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Course - DT249/1
Subject - Information Systems in Organisations
Semester 1, Week 5
INFORMATION SYSTEMS AND MODERN
APPLICATIONS
Model Content Title
From the course document, this week’s
lecture refers to:
Modern Information Systems applications
2
Textbooks?
The Laudon and Laudon book,
‘Management Information Systems’
(Seventh Edition) – Chapter 4:
 The Digital Firm: Electronic Commerce
and Electronic Business’


This chapter matches the theme of this
lecture the closest.
3
Management Information System
Applications

As described in previous lectures, an
organisation exists to be charitable or
profitable.

The organisation functions through a structure
such as ‘departmentalisation’ and ‘spreads’
responsibilities and tasks among the individuals
and groups of those departments.
4
MIS Applications (2)

The functions/tasks usually have a measure of
information – or, at least, data – that is/are a
very important asset to the organisation.

The more the organisation can control the
information, the more efficient (and profitable?)
it can become.
5
MIS Applications (3)
In many cases the information can be used as a
‘dividend’ – a product in its own right – or an
enhancement to the employees or customers of
the organisation.
 Central to information control, product or
service enhancement are Information Systems
and, by implication, Information Technology (IT).
 Central to Information Systems and IT are
computers.

6
MIS Applications (4)

If we ‘map’ the functions (perhaps departments)
of an organisation to the functions of an
Information System, put in place to help manage
the organisation, generally, we find that
computer-based applications fit many of the
information-oriented functions of an
organisation.

This lecture considers the Information Systems
applications of organisations and the issues
surrounding them.
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Business Organisations’ Information
Systems

Information Systems are placed in business
organisations because of:
◦ Business pressures (e.g. to sell more stock…)
◦ Organisational responses to competition and
legislation
◦ Information Systems and Information Technology
‘trends’
(A note on ‘Enterprise’ – the context of this word, when
used later in the notes, is one that describes the
organisation as ‘innovative’ - rising to challenges - rather
than just manufacturing and selling.)
8
Business Pressures

Market pressures
◦ The new ‘global economy’ that causes strong
competition
◦ The changing nature of the workforce
◦ ‘Customer Power’ – they are more demanding
9
Business Pressures (2)

Technological pressures
◦ Technological innovation continues
◦ The obsolescence of current systems (belonging
to the organisation)
◦ ‘Information overload’ – greater quantities of
information require bigger and better systems.
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Business Pressures (3)

Sociological pressures
◦ Social responsibility
 Government regulations
 Government deregulation
 Shrinking budgets and subsidies
◦ Ethical issues – (e.g. are customers’ details
secure? Does our product harm anyone/the
environment?)
11
Organisational Responses to Challenges

Organisations have established
◦
◦
◦
◦
◦
Strategic systems
Continuous improvement efforts
Business Process Reengineering (BPR)
Electronic commerce
Business alliances
...and continue to establish these things… will
continue to establish these things.
12
Strategic Systems
Strategic systems provide organisations with
strategic advantages, thus enabling them to;
increase their market share,
to better negotiate with their suppliers, or
to prevent competitors from entering their
specialist areas (and taking their customers).
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Continuous Improvement Efforts

These efforts by organisations could be viewed
as strategies:
◦
◦
◦
◦
◦
◦
Improved productivity
Just-in-Time (resource management)
Total Quality Management (TQM)
Improved decision making
Managing information and knowledge
Innovation and creativity (e.g. Research and
Development)
◦ Change management
◦ Customer service (new or improved)
14
Business Process Reengineering

Business Process Reengineering (known to
many as BPR) is a fancy term for changing the
organisation radically by, for example;
◦ Reducing the ‘cycle time’ (CT) for production,
customer service, etcetera.
◦ Taking a ‘customer-focused approach’
◦ The empowering of employees (giving them more
autonomy)
◦ Restructuring the organisation or departments
with, for example, a team-based structure
15
Business Alliances

The organisation might establish alliances –
agreements – with suppliers, customers or even
competitors (or a combination of any of these
(or yet other parties)). They might employ;
◦ Enterprise Resource Planning (ERP)
◦ Electronic commerce
… or something else
16
Reminder!

