Types of Information Systems

1. Types of Information Systems

2. Case: Frito Lay Frito-Lay, Inc., a snack food subsidiary of Pepsi-Cola, outfitted its 10,000-person direct store-delivery sales force with handheld terminals used while calling on the 400,000 stores that sell its 100 products. Salespeople use the terminals to enter replenishment orders and record the number of “stales” removed after their 35-day shelf life. Based on this data, a printer in the truck prints an invoice handed to the store manager as part of the day’s deliveries. Salespeople hook the terminals to telephone lines to transfer each day’s data to the company’s mainframe computers in Dallas. The system saves salespeople four or five hours of paperwork per week.

3. The mainframes in Dallas consolidate the data each night as part of Frito-Lay’s internal replenishment system. Requirements for that system changed drastically in the 1980s, and Frito-Lay’s regional competitors became stronger. Frito-Lay had to be able to respond quickly to a variety of competitive challenges, ranging from price changes to totally new products. Coordination between manufacturing and sales had to be much tighter because the company needed to be able to run local promotions on Thursday for a product that would have to be available on Monday.

4. The system also used a data warehouse to provide comprehensive, up-to-date data for studying sales by any combination of product, store, and time period. In South Texas, the data from this system showed an unexpected drop in sales of Tostitos tortilla chips. Research into the cause of the drop indicated that a small competitor had launched a white corn tortilla chip. Frito-Lay developed a competitive white corn product within three months and regained market share.

5. Question:What type(s) of information systems does the case illustrate?Debate:

6. The Frito-Lay information system supports a range of communication and decision-making functions typically associated with different types of information systems. It is a transaction processing system because it is used to enter orders from each retailer. It can be considered a management information system or executive information system because it provides information in a readily available form for management’s use. It is a decision support system because it supports decision making by helping route drivers, customers, and managers obtain needed information in a genuinely useful form.

7. Frito-Lay • Customers • Frito-lay Customers • Managers and others who use data • Products • Complete and timely information accessible for decision-making • Convenience and low-cost for salespeople and customers related to ordering and managing inventory • Business Process • Steps: • Track customer inventories of Frito-Lay products • enter orders • Consolidate data about orders and the market • Use data for monitoring and decision-making

8. Frito-Lay • Business Process • Rationale: Use hand-held terminals to collect data during sales calls. Consolidate the information in a system that supports decision making. • Participants • Driver and salespeople • Marketing managers • Information • Inventory by product and customer • Customer orders • sales by product, region, and period • Technology • hand held terminals • computers • telecommunications networks

9. Introduction • We can think of information systems as providing three basic functions: • support for decision-making (from computation capabilities) • support for communication • support for access to information • We will explore these concepts in depth over the next few weeks. The concepts are introduced here. • Types of information systems will be introduced and we will look at how they affect decision-making, communication, and information access.

10. Capabilities of Information Systems 1. Fast and Accurate Data Processing, with large-Capacity Storage and Rapid Communication Between Sites. • Computer and telecommunications systems • exploited by operational support systems • deriving management reporting from volumes of data • business opportunities built on this capability • e.g. consolidate financial results from multiple organizational sites 2. Instantaneous Access to Information • on-line, ad-hoc access to databases • tailorable graphical interfaces • support of knowledge-workers • e.g. EIS allowing executive access to yesterday’s sales

11. Capabilities of Information Systems - 2 3. Means of Coordination • bringing parts of organizations together in a common effort • office information systems • project management systems • portable computing widening the reach of information systems creating the virtual office • inter-organizational information systems coordinating efforts of cooperating enterprises. • Coordinate means to harmonize in a common action or effort • e.g. planning, scheduling, and running a workgroup project

12. Capabilities of Information Systems - 3 4. Boundary Spanning • IS link an organization to the outside world • EDI replacing paper documents • connecting suppliers with customers • Enables organizations to more quickly receive information about their environment • Use of the Internet and Web presence to make contact with customers • e.g. companies that have project teams to monitor public forums • e.g. investigating the competitive opportunities in new markets

13. Capabilities of Information Systems - 4 5. Support for Decision Making • Informing managers and permitting them to select from alternative courses of action. 6. Supporting Organizational Memory and Learning • organizational memory = the means by which knowledge from the past exerts influence on present organizational activities. • Preserving the experience the organization has delivering products and services • e.g. Auto manufacturers preserve electronic designs, hotels maintain customer preferences • Development of Knowledge Management Systems • organizations that acquire knowledge and modify behavior are learning.

