2
E-Business: Chapter How
Businesses Use
Information Systems
Information
2.1
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Components of a Business
Business: formal organization that makes products or
provides a service in order to make a profit
Organizing a Business: Basic Business Functions
Organizing
Four basic business functions
Manufacturing and production
Sales and marketing
Finance and accounting
Human resources
2.2
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Components of a Business
The Four Major Functions of a Business
Every business, regardless of its
size, must perform four functions to
succeed. It must produce the
product or service; market and sell
the product; keep track of
accounting and financial
transactions; and perform basic
human resources tasks, such as
hiring and retaining employees.
Figure 2-1
2.3
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Essentials
Chapter 2 E-Business: How Businesses Use Information Systems
Components of a Business
Organizing a Business: Basic Business Functions
Five basic business entities:
Suppliers
Customers
Employees
Invoices/payments
Products and services
2.4
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Components of a Business
Business Processes
Logically related set of tasks that define how
specific business tasks are performed
The tasks each employee performs, in what order, and on
what schedule
E.g., Steps in hiring an employee
Some processes tied to a functional area
Sales and marketing: identifying customers
Some processes are cross-functional
2.5
Fulfilling customer orders
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Components of a Business
An example: The Order Fulfillment Process
Fulfilling a customer order
involves a complex set of
steps that requires the
close coordination of the
sales, accounting, and
manufacturing functions.
Figure 2-2
2.6
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Components of a Business
Managing a Business and Firm Hierarchies
Managing
Firms coordinate work of employees by developing
hierarchy in which authority is concentrated at top.
Senior management
Middle management
Operational management
Knowledge workers
Data workers
Production or service workers
Each group has different needs for information.
2.7
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Components of a Business
Levels in a Firm
Business organizations are
hierarchies consisting of three
principal levels: senior
management, middle
management, and operational
management. Information
systems serve each of these
levels. Scientists and
knowledge workers often
work with middle
management.
Figure 2-3
2.8
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Components of a Business
The Business Environment
The
Global environment
Global
factors
factors
Technology and
Technology
science
science
Economy
Customers
Suppliers
Competitors
Competitors
Politics
International
International
change
change
2.9
Immediate
Immediate
environment factors
environment
Regulations
Stockholders
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Components of a Business
The Role of Information Systems in a Business
Firms invest in information systems in order to:
Achieve operational excellence
Develop new products and services
Attain customer and supplier intimacy
Improve decision making
Promote competitive advantage
Ensure survival
2.10
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Types of Business Information Systems
Systems For Different Levels of Management
2.11
Transaction Processing Systems (TPS)
Management Information Systems (MIS)
Decision Support Systems (DSS)
Executive Support Systems (ESS or EIS)
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems For Different Levels of Management
Systems
Transaction Processing Systems (TPS)
Serve operational managers and personnel
Keep track of basic activities and
transactions of organization (e.g., sales,
receipts, cash deposits, payroll, credit
decisions, flow of materials in a factory).
Principal purpose is to answer routine
questions and to track the flow of
transactions through the organization.
2.12
E.g., inventory questions, granting credit to customer
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems For Different Levels of Management
Transaction Processing Systems (TPS), cont.
Monitor status of internal operations and
firms relationship with external
environment.
Major producers of information for other
systems.
Highly central to business operations and
functioning.
2.13
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems For Different Levels of Management
Systems
Transaction Processing Systems (TPS), cont.
Processing the capturing of transaction & event
information using technology to (1) process the
information according to defined business rules, (2)
store the information, (3) update existing
information to reflect the new information
Processing can be either:
Batch grouped and processed together at a
later time
Online (real-time) processed individually in
real-time, as it occurs
2.14
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems For Different Levels of Management
Transaction Processing Systems (TPS), cont.
Batch transaction processing system method
of processing in which business transactions are
accumulated over a period of time and processed
as a single unit or batch
Uses master and transaction files which are
sorted in sequence
May include Remote Job Entry (RJE)
Advantages/Disadvantages
2.15
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems For Different Levels of Management
Transaction Processing Systems (TPS), cont.
