Unit-2: Global E-Business and Collaboration

Business Processes and Information Systems

We have all heard the term process before, but what exactly does it mean? A process is a series of
tasks that are completed in order to accomplish a goal. A business process, therefore, is a process
that is focused on achieving a goal for a business. If you have worked in a business setting, you
have participated in a business process. Anything from a simple process for making a sandwich at
Subway to building a space shuttle utilizes one or more business processes.
Processes are something that businesses go through every day in order to accomplish their mission.
The better their processes, the more effective is the business. Some businesses see their processes
as a strategy for achieving competitive advantage. A process that achieves its goal in a unique way
can set a company apart. A process that eliminates costs can allow a company to lower its prices
(or retain more profit).

Types of Information Systems

In the early days of computing, each time an information system was needed it was 'tailor made' -
built as a one-off solution for a particular problem. However, it soon became apparent that many of
the problems information systems set out to solve shared certain characteristics. Consequently,
people attempted to try to build a single system that would solve a whole range of similar
problems. However, they soon realized that in order to do this, it was first necessary to be able to
define how and where the information system would be used and why it was needed. It was then
that the search for a way to classify information systems accurately began.
Information systems are classified into different types based on the way in which task and
responsibilities are divided within an organization. As most organizations are hierarchical, the way
in which the different classes of information systems are categorized tends to follow the hierarchy.
This is often described as "the pyramid model" because the way in which the systems are arranged
mirrors the nature of the tasks found at various different levels in the organization.
For example, this is a three-level pyramid model based on the type of decisions taken at different
levels in the organization.

Similarly, by changing our criteria to the different types of data / information / knowledge that
are processed at different levels in the organization, we can create a five-level model.

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While there are several different versions of the pyramid model, the most common is probably a
four-level model based on the people who use the systems.

Using the four-level pyramid model above, we can now describe how the information systems are
categorized.

1. Transaction Processing Systems (TPS)

TPS are operational-level systems at the bottom of the pyramid. They are usually operated
directly by shop floor workers or front line staff, which provide the key data required to
support the management of operations. This data is usually obtained through the automated or
semi-automated tracking of low-level activities and basic transactions.

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Functions of a TPS: TPS are ultimately little more than simple data processing systems.
Functions of a TPS in terms of data processing requirements
Inputs Processing Outputs
Validation
Sorting Lists
Transactions Listing Detail reports
Events Merging Action reports
Updating Summary reports
Calculation
Some examples of TPS: Payroll systems, Order processing systems, Reservation systems, Stock
control systems, Systems for payments and funds transfers.
The role of TPS:
Produce information for other systems
Cross boundaries (internal and external)
Used by operational personnel + supervisory levels
Efficiency oriented

2. Management Information Systems (MIS)

For historical reasons, many of the different types of Information Systems found in commercial
organizations are referred to as "Management Information Systems". However, within our
pyramid model, MIS are management-level systems that are used by middle managers to help
ensure the smooth running of the organization in the short to medium term. The highly
structured information provided by these systems allows managers to evaluate an
organization's performance by comparing current with previous outputs.
Functions of a MIS: MIS are built on the data provided by the TPS.
Functions of a MIS in terms of data processing requirements
Inputs Processing Outputs
Internal Transactions Sorting Summary reports
Internal Files Merging Action reports
Structured data Summarizing Detailed reports
Some examples of MIS: Sales management systems, Inventory control systems, Budgeting
systems, Management Reporting Systems (MRS), Personnel (HRM) systems.
The role of MIS:
Based on internal information flows
Support relatively structured decisions
Inflexible and have little analytical capacity
Used by lower and middle managerial levels
Deals with the past and present rather than the future
Efficiency oriented

3. Decision Support Systems (DSS)

A DSS can be seen as knowledge based system, used by senior managers, which facilitates the
creation of knowledge and allow its integration into the organization. These systems are often
used to analyze existing structured information and allow managers to project the potential
effects of their decisions into the future. Such systems are usually interactive and are used to
solve ill structured problems. They offer access to databases, analytical tools, allow "what if"
simulations, and may support the exchange of information within the organization.
Functions of a DSS: DSS manipulate and build upon the information from a MIS and/or TPS
to generate insights and new information.

