E-Business: Use of Information Systems

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EE--Business:Business:Use of Information SystemsUse of Information Systems

Reading:Laudon & Laudonchapter 2

Additional Reading:Brien & Marakaschapter 1

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OutlineComponents of Business

Business ProcessManaging Business and Firm HierarchiesThe Business EnvironmentThe Role of Information Systems in Business

Types of Business Information SystemsFunctional PerspectivesConstituency PerspectiveRelationship Among Systems

Systems that Span the EnterpriseEnterprise ApplicationsIntranets and ExtranetsE-Business, E-Commerce and E-Government

The Information Systems Function in BusinessThe Information Systems DepartmentOrganizing the Information Systems Function

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IS in Tupperware PartyIn 1947, Earl S. Tupper, Leominster, Massachusetts came up with the unique,

air-tight, water-tight Tupper SealTupper Seal → Kept food fresh and prevented spills

1958, Mr. Tupper was able to sell his company for approximately sixteen million dollars and retire for life

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Business ModelNew Problems for Sales ConsultantSolution → Web based Management System

Oracle Collaboration Suite & Oracle PortalImportance of IS in driving growth and profitability

IS in Tupperware Party

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IS in Tupperware Party

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Organizing BusinessBasic Business Functions

Manufacturing and productionSales and marketingFinance and accountingHuman resources

Five Business EntitiesSuppliersCustomersEmployeesInvoices/PaymentsProducts and Services

What is Business?Formal Organization → Produce products, provide service for profit

Components of Business

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Logically related set of tasks

How specific business tasks are performedThe list of tasks each employee performsOrder, Schedule of these tasks

Some process are tied to functional areaSales and marketing: Identifying customers

Some process are cross functionalFulfilling customer order

Business Process

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The Order Fulfillment Process

Complex set of stepsCoordination of Sales, Accounting, Manufacturing

Business Process

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Case Study Case Study –– Toyota as Number OneToyota as Number One

Organizations

QuestionsWhat are the basic principles of Toyota’s production system? To which areas of the organization do these principles apply?

How is TPS interconnected with the culture at Toyota? Are TPS and Toyota’s culture interdependent? Could one exist without the other?

Describe how information systems support each of the business processes described in this case

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Business and Firm HierarchiesCoordinate and Control

Four Major functions/departmentsBusiness process

HierarchySenior management

Middle management

Operational management

Knowledge workers

Data workers

Production or service workers

Each group has different need for information


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Levels in Firm


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Global Environment FactorsTechnology and scienceTechnology and scienceEconomyEconomyPoliticsPoliticsInternational changeInternational change

Immediate Environment Factors

CustomersCustomersSuppliersSuppliersCompetitorsCompetitorsRegulationsRegulationsStockholdersStockholders

Business Environment

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Why Invest in Information Systems?Operational Excellence

ProductivityEfficiencyAgility

Develop New Product and ServicesAttain Customer Intimacy and ServiceImprove Decision Making

AccuracySpeed

Promote Competitive AdvantageEnsure Survival

Business: Role of Information Systems

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Complex Situation → PCs, Hundreds of Systems

All different Systems from two PerspectiveFunctional PerspectiveConstituency Perspective

Systems from Functional PerspectiveSales and marketing systemsManufacturing and production systems Finance and accounting systemsHuman resources systems

Types of Business Information Systems

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Sales and Marketing SystemsSelling and marketing firm’s products/services

Senior ManagementMonitor trends affecting products and sales, planning for new products and services, monitor performance of competitors

Middle ManagementSupport market research, analyze marketing campaigns, pricing decisions, sales performance

Operational Management and EmployeesLocating and contacting prospective customers, process orders, provide customer service support

Systems from Functional Perspective

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ExampleSales Information System


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Manufacturing and Production SystemsProducing firm’s products/services

Senior ManagementHelp plan long-term manufacturing goals, such as technology investments and locating new plants

Middle ManagementAnalyze and monitor manufacturing and production costs and resources

Operational ManagementManage status of production tasks


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ExampleInventory System


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Finance and Accounting SystemsManaging financial assets, firm’s capitalization, and financial records

Senior ManagementEstablish long-term investment goals and provide long-range forecasts of firm’s financial performance

Middle ManagementOversee and control firm’s financial resources

Operational ManagementTrack flow of funds in firm through transactions (paychecks, payments, securities reports, receipts, etc.)


