Chapter 1

Information
Systems in the
Enterprise

2.1
 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Types of Information Systems

2.2 Figure 2-1

 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Different Kinds of Systems

Three main categories of information systems serve
different organizational levels:

1. Operational-level systems: support operational managers,

keeping track of the elementary activities and
transactions

2. Management-level systems: serve the monitoring,

controlling, decision-making, and administrative activities

3. Strategic-level systems: help senior management tackle

and address strategic issues

2.3
 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Major Types of Systems

• Transaction Processing Systems (TPS)

• Management Information Systems (MIS)

• Decision-Support Systems (DSS)

• Executive Support Systems (ESS)

2.4
 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

The Four Major Types of Information Systems

2.5 Figure 2-2

 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Transaction Processing Systems (TPS)

• Basic business systems that serve the

operational level

• A computerized system that performs and

records the daily routine transactions necessary
to the conduct of the business

2.6
 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Management Information Systems (MIS)

Management level

• Inputs: High volume transaction level data

• Processing: Simple models

• Outputs: Summary reports

• Users: Middle managers

Example: Annual budgeting

2.7
 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Management Information Systems (MIS) (continued)

2.8 Figure 2-5

 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Management Information Systems (MIS) (continued)

A sample MIS report

2.9 Figure 2-6

 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Decision-Support Systems (DSS)

Management level

• Inputs: Transaction level data

• Processing: Interactive

• Outputs: Decision analysis

• Users: Professionals, staff

Example: Contract cost analysis

2.10
 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Decision-Support Systems (DSS) (Continued)

Voyage-estimating decision-support system

2.11 Figure 2-7

 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

EXECUTIVE SUPPORT SYSTEMS (ESS):

• Inputs: Aggregate data

• Processing: Interactive

• Outputs: Projections

• Users: Senior managers

Example: 5 year operating plan

2.12
 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued)

• Top Level Management

• Designed to the individual senior manager

• Ties CEO to all levels

• Very expensive to keep up

• Extensive support staff

2.13
 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Relationship of Systems to One Another

Interrelationships among systems

2.14 Figure 2-9

 MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Relationship of Systems to One Another

In contemporary digital firms, the different types of

systems are closely linked to one another. This is
the ideal. In traditional firms these systems tend to
be isolated from one another, and information does
not flow seamlessly from one end of the organization
to the other. Efficiency and business value tend to
suffer greatly in these traditional firms

2.15
 SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Overview of an Inventory System

2.16 Figure 2-10

 SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Human Resource Systems (Continued) An Employee Recordkeeping System

2.17 Figure 2-11

 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

Business Processes and Information Systems

Business processes:
• Manner in which work is organized, coordinated,
and focused to produce a valuable product or
service
• Concrete work flows of material, information, and
knowledge—sets of activities
• Unique ways to coordinate work, information, and
knowledge
• Ways in which management chooses to
coordinate work
2.18
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

Business Processes and Information Systems

(Continued)

• Information systems help organizations

achieve great efficiencies by automating parts
of processes

• IS also contributes to completely rethinking

processes.

• Business processes typically span several

different functional areas.

2.19
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

Business Processes and Information Systems

Cross-Functional Business Processes:

• Transcend boundary between sales, marketing,

manufacturing, and research and development

• Group employees from different functional

specialties to a complete piece of work

Example: Order Fulfillment Process

2.20
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

The Order Fulfillment Process

2.21 Figure 2-12

 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

Systems for Enterprise-Wide Process Integration

Enterprise applications:
• Designed to support organization-wide process
coordination and integration

2.22
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

Systems for Enterprise-Wide Process Integration

(Continued)
Consist of :
• Enterprise systems
• Supply chain management systems
• Customer relationship management systems
• Knowledge management systems

2.23
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

Enterprise Systems

• Enterprise systems, also known as enterprise

resource planning (ERP) systems, provide a
single information system for organization-wide
coordination and integration of key business
processes.

• Information that was previously fragmented in

different systems can seamlessly flow
throughout the firm so that it can be shared by
business processes in manufacturing,
accounting, human resources, and other areas.
2.24
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

Enterprise Application Architecture

2.25 Figure 2-13

 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

Traditional “Silo” View of Information Systems

Within the business:

• There are functions, each having its uses of
information systems

Outside the organization’s boundaries:

• There are customers and vendors

Functions tend to work in isolation

2.26
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

Traditional View of Systems

2.27 Figure 2-14

 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

Enterprise Systems

2.28 Figure 2-15

 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

Benefits of Enterprise Systems

• Help to unify the firm’s structure and

organization: One organization

• Management: Firm wide knowledge-based

management processes

• Technology: Unified platform

• Business: More efficient operations & customer-

driven business processes
2.29
 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:
Introduction to Enterprise Applications

Challenges of Enterprise Systems

• Difficult to build: Require fundamental changes in

the way the business operates

• Technology: Require complex pieces of software

and large investments of time, money, and
expertise

• Centralized organizational coordination and

decision making: Not the best way for the firms to
operate
2.30