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Functions of a DSS in terms of data processing requirements

Inputs Processing Outputs
Modelling
Internal Transactions Summary reports
Simulation
Internal Files Forecasts
Analysis
External Information Graphs / Plots
Summarizing
Some examples of DSS: Group Decision Support Systems (GDSS), Computer Supported Co-
operative work (CSCW), Logistics systems, Financial Planning systems, Spreadsheet Models.
The role of DSS:
Support ill-structured or semi-structured decisions
Have analytical and/or modelling capacity
Used by more senior managerial levels
Are concerned with predicting the future
Are effectiveness oriented

4. Executive Information Systems (EIS)

EIS are strategic-level information systems that are found at the top of the Pyramid. They help
executives and senior managers analyze the environment in which the organization operates, to
identify long-term trends, and to plan appropriate courses of action. The information in such
systems is often weakly structured and comes from both internal and external sources.
Executive Information System are designed to be operated directly by executives without the
need for intermediaries and easily tailored to the preferences of the individual using them.
Functions of an EIS: EIS organizes and presents data and information from both external data
sources and internal MIS or TPS in order to support and extend the inherent capabilities of
senior executives.
Functions of a EIS in terms of data processing requirements
Inputs Processing Outputs
External Data Summarizing Summary reports
Internal Files Simulation Forecasts
Pre-defined models "Drilling Down" Graphs / Plots
Some examples of EIS: EIS tend to be highly individualized and are often custom made for a
particular client group; however, a number of off-the-shelf EIS packages do exist and many
enterprise level systems offer a customizable EIS module.
The role of EIS:
Are concerned with ease of use
Are concerned with predicting the future
Are effectiveness oriented
Are highly flexible
Support unstructured decisions
Use internal and external data sources
Used only at the most senior management levels

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What are business processes? How are they related to information systems?
Define business processes and describe the role they play in organizations.
A business process is a logically related set of activities that define how specific business tasks are
performed. Business processes are the ways in which organizations coordinate and organize work
activities, information, and knowledge to produce their valuable products or services. How well a
business performs depends on how well its business processes are designed and coordinated. Well-
designed business processes can be a source of competitive strength for a company if it can use the
processes to innovate or perform better than its rivals. Conversely, poorly designed or executed
business processes can be a liability if they are based on outdated ways of working and impede
responsiveness or efficiency.
Describe the relationship between information systems and business processes.
Information systems automate manual business processes and make an organization more efficient.
Data and information are available to a wider range of decision-makers more quickly when
information systems are used to change the flow of information. Tasks can be performed
simultaneously rather than sequentially, speeding up the completion of business processes.
Information systems can also drive new business models that perhaps wouldn’t be possible without
the technology.

How do systems serve the various levels of management in a business?

Describe the characteristics of TPS and the roles they play in a business.
Transaction processing systems (TPS) are computerized systems that perform and record daily
routine transactions necessary in conducting business; they serve the organization’s operational
level. The principal purpose of systems at this level is to answer routine questions and to track the
flow of transactions through the organization.
• At the operational level, tasks, resources, and goals are predefined and highly structured.
• Managers need TPS to monitor the status of internal operations and the firm’s relationship with
its external environment.
• TPS are major producers of information for other types of systems.
• Transaction processing systems are often so central to a business that TPS failure for a few
hours can lead to a firm’s demise and perhaps that of other firms linked to it.
Describe the characteristics of MIS and explain how MIS differ from TPS and from DSS.
Middle management needs systems to help with monitoring, controlling, decision-making, and
administrative activities.
• MIS provide middle managers with reports on the organization’s current performance. This
information is used to monitor and control the business and predict future performance.
• MIS summarize and report the company’s basic operations using data supplied by TPS.
• The basic transaction data from TPS are compressed and usually presented in reports that are
produced on a regular schedule.
• MIS serve managers primarily interested in weekly, monthly, and yearly results, although some
MIS enable managers to drill down to see daily or hourly data if required.
• MIS generally provide answers to routine questions that have been specified in advance and
have a predefined procedure for answering them.
• MIS systems generally are not flexible and have little analytical capability.
• Most MIS use simple routines, such as summaries and comparisons, as opposed to
sophisticated mathematical models or statistical techniques.
MIS differs from TPS in that MIS deals with summarized and compressed data from the TPS.
While MIS have an internal orientation, DSS will often use data from external sources, as well as
data from TPS and MIS. DSS supports “what-if” analyses rather than a long-term structured
analysis inherent in MIS systems. MIS are generally not flexible and provide little analytical
capabilities. In contrast, DSS are designed for analytical purposes and are flexible.