14. Capabilities of Information Systems - 5 7. Routinizing Organizational Practice • e-mail and conferencing systems providing new protocols for interaction of people within an organization. • Expert systems approve/refuse credit card transactions assures high consistency. • Order processing cycle • Routinizing of organizational practice does not take away from the creativity of individuals. It may leave time and opportunity for greater productivity and knowledge work. • E.g. electronic processing of insurance policy with the support of workflow systems

15. Capabilities of Information Systems - 6 8. Differentiation of Products and Services • Firms compete by making their products and services different from others. • Gain an initial competitive advantage. • E.g. FedEx tracking packages and shipments • allows for mass customization 9. Modeling • model future economic conditions, prospective products, and the environment where they will operate. • Model = simplified representation of a real object or phenomenon • knowledge workers manipulate models of reality in order to gain understanding • e.g. the spreadsheet • e.g. product engineered and tested electronically before a physical prototype is made.

16. Capabilities of Information Systems - 7 10. Automation • fully automate certain business functions by replacing human labor • e.g. POS systems • However, loss of clerical positions gives rise to jon functions responsible for maintaining the system and developing new ones to analyze and exploit volumes of new information. • E.g. “lights-out” data centers run with out human participation.

17. Improving Communication and Decision Making Performance within Business Processes RATE OF OUTPUT Improve communication: Communicate more information or more types to more people Improve decision making: Make more decisions using better, more complete information CONSISTENCY Improve communication: Make sure different people receive the same communication Improve decision making: Make sure repetitive decisions are made in the same way PRODUCTIVITY Improve communication: Achieve more communication with less effort Improve decision making: Make better decisions with less effort

18. Improving Communication and Decision Making Performance within Business Processes CYCLE TIME Improve communication: Eliminate undesirable delays in communication Improve decision making: Eliminate unnecessary delays in decision making FLEXIBILITY Improve communication: Permit communication in many different forms Improve decision making: Maintain decision quality across a wider range of situations SECURITY Improve communication: Make sure communications go only to the intended recipients Improve decision making: Make sure decisions are controlled only by those authorized to make the decisions

19. Basic Concepts of Communication

20. Communication • Communication is an interpersonal process of sending and receiving symbols with messages attached to them.

21. General Model of a Communication System Feedback Receiver Decoder Transmitter encoder Source Destination Channel Noise and Distortion

22. Basic Communication Concepts • Social Context • Personal, Impersonal, and Anonymous Communication • Time, Place, and Direction of Communication

23. Social Context • The situation and relationships within which communication takes place. • Social presence • Organizational position • Relationships • Cultural Norms • Age • Gender • The topic being discussed • Nonverbal communication • Media Richness Theory

24. Personal, Impersonal, and Anonymous Communication • Personal - the relationship between sender and receiver matters. It affects form and content. • Impersonal - The sender and receiver’s relationship does not matter. Both serve as agents of the organization. • Anonymous - The sender’s identity is hidden from the recipient.

25. Time, Place, and Direction of Communication • Synchronous - The sender and Receiver are available simultaneously • Asynchronous - The sender and receiver are not available simultaneously. • Place Involves Physical Presence • Direction: One-way vs. Two Way communication.

26. Common Communications Classified By Time and Place Presentation Systems Copyboards PC Projectors Facilitation Services Polling Systems Group Decision Rooms Transaction databases World Wide Web Shared Files Electronic Mail Voice Mail Shift Work Communications SAME PLACE EDI Transaction databases Electronic Mail Computer Conferencing Voice Mail Fax Pre-recorded Radio/TV DIFFERENT PLACE Typical Telephone Video Telephone Video Conferencing Live Radio TV Broadcast SAME TIME DIFFERENT TIME

27. What are some approaches for Information Systems to improve communications?

28. Approaches for Improving Communication 1. Make face to face communication more effective. 2. Eliminate Unnecessary Person to Person Communication 3. Make Communications more systematic 4. Combine and Extend Electronic Communications

29. Making Face to Face Communication More Effective • Presentation Technologies: • Blackboard • Prepared Paper Handouts • Overhead projector or slide projector with color transparencies • Electronic Blackboard • Computer LCD Display panels • Computer for “What-If” Scenarios • Computer-controlled Multi-media • Computer controlled multi-media with interactive control.

30. Eliminate Unnecessary Person to Person Communication • Substitute on-line Access to data • Example: Supplier/Customer Relationships as discussed in Interorganizational Information systems • ATM access • Automated Telephone Attendants • Danger of becoming too impersonal

31. Making Communication Systematic • Contrast communication between people vs. communication between machines. • The business Memo Header: • To: • From: • Date: • Re: • Having structure reduces the effort required to figure out what the communication means. • Even with communication between groups of people, repetitive aspects of communication are systematized.

32. Combine and Extend Electronic Communication Functions • Early communication technologies have been combined and extended to create more powerful communication technologies. • Example: Telegraph, Telephone, Radio Broadcast • Consider how more modern technologies are being combined. • More convergence of computing and communications technologies.

33. Question: How have the different degrees of social presence in communication, or how have time, place, and direction of communication affected a situation in which you have been involved?