On-line transaction processing (OLTP)
processing in which each transaction is processed
immediately (in real time), without the delay of
accumulating transactions into a batch
Can be done remotely
Advantages/Disadvantages
2.16
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems For Different Levels of Management
Management Information Systems (MIS):
Provide middle managers with reports on firms
performance to monitor firm and help predict future
performance.
Summarize and report on basic operations using
data from TPS.
Provide weekly, monthly, annual results, but may
enable drilling down into daily or hourly data.
2.17
Help with monitoring, controlling, decision making,
and administrative activities.
Typically not very flexible systems with little analytic
capability.
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems For Different Levels of Management
How MIS Obtain Their Data from TPS
Figure 2-6
2.18
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems For Different Levels of Management
Sample MIS Report
Sample
This report,
showing
summarized
annual sales
data, was
produced by the
MIS in Figure 29.
Figure 2-7
2.19
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems For Different Levels of Management
Decision Support Systems (DSS):
Focus on problems that are unique and rapidly
changing
Use a variety of models to analyze data to support
decision-making
2.20
Support non-routine decision-making for middle
management
Focus on helping users make better decisions
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems For Different Levels of Management
Systems
Executive Support Systems (ESS or EIS):
Help senior managers address strategic issues and longterm trends.
E.g., what products should we make in five years?
Provide generalized computing capacity that can be
applied to changing array of problems.
Draw summarized information from MIS, DSS, and data
from external events.
Typically use portal with Web interface to present
content.
2.21
Address non-routine decision making.
Information is presented in form of a digital dashboard
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
Enterprise applications
Systems that span functional areas,
focus on executing business processes
across the firm, and include all levels of
management.
Enterprise systems aka Enterprise Resource
Planning Systems (ERP)
Supply chain management systems (SCM)
Customer relationship management systems
(CRM)
Knowledge management systems (KM)
2.22
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise: ERP
Systems
Enterprise Resource Planning Systems (ERP)
Enterprise
Are based on a suite of integrated SW modules and
a common central database
Integrate data from key business processes into
single system.
Speed communication of information throughout
firm.
Enable greater flexibility in responding to customer
requests, greater accuracy in order fulfillment.
Enable managers of large firms to assemble overall
view of operations.
2.23
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise: SCM
Supply Chain Management Systems (SCM)
Manage relationships with suppliers, purchasing
firms, distributors, and logistics companies.
Manage shared information about orders,
production, inventory levels, and so on.
Goal is to move correct amount of product from source to
point of consumption as quickly as possible and at
lowest cost
Type of interorganizational system:
2.24
Automating flow of information across organizational
boundaries
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise: CRM
Customer Relationship Management Systems (CRM)
Help manage relationship with customers.
Coordinate business processes that deal with
customers to optimize revenue and customer
satisfaction, and increase sales.
Combine sales, marketing, and service record data
from multiple communication channels to provide
unified view of customer, eliminate duplicate
efforts.
2.25
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter E-Business: 2 How Businesses Use Information Systems
Systems That Span the Enterprise: KM
Systems
Knowledge Management Systems (KM)
Both tangible & intangible knowledge assets
Knowledge about producing and delivering products
Source of value and advantage for firms
Knowledge management systems:
2.26
Help capture, storage, distribute, and apply knowledge so
that it can be leveraged for strategic benefit.
