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CHAPTER 9 FUNCTIONAL AND ENTERPRISE SYSTEMS

CHAPTER 9 FUNCTIONAL AND ENTERPRISE SYSTEMS. Learning Objectives. Describe the role and characteristics of functional information systems State the objective and operations of transaction processing and how it is supported by IT

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CHAPTER 9 FUNCTIONAL AND ENTERPRISE SYSTEMS

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  1. CHAPTER 9FUNCTIONAL AND ENTERPRISE SYSTEMS

  2. Learning Objectives • Describe the role and characteristics of functional information systems • State the objective and operations of transaction processing and how it is supported by IT • Discuss the managerial and strategic applications in the accounting and finance areas that are supported by IT • Understand the marketing and sales applications provided by IT

  3. Learning Objectives(continued …) • List the various production and operations management activities and describe how they are supported by IT • Discuss the human resources management activities and how they can be improved by IT • Discuss the need for integrating functional information systems and describe the role of ERP and supported software such as SAP

  4. Information Systems to Support Business Functions Transaction Processing Information Systems Accounting and Finance Systems • Characteristic of • functional • Information • Systems • Functional • Support for • Managers; • Management • Information • Systems • Tracking Business • Transactions • Objectives of TPS • The Process of TPS • Modernized TPS: • From Online • Processing to Intranet • Typical TPS Tasks and • Modules • Financial • Planning and • Budgeting • Investment • Management • Financial • Controls Chapter Overview

  5. Marketing and Sales Systems Production and Operations Systems • Customer Service • Telemarketing • Distribution Channels • Management • Marketing Management • Ethical and Societal Issues in • IT-supported Sales Activities • Supply-Chain Management • Logistics and Materials • Management • Planning Production/Operations • Automatic Design Work and • Manufacturing Human Resources Management Systems Integrated Information Systems and Enterprise Resource Planning • Recruitment • HRM and Development • HRM and Planning • Intranet Applications in HRS • Why Integrate? • How to Integrate? • Extreme Integration: Putting it • All Together Chapter Overview (continued …)

  6. Case : Colonial Building Supply • The Business Problem • Needed a technology • to monitor inventory and support-related decisions • to provide it with current information about inventory levels and customer buying trends • to show the price of the lumber fluctuates daily • The Solution • integrated system • Point-of-sales (POS) terminals with hand-held automatic identification and data collection devices

  7. Case (continued…) • The Results • Lower costs for data entry labor • Reduction in inventory and storage space • Fast access to information • Better customer service • Higher employee satisfaction • Stay competitive • Increase its market share and profitability • What have we learned from this case?? • The system’s major applications are in logistics • IT can be beneficial to a relatively small company • An integration includes connection to business partners using the Internet

  8. Characteristics ofFunctional Information Systems • Comprises of several smaller information system • Specific IS applications • can be integrated to form a coherent departmental function system • can be completely independent • can be integrated across departmental lines • Interface with each other to form the organization wide information system • Interface with the environment

  9. Business Transactions Reports Scheduled, Exception, Demand, Others Enterprise Application such as EIS TPS Databases Internal, External Data Warehouse Functional applications, DSS Management Information Systems • Provide routine information to managers in the functional areas • Provide information in exception reports and ad hoc (demand) reports A Management Information System

  10. Transaction Processing Information Systems • Transaction Processing • major business processes • provide the mission-critical activities • transaction may generate additional transaction • simple transactions • large volume and repetitive transactions • Transaction Processing System (TPS) • computerized information system • supports the transaction processes

  11. Characteristics of TPS • Large amounts of data are processed • The sources of data are mostly internal, and the output is intended mainly for an internal audience • The TPS processes information on a regular basis • Large storage (database) capacity is required • High processing speed is needed due to the high volume • Input and output data are structured • High level of detail is usually observable • Low computation complexity is usually evident • High level of accuracy, data integrity, and security is needed • High processing reliability is required • Inquiry processing is a must

  12. Customer makes a purchase of an item Queries, Answers  Transaction File The Items’ Processing System Payment Processing POS Terminal Inventory File Report Master Files Sales Files Overview of typical transaction processing TPS (continued…)

  13. BatchProcessing Online Processing Hybrid System The Process of TPS Data are collected and entered automatically • Modernized TPS: from OLTP to the Internet • Online Transaction Processing (OLTP) • created on a client/server architecture can save money • Internet (Intranet) transaction Processing • allow multimedia data transfer, fast response time, and storage of large databases of graphics and videos

  14. Accounting & Finance Systems • Financial Planning and Budgeting • Financial and Economic Forecasting • much of the interrelated indicators are available on the Internet • many software packages conducting forecasting and planning • Planning for Cash Management • build a decision support model • make decisions about when and how much to refinance • Budgeting • Budget 2000 and Comshare BudgetPlus are available to support budgeting and to facilitate communication among all participants in the preparation process

