McLeod CH08

Management
Information Systems,
Raymond McLeod
10/eand George
Schell
2007 by Prentice Hall
Management Information Systems, 10/e R

aymond McLeod and George Schell
Chapter 8
Information in Action
2007 by Prentice Hall
Management Information Systems, 10/e R

aymond McLeod and George Schell
Learning Objectives
Know that a firms ability to develop effective

information systems can be a key factor in its success.
Recognize that the transaction processing system
processes describes the firms basic daily operations.
Be familiar with the processes performed by a
transaction processing system for a distribution firm.
Recognize that organizational information systems
have been developed for business areas &
organizational levels.
Be familiar with architectures of marketing, human
resources, manufacturing, & financial information
systems.
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Management Information S
ystems, 10/e Raymond Mc
Learning Objectives (Contd)
Know the architecture of an executive information system.

Understand what customer relationship management is &
why is requires a large computer storage capability.
Recognize how a data warehouse differs from a database.
Understand the architecture of a data warehouse system.
Know how data are stored in a data warehouse data
repository.
Know how a user navigates through the data repository.
Know what on-line analytical processing (OLAP) is.
Know the two basic ways to engage in data mining.
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Information as a Critical Success

Factor
Critical
success factor (CSF) was coined by

Ronald Daniel to identify a few key activities
that spell success or failure for any type of
organization.
Transaction processing system (TPS) is the
information system that gathers data
describing the firms activities, transforms the
data into information, & makes the information
available to users both inside & outside the
firm.
1st business application to be installed on computers.

Also
electronic data processing (EDP) system &

accounting information system .
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Figure 8.1 Model of a TPS
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System Overview
Distribution
system is a TPS used by

distribution firms.
Distribution firms distribute products or
services to their customers.
We will use data flow diagrams, or
DFDs, to document the system.
Figure 8.2 represents the highest level.
Figure 8.3 identifies the three major
subsystems.
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Figure 8.2 Context Diagram of

Distribution System
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Figure 8.3 Figure 0 Diagram of

Distribution System
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Major Subsystems of
Distribution System
Systems
that fill customer orders.
Systems
that order replenishment stock.
Order entry system enters customer orders into

the system.
Inventory system maintains the inventory
records.
Billing system prepares the customer invoices.
Accounts receivable system collects the money
from the customers.
Purchasing system issues purchase orders to
suppliers for needed stock.
Receiving system receives the stock.
Accounts payable system makes payments.
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Systems that Fills Customers
Orders
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Systems that Order
Replenishment Stock
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Major Subsystems of
Distribution System (Contd)
Systems
that perform general ledger processes.
General ledger system is the accounting system

that combines data from other accounting systems
for the purpose of presenting a composite financial
picture of the firms operations.
General ledger is the file that contains the
combined accounting data.
Updated general ledger system posts records
that describe various actions & transactions to the
general ledger.
Prepare management reports system uses the
contents of the general ledger to prepare the
balance sheet, income statement, & other reports.
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Systems that Perform General
Ledger Processes
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Organizational Information
Systems
Organizational
information systems
are developed to meet the needs for
information relating to those particular
parts of the organization.
Marketing information system
(MKIS) provides information that relates
to the firms marketing activities.
Consists of a combination of input & output
subsystems connected by a database.
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Figure 8.7 Model of MKIS
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MKIS
Output subsystems provide information about

critical elements in marketing mix.
Marketing mix consists of 4 main ingredients that
management manages in order to meet customers
needs at a profit.
Product subsystem provides information about the firms

products.
Place subsystem provides information about the firms
distribution network.
Promotion subsystem provides information about the
firms advertising & personal selling activities.
Price subsystem helps the manager make pricing decisions.
Integrated-mix subsystem enables the manager to
develop strategies that consider the combined effects of the
ingredients.
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MKIS (Contd)
Database
is populated with data from the

three MKIS input subsystems.
Input subsystems
Transaction processing system gathers data

from both internal & environmental sources & enters
the data into the database.
Marketing research subsystem gathers internal
& environmental data by conducting special studies.
Marketing intelligence subsystem gathers
environmental data that serves to keep
management informed of activities of the firms
competitors & customers & other elements that can
influence marketing operations.
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Other Organizational
Information System
Human
Resources information system

(HRIS) provides information to managers
throughout the firm concerning the firms
human resources.
Manufacturing information system
provides information to managers throughout
the firm concerning the firms manufacturing
operations.
Financial information system provides
information to managers throughout the firm
concerning the firms financial activities.
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Figure 8.8 Model of HRIS
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Figure 8.9 Model of

Manufacturing Information
System
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Figure 8.10 Model of Financial

Information System
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Executive Information
System
Executive
information system (EIS) is a

system that provides information to upperlevel managers on the overall performance
of the firm; also called Executive support
system (ESS).
Drill-down capability allows for executives
to bring up a summary display & then
successively display lower levels of detail
until executives are satisfied that they have
obtained as much detail as is necessary.
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Figure 8.11 An EIS Model
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Figure 8.12 Drill-down

Technique
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Customer Relationship
Management
Customer
relationship management
(CRM) is the management of the relationships
between the firm & its customers so that both
the firm & its customers receive maximum
value from the relationship.
CRM system accumulates customer data over
a long term 5 years, 10 years, or more - &
uses that data to produce information for
users.
Uses a data warehouse.
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Data Warehousing
Data
warehouse describes data storage that

has the following characteristics:
Storage capacity is very large.
Data are accumulated by adding new records, as
opposed to being kept current by updating existing
records with new information.
Date are easily retrievable.
Date are used solely for decision making, not for use
in the firms daily operations.
Data
mart is a database that contains data

describing only a segment of the firms
operations.
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Data Warehousing System