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Describe the characteristics of decision support systems (DSS) and how they benefit businesses.
Decision-support systems (DSS) support non-routine decision-making for middle managers.
• DSS provide sophisticated analytical models and data analysis tools to support semi-structured
and unstructured decision-making activities.
• DSS use data from TPS, MIS, and external sources, in condensed form, allowing decision
makers to perform “what-if” analysis.
• DSS focus on problems that are unique and rapidly changing; procedures for arriving at a
solution may not be fully predefined.
• DSS are designed so that users can work with them directly; these systems include interactive,
user-friendly software.
Describe the characteristics of executive support systems (ESS) and explain how these systems
differ from DSS.
Executive support systems help senior managers address strategic issues and long-term trends,
both in the firm and in the external environment.
• ESS address non-routine decisions requiring judgment, evaluation, and insight because there is
no agreed-on procedure for arriving at a solution.
• ESS provide a generalized computing and communications capacity that can be applied to a
changing array of problems.
• ESS are designed to incorporate data about external events, such as new tax laws or
competitors, but they also draw summarized information from internal MIS and DSS.
• ESS are designed for ease-of-use and rely heavily on graphical presentations of data.

How do systems that link the enterprise improve organizational performance?

Explain how enterprise applications improve organizational performance.
An organization operates in an ever-increasing competitive and global environment. The
successful organization focuses on the efficient execution of its processes, customer service, and
speed to market. Enterprise applications provide an organization with a consolidated view of its
operations across different functions, levels, and business units. Enterprise applications allow an
organization to efficiently exchange information among its functional areas, business units,
suppliers, and customers.
Define enterprise systems, supply chain management systems, customer relationship management
systems, and knowledge management systems and describe their business benefits.
Enterprise systems integrate the key business processes of an organization into a single central
data repository. This makes it possible for information that was previously fragmented in different
systems to be shared across the firm and for different parts of the business to work more closely
together.
Business benefits include:
• Information flows seamlessly throughout an organization, improving coordination, efficiency,
and decision making.
• Gives companies the flexibility to respond rapidly to customer requests while producing and
stocking only that inventory necessary to fulfil existing orders.
• Increases customer satisfaction by improving product shipments, minimizing costs, and
improving a firm’s performance.
• Improves decision making by improving the quality of information for all levels of
management. That leads to better analyses of overall business performance, more accurate
sales and production forecasts, and higher profitability.
Supply chain management (SCM) systems help businesses better manage relationships with
their suppliers. Objective of SCM is to get the right amount of products from the companies’
source to their point of consumption with the least amount of time and with the lowest cost. SCM
provides information to help suppliers, purchasing firms, distributors, and logistics companies
share information about orders, production, inventory levels, and delivery of products and services
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so that they can source, produce, and deliver goods and services efficiently. SCM helps
organizations achieve great efficiencies by automating parts of these processes or by helping
organizations rethink and streamline these processes. SCM is important to a business because
through its efficiency it can coordinate, schedule, and control the delivery of products and services
to customers.
Business benefits include:
• Decide when and what to produce, store, and move
• Rapidly communicate orders
• Track the status of orders
• Check inventory availability and monitor inventory levels
• Reduce inventory, transportation, and warehousing costs
• Track shipments
• Plan production based on actual customer demand
• Rapidly communicate changes in product design

