Lecture 2

Management Information Systems:
Managing the Digital Firm

Seventeenth Edition, Global Edition
Chapter 2
Global E-Business and
Collaboration
Chapter 9
Achieving Operational Excellence
and Customer Intimacy:
Enterprise Applications
Copyright © 2022, 2020, 2018 Pearson Education, Ltd. All Rights Reserved
Learning Objectives
2.1 What are business processes? How are they related to
information systems?
2.2 How do systems serve the different management groups
in a business, and how do systems that link the
enterprise improve organizational performance?
2.3 Why are systems for collaboration and social business
so important, and what technologies do they use?
2.4 What is the role of the information systems function in a
business?
2.5 How will MIS help my career?
Business Processes (1 of 2)
• Business processes
– Flows of material, information, knowledge
– Logically related set of tasks that define how specific
business tasks are performed
– May be tied to functional area or be cross-functional
• Businesses: Can be seen as collection of business
processes
• Business processes may be assets or liabilities
Business Processes (2 of 2)
• Examples of functional business processes
– Manufacturing and production
▪ Assembling the product
– Sales and marketing
▪ Identifying customers
– Finance and accounting
▪ Creating financial statements
– Human resources
▪ Hiring employees
Figure 2.1 The Order Fulfillment Process
How Information Technology Improves
Business Processes
• Increasing efficiency of existing processes
– Automating steps that were manual
• Enabling entirely new processes
– Changing flow of information
– Replacing sequential steps with parallel steps
– Eliminating delays in decision making
– Supporting new business models
Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved.
Systems for Different Management
Groups (1 of 2)
• Transaction processing systems
– Serve operational managers and staff
– Perform and record daily routine transactions necessary to
conduct business
▪ Examples: sales order entry, payroll, shipping
– Allow managers to monitor status of operations and
relations with external environment
– Serve predefined, structured goals and decision making
Figure 2.2 A Payroll TPS
Systems for Different Management
Groups (2 of 2)
• Systems for business intelligence
– Data and software tools for organizing and analyzing
data
– Used to help managers and users make improved
decisions
▪ Management information systems
▪ Decision support systems
▪ Executive support systems
Management Information Systems
• Serve middle management
• Provide reports on firm’s current performance, based on
data from TPS
• Provide answers to routine questions with predefined
procedure for answering them
• Typically have little analytic capability
Figure 2.3 How Management Information
Systems Obtain Their Data from the
Organization’s TPS
Figure 2.4 Sample MIS Report
Consolidated Consumer Products Corporation Sales by Product and Sales Region: 2020
Decision Support Systems
• Serve middle management
• Support nonroutine decision making
– Example: What is the impact on production schedule if
December sales doubled?
• May use external information as well as TPS / MIS data
• Model driven DSS
– Voyage-estimating systems
• Data driven DSS
– Intrawest’s marketing analysis systems
Figure 2.5 Voyage-Estimating Decision-
Support System
Executive Support Systems
• Support senior management
• Address nonroutine decisions
– Requiring judgment, evaluation, and insight
• Incorporate data about external events (e.g., new tax laws
or competitors) as well as summarized information from
internal MIS and DSS
• Example: Digital dashboard with real-time view of firm’s
financial performance
Enterprise Applications
• Systems for linking the enterprise
• Span functional areas
• Execute business processes across the firm
• Include all levels of management
• Four major applications
– Enterprise systems
– Supply chain management systems
– Customer relationship management systems
– Knowledge management systems
Figure 2.6 Enterprise Application Architecture
What Are Enterprise Systems
• Also known as enterprise resource planning (ERP) systems
• Based on a suite of integrated software modules and a common
central database
• Collects data from many divisions of firm for use in nearly all of firm’s
internal business activities
• Information entered in one process is immediately available for other
processes
– Speed communication of information throughout firm
– Enable greater flexibility in responding to customer requests,
greater accuracy in order fulfillment
– Enable managers to assemble overall view of operations
Figure 9.1 How Enterprise Systems
Work
Enterprise Software
• Built around thousands of predefined business processes that
reflect best practices
– Finance and accounting
– Human resources
– Manufacturing and production
– Sales and marketing
• To implement, firms:
– Select functions of system they wish to use
– Map business processes to software processes
▪ Use software’s configuration tables for customizing
Business Value of Enterprise
Systems
• Increase operational efficiency
• Provide firm-wide information to support decision making
• Enable rapid responses to customer requests for
information or products
• Include analytical tools to evaluate overall organizational
performance and improve decision-making
Supply Chain Management (SCM)
Systems