Include systems for:
Managing and distributing documents, graphics,
other digital knowledge objects
Creating knowledge directories of employees with
specialized expertise
Distributing knowledge
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Essentials
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise: Intranets
and Extranets
and
Technology platforms that increase integration and
expedite the flow of information
Intranet:
Network within an organization that uses Internet
protocols and technologies for collecting, storing,
and disseminating useful information that
supports business activities
Also called corporate portals
For internal use by employees
May be accessed from remote locations
Define and limit user access carefully
2.27
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Essentials
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise:
Intranets and Extranets
Intranets
Extranet:
2.28
Secure network
Uses the Internet and Web technologies and
protocols to connect intranets of business
partners
Allows authorized outside users access to
certain portions of your intranet
Type of interorganizational system (IOS)
Facilitate information exchange between
business partners
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Essentials
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise:
Intranets and Extranets
Intranets
Benefits of Intranets and Extranets
* Expedited communication & coordination of
information among business partners
Improved information access to authorized users
Improved timeliness and accuracy of information
Global reach allowing access from anywhere
Cross platform integration
* Cost reduction
Lower cost deployment of information
* Facilitates Feedback from business partners
* Improves Customer & Supplier Satisfaction
2.29
Copyright 2011 Pearson Education, Inc. publishing as Prentice
The Internet versus Intranets
Table 7.2
Comparison of the Internet, Intranets, Extranets
Internet
Intranet
Extranet
Access
Public
Private
Private
Inform
ation
Users
General
Typically
confidential
Membersofan
Organization
TypicallyConfidential
2.30
Everybody
Groupsofcloselyrelated
companies,users,or
organizations
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems That Span the Enterprise
E-Business, E-Commerce, and E-Government
E-Business,
E-business:
Use of digital technology and Internet to drive major
business processes
E-commerce:
Subset of e-business
Buying and selling goods and services through Internet
E-government:
2.31
Using Internet technology to deliver information and
services to citizens, employees, and businesses
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems for Collaboration and Teamwork
What Is Collaboration?
What
Collaboration working with others to achieve
shared and explicit goals
Can be informal groups or formal teams
Growing importance of collaboration in todays
organizations
Many benefits of collaboration
Productivity
Quality
Innovation
Customer Service
Financial performance
Must build a Collaborative Culture
2.32
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems for Collaboration and Teamwork
Collaboration Systems/Group Support Systems
Collaboration
Assist decision makers working in groups or teams
Use computer and communication technologies to
formulate, process and implement a decisionmaking task
Support complex interactions between people
across different functions, locations, time zones
2.33
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems for Collaboration and Teamwork
Tools and Technologies for Collaboration and Teamwork
Tools
E-mail, instant messaging (IM), chat
Newsgroups
Teleconferencing
Group calendars
Social networking
Wikis
Virtual worlds
Internet-based collaboration environments
Virtual meeting systems (telepresence)
Google Apps/Google sites
Microsoft SharePoint
Lotus Notes
2.34
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems for Collaboration and Teamwork
Collaboration Systems/Group Support Systems
Collaboration
Groupware software that supports team interaction and
dynamics including calendaring, scheduling, and
videoconferencing; enables people to work together
more effectively
Includes Electronic Meeting Systems to specifically
support group decision making
Dimensions of Groupware Support
Time Dimension
Location Dimension
2.35
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Time Dimension
Asynchronous Groupware Systems that do not
require users to be on the system working at the same
time; examples: e-mail, newsgroups, workflow
automation, group calendars, collaborative writing
tools
Synchronous Groupware Systems that allow and
support simultaneous group interactions; examples:
shared whiteboards, electronic meeting support
systems, video communication systems
2.36
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Location Dimension
Co-located - Systems that support users
working at the same place
Remote - Systems that allow and support users
working at different locations; different place
2.37
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Time/Space Collaboration Matrix
Collaboration technologies
can be classified in
terms of whether they
support interactions at
the same or different
time or place, and
whether these interactions
are remote or colocated.
