To Information Technology: Functional, Enterprise, and Interorganizational Systems

Introduction to Information
Technology
2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
Chapter 8:
Functional, Enterprise, and
Interorganizational Systems
Prepared by:
Roberta M. Roth, Ph.D.
University of Northern Iowa
Introduction to Information Technology, 2nd Edition

8-1
Chapter Preview
 In this chapter, we will study:
 The role and function of Management
Information Systems (MIS) and Transaction
Processing Systems (TPS) in organizations
 How functional information systems support
Accounting & Finance; Sales and Marketing;
Production and Operations; and Human
Resource Management
 How and why information systems should
be integrated
 The role of interorganizational systems
8-2
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
8-3
Functional Information Systems
(continued)
Management Information Systems
Provide routine information to
managers in the functional areas
Business Reports
Transactions
Management Scheduled
Information Demand
TPS System Exception
Databases
Internal Data Warehouse
External
8-4
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
8-5
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 POS
makes a system
purchase
Inventory file
Update
Transaction file
files Sales file

8-6
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
Introduction high
to Information Technology, processing reliability; organizations
2nd Edition
8-7
© 2003 Johncannot function for long without TPSs
Wiley & Sons, Inc.
Methods of Processing
Transactions
Batch Processing: simple,
inexpensive
Employee Data entry
timecards of timecardPayroll transactions
data
Employee data:
Pay rate Process Employee
Withholdings payroll paychecks
Etc.
Cash on hand Payroll summary

8-8
Transactions
Online Processing: complex,
expensive
Transaction history file

Customer
POS
makes a Inventory file
system
purchase
Sales file

8-9
Transactions
Hybrid Processing: simple, inexpensive, more
accurate
Badge reader Whenever employees
collects employee arrive / leave work
Payroll transactions
work data
Employee data: Process Employee

Pay rate payroll paychecks
Withholdings
Etc.
Normal payroll
Cash on hand Payroll summary
schedule:
weekly, monthly,
etc.
8-10
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
8-11
© 2003John Wiley & Sons, Inc.
Typical TPS Tasks
 Order processing
 General ledger
 Accounts payable and receivable
 Inventory management, shipping, and
receiving
 Payroll
 Periodic reports and statements

8-12
Accounting and Finance Systems
Financial Planning and Budgeting
Financial and economic forecasting
Budgeting
Investment Management
Access to financial and economic
reports
Financial analysis

8-13
Accounting and Finance Systems
Financial Controls
Budgetary Controls
Auditing
Financial Health Analysis
Profitability Analysis and Cost Control

8-14
Marketing & Sales Systems
 Distribution Channel (definition)
 providing the goods or services to the customer; may
extend through various intermediaries such as
wholesalers and retailers
Manufacturing R&D/Design
Company
Distribution Accounting/Finance
 Other Channel Systems
 support all marketing linkages, such as after-sales
customer support
Market Intelligence Channel Dealer Systems
Systems Systems Delivery Systems
Target Marketing
Customer Support
Systems Sales Systems Systems

8-15
(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
8-16
(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

8-17
(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

8-18
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

8-19
Production & Operations
Management Systems (continued)
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)
8-20
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

8-21
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
8-22
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

8-23
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
8-24
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)

Turban, Publicly
Rainer & Potter
accessible networks (Internet) 8-25
Interorganizational Systems
(continued)
 Types of Interorganizational
Systems
 Global systems
 Electronic data interchange (EDI)
 Electronic funds transfer (EFT)
 Extranets
 Shared databases
 Integrated messaging

8-26
Issues in IOS / Global IS Design
 Cultural differences
 Economic and political differences
 Cross-border data transfer
concerns

8-27
Chapter Summary
 Role and function of TPSs
 Role and function of MISs
 In-depth review of how Iss support
various business functional areas
 Need and methods for integrating
functional information systems
 Interorganizational and global
information systems provide great
opportunities but also great complexity

8-28

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Introduction to Information

Introduction to Information Technology, 2nd Edition

Introduction to Information Technology, 2nd Edition

Cash on hand Payroll summary

Introduction to Information Technology, 2nd Edition

Transaction history file

Introduction to Information Technology, 2nd Edition

Employee data: Process Employee

Introduction to Information Technology, 2nd Edition

Introduction to Information Technology, 2nd Edition

Introduction to Information Technology, 2nd Edition

Introduction to Information Technology, 2nd Edition

Introduction to Information Technology, 2nd Edition

Introduction to Information Technology, 2nd Edition

Introduction to Information Technology, 2nd Edition

Introduction to Information Technology, 2nd Edition

Introduction to Information Technology, 2nd Edition

Introduction to Information Technology, 2nd Edition

Introduction to Information Technology, 2nd Edition

Introduction to Information Technology, 2nd Edition

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