MANAGEMENT INFORMATION SYSTEM Business Processes

MIDTERMS – LM4A
- Manner in which work is organized,
INFORMATION SYSTEM IN THE ENTERPRISE coordinated and focused to produce a
valuable product or service.
Information systems help organizations achieve
- A set of activities such as concrete work
great efficiencies by automating parts of
flow of materials, information and
processes and rethink streamline processes.
knowledge.
- Ways to coordinate work

e.g.
manufacturing and production
sales and marketing
finance and accounting
human resources

CROSS-FUNCTIONAL BUSINESS PROCESSES

Transcend boundary between sales, marketing,

Challenges: manufacturing, research and development. It
groups employees from different functional
1. Integration: systems serve a variety of specialties to a complete piece of work.
functions and connecting organizational Applications: 1) enterprise systems 2) Enterprise
level is difficult and costly. Resource Planning (ERP) 3) Supply Chain
2. Enlarged scope of management thinking: Management (SCM) System 4) Customer
huge system investment, long Relationship Management (CRM) System 5)
development time must be guided by Knowledge Management System (KMS)
common objective.
TRADITIONAL VIEW:
Within business: functions and their uses of
information systems.
ENTERPRISE APPLICATION
Outside the organization’s boundaries: there are
customers and suppliers.

“Island of Automation” means different systems

were created independently or loosely.
1970s – vision to have an integrated IS but can’t…
- Capacity of computers
- Programming languages are not flexible
- Organizations were contented to manage
narrow functional lines

1990s – IS communities started developing

integrated systems; redevelopment of core
transaction systems for client/server
architecture…
… but it was too expensive and highly failure 4) Some assembly required: the software is
prone what’s integrated not the computing
… packages as an alternative to in-house platform where it runs; difficulty in
development became an appealing option integrating.
… packages got a huge boost 5) Evolving: rapid architectural change;
1998 – many implemented ERPS. 1980s- designed for mainframe
architecture. Now- designed for client-
server architecture and having a web-
ENTERPRISE SYSTEM
enabled versions of software.
Software package that enables the integration of
TECHNICAL REASONS
transactions-oriented data and business
processes throughout an organization (and  Integrate applications cross-functionally
perhaps eventually throughout the entire  Replace hard to maintain interfaces
interorganizational supply chain)  Reduces software maintenance burden
through outsourcing
ENTERPRISE-WIDE INFORMATION SYSTEM /
ENTERPRISE INTEGRATED SYSTEM  Eliminate redundant data entry and
concomitant errors
ES provide a technology platform that enables  Difficulty analyzing data
firm to integrate and coordinate their business
 Improved IT architecture
processes. A single system that is central to the
 Ease technology capacity constraints
firm and ensure that information can be shared
across all functional levels and management  Decreased computer operating costs
hierarchies. Also invaluable in eliminating the  Consolidate multiple different systems of
problem of information fragmentation caused by the same type
multiple transformation systems in an
organization, by creating a standard data BUSINESS REASONS
structure.
 Accommodate business growth
CHARACTERISTICS OF ENTERPRISE SYSTEM (ES)  Improve informal and inefficient business
processes
1) Integration: “seamless integration” of all
 Clean up data and records through
the information flowing through a
standardization
company; integration depends on
 Reduce business operating costs and stock
configuring (setting up) the system in
outs
particular ways.
 Eliminate delays and errors in filling
2) Packages: purchased or leased from a
customer orders
software vendor; configuring is different
 Provide integrated IT support
from programming. Configuring is
 Standardize procedures
selecting a module of the package while
 Improve company-wide decision support
programming is more of creating new
software functionality. VALUE CHAIN
3) Best practices: built to support generic
I. Primary activities – are functional areas
businesses processes which may differ
within an organization that process inputs
from the way the firm does business but
and produce outputs. E.g. inbound
they are designed to fit the needs of the
logistics operations and manufacturing,
organization.
outbound logistics, marketing and sales,
customer service.
 II. Support activities – activities that enable Enterprise Resource Planning are integrated
primary activities to take place. applications or group of software applications
 Infrastructure – hardware and integrated to form enterprise-wide information
software systems that allows the corporate management
 Human resource – hiring, of a business, and aims to integrate the individual
interview, scheduling, payroll, functional system such as manufacturing, finance,
benefits procurement and distribution. It also allows
 Technology development – companies to replace their existing ISs and also
software selection, internet, help to standardize the flow of management
intranet, extranet information and have been regarded as the next
 Procurement – purchasing of step in the evolution MRPII (Manufacturing
goods and services required as Resource Planning)
inputs primary service
BENEFITS OF ERP
BENEFITS OF ES:
 Business process automation
 Firm structure and organization: one  Timely access to management information
organization  Improvement in the supply chain via the
 Management: firm-wide knowledge-based use of e-communication and e-commerce
management processes  Companies that use ERP can gain
 Technology: unified platform competitive advantage from the way they
 Business: more efficient operations and implement the system and then exploit
customer-driven business processes the resulting data.

