MANAGEMENT INFORMATION SYSTEMS

MODULE I: MANAGEMENT INFORMATION SYSTEMS

CHAPTER II: GLOBAL E-BUSINESS AND COLLABORATION

I. OBJECTIVES
At the end of this chapter, the students should be able to:
 Define and describe business processes and their relationship to information systems.
 Evaluate the role played by systems serving the various levels of management in a
business and their relationship to each other.
 Explain how enterprise applications improve organizational performance.
 Explain the importance of collaboration and teamwork in business and how they are
supported by technology.
 Assess the role of the information systems function in a business.

II. SUBJECT MATTER

Topic: Global E-Business and Collaboration
Sub topic: - Business Processes and Information System
- Types of Information Systems
- Systems for Collaboration and Teamwork
- The Information Systems function on Business

III. PROCEDURE
A. Preliminaries
Pre- Assessment
1. Define and discuss the Business processes and Information System. Cite some
examples of functional business process
2. Enumerate and explain the types of Information Systems.
3. Discuss the Systems for Collaboration and Teamwork.
4. Compare and contrast High-tech and Low-tech information systems.
5. Discuss and explore the function of information systems in Business today.

B. Lesson Proper
In order to operate, businesses must deal with many different pieces of information about
suppliers, customers, employees, invoices, and payments, and of course their products and
services. They must organize work activities that use this information to operate efficiently and
enhance the overall performance of the firm. Information systems make it possible for firms to
manage all their information, make better decisions, and improve the execution of their
business processes.
 1. Business Processes and Information Systems

 Business processes:
o Workflows of material, information, knowledge
o Sets of activities, steps
o May be tied to functional area or be cross-functional
 Businesses: Can be seen as collection of business processes
 Business processes may be assets or liabilities

Every business can be seen as a collection of business processes, some of which are part of larger
encompassing processes. For instance, uses of mentoring, wikis, blogs, and videos are all part of
the overall knowledge management process. Many business processes are tied to a specific
functional area.

Examples of functional business processes

The Order Fulfilment Process

What at first appears to be a simple process, fulfilling an order, turns out to be a very complicated
series of business processes that require the close coordination of major functional groups in a
firm. Moreover, to efficiently perform all these steps in the order fulfilment process requires a
great deal of information. The required information must flow rapidly both within the firm from
one decision maker to another; with business partners, such as delivery firms; and with the
customer. Computer-based information systems make this possible.

To have efficiency in fulfilment process required:

Information technology enhances business processes in two main ways:

 Increasing efficiency of existing processes

o Automating steps that were manual
 Enabling entirely new processes that are capable of transforming the businesses
o Change flow of information
o Replace sequential steps with parallel steps
o Eliminate delays in decision making

System for different Management Groups:

 Transaction processing systems

o Perform and record daily routine transactions necessary to conduct business
o Examples: sales order entry, payroll, shipping
 Allow managers to monitor status of operations and relations with external environment
 Serve operational levels
 Serve predefined, structured goals and decision making
The purpose of these systems is to answer routine questions about the flow of transactions
through the organization. These systems are a necessity for any business.
2. Types of Information System
A Payroll TPS
A TPS for payroll processing captures employee payment transaction data (such as a time card).
System outputs include online and hard-copy reports for management and employee pay checks.
System for Business Intelligence:

 Management information systems

o Serve middle management
o Provide reports on firm’s current performance, based on data from TPS
o Provide answers to routine questions with predefined procedure for answering
them
o Typically have little analytic capability

How Management Information Systems Obtain Their Data from the Organization’s TPS

This show the relationship between TPS and MIS. MIS receive data from an organization’s TPS
systems and create outputs that management can use to make strategic decisions.
Sample MIS Report
Decision support systems

 Serve middle management

 Support non-routine decision making
o Example: What is impact on production schedule if December sales doubled?
 Often use external information as well from TPS and MIS
 Model driven DSS
o Voyage-estimating systems
 Data driven DSS
 Intrawest’s marketing analysis systems
Voyage-Estimating Decision Support System

Decision-support systems (DSS) focus on problems that are unique and rapidly changing, for
which the procedure for arriving at a solution may not be fully predefined in advance.
Business intelligence

 Class of software applications

 Analyse current and historical data to find patterns and trends and aid decision-making
 Used in systems that support middle and senior management
o Data-driven DSS
o Executive support systems (ESS)

Business intelligence is a type of software used in analysing data, and is used in both DSS and
ESS. As an example, the BMW Oracle boat described in the chapter opening case was using
business intelligence – the software analysed huge amounts of data, including real-time data, to
determine hidden factors and correlations that make a sailboat go faster, and help the sailors
make decisions in navigating and managing the boat.
Executive support systems

