IT is part of every manager's job. Managers in the 1990s must use IT to leverage their contributions to the organisation, and they must be knowledgeable about IT so that they can lead others to do the same.” Professor Richard L. Nolan, Harvard Business School

3. Strategic Role of Information Systems • Strategic Information System • Can Change: • Goals, Operations • Products, Services • Environment • To Gain Competitive Advantage

4. 1960s-1970s General purpose support MIS 1970s-1980s Customized management support DSS - ESS Improve, customize Decision making 1985-now Strategic resource Promote survival and prosperity of organization Strategic system Competitive advantage Business foundation Changing Concepts of IS Information system Conception of information Time period Purpose Bureaucratic requirement Electronic Accounting Speed accounting & Paper processing 1950-1960 Speed general Reporting requirements

5. Business-level Strategy • Product Differentiation • Focused Differentiation • Data-mining • Supply Chain Management • Efficient Customer Response • Enhancing Core Competencies

6. Cooperation vs competition Competitive forces model Electronic transactions Licensing Network economies Communications networks Industry Standards Interorganizational systems Information partnerships Firm Synergy Core competency Knowledge systems Core competencies Organizational systems Business Low cost Value chain analysis Datamining Differentiation It-based products / services Scope Interorganizational systems Supply chain management Efficient customer response Strategy Levels & IT Strategies Models IT technologies

7. Competitive Forces Model NEW MARKET ENTRANTS SUBSTITUTE PRODUCTS & SERVICES TRADITIONAL COMPETITION THE FIRM SUPPLIERS CUSTOMERS

8. Countering Competitive Forces • Product differentiation • Focused differentiation • Link customers & suppliers • Low-cost producer • Use the Internet!

9. Product Differentiation Focused Differentiation Links to Customers and Suppliers Low-cost Producer Low-cost Vendor RBC Centura Hyatt Hotels TravelWeb Federal Express AVEX Electronics E-Buyer Countering Competitive Forces

10. KIND OF SYSTEM GROUPS SERVED STRATEGIC LEVEL SENIOR MANAGERS MANAGEMENT LEVEL MIDDLE MANAGERS KNOWLEDGE LEVEL KNOWLEDGE & DATA WORKERS OPERATIONAL OPERATIONAL LEVEL MANAGERS SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN RESOURCES MARKETING Types of Information System

11. Major Types Of Systems • Executive Support Systems (ESS) • Management Information Systems (MIS) • Decision Support Systems (DSS) • Knowledge Work Systems (KWS) • Office Automation Systems (OAS) • Transaction Processing Systems (TPS or OLTP)

12. Transaction Processing Systems (TPS) • Operational Level • Inputs: Transactions, Events • Processing: Updating • Outputs: Detailed Reports • Users: Operations Personnel • Example: Accounts Payable The following examples are taken from Laudon & Laudon TPS

13. Major System Functions: Sales Management Market Research Promotion Pricing New Products Major System Applications: Sales Order Info System Market Research System Pricing System Typical TPS Applications Sales & Marketing Systems TPS

14. Major System Functions: Scheduling Purchasing Shipping/Receiving Engineering Operations Major System Applications: Materials Resource Planning Systems Purchase Order Control Engineering Systems Quality Control Manufacturing & Production Systems TPS

15. Major System Functions: Budgeting General Ledger Billing Cost Accounting Major System Applications: General Ledger Accounts Receivable/Payable Budgeting Funds Management Finance & Accounting Systems TPS

16. Major System Functions: Personnel Records Benefits Compensation Labour Relations Training Major System Applications: Payroll Employee Records Benefit Systems Career Path Systems Personnel Training Systems Human Resource Systems TPS

17. Major System Functions: Admissions Grade Records Course Records Time-tabling Alumni relations Major System Applications: Registration System Student Transcript System Curriculum Class Control Scheduling Alumni Benefactor System Others – e.g. University TPS

18. Knowledge Work Systems (KWS) KNOWLEDGE LEVEL • Inputs: Design Specs • Processing: Modelling • Outputs: Designs, Graphics • Users: Technical Staff EXAMPLE: ENGINEERING WORK STATION

19. Office Automation Systems (OAS) • Toward A “Paperless” Office • Redesign Of Work Flow • Integrated Software • Ergonomic Design • Bright, Cheerful Work Space EXAMPLE: PRESENTATION GRAPHICS

20. Management Information Systems (MIS) MANAGEMENT LEVEL • Inputs: High Volume Data • Processing: Simple Models • Outputs: Summary Reports • Users: Middle Managers EXAMPLE: ANNUAL BUDGETING

21. Management Information Systems (MIS) • Structured & Semi-structured Decisions • Report Control Oriented • Past & Present Data • Internal Orientation • Lengthy Design Process

22. TPS SALES DATA Order Processing System UNIT PRODUCT COST ORDER FILE Materials Resource Planning System PRODUCT CHANGE DATA PRODUCTION MASTER FILE General Ledger System EXPENSE DATA ACCOUNTING FILES TPS Data for MIS Applications MIS MIS REPORTS MANAGERS MIS FILES Source: Laudon & Laudon

23. Decision Support Systems (DSS) MANAGEMENT LEVEL • Inputs: Low Volume Data • Processing: Interactive • Outputs: Decision Analysis • Users: Professionals, Staff EXAMPLE: CONTRACT COST ANALYSIS

24. Decision Support Systems (DSS) • Flexible, Adaptable, Quick • User Controls Inputs/outputs • No Professional Programming • Supports Decision Process • Sophisticated Modeling Tools

25. STRATEGIC LEVEL Inputs: Aggregate Data Processing: Interactive Outputs: Projections Users: Senior Managers EXAMPLE: 5 YEAR OPERATING PLAN TOP LEVEL MANAGEMENT Designed to the Individual Ties CEO to All Levels Very Expensive to Keep Up Extensive Support Staff Executive Support Systems (ESS)

26. ESS MIS DSS KWS OAS TPS Interrelationships Among Systems

27. Goodsell Estate Agents • Problems identified: • Sales slipping • Rapid staff turnover • Not working as a team • What can be done? • Analysis of missed sales • Are we not showing customers what they want? • Is it lack of expertise from rapid turnover? • How can we share information among the team? • Could improve morale and cut attrition

28. Zilkha Exploration • A new approach to oil exploration • Virtual company with low overheads • Purchased oil exploration data, not leases • Hired expert geologists to analyse mass of data • Analysed data using latest computer technology • Then bought leases and contracted other to drill • Had twice the hit rate for new oil fields than conventional exploration procedures • Zilkha was bought out for a billion dollars in 1998http://www.zilkha.com/zilkhaenergy/ http://www.zilkha.com/