  15. STRATEGIC SYSTEMS a. Strategic Planning b. Ratios and Financial Health c. Merger and Acquisition Analysis INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT TACTIAL SYSTEMS Top Management Operation/ Production Marketing HRM Engineering a. Budgeting Preparation and Control b. Investment Management c. Capital Budgeting d. Cost Analysis and Control e. Tax Management f. Auditing g. Financial Planning IRS SEC Vendors Clients CPA Companies Suppliers Customers Business Partners OPERATIONAL AND TRANSACTION PROCESSING SYSTEMS a. The General Ledger b. Sales Order Processing c. Accounts Payable and Receivable d. Receiving and Shipping e. Payroll f. Inventory Management g. Periodical Reports & Statements Accounting & Finance Systems (continued …) • Major activities

  16. Accounting & Finance Systems(continued …) • Investment Management • Access to financial and economic reports • hundreds of sources for the financial and economic reports and news • Financial analysis • is executed with a spreadsheet program, or with commercially available, ready-made decision support software

  17. Accounting & Finance Systems(continued …) • Financial Controls • Budgetary Controls • more sophisticated software attempts to tie expenditures to program accomplishment • Auditing • auditing software is especially suitable when computerized information systems are audited • Financial Health Analysis • supported by expert systems • Profitability Analysis and Cost Control • profitability analysis software allows accurate computation of profitability for individual products and for entire organizations

  18. Marketing & Sales Systems • Distribution Channel • provide the goods or services to the customer, and may extend through various intermediaries such as wholesalers and retailers • Channel Systems • support all marketing linkages, such as after-sales customer support

  19. Manufacturing R & D/Design COMPANY Distribution Accounting/ Finance Market Intelligence Systems Dealer Systems CHANNEL SYSTEMS Delivery Systems Sales Systems Target Marketing Systems Customer Support Systems Marketing & Sales Systems (continued ...)

  20. Marketing & Sales (continued ...) • Customer Service • Customer Profiles and Preference Analysis • IT creates customer database and merges computerized lists • Mass Customization • Dell computers assembles computers according to the specifications of the buyers • J.C. Penny measures you and transfers the data directly to the production floor • Targeted Advertisement on the Web • match appropriate ads with specific groups of customers • Customer Inquiry Systems and Automated Help Desk • expert systems and intelligent agents

  21. Marketing & Sales (continued ...) • Telemarketing • Five major activities which are supported by IT : • advertisement and reaching customers • order processing  customer service • sales support  account management • Distribution Channels • Delivery management • DSS models are used to support decisions like use own outlets or distributors, and transportation mode • Improving sales at retail stores • IT reduces the long lines in stores by reengineering the checkout process

  22. Marketing & Sales (continued ...) • Marketing Management • Pricing of Products or Services - online analytical processing is supporting pricing decisions • Salesperson Productivity - sales-force automation provides salespeople in the field with portable computers, access to databases, and to the web • Product-Customer Profitability Analysis - a cost-accounting system identifies profitable customers and frequency • Sales Analysis and Trends - geographical information system (GIS) analyzes customers and competitors and examines potential strategies • New Products, Services, and Market Planning - IT evaluates large number of factors and uncertainties and conducts survey

  23. Marketing & Sales (continued ...) • Ethical and Social Issues in IT-supported Sales Activities • Example of Privacy Policy : 3M Corp. • Information Collection • personally identifiable information that you voluntarily provide through 3M’s website or e-mail correspondence • general information (such as the type of browser you use, the files you request, and the domain name and country from which you submit the request for information) • Use of Information • responding to your inquires • tracking orders you place with 3M • supplying you with requested information on 3M products

  24. Retail Supplier Manufacturing Transfer Distribution Transfer Retail Outlet Transfer Consumer Transfer Production Operations & Logistics • Supply-Chain Management (SCM) INFORMATION FLOW • SCM plans and controls the flow of information and cash CASH FLOW

  25. Production Operations & Logistics (continues …) • Logistics and Material Management • Inventory Management • determining how much inventory to keep • what to order, from whom, when to order and how much • inventory model : economic order quantity (EOQ) • many low cost commercial inventory software packages • Quality Control • providing information about the quality of incoming material and parts, as well as the quality of in-process semi-finished, and finished products • standard quality control information systems and expert systems

  26. Production Operations & Logistics (continues …) • Planning Production/Operations • Material Requirements Planning (MRP) - facilitates the plan for acquiring parts, subassemblies, or material • Manufacturing Resource Planning (MRPII) - connects the regular MRP to other functional areas • Just-in-Time Systems - minimizes waste of all kinds, improves processes and systems, and maintains respect for all workers • Project Management - Program Evaluation and Review Technique (PERT) and Critical Path Method (CPM) • Short-Term Schedules - schedule jobs and employees on a daily or weekly basis

