Business Information

Systems
Module – 1
Information Systems in Business
Business Information System
 Information Systems

• Why Do People Need Information?

– Individuals - Entertainment and enlightenment

– Businesses - Decision making, problem solving and control

3
 Why Organizations need
Information Systems
• Meeting Global Challenges
• Capturing opportunities in the Market Place
• Supporting Corporate Strategy
• Linking Departments Whose Functions are different
• Enhancing Worker Productivity
• Increasing Quality of Goods and Services

4
Information Architecture
TOWARD andTHE
Information
DIGITALTechnology
FIRM Infrastructure
 Types of Information System
KIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR MANAGERS

(DSS, ESS)

MANAGEMENT LEVEL MIDDLE MANAGERS

(MIS, DSS)

KNOWLEDGE LEVEL KNOWLEDGE &

(KWS) DATA WORKERS

OPERATIONAL OPERATIONAL LEVEL (TPS)

MANAGERS

SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN

MARKETING RESOURCES
History of the role of Information Systems
1950-1960 1960-1970 1970-1980 1980-1990 1990-2000

Data Management Decision Strategic & Electronic

Processing Reporting Support End User Commerce

Electronic
Data Management
Processing Information
- TPS Decision
Systems
Support
Systems End User
- Ad hoc Computing
Reports Exec Info Sys Electronic
Expert Systems Business &
Commerce
-Internetworked
E-Business &
Commerce
 Major Types Of Systems

• Executive Support Systems (ESS)

• Decision Support Systems (DSS)
• Management Information Systems (MIS)
• Knowledge Work Systems (KWS)
• Office Automation Systems (OAS)
• Transaction Processing Systems (TPS or OLTP)
TRANSACTION PROCESSING
SYSTEMS

( TPS )
 System Architecture:
Transaction Processing
System
 Transaction Processing Systems (TPS)
• Operational Level
• Inputs: Business Transactions, Events
• Processing: Updating
• Outputs: Business actions (and Detailed Reports)
• Users: Operations Personnel

• Examples: Accounts Payable, Payroll, Order Entry

 Typical TPS Applications
Sales & Marketing
Systems
Major System Major System
Functions: Applications:

• Sales Management • Sales Order Info

System
• Market Research
• Market Research
• Promotion System
• Pricing • Pricing System
• New Products
 Manufacturing & Production Systems

Major System Major System Applications:

Functions:
• Production Planning & Control
• Scheduling • Materials Management (JIT)
• Purchasing • Manufacturing Resource
Planning
• Shipping/Rec
• Purchase Order
eiving
• Engineering Systems (CAD,
• Engineering CAM, CAE)
• Operations • Quality Control
 Mfg resource planning Mfg execution Engineering
Systems system system
Production
forecasting
Shop floor
CAD
Production scheduling
scheduling
CAE
Material Shop floor
Requirement control
E planning
Machine Com. Aided
R Capacity control Process
P planning planning
Robotics
Pro. Cost control Product
control simulation &
Quality Process prototyping
control control

Computer Integrated Mfg

 Finance & Accounting Systems
Major System Major System
Functions: Applications:

• • General Ledger
Budgeting
• Accounts
• General Ledger Receivable/Payable
• Billing • Budgeting
• Cost Accounting • Funds Management
• Profit / Loss & Cost
system
• Audit System
 Human Resource Systems
Major System Major System Applications:
Functions:

• Personnel Records • Employee Records System

• Benefits • Payroll System
• • Benefit System
Compensation
• HR Planning & Recruitment
• Labour Relations
• Job Allocation System
• Training
• Career Path Systems
• Recruitment • Personnel Training System
• Job allocation
 Knowledge Work Systems (KWS)
Components:
Communication, Collaboration, Storage & Retreival
Technologies that support KWS
AI, Intelligent Agents, Knowledge Discovery
Tools
• Collaborative Computing Tools (Lotus Notes / Domino Server,
Documentum)
• Knowledge Servers (Hummingbird)
• Enterprise Knowledge Portals
• Electronic Document Mgmt (Docushare, Lotus Notes)
• Knowledge Harvesting Tools (Knowledge Mail)
• Search Engines (Google)
• KM Sites (Lotus Notes)
 Office Automation Systems (OAS)

• Toward A “Paperless” Office*

• Redesign Of Work Flow
• Integrated Software
• Bright, Cheerful Work Space
MANAGEMENT INFORMATION
SYSTEMS

( MIS )
 System Architecture:
Management Information
System
 Management Information Systems (MIS)

MANAGEMENT LEVEL
• Inputs: High Volume Data
• Processing: Simple Models
• Outputs: Summary Reports
• Users: Middle Managers
• Example: ANNUAL BUDGETING
 Management Information Systems (MIS)

OPERATIONAL LEVEL
• Structured Decisions
• Reporting is Control-oriented
• Past & Present Data
• Internal Orientation
• Lengthy Design Process
• Reports now tend to be available on-line, on demand
 TPS Data for MIS Applications

TPS MIS
Order Processing SALES
DATA
System

ORDER FILE UNIT

PRODUCT
Materials Resource COST MIS REPORTS
Planning System
PRODUC
T
PRODUCTION MASTER FILE
CHANGE
General Ledger DATA
EXPENSE MANAGERS
System DATA