The previous slides describing strategies and
responses to challenges/pressures had example
functions with them.
◦ Example functions were improved productivity,
customer-focus, e-commerce…

These can have Information Systems
applications designed for them – or be the basis
for MIS applications.
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Applications Within an Organisation

An example of functional business systems
might include, for example, variety of
information systems (transaction processing,
management information systems, decision
support, etc.) that support the business
functions of;
◦
◦
◦
◦
Marketing,
Human Resource Management (HRM),
Finance and Accounting,
Operations Management
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Functional Business Systems
Marketing
Examples of Functional
Business Information
Systems
• Customer
relationship
management
• Interactive
marketing
• Sales force
automation
Production
Operations
• Manufacturing
resource planning
• Manufacturing
execution systems
• Process control
•
•
•
•
•
•
Human Resource
Management
Functional
Business
Systems
• Compensation
analysis
• Employee skills
inventory
• Personnel
requirements
forecasting
Order processing
Inventory control
Accounts receivable
Accounts payable
Payroll
General ledger
• Cash management
• Credit management
• Investment
management
• Capital budgeting
• Financial forecasting
Accounting
Finance
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Functional Business Systems (2)
In the diagram of the previous slide the features of:
Marketing,
Human Resource Management,
Finance
Accounting and
Operations Management
could be considered as departments, the descriptions
within each box considered as key tasks and those
tasks might match applications (and software
programs?)

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Marketing Information Systems

The function of marketing can have its
own set of applications.
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Marketing Information Systems (2)
Market
Information
Systems
Interactive
Marketing
Sales Force
Automation
Market
Research and
Forecasting
Customer
Relationship
Management
Advertising
and Promotion
Sales
Management
Product
Management
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Interactive Marketing

Interactive marketing:
◦ A customer-focused marketing process using the
Internet, intranets and extranets to establish twoway transactions between a company and its
customers or potential customers.

The goal is to profitably attract and keep
customers who will become partners with the
business.
23
Targeted Marketing Components





Community – with customised advertising to
appeal to people of specific virtual communities.
Content – with advertising placed on a variety of
selected websites aimed at a specific audience.
Context – with advertising placed on web pages
that are relevant to the content of a product or
service.
Demographic/Psychographic – web marketing
efforts aimed at specific types or classes or people.
Online Behaviour – promotion efforts tailored to
each visit to a site by an individual, e.g., using
‘cookies’ files. (‘Cookies’? Worth looking up online.)
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Targeted Marketing
This is an advertising and promotion management concept that includes
five targeting components
25
Internet Marketing

There are numerous examples of (software)
applications related to Marketing using the
Internet. Attached to the applications are;
◦ E-mail – a communications tool for ‘pushing’ the
message to customers.
◦ Web publishing – a page development tool for
developing pages that ‘pull’ the customers to the
message.
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Sales Function Automation
The Sales Department might provide the sales
force with notebook computers, Web
connectivity and sales contract management
software.
 They can connect their work to marketing
websites and the company intranet.
 The goal being to:

◦ Increase personal productivity
◦ Speed up capture and analysis of sales data from the
field to be passed on to Marketing Managers
◦ Have the effect of gaining strategic advantage
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Human Resource Management (HRM)

HRM often has its own department. As a
collection of applications its information
systems are designed to support
◦ The planning required to meet the personnel
needs of the organisation
◦ The development of employees to their full
potential
◦ Control of all personnel policies and programmes
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Human Resources Systems Will Support…
Staffing
Training and
Development
Strategic
Systems
• Human resource
planning
• Labor force
tracking
• Succession
planning
• Performance
appraisal
planning
Tactical
Systems
• Labor cost
analysis and
budgeting
• Turnover
analysis
• Training
effectiveness
• Career
matching
• Recruiting
• Workforce
planning/
• scheduling
• Skill assessment
• Performance
evaluations
Operational
Systems
Compensation
Administration
• Contract
costing
• Salary
forecasting
• Compensation
effectiveness
and equity
analysis
• Benefit
preference
analysis
• Payroll control
• Benefits
administration
29
HRM and the Internet