• 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: Automating flow of
information across organizational boundaries
The Supply Chain
• Network of organizations and processes for:
– Procuring materials
– Transforming materials into products
– Distributing the products
• Upstream supply chain
• Downstream supply chain
• Internal supply chain
Figure 9.2 Nike’s Supply Chain
Supply Chain Management
• Inefficiencies cut into a company’s operating costs
– Can waste up to 25 percent of operating expenses
• Just-in-time strategy
– Components arrive as they are needed
– Finished goods shipped after leaving assembly line
• Safety stock: buffer for lack of flexibility in supply chain
• Bullwhip effect
– Information about product demand gets distorted as it
passes from one entity to next across supply chain
Figure 9.3 The Bullwhip Effect
Supply Chain Management Software
• Supply chain planning systems
– Model existing supply chain
– Enable demand planning
– Optimize sourcing, manufacturing plans
– Establish inventory levels
– Identify transportation modes
• Supply chain execution systems
– Manage flow of products through distribution centers
and warehouses
Global Supply Chains and the Internet
• Global supply chain issues
– Greater geographical distances, time differences
– Participants from different countries
▪ Different performance standards
▪ Different legal requirements
• Internet helps manage global complexities
– Warehouse management
– Transportation management
– Logistics
– Outsourcing
Demand-Driven Supply Chains: From Push to
Pull Manufacturing and Efficient Customer
Response
• Push-based model (build-to-stock)
– Earlier SCM systems
– Schedules based on best guesses of demand
• Pull-based model (demand-driven)
– Web-based
– Customer orders trigger events in supply chain
• Internet enables move from sequential supply chains to concurrent
supply chains
– Complex networks of suppliers can adjust immediately
Figure 9.4 Push- Versus Pull-Based
Supply Chain Models
Figure 9.5 The Emerging Internet-
Driven Supply Chain
Business Value of Supply Chain
Management Systems
• Match supply to demand
• Reduce inventory levels
• Improve delivery service
• Speed product time to market
• Use assets more effectively
– Total supply chain costs can be 75 percent of operating
budget
• Increase sales
Customer Relationship Management
(CRM) Systems
• Help manage relationship with customers
• Coordinate business processes that deal with customers in sales,
marketing, and customer service
• Goals:
– Optimize revenue
– Improve customer satisfaction
– Increase customer retention
– Identify and retain most profitable customers
– Increase sales
• Knowing the customer
• In large businesses, too many customers and too many ways
customers interact with firm
• CRM systems
– Capture and integrate customer data from all over the
organization
– Consolidate and analyze customer data
– Distribute customer information to various systems and
customer touch points across enterprise
– Provide single enterprise view of customers
Figure 9.6 Customer Relationship
Management (CRM)
Software (1 of 2)
• Packages range from niche tools to large-scale enterprise applications
• More comprehensive packages have modules for:
– Partner relationship management (PRM)
▪ Integrating lead generation, pricing, promotions, order
configurations, and availability
▪ Tools to assess partners’ performances
– Employee relationship management (ERM)
▪ Setting objectives, employee performance management,
performance-based compensation, employee training
Software (2 of 2)
• CRM packages typically include tools for:
– Sales force automation (SFA)
▪ Sales prospect and contact information
▪ Sales quote generation capabilities
– Customer service
▪ Assigning and managing customer service requests
▪ Web-based self-service capabilities
– Marketing
▪ Capturing prospect and customer data, scheduling and tracking
direct-marketing mailings or e-mail
▪ Cross-selling
Figure 9.7 How CRM Systems
Support Marketing
Figure 9.8 CRM Software Capabilities
Figure 9.9 Customer Loyalty
Management Process Map
Operational and Analytical CRM
• Operational CRM
– Customer-facing applications
– Sales force automation call center and customer service
support
– Marketing automation
• Analytical CRM
– Based on data warehouses populated by operational CRM
systems and customer touch points
– Analyzes customer data (OLAP, data mining, etc.)
▪ Customer lifetime value (CLTV)
Figure 9.10 Analytical CRM Data
Warehouse
Business Value of Customer
Relationship Management Systems
• Business value of CRM systems
– Increased customer satisfaction
– Reduced direct-marketing costs
– More effective marketing
– Lower costs for customer acquisition/retention
– Increased sales revenue
• Churn rate
– Number of customers who stop using or purchasing products or
services from a company
– Indicator of growth or decline of firm’s customer base
Knowledge Management Systems
(KMS)
• Manage processes for capturing and applying knowledge
and expertise
• Collect relevant knowledge and make it available wherever
needed in the enterprise to improve business processes
and management decisions
• Link firm to external sources of knowledge
Enterprise Application Challenges
• Expensive to purchase and implement
– Many projects experience cost overruns
– Long development times
• Technology changes
• Business process changes
• Organizational learning changes