 Support senior management

 Address non-routine decisions
o Requiring judgment, evaluation, and insight
 Incorporate data about external events (e.g. new tax laws or competitors) as well as
summarized information from internal MIS and DSS
 Example: Digital dashboard with real-time view of firm’s financial performance: working
capital, accounts receivable, accounts payable, cash flow, and inventory
A critical feature of ESS is ease of use and simplicity of display. Executives using an ESS want quick
access to the most critical data affecting their firm.
Systems from a constituency perspective

 Transaction processing systems: supporting operational level employees

 Management information systems and decision-support systems: supporting managers
 Executive support systems: supporting executives
In a constituency perspective, systems are distinguished on the basis of who uses the system–
operational managers, middle management, and senior management. Systems are often
designed to fit the specific needs of each of these groups in a firm. These groups form
“constituencies” that CIOs must appeal to for support.
Relationship of systems to one another

 TPS: Major source of data for other systems

 ESS: Recipient of data from lower-level systems
 Data may be exchanged between systems
Systems for Linking the Enterprise:

 Enterprise applications
o Systems for linking the enterprise
o Span functional areas
o Execute business processes across firm
o Include all levels of management
o Four major applications:
 Enterprise systems
 Supply chain management systems
 Customer relationship management systems
 Knowledge management systems
Enterprise applications are used to manage the information used in the systems discussed
previously. In other words, enterprise applications are used to ensure that TPS, MIS, DSS, and ESS
work together smoothly.
Enterprise Application Architecture

Enterprise applications automate processes that span multiple business functions and
organizational levels and may extend outside the organization.
The purpose of this graphic is simply to illustrate that enterprise systems are very large and
diverse databases that pull information from many parts of the firm and enable processes both
across the firm, at different organizational levels, as well as with suppliers and customers.
Enterprise systems

 Collects data from different firm functions and stores data in single central data repository
 Resolves problem of fragmented, redundant data sets and systems
 Enable:
o Coordination of daily activities
o Efficient response to customer orders (production, inventory)
o Provide valuable information for improving management decision making
Supply chain management (SCM) systems

 Manage firm’s relationships with suppliers

 Share information about
o Orders, production, inventory levels, delivery of products and services
 Goal: Right amount of products to destination with least amount of time and lowest cost
SCM systems are inter-organizational systems, automating the flow of information across
organizational boundaries. This distinction is important because SCM systems must be designed
with the business processes of potential partners and suppliers in mind.
Customer relationship management systems:

 Provide information to coordinate all of the business processes that deal with customers
in sales, marketing, and service to optimize revenue, customer satisfaction, and customer
retention
 Integrate firm’s customer-related processes and consolidate customer information from
multiple communication channels
Knowledge management systems (KMS)

 Support processes for acquiring, creating, storing, distributing, applying, integrating

knowledge
o How to create, produce, distribute products and services
 Collect internal knowledge and experience within firm and make it available to employees
 Link to external sources of knowledge
 Knowledge management systems are useful for helping a firm’s employees understand
how to perform certain business processes or how to solve problems.
Alternative tools that increase integration and expedite the flow of information
Intranets: Internal company Web sites accessible only by employees.
Internet: A public network linking organization and other external networks.
Extranets: Company Web sites accessible externally only to vendors and suppliers. Often used to
coordinate supply chain.
Enterprise applications are typically extremely expensive as well as difficult to implement.
Intranets and extranets use Internet technology to communicate internally to employees, allow
employees to communicate with each other and share documents, and to help communication
with vendors. They are essentially password protected Web sites. The simplest intranets and
extranets may use static web pages to relay information, while more sophisticated versions may
be database-driven and enable key business processes.
E-business

 Use of digital technology and Internet to drive major business processes. Includes e-
commerce and activates for the internal management for the firm and for coordination
with suppliers.
 E-business refers to the use of the Internet and networking to enable all parts of the
business.
E-commerce

 Subset of e-business
 Buying and selling goods and services through Internet
 E-commerce refers to just that part of business that involves selling goods and services
over the Internet. And encompasses activates supporting market transaction like
advertising.
E-government:

 Using Internet technology to deliver information and services to citizens, employees, and
businesses

3. Systems for Collaboration and Teamwork

Collaboration: is working with others to achieve shared an explicit goals

 Short-lived or long-term
 Informal or formal (teams)
Growing importance of collaboration:

 Changing nature of work

 Growth of professional work – “interaction jobs”
 Changing organization of the firm
 Changing scope of the firm
 Emphasis on innovation
 Changing culture of work
A number of factors are leading to a growing emphasis on collaboration in the firm. Work is
changing, requiring more cooperation and coordination. Professions play a larger role in firms
than before, and this often requires more consultation among experts than before. Organizations
are flatter, with many more decisions made far down in the hierarchy. Organizations are more far
flung around the globe, in multiple locations. There’s an emphasis on finding and sharing ideas
which requires collaboration.
Business benefits of collaboration and teamwork