The Internet is useful to the HRM
(Department) for;
◦ Recruiting employees using the corporate
website and commercial recruiting services
◦ Posting messages in selected Internet newsgroups
◦ Communicating with job applicants via e-mail
30
HRM and Corporate Intranets

An Intranet is useful to HRM for;
◦ Processing common HRM applications
◦ Allowing the HRM department to provide around-theclock services to employees and applicants
◦ Disseminating valuable information faster than through
previous company channels (such as ‘snail mail’)
◦ Collecting information from employees online
◦ Allowing managers and other employees to perform HRM
tasks with little intervention by the HRM department
◦ Acting as a training tool
Employee Self-Service (ESS)

Intranet applications that allow employees to
◦
◦
◦
◦
◦
View benefits
Enter travel and expense reports
Verify employment and salary information
Update their personal information
Enter data that has a time constraint to it
can be described as ‘self-service’ and can be
included as an application.
32
Financial Management Systems

The management systems of a Financial function
support business managers and professionals in
decisions concerning
◦ the financing of a business
◦ the allocation and control of financial resources
within a business.
33
Financial Management System Examples
34
Accounting Information Systems

An Accounting Application will typically
◦ Record and report the flow of funds through an
organisation
◦ Produce financial statements
◦ Allow forecasts of future conditions to be
generated
35
Accounting Information Systems (2)
An example of Accounting application processes
36
Accounting Information Systems (3)

In the diagram of the previous slide the features
of Sales Transaction System, Cash
Receipts…System, General Ledger… System,
Purchase Transaction… System and payroll…
System could be considered as subsystems of
the Accounts Department. The descriptions
within each box considered as tasks that might
match applications (and more software
programs?)
37
Accounting IS Processes



Order Processing –
Captures and processes customer orders and
produces data for inventory control and accounts
receivable.
Inventory Control –
Processes data reflecting changes in inventory and
provides shipping and reorder information.
Accounts Receivable –
Records amounts owed by customers and
produces customer invoices, monthly customer
statements and credit management reports.
38
Accounting IS Processes (2)



Accounts Payable –
Records purchases from, amounts owed to and
payments to suppliers – it also produces cash
management reports.
Payroll –
Records employee work and compensation data
and produces paycheques and other payroll
documents and reports.
General Ledger –
Consolidates data from other accounting systems
and produces the periodic financial statements and
reports of the business.
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Operations Management

As an Operations Management example there
follows a view of Manufacturing Information
Systems that;
◦ Supports the production/operations part of the
Manufacturing function
◦ Includes all activities concerned with planning and
control of producing goods or services
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Computer-Integrated Manufacturing (CIM)
41
CIM Objectives

The objectives if Computer Integrated
Manufacturing are to typically;
◦ Simplify production processes, product designs and factory
organisation as a vital foundation to automation and
integration
◦ Automate production processes and the business functions
that support them with computers, machines and (possibly)
robots
◦ Integrate all production and support processes using
computer networks, cross-functional business software and
other information technologies
These objectives will employ many different
applications – some of which may be integrated.
42
CIM Systems

Examples of CIM hardware/software systems are;
◦ Computer-Aided Manufacturing (CAM) – that automate the
production process
◦ Manufacturing Execution Systems (MES) – performance
monitoring information systems for factory floor operations
◦ Process Control (Systems) – that control ongoing physical
processes
◦ Machine Control (Systems) – that control the actions of
machines
Each of these could be viewed as an application or
group of applications.
43
Information System Applications for
E-Commerce

Information Systems applications can be used by
an organisation as a basis for trade. It may be
the main basis for trade (as it is for E-Bay).

Many organisations use IS applications to ‘add
value’ to their product.
44
Major E-Business Applications
Electronic
Business
Applications
Telecommunications
Networks
Enterprise
Communication
Coordination &
Collaboration
Electronic
Commerce
Front End
Intranets
Extranets
The Internet
(Other networks)
Internal
Business
Systems
Back End
45
Cross-Functional Systems

In organisations the boundaries of traditional
business functions often intersect, overlap or
integrate.