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ExampleAn Accounts Receivable System


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Human Resources SystemsAttracting, developing, maintaining firm’s workforce

Senior ManagementIdentify manpower requirements (skill, education level, types and numbers of positions, etc.) for meeting long-term business plans

Middle ManagementMonitor and analyze recruitment, allocation, and compensation of employees

Operational ManagementTrack recruitment and placement of employees


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ExampleAn Employee Record Keeping System


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GoogleGoogle’’s New Search for Best and the Brightests New Search for Best and the Brightest

Case Study

QuestionsDid GoogleDid Google’’s traditional hiring practices create business s traditional hiring practices create business problems?problems?

Is GoogleIs Google’’s quantitative approach to hiring a good solution s quantitative approach to hiring a good solution to its employee recruiting problems? Why or why not?to its employee recruiting problems? Why or why not?

What role does culture play in GoogleWhat role does culture play in Google’’s hiring preferences?s hiring preferences?

What kind of system or systems described in this chapter What kind of system or systems described in this chapter are discussed in this case? What are the inputs, process, are discussed in this case? What are the inputs, process, and outputs?and outputs?

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GoogleGoogle’’s New Search for Best and the Brightests New Search for Best and the Brightest

Case Study

QuestionsCreate a list of ten questions that you think might be Create a list of ten questions that you think might be appropriate for Googleappropriate for Google’’s job applicant survey. Justify s job applicant survey. Justify each question with a short explanation of why the each question with a short explanation of why the answer would be useful.answer would be useful.

If you were applying for a job at Google, how would If you were applying for a job at Google, how would you want to be evaluated? Which evaluation you want to be evaluated? Which evaluation techniques do you think favor your strengths? Which techniques do you think favor your strengths? Which techniques might expose your weaknesses?techniques might expose your weaknesses?

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Constituency Transaction Processing Systems

Keep track of basic activities and transactions of organization (e.g. sales, receipts, cash deposits, payroll, credit decisions,flow of materials in a factory))

Management Information Systems and Decision-Support Systems

Help with monitoring, controlling, decision-making, and administrative activities

Executive Support SystemsHelp address strategic issues and long-term trends, both in firm and in external environment

Systems from Constituency Perspective

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Transaction Processing Systems

Serve Operational ManagersAnswer Routine QuestionsTrack flow of Transactions

Monitor Status of Internal Operation and External Environment

Major Producer of Information for Other Systems

Highly Central to Business Operations and Functioning


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Management Information SystemsMiddle Managers Report on firm’s Performance

MonitorHelp Predict Future Performance

Summarize and Report on Basic Operations (using Data from TPS)

Weekly, Monthly, Annual ResultsDaily or Hourly if Required

Generally not Very Flexible with Limited Analytic Capability


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ExampleHow MIS Obtain Data from TPS


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ExampleSample MIS Report


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Decision Support Systems

Support Non-Routine Decision Making for Middle Management

Impact of Production Schedule if Sales is Doubled in December?

Use of Information fromTPSMISExternal Sources

Product price of competitors, Stock prices, etc.

DSS → Business Intelligence Systems


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Decision Support SystemsVoyage-Estimating Decision Support System


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Executive Support SystemsSupport Senior Managers,Senior Managers, Non-Routine Decisions Requiring Judgment, Evaluation, Insight (why?)

Products should we make in 5 years?Long term Industry cost trends?Employment levels in 5 years?

