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
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