This is so that Management can reengineer and
improve vital business processes all across the
enterprise.
46
Cross-Functional Systems (2)

Below the diagram describes a sequence of events that
matches the early part of a product’s life cycle. The functions
of Marketing, Engineering and Manufacturing will have tasks
(therefore applications) that overlap.
New Product Development Process
47
Enterprise Business Systems
Supply Chain Management
Sourcing - Procurement
Enterprise Resource Planning
Internal Business Processes
Customer Relationship Management
Marketing – Sales - Service
Partners
Suppliers
Partner Relationship Management
Selling – Distribution
Knowledge Management
Collaboration – Decision Support
Employees
Enterprise Application
Architecture
Customers
48
Customer Relationship Management (CRM)

CRM uses technology to:
◦ Create a cross-functional enterprise system that
integrates and automates many of the processes
in sales, marketing and customer service that
interact with customers
◦ Create a framework of web-enabled software
and databases that integrate these processes with
the rest of the company’s processes.
49
Customer Relationship Management
CRM Uses IT to Create a Cross-Functional Enterprise System
Marketing and
Fulfillment
= Employee or
Prospective
Customer
Fax
Sales
•Cross-Sell
•Up-Sell
Telephone
Customer
Service and
Support
e-Mail
Web
Contact and
Account
Management
Retention
and Loyalty
Programs
50
CRM Applications

Contract and Account Management;
◦ Helps sales, marketing and service professionals
capture and track data about past/planned contacts
with customers/prospects

Sales
◦ Provides Sales Representatives (reps) with the
software tools and data they need to support and
manage sales activities
◦ ‘Cross-selling’ is trying to sell a customer of one
product with a related product
◦ ‘Up-selling’ is trying to sell customer a better
product than they are currently seeking
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CRM Applications (2)

Marketing and Fulfillment help marketing
professionals accomplish direct marketing
campaigns by tasks such as:
◦ Qualifying leads for targeted marketing and
scheduling and tracking direct marketing mailings.
52
CRM Applications (3)

Customer Service and Support
◦ Provides sales reps with software tools and database
access to customer database shared by sales and
marketing professions
◦ Helps create, assign and manage requests for service
◦ Call centre software that routes sales calls to
customer support agents based upon their skills and
type of call
◦ Help desk software that provides relevant service
data and suggestions for resolving problems for
customer service reps helping customers with
problems
53
CRM Applications (4)

Retention and Loyalty Programmes
◦ Try to help a company identify, reward, and market to
their most loyal and profitable customers
Seen as a function, Retention and Loyalty might
use data mining tools and analytical software
that extracts information about customers and
prospective customers from a ‘Customer Data
Warehouse’.
54
CRM: The Business Focus
Customer Relationship Management supports integrated and
collaborative relationship between a business and it’s customers.
Customer
Life Cycle
CRM
Functional
Solutions
Acquire
Direct Marketing
Enhance
Retain
Cross-sell and Up-sell
Proactive Service
Sales Force Automation
Customer Support
The Internet
CRM
Integrated
Solution
Shared
Customer Data
Partner
Collaborative
Service
Company
Customer
55
Benefits and Challenges of CRM
Customer Relationship Management benefits are;
◦ Identify and target the best customers
◦ Customisation and personalisation of products and
services
◦ Track customer contacts
◦ Provide consistent customer experience and superior
service/support
CRM failures identified in a case study;
◦ 50% of applications fail to meet expectations
◦ 20% of the time CRM damaged, rather than enhanced,
customer relationships
◦ A lack of understanding of customer expectation and
preparation for customer service is blamed
56
Enterprise Resource Planning (ERP)

ERP: a cross-functional enterprise system with an
integrated suite of software modules that support
the basic internal functions of an organisation.