Figure 2-12
2.38
Copyright 2011 Pearson Education, Inc. publishing as Prentice
GROUPWARE: SYNCHRONOUS/CO-LOCATED
Synchronous (same time) & Co-located
(same place)
technological support for live meetings in
electronic meeting facilities using Electronic
Meeting System SW
Decision rooms
War rooms
2.39
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GROUPWARE: SYNCHRONOUS/CO-LOCATED
A Decision Room
2.40
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General Characteristics/Features of an Electronic
Meeting System to support decision making
2.41
Idea generation/brainstorming
Parallel communication
Idea organization
Prioritization, ranking
Anonymous input
Voting
Reduction of negative group behaviors
Enables larger group size
Access to external information
Automated record keeping
Copyright 2011 Pearson Education, Inc. publishing as Prentice
GROUPWARE: ASYNCHRONOUS/COLOCATED
Asynchronous (different time) & Co-located
(same place)
Asynchronous technologies to support
communication
e-mail, voice mail, fax, text messaging, newsgroups,
group calendars, scheduling and appointment books,
workflow management systems, to-do lists, database
access; shared document access
Project room as home base or team room
2.42
Copyright 2011 Pearson Education, Inc. publishing as Prentice
GROUPWARE: SYNCHRONOUS/REMOTE
Synchronous (same time) & Remote (different
place)
2.43
Conference calls
Instant messaging
On-line chat
Real time computer conferencing
Videoconferences
Desktop conferences
Web conferences (Web Ex, web seminars)
Virtual Worlds
Copyright 2011 Pearson Education, Inc. publishing as Prentice
GROUPWARE: ASYNCHRONOUS/REMOTE
Asynchronous (different time) & Remote
(different place)
Asynchronous technologies to support
communication
e-mail, voice mail, fax, text messaging, newsgroups,
group calendars, scheduling and appointment books,
workflow management systems, blogs, wikis, Internet
based collaboration environments for shared document
and data access
2.44
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Advantages of Collaboration Technologies
Advantages:
Decreasedtravelcosts
Decreasedtraveltime/timeawayfromoffice
Moretimetotalkwitheachotherandsolveproblems
ShynessisntasmuchofanissueinGSSsessions
Increasedcollaborationimprovestheeffectivenessof
decisionmakers
Reductionofnegativegroupbehaviors
Inclusionofparticipantsbasedonexpertise
regardlessoflocation
Moreproductiveuseofmeetingtime
2.45
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Disadvantages of Collaboration Technologies
Disadvantages:
Lackofthehumantouchlossofnonverbal
communicationcuesusingsomeofthetechnologies
Mayresultinunnecessarymeetings
Securityproblemsduetodatatransmission
CostsofGSSimplementationarehigh
Userresistancetouseofnewprocesses/systems
2.46
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
Systems for Collaboration and Teamwork
Systems
Evaluating and Selecting Collaboration Software Tools
What kinds of solutions are available?
Analyze cost and benefits of available technologies
Evaluate security risks.
Consult users for implementation and training issues.
2.47
What are your firms collaboration challenges?
Evaluate product vendors.
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
The Information Systems Function in Business
The Information Systems Department
The
Programmers
Systems analysts
Principal liaisons to rest of firm
Information systems managers
Leaders of teams of programmers and analysts, project
managers, physical facility managers,
telecommunications managers, database specialists,
managers of computer operations, and data entry staff
Senior managers: CIO, CTO, CSO, CPO, CKO
Other players
End users
External specialists
2.48
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 1 Business Information Systems in Your Career
The Information Systems Function in Business
The
Senior Managers
Chief Information Officer (CIO) a senior manager who
oversees all uses of IT and ensures the strategic
alignment of IT with business goals and objectives
Chief Technology Officer (CTO) responsible for
ensuring the throughput, speed, accuracy, availability,
and reliability of IT
Chief Security Officer (CSO) responsible for ensuring
the security of IT systems
2.49
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Essentials
Chapter 1 Business Information Systems in Your Career
The Information Systems Function in Business
The
Senior Managers, cont.
Chief Privacy Officer (CPO) responsible for ensuring
the ethical and legal use of information, complying with
existing data privacy laws
Chief Knowledge Office (CKO) - responsible for
collecting, maintaining, and distributing the
organizations knowledge; responsible for the firms
knowledge management program
2.50
Copyright 2011 Pearson Education, Inc. publishing as Prentice
Essentials of Management Information Systems
Chapter 2 E-Business: How Businesses Use Information Systems
The Information Systems Function in Business
Information Systems Services
Information
Services provided by the information systems department:
Computing and telecommunications services
Data management services
Application software services
Physical facilities management services
IT management services
IT standards services
IT educational services
IT research and development services
2.51
Copyright 2011 Pearson Education, Inc. publishing as Prentice