  27. Production Operations & Logistics (Continues …) • Automatic Design Work and Manufacturing • Computer-Aided Design (CAD) • enables drawings to be constructed on a computer screen and subsequently stored, manipulated, and updated electronically • Computer-Aided Manufacturing (CAM) • facilitates planning, operation, and control of production jobs • Computer-Integrated Manufacturing (CIM) • concept or philosophy about the implementation of various integrated computer systems in factory automation

  28. Human Resources Management Systems • Recruitment • finding, testing, and deciding which employees to hire • Positions inventory • matching open positions with available personnel • allowing data to be viewed by an employee over the intranet • Employee Selection • conducting interviews by video teleconferencing • expediting the testing and evaluation process, assuring consistency in selection by using expert systems • Using the Internet • advertising position openings on the Internet

  29. Human Resources Management Systems (continued …) • Human Resources Maintenance and Development • Performance Evaluation • online evaluations - supports many decisions, ranging from rewards to transfer to layoffs • expert systems - provide an unbiased and systematic interpretation of performance over time • paperless wage system (PWS) - tracks employee review dates and automatically initiates the wage review process • Training and Human Resources Development • digital video-editing system - produces training videotapes • Turnover, Tardiness, and Absenteeism Analyses • DSS models - identifies causes and patterns

  30. Human Resources Management Systems (continued …) • Human Resources Management and Planning • Personal files and skills inventory - computerized personnel files identify qualified employees within the company for open positions, promotion, transfer, special training programs, and layoffs • Benefits administration - Networks and voice technology, or the intranets, specifying the value of each benefit and the available benefits balance of each employee • Government reports - Availability of computerized personnel records greatly eases the reporting process • Personnel planning - IT is used to collect, update, and process the information • Succession planning and implementation - expert systems and personnel databases supporting and implementing planning • Labor-Management Negotiations - DSS improve the negotiation climate and considerably reduce the time needed for reaching an agreement

  31. Human Resources Management Systems (continued …) • Intranet Applications in HRM • Edify Corp.’s employee service system • Oracle Corp.’s flexible benefits enrollment program on the intranet • Aetna health Plan’s online directory of primary care physicians, hospitals, medical services, and health information • Apple Computers’ extensive education and development activities on the intranet • Merck Inc.’s intranet for HR transactions

  32. Integrated Information Systems • Reasons for Integration • using twentieth-century computer technology, which is functionally oriented : • cannot give employees all the information they need • do not let different departments communicate effectively with each other in the same language • crucial sales, inventory, and production data often have to be painstakingly entered manually into separate computer systems every time a person who is not a member of a specific department needs ac hoc information related to the specific department

  33. How to Integrated Information Systems • Connect existing systems • maximize the use of existing systems and minimize the changes in them • allows the addition of new applications to existing ones and the connection of systems to intranets and the Internet • Using supply chain management software • use one integrated package in one or several functional areas • overcomes the isolation of the traditional departmental structure where the functional areas are separated from one another

  34. How to Integrated Information Systems (continued …) • Enterprise resource planning (ERP) • control all major business processes with a single software architecture in real time • increased efficiency to improved quality, productivity, and profitability • SAP software (R|3; my SAP.com) • crosses functional departments and can be extended along the supply chain to both suppliers and customers • composed of four major parts : accounting, manufacturing, sales and human resources

  35. Sales Offices The factory automati- cally receives the sales order and can begin production. FACTORY The warehouse is si- multaneously informed about the order and can schedule shipping. WAREHOUSE Accounting gets up- dated sales and pro- duction data at every step of the process ACCOUNTING HEAD QUARTERS Headquarters can tap into up-to-the-minute data on sales, inven- tory, and production ERP • SAP concept Central SAP Database & Servers

  36. What’s in IT for Me? • For Accounting • Executing TPS effectively is a major concern of any accountant • For Finance • The use of IT helps financial analysts and managers perform their difficult tasks better • For Marketing • By understanding how ERP software operates, marketing people can greatly improve the software utilization by developing challenging corporate applications

  37. What’s in IT for Me? (continued …) • For Production/Operations Management • Supply chain management and ERP are critical today for any medium and large manufacturing company, and for service organizations such as banks • For Human Resources Management • IT can improve the efficiency and effectiveness of the HRM activities • conducting training on the intranet

  38. What’s in IT for Me? (continued …) • For Human Resource Management • Human resource managers utilize their corporate networks extensively for posting job openings, and use internal corporate networks to publish corporate policies, company newsletters and job openings

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