THIRD-PARTY MODULES
CHALLENGES OF ES:
1. Customer Relationship Management
 Difficult to build: require fundamental (CRM)
changes in the way the business operates 2. Customer Self-Service (CSS)
 Technology: require complex pieces of 3. Sales Force Automation (SFA)
software and large investments of time, 4. Supply Chain Management (SCM)
money and expertise. 5. Product Lifecycle Management (PLM)
 Centralized organizational coordination
ERP Implementation
and decision: not the best way for the
 When it is successfully implemented, it
firms to operate.
links all areas of the company into a tightly
TYPES OF ES: integrated system with shared data and
visibility.
 PACKAGED APPLICATIONS
 Potential benefit includes drastic declines
 CUSTOM APPLICATIONS in inventory, breakthrough reductions in
 STAND ALONE APPLICATIONS working capital, abundant information
about customer wants and needs along
with the ability to view and manage the
ENTERPRISE RESOURCE PLANNING (ERP) extended enterprise of suppliers, alliances
and customers as an integrated whole.
It aims to integrate business through the support
of an integrated computer information system. It  Assessment for readiness of an
has been estimated that business around the organization regarding ERP
world have been spending almost $10 billion per
year on ERP systems.  Organization has to be organized before
implementing
  The key factor is the way in which the SCM supply network or management of a
software is configured network of interconnected businesses involved in
 The most important issue to identity a provision of product and service packages
before implementation is the “core” of the required by the end customers in a supply chain.
business which can be identified by the It is also a close linkage and coordination of
use of the business model activities involved in buying, making, and moving
a product.
Why companies use ERP?
It integrates supplier, manufacturer, distributor
o Integrate financial information
and customer logistics time. It reduces time,
o Integrate customer order information redundant effort and inventory cost. SCM also
o Standardize and speed up manufacturing helps in procurement of materials, transformation
processes of raw materials into intermediate and finished
o Reduce inventory product.
o Standardize HR information Supply Chain – the producers of supplies that a
company uses.
ENTERPRISE RESOURCE MANAGEMENT (ERM)
 It manages all ways used by firms to deal
with existing and potential new Objectives:
customers.
 Accelerate product development
 Uses information system to coordinate
 Reduce costs associated with suppliers
entire business processes as a firm
 Provides end-to-end customer care
Limitations:
 Provides a unified view of customer across
the company  Inefficiencies can waste as much as 25% of
company’s operating cost
 Consolidates customer data from multiple
sources and provides analytical tools for  Bullwhip effect: information about the
answering questions demand for the product gets distorted as
it passes from one entity to next

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

CRM manages the company’s interactions with

current and future customers. It involves using
technology to organize, automate and
synchronize sales, marketing, customer service
and technical support.
TYPES & VARIATIONS:
 Sales Force Automation (SFA)
SCM helps in distribution of the finished products
 Marketing – track and measure campaigns to customers. It includes reverse logistics that
over multiple channels returned items flow in the reversed direction
 Customer Service and Support – create, from the buyer back to the seller.
assign and manage customer requests
 Appointments – provide suitable
appointment time for customers

SUPPLY CHAIN MANAGEMENT

HOW INFORMATION SYSTEM FACILITATE SCM?
 - Decides when, what to produce, store and Vertical Information Interchange – output of an
move organization is used in the processes of another
- Rapidly communicate orders organization.
- Communicate orders and track order
Electronic Data Interchange – it is a type of an
status
interorganizational information system that utilize
- Check inventory availability and monitor telecommunications to exchange data. It is also a
levels
set of hardware, software and standard that
- Track shipments accommodates data interorganizational
- Plan production based on actual demand exchange. It has been used in some industries
- Rapidly communicate product design over the past 3 decades.
change
THE FORMULA FOR SUCCESSFUL ES:
- Provide product specification
o Secure executive sponsorship
- Share information about defect rates and
returns o Get help from outside experts
o Thoroughly train users
Supply Chain Planning System o Take a multidisciplinary approach to
Enables firm to generate forecasts for a product implementation
and to develop sourcing and a manufacturing plan
for the product. INFORMATION SYSTEM AND ORGANIZATION
Supply Chain Execution System
Primary uses of IS:
Manages the flow of products through
distribution centers and warehouses. 1. Providing support to complete the task
faster, cheaper, and perhaps with greater
accuracy and consistency (automation).
KNOWLEDGE MANAGEMENT SYSTEM (KMS) 2. Providing support to improve day-to-day
 Creating knowledge operations by creating, acquiring and
transferring knowledge.
 Discovering and codifying knowledge
 Sharing knowledge 3. Providing support in a way that enables
the firm to gain or sustain competitive
 Distributing knowledge
advantage over rivals.
Interorganizational System (IOS) – systems
shared by two or more organizations to transfer Styles of processing:
data electronically. Its key purpose is to 1. Manual Processing
streamline the flow of information from one
2. Technology-supported processing
company’s operation to another. It also provides
electronic transmission of information to another 3. Fully-automated processing
company.
ORGANIZATIONAL LEARNING (INFORMATING)
Competitive advantage can be accomplished by
integrating multiple business processes to meet a  DOING THINGS BETTER
wide range of unique customer needs. Sharing  Providing support to improve day-to-day
information between organization also helps operations by creating, acquiring and
companies to adapt more quickly to changing transferring knowledge
market conditions.  Provides information needed for decision-
making and organizational learning.
SUPPORTING STRATEGY (STRATEGIZING) Organization is the collection of rights, privileges,
obligations and responsibilities that is delicately
 DOING THINGS SMARTER balanced over a period of time through conflict
 Providing support in a way that enables and conflict resolution. A bureaucracy with clear-
the firm to gain or sustain competitive out divisions of labor and specialization. Arranges
advantage over rivals. specialists in a hierarchy of authority in which
 IS supports… decision-making, planning everyone is accountable to someone and
authority is limited to specific actions governed by
and strategic decision-making.
abstract rules and procedures. These rules create
a system of impartial and universal decision-
making. Organizations will hire and promote
INFORMATION SYSTEM VS ORGANIZATION
employees on the basis of technical qualification
IS must align with the existing structure but also and professionalism, not personal connection.
that organizations should be ready to adapt to
fully leverage IS improvements. In essence, an
Principle of Efficiency – maximizing output using
effective IS supports organizational objectives,
limited inputs.
and adaptability enables organizations to
maximize IS benefits. FEATURES OF ORGANIZATION