34. Basic Decision-Making Concepts

35. Steps in Decision Making

36. Types of Information Systems

37. Different Classification Schema • There is no one hard and fast rule for classifying information systems. Some way we might consider: • By Organizational Level • By Major Functional Area • By the Support Provided by the System • By the Information System Architecture

38. Classification of IS: Organizational Levels • Consider the hierarchical nature of organizations. Although many organizations are reengineering themselves and transforming themselves to other structures, the vast number of organizations have a hierarchical structure. Typical information systems that follow organizational levels are: • Departmental or functional area • Enterprise Information Systems ( e.g. vendors today market enterprise systems - PeopleSoft, SAP). • Inter-organizational Systems (e.g. American Airlines Sabre)

39. Classification of IS: Major Functional Area • Departmental information systems may follow traditional Functional Areas: • The accounting system • the finance system • the manufacturing (operation/production) system • the marketing system • the human resource system • Note in each functional area, there may be basic computerized tasks that essential to the operations of the organization and are routine in nature (e.g. preparing a payroll and billing a customer).

40. Classification of IS: Major Functional Area - 2 • Such tasks are mission-critical and often are supported by transaction processing systems (TPS). TPS support tasks in all functional areas. • In each functional area it is often possible to fund dozens of IS-specific applications. • The functional area classification is outdated and perpetuates the notion of functional silos or functional islands of information. • There is the need for cross-functional information systems.

41. Major Functional Areas • Primary Activities: • Manufacturing • Materials Management (logistics) • Engineering • Testing and Quality Control • Maintenance and Service • Marketing and Sales • Support Activities • Accounting • Finance • Strategic Planning • Human Resource Management • Research and Development • Procurement (Purchasing) • Public Relations • Information Systems

42. Classification of IS: Support Provided Another way to classify IS is by the type of support provided regardless of the functional area involved: • Transaction Processing Systems (TPS) - supporting routine operations central to the mission of the organization. • Management Information Systems (MIS) - supporting functional managers. • Office Automation Systems (OAS) - supporting office workers. • Group Support Systems (GSS) - supporting people working in groups

43. Classification of IS: Support Provided • Decision Support Systems (DSS) - supporting managers and analysts. • Executive Information Systems (EIS) - supporting executives • Execution systems - systems that directly support the organization’s value-added work (e.g. help sales people sell, doctor’s practice medicine, architects design, etc.) • Intelligent Support system - supporting knowledge workers using Expert systems (ES) and artificial neural networks (ANN)

44. Classification of IS:By Nature of Activity Supported • Operational Systems - deal with day to day operations. Often involve TPS. Systems used by first-line managers (supervisors). Operational decisions are of short-term nature. • Managerial or Tactical - used by middle management; short-term planning, organizing, and controlling. Managerial systems are broader in scope that operational systems. They are often equated with MIS. • Strategic - deal with long-term situations which significantly affect how business is conducted. • Note: Reference Gorry Scott-Morton article.

45. Information Systems Design • The manner is which an IS is designed depends on what it is intended to support. • It is important to conceptualize the information requirements of the organization (See Wetherbe article). • Often the conceptualization of how information requirements will be met is called the information architecture. It is a high-level description of an organization’s information resources. • The Information Systems infrastructure or information technology infrastructure is a related concept.

46. Information Systems Design - 2 • The information technology infrastructure is a description of how computers, networks, databases, and other facilities are arranged and how they are operated and managed. • Architecture and Infrastructure are related aspects of Information System Design. • An analogy is the conceptual planning of a house (architecture) and the physical construction of the foundation, walls, roof, etc. (infrastructure).

47. Classification of IS:By Information Systems Architecture • Information Systems can be classified according to the systems architecture: • a mainframe based system, sometime called host-based systems. • a stand-alone personal computer. • a Networked (or distributed) environment divides the work between two or more computers. • Cooperative processing (geographic dispersed) • client-server (generally with LANs) • enterprise wide (uses intranet)

48. Detail on Information Systems by Support Provided

49. Transaction Processing Systems • A transaction is an elementary activity conducted during business operations (e.g. merchandise sale). • Earliest Information Systems in organizations. • Support the monitoring, collection, storage, processing, and dissemination of the organization’s basic business transactions. • Provides backbone for many other applications involving other support systems. • On-line systems called OLTP vs. batch • Routine, repetitive tasks.

50. Business Transactions in a Factory • Payroll: employee time cards, employee pay and deductions, payroll checks. • Purchasing: purchase orders, deliveries, payments (accounts payable) • Sales: sales records, invoices and billing, accounts receivable, sales returns, shipping • Manufacturing: production reports, quality-control reports • Finance and Accounting: financial statements, tax records, expense accounts • Inventory management: materials usage, inventory levels