(Functions = ‘business processes’ in some of the books, case
studies and web sites.)
57
Enterprise Resource Planning
Production
Planning
Sales
Distribution,
Order
Management
Integrated
Logistics
Customer/
Employee
Accounting
and Finance
Human
Resources
58
Enterprise Resource Planning – the
Benefits

ERP is often established in organisations with
large numbers of employees, numerous or
complex departments and/or large numbers of
customers because of a perceived value of;
◦
◦
◦
◦
Quality and efficiency in products and operations
Decreased costs in production and operations
Decision support for Management
Enterprise agility – the ability to change strategies
and/or methods in response to ‘outside’ changes
59
Costs of Implementing a New ERP
Percentages identified in a
case study
60
Enterprise Resource Planning Failures

Case study findings;
◦ A company had software installation problems of
ERP Integrated Suite into its retail environment.
◦ Two retail outlets blamed ERP software for poor
financial performance.
◦ A grocery had problems with number of
transactions.
◦ Another large retailer replaced the entire ERP
system.
61
Enterprise Resource Planning Failures (2)

Causes of ERP failure:
◦ Underestimating the complexity of the planning,
development and training needed
◦ Failure to involve affected employees
◦ Trying to do too much too fast
◦ Insufficient training in new work tasks
◦ Failure to do enough data conversion and testing
◦ Over reliance by the company on claims of the
ERP sellers or consultants
62
Supply Chain Management (SCM)

Supply Chain Management is a cross-functional
inter-enterprise system to help support and
manage the links between a company’s key
business processes and those of its suppliers,
customers and business partners.
(Processes? Functions!)
63
Supply Chain Management (2)

Supply Chain Management (SCM): an application
to match strategic objectives for many firms ◦
◦
◦
◦
◦
the right products
the right place
the right time
in the proper quantity
at an acceptable cost
64
Supply Chain Management (3)
Supply
Chain
Life
Cycle
SCM
Functional
Processes
Commit
Schedule
Make
Deliver
Order
Commitment
Demand
Planning
Manufacturing
Planning
Advance
Scheduling
Transportation
Planning
Distribution
Planning
SCM
Integrated
Solution
Internetworked Supply Chain Management
65
The Role of SCM
66
Supply Chain Management (4)
SCM Software helps organisations reengineer and integrate the functional
SCM processes
Supply Chain
Life Cycle
Commit
Schedule
Make
Deliver
Forecast and Demand Planning
Strategic Sourcing
and Procurement Customer Order Fulfillment Service
SCM
Functional
Processes
Distribution Network and Warehouse Operations
Production
Logistics
Transportation and Shipment
Management
The Internet
Shared
Market Data
SCM
Integrated
Solution
Supplier
Manufacturer
Collaborative
Fulfillment
Retailer
Customer
67
Supply Chain Management (5)

The goals of SCM is to establish fast, efficient,
low-cost network of business relationships or a
supply chain to get a company’s products from
concept to market.

A supply chain is made up of interrelationships
with suppliers, customers, distributors, and
other businesses that are needed to design,
build and sell a product.
68
Supply Chain Management (6)

Causes of problems with SCM:
◦ Lack of proper demand-planning knowledge, tools
and guidelines
◦ Inaccurate or over-optimistic demand forecasts
◦ Inaccurate production, inventory and other data
◦ Lack of adequate collaboration within the
company and between partners
◦ SCM software considered immature, incomplete
and hard to implement
69
Enterprise Application Integration (EAI)

EAI connects cross-functional system and
serves as middleware to provide data
conversion, communication between systems
and access to system interfaces.
70
Enterprise Collaboration Systems
(ECS)

Enterprise Collaboration Systems (ECS): crossfunctional Information Systems that enhance
communication, coordination and collaboration
among the members of business teams and
workgroups.
71
Enterprise Collaboration Systems (2)

Enterprise Collaboration Systems goals are to:
◦ Communicate - share information with teams and
work groups
◦ Coordinate - coordinate individual work efforts
and use of resources with teams and work
groups
◦ Collaborate - work together cooperatively on
joint projects and assignments
72
ECS Tools
73
Why Collaborate?

Workgroups and project teams work together
efficiently and effectively regardless of location,
they share information, coordinate work efforts
and resources. They work together
cooperatively.
74
What Next?

Next Week:
Selection and acquisition of information
systems
75