 Investments in collaboration technology can produce organizational improvements

returning high ROI
 Benefits:
o Productivity
o Quality
o Innovation
o Customer service
o Financial performance
o Profitability, sales, sales growth

Research regarding the business benefits of collaboration is anecdotal; however, business and
academic communities generally regard collaboration as an essential driving factor in business
success: Firms that collaborate more make more money.
Requirement for Collaboration

Successful collaboration requires an appropriate organizational structure and culture, along with
appropriate collaboration technology.
Building a collaborative culture and business processes

 “Command and control” organizations

o No value placed on teamwork or lower-level participation in decisions
 Collaborative business culture
o Senior managers rely on teams of employees
 o Policies, products, designs, processes, systems rely on teams
o Managers purpose is to build teams

Technology for collaboration and teamwork

15 categories of collaborative software tools

 Email and instant messaging

 White boarding
 Collaborative writing Web presenting
 Collaborative reviewing
 Work scheduling
 Event scheduling
 Document sharing /wikis
 File sharing
 Mind mapping
 Screen sharing Large audience Webinars
 Audio conferencing
 Co-browsing
 Video conferencing
Two dimensions of collaboration technologies

 Space (or location) – remote or colocated

 Time – synchronous or asynchronous
Six steps in evaluating software tools

 What are your firm’s collaboration challenges?

 What kinds of solutions are available?
 Analyze available products’ cost and benefits
 Evaluate security risks
 Consult users for implementation and training issues
 Evaluate product vendors
When evaluating collaboration tools for your businesses, the first step is to identify the kind of
problem you have. The key problems are time and location. Generally, no one has enough time
and often key people are not in the right place. Some teams may need to work together in real-
time, while others may simply need shared documentation. In analysing collaboration tools by
the space/time dimensions you can determine what types of tools will solve your problem. The
six steps in evaluating software is applicable not only for collaboration tools but any software
solution for your company. First determine the challenge or problem, look for solutions for this
particular problem and so forth.
 4. The Time/Space Collaboration Tool Matrix

Collaboration technologies can be classified in terms of whether they support interactions at the
same or different time or place whether these interactions are remote or co-located.
5. The Information Systems function is Business
The information systems department of a firm is responsible for coordinating all of the systems
previously mentioned in this chapter. How the department is organized depends on the nature
and size of the business. Small companies may not have a formal department, while large
companies may have several departments for different business functions, or they have an IT
Department in each corporate division.

 Formal organizational unit responsible for information technology services

 Often headed by chief information officer (CIO)
o Other senior positions include chief security officer (CSO), chief knowledge officer
(CKO), chief privacy officer (CPO)
 Programmers
 Systems analysts
 Information systems managers
End users

 Representatives of other departments for whom applications are developed

 Increasing role in system design, development
IT Governance:

 Strategies and policies for using IT in the organization

 Decision rights
 Accountability
 Organization of information systems function
 Centralized, decentralized, etc.
As the development of business information systems matures, end users have been increasingly
recognized as pivotal to developing a successful system. In addition, the information systems
department has also been recognized as a powerful resource for developing new products,
services and efficiencies. As such, IT governance is a central business concern – being able to use
IT efficiently and effectively has become more and more essential to a business’ success.

ACTIVITY 1: CASE STUDY

Modernization of NTUC Income
Sources: Melanie Liew, Computerworld, July 2004; “NTUC Income of Singapore Successfully Implemented eBaoTech
Lifesystem,” ebaotech.com, accessed November 2008; Neerja Sethi & D G Allampallai, “NTUC Income of Singapore
(A): Re-architecting Legacy Systems,” asiacase.com, October 2005

NTUC Income (“Income”), one of Singapore’s largest insurers, has over 1.8 million policy holders with total assets of
S$21.3 billion. The insurer employs about 3,400 insurance advisors and 1,200 office staff, with the majority located
across an eight-branch network. On June 1, 2003, Income succeeded in the migration of its legacy insurance systems
to a digital webbased system. The Herculean task required not only the upgrading of hardware and applications, it
also required Income to streamline its decade-old business processes and IT practices.