Data
warehousing is the creation & use

of a data warehouse or data mart.
Primary data sources are TPS & data
obtained from other sources, both
internal & environmental; any data
identified as having potential value in
decision making.
Staging area is where the data
undergoes extraction, transformation, &
loading (abbrev. as ETL process)
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Data Warehousing System

(Contd)
Extraction
process combines data from the

various sources.
Transformation process cleans the data, puts it
into standardized format, & prepares summaries.
Data stored in both detail & summary form.
Loading
process involves the entry of the data

into the data warehouse repository.
Metadata
Data about data.
Data that describes the data in the data repository.
Tracks data as it flows through the data warehouse
system.
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Figure 8.13 Model of Data

Warehousing System
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Storing Data in the Warehouse

Data Repository
Dimension
tables store the identifying &

descriptive data.
Dimension provides the basis for viewing the
data from various perspectives or dimensions.
Fact
tables are separate tables containing

the quantitative measures of an entity.
Combined with dimension table data, various
analyses can be prepared.
Users can request information that involves any
combination of the dimensions & facts.
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Figure 8.14 Simple Dimension

Table
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Figure 8.15 Sample Fact Table
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Storing Data (Contd)

Information
package identifies all of the

dimensions that will be used in analyzing a
particular activity.
Star schema - for each dimension, a key
identifies the dimension & provides the link to
the information package which results in a
structure that is similar to the pattern of a star.
The warehouse data repository contains multiple
star schemas, one for each type of activity to be
analyzed.
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Figure 8.16 Information Package

Format
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Figure 8.17 Sample Information

Package
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Figure 8.18 Star Schema

Format
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Figure 8.19 A Sample Star

Schema
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Information Delivery
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Figure 8.20 Navigating the

Warehouse Data Repository
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Figure 8.21 Drilling Across

Hierarchies Produces Multiple
Views
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OLAP
On-line analytical processing (OLAP) enables the

user to communicate with the data warehouse either
through a GUI or a Web interface & quickly produce
information in a variety of forms, including graphics.
Relational OLAP (ROLAP) uses a standard relational
database management system.
ROLAP data exists in detailed form.

Analyses must be performed to produce summaries.
Constrained to a limited number of dimensions.
Multidimensional OLAP (MOLAP) uses a special

multidimensional database management system.
MOLAP data are preprocessed to produce summaries at the

various levels of detail & arranged by the various dimensions.
Faster summary ability, can use many dimensions 10 or
more.
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Figure 8.22 ROLAP & MOLAP

Architectures
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Figure 8.23 Example Report

Produced with ROLAP
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Figure 8.24 Example Report

Produced with MOLAP
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Data Mining
Data
mining is the process of finding

relationships in data that are unknown to the
user.
Hypothesis verification begins with the users
hypothesis of how data are related.
Retrieval process guided entirely by user.
Selected information can be no better than users
understanding of the data.
Traditional way to query a database.
Knowledge
discovery is when the data

warehousing system analyzes the warehouse
data repository, looking for groups with common
characteristics.
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Management

2007 by Prentice Hall

Management Information Systems, 10/e R

2007 by Prentice Hall

Management Information Systems, 10/e R

Know that a firms ability to develop effective

Learning Objectives (Contd)

Know the architecture of an executive information system.

Information as a Critical Success

success factor (CSF) was coined by

1st business application to be installed on computers.

electronic data processing (EDP) system &

Figure 8.1 Model of a TPS

system is a TPS used by

Figure 8.2 Context Diagram of

Figure 8.3 Figure 0 Diagram of

that fill customer orders.

that order replenishment stock.

Order entry system enters customer orders into

Figure 8.4 Figure 1 Diagram of

Figure 8.5 Figure 2 Diagram of

that perform general ledger processes.

General ledger system is the accounting system

Figure 8.6 Figure 3 Diagram of

Figure 8.7 Model of MKIS

Output subsystems provide information about

Product subsystem provides information about the firms

is populated with data from the

Transaction processing system gathers data

Resources information system

Figure 8.8 Model of HRIS

Figure 8.9 Model of

Figure 8.10 Model of Financial

information system (EIS) is a

Figure 8.11 An EIS Model

Figure 8.12 Drill-down

warehouse describes data storage that

mart is a database that contains data

Data Warehousing System

warehousing is the creation & use

Data Warehousing System

process combines data from the

process involves the entry of the data

Figure 8.13 Model of Data

Storing Data in the Warehouse

tables store the identifying &

tables are separate tables containing

Figure 8.14 Simple Dimension

Figure 8.15 Sample Fact Table

Storing Data (Contd)

package identifies all of the

Figure 8.16 Information Package

Figure 8.17 Sample Information

Figure 8.18 Star Schema

Figure 8.19 A Sample Star

Figure 8.20 Navigating the

Figure 8.21 Drilling Across

On-line analytical processing (OLAP) enables the

ROLAP data exists in detailed form.

Multidimensional OLAP (MOLAP) uses a special

MOLAP data are preprocessed to produce summaries at the

Figure 8.22 ROLAP & MOLAP