• Switching costs, dependence on software vendors
• Data standardization, management, cleansing
Next-Generation Enterprise
Applications (1 of 2)
• Enterprise solutions/suites
– Make applications more flexible, web-enabled,
integrated with other systems
• Cloud-based versions
• Functionality for mobile platform
• Versions also available for small and medium-sized
businesses
Next-Generation Enterprise
Applications (2 of 2)
• Social CRM
– Incorporating social networking technologies
– Company social networks
– Monitor social media activity; social media analytics
– Manage social and web-based campaigns
• Business intelligence
– Inclusion of BI with enterprise applications
– Flexible reporting, ad hoc analysis, “what-if” scenarios, digital
dashboards, data visualization, AI machine learning
Intranets and Extranets
• Technology platforms that increase integration and
expedite the flow of information
• Intranets:
– Internal networks based on Internet standards
– Often are private access area in company’s website
• Extranets:
– Company websites accessible only to authorized
vendors and suppliers
– Facilitate collaboration
E-business, E-commerce, and
E-government
• 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
– Using Internet technology to deliver information and
services to citizens, employees, and businesses
Interactive Session: Organizations: The
City of Mississauga Goes Digital
• Class discussion
– Describe the problems the City of Mississauga hoped to address using
digital technology.
– What technologies did Mississauga employ for a solution? Describe each
of these technologies and the role each played in a solution.
– What management, organization, and technology issues did the City of
Mississauga have to address in developing a solution?.
– How did the technologies in this case improve operations and decision
making at the City of Mississauga?
What is Collaboration?
• Collaboration
– Short lived or long term
– Informal or formal (teams)
• Growing importance of collaboration
– Changing nature of work
– Growth of professional work—“interaction jobs”
– Changing organization of the firm
– Changing scope of the firm
– Emphasis on innovation
– Changing culture of work
What is Social Business?
• Social business
– Use of social networking platforms (internal and
external) to engage employees, customers, and
suppliers
• Aims to deepen interactions and expedite information
sharing
• “Conversations” to strengthen bonds with customers
• Requires information transparency
• Seen as way to drive operational efficiency, spur
innovation, accelerate decision making
Business Benefits of Collaboration
and Teamwork
• Investment in collaboration technology can return large
rewards, especially in sales and marketing, research and
development
• Productivity: Sharing knowledge and resolving problems
• Quality: Faster resolution of quality issues
• Innovation: More ideas for products and services
• Customer service: Complaints handled more rapidly
• Financial performance: Generated by improvements in
factors above
Figure 2.7 Requirements for Collaboration
Building a Collaborative Culture and
Business Processes
• “Command and control” organizations
– No value placed on teamwork or lower-level
participation in decisions
• Collaborative business culture
– Senior managers rely on teams of employees
– Policies, products, designs, processes, and systems
rely on teams
– The managers purpose is to build teams
Tools and Technologies for
Collaboration and Social Business
• E-mail and instant messaging (IM)
• Wikis
• Virtual worlds
• Collaboration and social business platforms
– Virtual meeting systems: videoconferencing, telepresence)
– Cloud collaboration services (Google Drive, Google Docs,
etc.)
– Microsoft SharePoint and IBM Notes
– Enterprise social networking tools
Interactive Session: Technology: : Virtual
Education at Ahlia University
• Class discussion
– How does Microsoft Teams promote efficient collaboration in
universities and colleges?
– What management, organization, and technology based issues
did Ahlia University address before pivoting its operations to deal
with the pandemic?
– What advantages has using collaboration tools provided for Ahlia
University?
Checklist for Managers: Evaluating and
Selecting Collaboration and Social Software
Tools
• Time/space matrix
• Six steps in evaluating software tools
– Identify your firm’s collaboration challenges
– Identify what kinds of solutions are available
– Analyze available products’ cost and benefits
– Evaluate security risks
– Consult users for implementation and training issues
– Evaluate product vendors
Figure 2.8 The Time/Space
Collaboration and Social Tool Matrix
The Information Systems Department
• Often headed by chief information officer (CIO)
– Other senior positions include chief security officer
(CSO), chief knowledge officer (CKO), chief privacy
officer (CPO), chief data officer (CDO)
• Programmers
• Systems analysts
• Information systems managers
• End users
Organizing the Information Systems
Function
• IT governance
– Strategies and policies for using IT in the organization
– Decision rights
– Accountability
– Organization of information systems function
▪ Centralized, decentralized, and so on

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Management Information Systems:

Managing the Digital Firm

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