Until a few years ago, Income’s insurance processes were very tedious and paper-based. The entire insurance
process started with customers meeting an agent, filling in forms and submitting documents. The agent would then
submit the forms at branches, from where they were sent by couriers to the Office Services department. The
collection schedule could introduce delays of two to three days. Office Services would log documents, sort them, and
then send them to departments for underwriting. Proposals were allocated to underwriting staff, mostly at random.
Accepted proposals were sent for printing at the Computer Services department and then redistributed. For storage,
all original documents were packed and sent to warehouses where, over two to three days, a total of seven staff
would log and store the documents. In all, paper policies comprising 45 million documents were stored in over
16,000 cartons at three warehouses. Whenever a document needed to be retrieved, it would take about two days to
locate and ship it by courier. Refiling would again take about two days.
In 2002, despite periodic investments to upgrade the HP 3000 mainframe that hosted the core insurance applications
as well as the accounting and management information systems, it still frequently broke down. When a system
breakdown did occur, work had to be stopped while data was restored. Additionally, the HP 3000 backup system
could only restore the data to the version from the previous day. This meant that backups had to be performed at
the end of every day in a costly and tedious process, or the company would risk losing important data. In one of the
hardware crashes, it took several months to recover the lost data. In all, the HP 3000 system experienced a total of
three major hardware failures, resulting in a total of six days of complete downtime.

That was not enough. The COBOL programs that were developed in the early 1980s and maintained by Income’s in-
house IT team also broke multiple times, halted the systems, and caused temporary interruptions. In addition, the IT
team found developing new products in COBOL to be quite cumbersome and the time taken to launch new products
ranged from a few weeks to months.

At the same time, transaction processing for policy underwriting was still a batch process and information was not
available to agents and advisors in real-time. As a result, when staff processed a new customer application for motor
insurance, they did not know if the applicant was an existing customer of Income, which led to the loss of
opportunities for cross-product sales, as staff had to pass physical documents between each other and there was no
means of viewing an up-to-date report on a customer’s history on demand. Furthermore, compatibility issues
between the HP 3000 and employees’ notebooks caused ongoing problems, especially with a rise in telecommuting.

All this changed in June 2003, when Income switched to the Java based eBao LifeSystem from eBao Technology. The
software comprised three subsystems - Policy Administration, Sales Management and Supplementary Resources —
and fulfilled many of the company’s requirements, from customerorientated design to barcode technology
capabilities, and the ability to support changes in business processes.

Implementation work started in September 2002 and the project was completed in nine months. By May 2003, all
the customization, data migration of Income’s individual and group life insurance businesses and training were
completed.

The new system was immediately operational on a high-availability platform. All applications resided on two or more
servers, each connected by two or more communication lines, all of which were “load balanced.” This robust
architecture minimized downtime occurrence due to hardware or operating system failures.

As part of eBao implementation, Income decided to replace its entire IT infrastructure with a more robust, scalable
architecture. For example, all servicing branches were equipped with scanners; monitors were changed to 20 inches;
PC RAM size was upgraded to 128 MB; and new hardware and software for application servers, database servers,
web servers, and disk storage systems were installed. Furthermore, the LAN cables were replaced with faster cables,
a fibre-optic backbone, and wireless capability.

In addition, Income also revamped its business continuity and disaster-recovery plans. A real-time hot backup
disaster-recovery center was implemented, where the machines were always running and fully operational. Data was
transmitted immediately on the fly from the primary datacentre to the backup machines’ data storage. In the event
of the datacentre site becoming unavailable, the operations could be switched quickly to the disaster recovery site
without the need to rely on restoration of previous day data.

Moving to a paperless environment, however, was not easy. Income had to throw away all paper records, including
legal paper documents. Under the new system, all documents were scanned and stored on “trusted” storage devices
- secured, reliable digital vaults that enabled strict compliance with stringent statutory requirements. Income had to
train employees who had been accustomed to working with paper to use the eBao system and change the way they
worked.

As a result of adopting eBao Life System, about 500 office staff and 3,400 insurance advisors could access the system
anytime, anywhere. Staff members who would telecommute enjoyed faster access to information, almost as fast as
those who accessed the information in the office.
This allowed Income to view a summary of each customer over different products and business areas. As a result,
cross-selling became easier, and customer service could be improved. Simplified workflows cut policy processing
time and cost by half, and greatly reduced the time required to design and launch new products from months to
days.

Additionally, the systems allowed for online support of customers, agents and brokers.

CASE STUDY QUESTIONS

1. What were the problems faced by Income in this case? How were the problems resolved by the
new digital system?
2. What types of information systems and business processes were used by Income before
migrating to the fully digital system?
3. Describe the Information systems and IT infrastructure at Income after migrating to the fully
digital system?
4. What benefits did Income reap from the new system?
5. How well is Income prepared for the future? Are the problems described in the case likely to
be repeated?

ACTIVITY 2: ESSAY WRITING

Answer each questions and / or statements briefly. Write on the spaces provided below.
1. What are business processes? How are they related to information systems?
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What is system software? What kinds of

programs are included in system
software?
What is system software? What kinds of
programs are included in system
software?
2. How do systems serve the different management groups in a business?
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3. How do systems that link the enterprise improve organizational performance?

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4. Why systems for collaboration and social business are so important and what
technologies do they use?
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5. What is the role of the information systems function in a business?

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