Chapter 8:Functional, Enterprise, and Interorganizational Systems

Functional Information Systems

• Characteristics:– Comprised of several small information system

focused on specific activities– Specific IS applications can be

• completely independent, or• integrated to form a coherent departmental functional system• also, can be integrated across departmental lines to support

a broad business process (cross-departmental)

– Interface with each other to form the organization wide information system

– Interface with the environment

Functional Information Systems (continued)

• Management Information Systems– Provide routine information to managers in

the functional areasBusiness

Transactions

TPS

ManagementInformation

System

Data WarehouseDatabases

InternalExternal

Reports

ScheduledDemand

Exception

Transaction Processing Systems

• What is a transaction?– Every business event that occurs during

business operations– Business events (transactions) can trigger

other business events– Each event (transaction) can be described

by a number of data items– Transaction processing systems (TPS) are

designed to record and store the data that describes every business event that occurs

Transaction Processing Systems (continued)

• TPSs were the first to be automated – repetitive, consistent, high-volume tasks are ideal candidates for computerization

• TPSs provide foundation for all other information systems

• Many TPSs are outward-reaching and convey impressions to the customers about the quality of the business

Customer makes apurchase

POSsystem

Transaction file Updatefiles

Inventory file

Sales file

Transaction Processing System (continued)

• Some characteristics of TPSs– Process large volume of data – Data sources mostly internal, and output intended mainly for

internal audience– TPS operate regularly (on demand, daily, weekly, etc.)– Require large storage (database) capacity– Require high processing speed (due to the high volume)– Input and output data known and well-understood (highly

structured)– Involves high level of detail but low computation complexity– Requires high level of accuracy, data integrity, and security– Requires high processing reliability; organizations cannot

function for long without TPSs– Inquiry processing supported

Methods of Processing TransactionsBatch Processing: simple,

inexpensiveEmployeetimecards

Data entryof timecard

dataPayroll transactions

Processpayroll

Employee data:Pay rate

WithholdingsEtc.

Employeepaychecks

Cash on hand Payroll summary

Methods of Processing TransactionsOnline Processing: complex,

expensive

Customer makes apurchase

POSsystem

Transaction history file

Inventory file

Sales file

Methods of Processing TransactionsHybrid Processing: simple, inexpensive, more

accurateBadge reader

collects employee work data

Payroll transactions

Whenever employeesarrive / leave work

Processpayroll

Employee data:Pay rate

WithholdingsEtc.

Employeepaychecks

Cash on hand Payroll summaryNormal payroll

schedule:weekly, monthly,

etc.

TPS Today• Traditionally, TPS were implemented on

mainframe systems using batch processing• Online Transaction Processing (OLTP)

– can be built on a client/server architecture– can save money

• Internet (Intranet) Transaction Processing– allows multimedia data transfer– fast response time– storage of large databases of graphics and videos– real time– low cost

Typical TPS Tasks• Order processing• General ledger• Accounts payable and receivable• Inventory management, shipping, and

receiving• Payroll• Periodic reports and statements

Accounting and Finance Systems

• Financial Planning and Budgeting– Financial and economic forecasting– Budgeting

• Investment Management– Access to financial and economic reports– Financial analysis

• Financial Controls– Budgetary Controls– Auditing– Financial Health Analysis– Profitability Analysis and Cost Control

Accounting and Finance Systems

Marketing & Sales Systems • Distribution Channel (definition)

– providing the goods or services to the customer; may extend through various intermediaries such as wholesalers and retailers

Other Channel Systems support all marketing linkages, such as after-sales

customer support

Manufacturing

DistributionR&D/Design

Accounting/FinanceCompany

Dealer Systems

Delivery Systems

Customer Support SystemsSales Systems

Target Marketing Systems

Market Intelligence Systems

Channel Systems

Marketing & Sales Systems (continued)

• Customer Service– customer profiles and preference analysis– mass customization – high volume production of

specialized product– targeted advertising– customer inquiry systems and automated Help

Desk• Telemarketing

– advertisement and reaching customers– order processing– customer service– sales support– account management

Marketing & Sales Systems (continued)

• Distribution Channels– Delivery and shipping management– Improve retail stores

• Marketing Management– Set and monitor prices of products or services– Monitor and evaluate salesperson productivity– Evaluate profitability of products / customers– Assess sales trends– Analyze new products, services, and markets

Marketing & Sales Systems (continued)

• Ethical and Social Issues in IT-supported Sales Activities– Information collection and usage– Privacy concerns

• Current trend – Customer Relationship Management (CRM)– Focus is on developing a one-to-one relationship

with customers

Production & Operations Management Systems

• Logistics and Material Management– Logistics Management

• Ordering, purchasing, and inbound and outbound shipping

– Inventory Management• Determine how much inventory to carry

– Quality Control• Monitor and report quality of materials, work in

process, and finished goods

• Planning Production/Operations– Material Requirements Planning; MRP II– Just-In-Time – Project Management (PERT & CPM)– Short-term scheduling

• Automatic Design Work and Manufacturing– Computer Aided Design (CAD)– Computer Aided Manufacturing (CAM)– Computer Integrated Manufacturing (CIM)

Production & Operations Management Systems (continued)

Human Resources Management Systems

• Recruitment– Keep track of all open positions– Advertise positions via Internet– Employee selection

• Human Resources Maintenance and Development– Training and retraining employees– Performance assessment– Turnover, tardiness, and absenteeism analysis

Human Resources Management Systems

• Human Resources Management and Planning– Maintain personnel files and skills inventory– Administer benefits– Comply with government reporting– Personnel planning– Succession planning– Labor negotiations

Integrated Information Systems

• Reasons for Integration– Existing, functionally oriented information

systems are deficient:• cannot give employees all the information they

need• do not let different departments communicate

effectively • crucial sales, inventory, and production data

often entered manually into separate computer systems

Integrated Information Systems

• How to Integrate Information Systems– Connect existing systems

• maximize the use of existing systems and allows the addition of new applications

– Using supply chain management software• Overcomes the isolation of traditional

departmental structure by integrating processing across several functional areas

– Use Enterprise Resource Planning software• control all major business processes with a single

software architecture in real time• increased efficiency to improve quality,

productivity, and profitability

Interorganizational Information Systems (IOS)

• Electronic systems involving information flow among two or more organizations in an on-going relationship

• Objective – efficient transaction processing• Many large businesses require suppliers to be

linked to them though IOS applications• IOSs may be implemented with

– Private, third-party networks (value-added networks)

– Publicly accessible networks (Internet)

Interorganizational Systems (continued)

• Types of Interorganizational Systems– Global systems– Electronic data interchange (EDI) – Electronic funds transfer (EFT)– Extranets– Shared databases – Integrated messaging

Issues in IOS / Global IS Design

• Cultural differences• Economic and political differences• Cross-border data transfer concerns