Customer relationship management (CRM) systems enable a business to better manage its
relationships with existing and potential customers. With the growth of the Web, potential
customers can easily comparison shop for retail and wholesale goods and even raw materials, so
treating customers better has become very important.
Business benefits include:
• CRM systems provide information to coordinate all the business processes that deal with
customers in sales, marketing, and service to optimize revenue, customer satisfaction, and
customer retention. This information helps firms identify, attract, and retain the most profitable
customers; provide better service to existing customers; and increase sales.
• CRM systems consolidate customer data from multiple sources and provide analytical tools for
answering questions such as: What is the value of a particular customer to the firm over his/her
lifetime?
• CRM tools integrate a business’s customer-related processes and consolidate customer
information from multiple communication channels, giving the customer a consolidated view
of the company.
• Detailed and accurate knowledge of customers and their preferences help firms increase the
effectiveness of their marketing campaigns and provide higher-quality customer service and
support.
Knowledge management systems (KMS) enable organizations to better manage processes for
capturing and applying knowledge and expertise. These systems collect all relevant knowledge and
experience in the firm, and make it available wherever and whenever it is needed to improve
business processes and management decisions. They also link the firm to external sources of
knowledge.
Business benefits include:
• KMS support processes for acquiring, storing, distributing, and applying knowledge, as well as
processes for creating new knowledge and integrating it into the organization.
• KMS include enterprise-wide systems for managing and distributing documents, graphics, and
other digital knowledge objects; systems for creating corporate knowledge directories of
employees with special areas of expertise; office systems for distributing knowledge and
information; and knowledge work systems to facilitate knowledge creation.
• KMS use intelligent techniques that codify knowledge and experience for use by other
members of the organization and tools for knowledge discovery that recognize patterns and
important relationships in large pools of data.
Explain how intranets and extranets help firms integrate information and business processes.
Because intranets and extranets share the same technology and software platforms as the Internet,
they are easy and inexpensive ways for companies to increase integration and expedite the flow of
information within the company (intranets alone) and with customers and suppliers (extranets).
They provide ways to distribute information and store corporate policies, programs, and data. Both
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types of nets can be customized by users and provide a single point of access to information from
several different systems. Businesses can connect the nets to transaction processing systems easily
and quickly. Interfaces between the nets and TPS, MIS, DSS, and ESS systems provide input and
output for users.

Why are systems for collaboration and teamwork so important and what technologies
do they use?
Define collaboration and teamwork and explain why they have become so important in business
today.
Collaboration is working with others to achieve shared and explicit goals. It focuses on task or
mission accomplishment and usually takes place in a business, or other organizations, and between
businesses. Collaboration can be short-lived or longer term, depending on the nature of the task
and the relationship among participants. It can be one-to-one or many-to-many.
Teamwork is part of the organization’s business structure for getting things done. Teams have a
specific mission. The members of a team need to collaborate on the accomplishment of specific
tasks and collectively achieve the team mission. Teams are often short-lived, depending on the
problems they tackle and the length of time needed to find a solution and accomplish the mission.
Collaboration and teamwork are important because:
• Changing nature of work. More jobs are becoming “interaction” jobs. These kinds of jobs
require face-to-face interaction with other employees, managers, vendors, and customers. They
require systems that allow the interaction workers to communicate, collaborate and share ideas.
• Growth of professional work. Professional jobs in the service sector require close coordination
and collaboration.
• Changing organization of the firm. Work is no longer organized in a hierarchical fashion as
much as it is now organized into groups and teams who are expected to develop their own
methods for accomplishing tasks.
• Changing scope of the firm. Work is more geographically separated than before.
• Emphasis on innovation. Innovation stems more from groups and teams than it does from a
single individual.
• Changing culture of work and business. Diverse teams produce better outputs, faster than
individuals working on their own.
List and describe the business benefits of collaboration.
The general belief is that the more a business firm is collaborative in nature, the more successful it
will be and that collaboration within and among firms is more essential than in the past. The
overall economic benefit of collaboration is significant. The business benefits of collaboration are
listed below:
• Productivity: People working together accomplish tasks faster, with fewer errors, than those
working alone.
• Quality: People can communicate errors and correct them faster when working together versus
working alone.
• Innovation: People working in groups can generate more innovative ideas than if they were
working alone.
• Customer service: People working in teams can solve customer complaints and issues faster
and more effectively versus working in isolation.
• Financial performance: Collaborative firms have superior sales, sales growth, and financial
performance.
Describe a supportive organization culture and business processes for collaboration.
Historically, organizations were built on hierarchies which did not allow much decision making,
planning, and organizing at lower levels of management or by employees. Communications were
generally vertical through management levels rather than horizontal between groups of employees.