Generalized computing capacity that can be applied to changing array of problems

Draw summarized information from MIS, DSS and data from external events (e.g. new tax laws)

Portal with Web interface to present content


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Executive Support SystemsTypical Model of ESS


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Relationship of System to One AnotherTPS: Major source of data for other systemsESS: Primarily receives data from lower-level systemsOther systems may exchange data as wellIn most organizations, systems are loosely integrated


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Enterprise ApplicationsSo many different systems, maintenance

Automate process for multiple business functions and organizational areas

Enterprise systemsSupply chain management systems Customer relationship management systemsKnowledge management systems

Systems that Span Enterprise

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Enterprise Applications


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Enterprise SystemsWhy Needed?Integrate data from key business processesSingle central data repository Speed communication of information throughout firmEnable greater flexibility in responding to customer requests, greater accuracy in order fulfillmentEnable managers of large firms to assemble overall view of operations Alcoa used ERP to eliminate redundancies and inefficiencies in its disparate systems on firm’s Performance


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Enterprise Systems


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Supply Chain Management System

Manage relationships with suppliers, purchasing firms, distributors, and logistics companies

Manage shared information about orders, production, inventory levels, etc.

Goal is to move correct amountcorrect amount of product from source to point of consumption quicklyquickly and at lowest costlowest cost

Type of inter-organizational systemAutomating flow of information across organizational boundaries


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Customer Relationship Management SystemManages relationships with customers

Coordinate all business processes that deal with customers to optimize revenueoptimize revenue and customer customer satisfactionsatisfaction, and increase salesincrease sales

Combine sales, marketing, and servicesales, marketing, and service record data from multiple communication channels to provide unified view of customer, eliminate duplicate effortseliminate duplicate efforts

Example → Saab CRM applications to achieve 360ºview of customers resulted in greater follow-up rate on sales leads and increased customer satisfaction


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Knowledge Management SystemIntangible knowledge assets

Knowledge about producing and delivering productsSource of value and advantage for firms

Knowledge management systemsHelp capture, storage, distribute, and apply knowledge so that it can be leveraged for strategic benefit

Include systems forManaging and distributing documents, graphics, other digital knowledge objectsCreating knowledge directories of employees with specialized expertiseDistributing knowledge


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Intranets and ExtranetsCompanies that do not have resourcesdo not have resources to invest in Enterprise applications Technology platforms that increase integration and expedite the flow of informationIntranets

Internal distribution of information to employeesInternal networks based on Internet standardsTypically utilize a portal

ExtranetsIntranets extended for authorized use outside the company for partners, customersFacilitate collaboration

Information Integration

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Collaboration and Communication SystemsInteraction jobs

Primary value-adding activities are talking, e-mailing, presenting, persuading41% of U.S. labor force70% of new jobs since 1998

Enterprise-wide information system solutionsInternet-based collaboration environmentsE-mail and instant messaging (IM)Cell phones and wireless handheldsSocial networkingWikisVirtual worlds

Interaction in Global Economy

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E-BusinessUse of digital technology and Internet to drive major business processes

E-CommerceSubset of e-businessBuying and selling goods and services through InternetAdvertising, Marketing, Transactions, Security, Delivery, Payment, Customer Support

E-GovernmentUsing Internet technology to deliver information and services tocitizens, employees, and businessesOperational Efficiency ↑, Example → Online IRD Tax Payment

Interaction in Global Economy

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Programmers

System AnalystsPrinciple liaisons to rest of firm

Information Systems ManagersLeaders of teams of programmers and analysts, project managers, physical facility managers, telecom managers, database specialists, managers of computer operations and data entry staff

Senior Managers: CIO, CSO, CKOCIO → Strong Business & IS Background, Oversee use of IS/TCISO → Enforce information security policy, Breakdowns, ThreatsCKO → Knowledge Management, Design Programs/Systems; CPO

End Users (outside IS group)

Information System Department

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ServicesComputing and telecommunications servicesData management servicesApplication software servicesPhysical facilities management servicesIT management servicesIT standards servicesIT educational servicesIT research and development services

Information System Department

Documents

E-Business: Use of Information Systems