Similarity: a) Business Processes – consist of routines

 Require inputs such as precise rules, procedures and
practices that have been developed, in
- IS needs data as main ingredient order to produce goods and services.
- Organization rely on people b) Organizational Politics - People occupy
- But both are structured method of different positions with different
turning raw products into a useful specialties, concerns, and perspectives.
one. There may be different perspectives about
 Have some processing how resources, rewards, and punishments
results in political struggle for resources,
 Have outputs competition, and conflict. Political
 Both depend of feedback for a successful resistance is one of the great difficulties of
completion of the cycle bringing about organizational change.
Organizational politics affect the way IS
implemented
As a manager, you must decide…
c) Organizational Culture - All organizations
- Which system will be built have bedrock, unassailable, unquestioned
- What systems will do assumptions that define their goals and
- How systems are implemented products. It encompasses set of
assumptions about their product, what
products the organization should produce,
WHAT IS ORGANIZATION? how it should produce them, where and
for whom.
It is a stable, formal social structure that takes
It is a powerful unifying force that
resources from the environment and processes
restrains political conflict and promotes
them to produce outputs. These are formal legal
common understanding, agreement on
entities with internal rules and procedures that
procedures, and common practices.
must abide by the laws.
d) Organizational Environment –
Social structure because they are a collection of
organizations reside in environment from
social elements. And more stable than informal
which they draw resources and to which
groups because there is a goal and forms a legal
they supply goods and services. They must
basis.
respond to government requirements and
actions of customers and competitors, on
 the other hand, it must influence the II. ORGANIZATIONAL AND BEHAVIORAL
environment. Organizations and IMPACTS
environments have a reciprocal Behavioral researchers have theorized
relationship. Organizations are open to, that IT facilitates flattening of hierarchies
and dependent on, the social and physical by broadening the distribution of
environment that surrounds them. information to empower lower-level
Information technology plays a critical role employees and increase management
in helping organizations perceive efficiency.
environmental change and in helping
organizations act on their environment.
Information systems are key instruments IMPLICATIONS FOR THE DESIGN AND
for environmental scanning. UNDERSTANDING OF INFORMATION SYSTEMS

FACTORS TO CONSIDER WHEN PLANNING A NEW

SYSTEM
ORGANIZATIONAL STRUCTURES
o Environment in which the organization
Types: must function
 Entrepreneurial structure (small start-up o Structure of the organization: hierarchy,
business) specialization, routines, and business
 Machine bureaucracy (midsize processes
manufacturing firm) o Organization’s culture and politics
 Divisionalized bureaucracy (one firm with
o Type of organization and its style of
different midsized firm) leadership
 Professional bureaucracy (law firms,
o Principal interest groups affected by the
schools and hospitals)
system and the attitudes of workers who
 Adhocracy (consulting firms) will be using the system
o Kinds of tasks, decisions, and business
processes that the information system is
IMPACT OF IS IN ORGANIZATION AND BUSINESS designed to assist
FIRM
Information systems are integral, online,
interactive tools involved in the minute-to-minute
operations and decision making of most
organizations. Gives Economic Impact,
Organizational and behavioral impacts.

I. ECONOMIC IMPACT
IT changes both the relative costs of
capital and the costs of information. ISs
can be viewed as a factor of production
that can be substituted for traditional
capital and labor.
I.T.’s goal is to reduce cost in order for the
organization to grow. Thru: fast processing
of data, information is easily produced,
analyze and distributed.