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A collaborative culture relies on teams of employees to implement and achieve results for goals set
by senior managers. Policies, products, designs, processes, and systems are much more dependent
on teams at all levels of the organization to devise, to create, and to build. Rather than employees
being rewarded for individual results, they are rewarded based on their performance in a team. The
function of middle managers in a collaborative business culture is to build the teams, coordinate
their work, and monitor their performance. In a collaborative culture, senior management
establishes collaboration and teamwork as vital to the organization, and it actually implements
collaboration for the senior ranks of the business as well.
List and describe the various types of collaboration and communication systems.
OR
What are the systems for linking Enterprise Systems for Collaboration and Teamwork?
Below is the list of collaborative software tools. Some of the more common enterprise-wide
information systems that businesses can use to support interaction jobs include:
• Internet-based collaboration environments like Lotus Notes, Groove, and WebEx provide
online storage space for documents, team communications (separated from email), calendars,
and audio-visual tools members can use to meet face-to-face.
• Email and Instant Messaging (IM) are reliable methods for communicating whenever and
wherever around the globe.
• Cell phones and wireless handhelds give professionals and other employees an easy way to talk
with one another, with customers and vendors, and with managers. These devices have grown
exponentially in sheer numbers and in applications available.
• Social networking is no longer just “social.” Businesses are realizing the value of providing
easy ways for interaction workers to share ideas and collaborate with each other.
• Wikis are ideal tools for storing and sharing company knowledge and insights. They are often
easier to use and cheaper than more proprietary knowledge management systems. They also
provide a more dynamic and current repository of knowledge than other systems.
• Virtual worlds house online meetings, training sessions, and “lounges” where real-world
people meet, interact, and exchange ideas.
• Google Apps/Google sites allow users to quickly create online group-editable Web sites that
include calendars, text, spreadsheets, and videos for private, group, or public viewing and
editing.
• Microsoft SharePoint software makes it possible for employees to share their office documents
and collaborate on projects using office documents as the foundation.

What is the role of the information systems function in a business?

Describe how the information systems function supports a business.
The information systems department is the formal organizational unit responsible for information
technology services. The information systems department is responsible for maintaining the
hardware, software, data storage, and networks that comprise the firm’s IT infrastructure.
Compare the roles played by programmers, systems analysts, information systems managers, the
chief information officer (CIO), chief security officer (CSO), and chief knowledge officer (CKO).
• Programmers are highly trained technical specialists who write the software instructions for
computers.
• Systems analysts constitute the principal liaisons between the information systems groups and
the rest of the organization. The systems analyst’s job is to translate business problems and
requirements into information requirements and systems.
• Information systems managers lead teams of programmers and analysts, project managers,
physical facility managers, telecommunications mangers, or database specialists.
• Chief information officer (CIO) is a senior manager who oversees the use of information
technology in the firm.

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• Chief security officer (CSO) is responsible for information systems security in the firm and has
the principle responsibility for enforcing the firm’s information security policy. The CSO is
responsible for educating and training users and IS specialists about security, keeping
management aware of security threats and breakdowns, and maintaining the tools and policies
chosen to implement security.
• Chief knowledge officer (CKO) helps design programs and systems to find new sources of
knowledge or to make better use of existing knowledge in organizational and management
processes.

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