ACCOUNTING FILES MIS FILES

Source: Laudon & Laudon

Business Enterprise Application
Software
Accounting and
Financial
Management

Customer Supply
Relationship Business Chain
Management Decision Management
Support

Human Enterprise
Resource Resource
Management Planning
 Internet
Internet An Organization’s
MIS

Financial
MIS
Business
transactions

Drill down reports

Accountin
Transaction Databases g Exception reports
processing of MIS
Demand reports
systems valid
transactions Key-indicator reports
Marketing
MIS Scheduled reports

Business
transactions Databases Human
of
Resources Etc.
external
data MIS
Extranet
Extranet
Etc.
 Databases of Financial
Databases of
internal data external data DSS

Business
transactions
Transaction Databases
processing of valid
Financial
systems transactions MIS Financial
for each applications
TPS databases

Business
transactions
Financial statements
Financial
Operational Uses and management ES
Internet databases of funds
Internet
or
or Financial statistics
Extranet
Extranet for control

Business Customers,
transactions Suppliers
 Databases of Manufacturing
Databases of
internal data external data DSS

Business
transactions
Transaction Databases
processing of valid
Manufacturing
systems transactions MIS Manufacturing
for each applications
TPS databases

Business Quality control reports

transactions
Process control reports Manufacturing
Operational ES
JIT reports
Internet databases
Internet MRP reports
or
or
Extranet Production schedule
Extranet
CAD output

Business Customers,
transactions Suppliers
 Databases of Manufacturing
Databases of
internal data external data DSS

Transaction Databases
Business processing of valid
Marketing
transactions systems transactions MIS Marketing
for each applications
TPS databases

Sales by customer

Sales by salesperson Manufacturing

Operational Sales by product ES
databases Pricing report
Total service calls
Customer satisfaction

Figure 9.9
 Databases of Manufacturing
Databases of
internal data external data DSS

Transaction Databases Human

Business processing of valid Resource Human
transactions systems transactions resource
MIS
for each applications
TPS databases

Benefit reports

Salary surveys Manufacturing

Operational Scheduling reports ES
databases Training test scores
Job applicant profiles
Needs and planning
reports
DECISION SUPPORT SYSTEMS

( DSS )
 Decision Support Systems (DSS)
MANAGEMENT LEVEL
• Inputs: (usually) Low volume data
• Processing: Interactive
• Outputs: Decision Analysis
• Users: Professionals, Staff

Example: CONTRACT COST ANALYSIS

 Decision Support Systems (DSS)

• Flexible, Adaptable, Quick

• User Controls Inputs/outputs
• Supports Decision Process
• No Professional Programming
• Fairly sophisticated modeling tools

(more sophisticated tools exist, and are based on

use of professionally-programmed DSS packages)
 Decision Support System
Definition:
• A DSS is an interactive, flexible, and adaptable CBIS
specially developed for supporting the solution of a
non-structured management problem for improved
decision making. It utilizes data, it provides easy user
interface, and it allows for the decision maker’s own
insight.
 Characteristics and Capabilities of DSS
• Provide support on semi-structured and instructed
situations including human judgment and computerized
information.
• Supports for various management level
• Support for individuals and group
• Have user friendly interface
• Utilizes the Model for Analysis
• Provide access for variety of data sources
• Decision makers can make better, more consistent
decision in a timely manner.
 Types of DSS Analytical
Modeling
• What-if Analysis
• Sensitivity Analysis
• Goal Seeking Analysis
• Optimization Analysis
 Examples of DSS
• American airlines: for pricing decisions and
choosing air routes
• IBM: for determining routing for repair people
• Texas oil and gas: for evaluating potential drill
sites
• National Gypsum: corporate planning and
forecasting.
Executive Support
Systems (ESS)
 Executive Support Systems (ESS)
STRATEGIC LEVEL TOP LEVEL
• Inputs: Aggregate MANAGEMENT
Data • Designed to the
• Processing: Interactive Individual
• Outputs: Projections • Ties CEO to All Levels
• Users: Senior • Very Expensive to
Managers Keep Up
• Extensive Support
Staff
Example: 5 YEAR
OPERATING PLAN
 Executive Information System (EIS)

• It is also called Executive support systems

• Serves Strategic level of the Organization
• Support non-routine decision making
• Use graphic software to create visual information
display of key summary information
• Use data from sources within and outside the
organization
• Have drill-down capability to reveal what is
behind summary information.
 Expert System
• It is a knowledge based information system adds a
knowledge about the specific, complex application area
to act as an expert consultant to end users.
• Expert systems provide answers to questions in a
specific problem area by making human like interfaces
about knowledge contained in a specialized knowledge
base.
• Applications
– Medicine, Engineering, diagnose Illness,
Recommended Repairs, Do financial Planning.s
 BIS application software
• MS Office (Word, Excel, Power Point, Visio, Access)
• Accounting Packages: Tally, SAPM, Metastock
• Marketing Packages: SPSS, SYSSTA, MINITAB
• Production Management Software: POM, TORA
• Human Resource Management Software: PeopleSoft
• Database Management software: Oracle, SQL Server
• Business Intelligence: SAS, Informatica, Cognus,
Business Objects, Data Stage