Weeks 4-5: Internal Information Systems

1. Weeks 4-5: Internal Information Systems MIS 2101: Management Information Systems Douglas M. Schutz Based on material from Information Systems Today: Managing in the Digital World, Leonard Jessup and Joseph Valacich, Pearson Prentice Hall, 2007 Also includes material by David Schuff, Paul Weinberg, Cindy Joy Marselis, Munir Mandviwalla, and Mart Doyle.

2. Enhancing Business Intelligence (BI) using Information Systems • Business Intelligence : • The process of gathering information from both internal and external sources to make better decisions • The data derived from these processes • Companies such as Amazon.com use Information Systems to gain BI for increasing sales and for reducing the risk of ecommerce fraud.

3. Learning Objectives • Describe the characteristics that differentiate the operational, managerial, and executive levels of an organization. • Explain the characteristics or the three MIS systems designed to support each level of an organization: • Transaction Processing Systems (TPS) • Management Information Systems (MIS) • Executive Information Systems (EIS) • Describe the characteristics seven MIS systems that span the operational, managerial, and executive levels: • Decision Support Systems (DSS) • Intelligent Support Systems • Data Mining and Visualization Systems • Office Automation Systems • Collaboration Technologies • Knowledge Management Systems • Functional Area Information Systems

4. Operational, managerial, and executive level decision making

5. 1. Operational Level Day-to-day business processes Interactions with customers Information systems used to: Automate repetitive tasks Improve efficiency Decisions: Structured (What are structured decisions?) Recurring Can often be automated (using TPSs) Usually daily/weekly Examples of Operational Level Decisions?

6. 2. Managerial Level Functional managers Monitoring and controlling operational-level activities Providing information to executive level Midlevel managers Focus on effectively utilizing and deploying resources Goal of achieving strategic objectives Managers’ decisions Semistructured Contained within business function Moderately complex Time horizon of few days to few months Examples of Managerial Level Decisions?

7. 3. Executive Level The president, CEO, vice presidents, possibly board of directors Decisions Long-term strategic issues Unstructured decisions Complex and nonroutine problems Long-term ramifications Examples of executive level decisions? 7-7

8. Comparison of Decision-Making Levels in an Organization

9. Learning Objectives • Describe the characteristics that differentiate the operational, managerial, and executive levels of an organization. • Explain the characteristics or the three MIS systems designed to support each level of an organization: • Transaction Processing Systems (TPS) • Management Information Systems (MIS) • Executive Information Systems (EIS) • Describe the characteristics seven MIS systems that span the operational, managerial, and executive levels: • Decision Support Systems (DSS) • Intelligent Support Systems • Data Mining and Visualization Systems • Office Automation Systems • Collaboration Technologies • Knowledge Management Systems • Functional Area Information Systems

10. Question • What is the difference between a: • TPS, • MIS, and • EIS?

11. General Types of Information Systems Input-process-output model Basic systems model Payroll system example

12. 1. Transaction Processing System (TPS) Operational level Purpose Processing of business events and transactions How does TPS increase efficiency? What are examples of business processes supported by TPS?

13. Architecture of a TPS

14. Architecture of a TPS: Inputs

15. Architecture of a TPS: Processing

16. Summary of TPS Characteristics

17. 2. Management Information Systems (MIS) Managerial level Purpose: Produce reports Support of midlevel managers’ decisions What are some examples of the types of business processes supported by MISs?

18. Architecture of an MIS

19. Architecture of an MIS: Outputs

20. Summary of MIS Characteristics

21. 3. Executive Information Systems (EIS) A.k.a. Executive Support System Executive level Purpose Aid in executive decision-making Provide information in highly aggregated form What are some examples of the types of business processes supported by EIS?

22. Architecture of an EIS

23. Architecture of an EIS: Inputs Internal data External data What other type of input do EIS systems typically have? What is the difference between hard data and soft data?

24. Architecture of an EIS: Processing Summarizing Graphical interpreting

25. Architecture of an EIS: Outputs Summary Reports Trends Simulations

26. EIS Output: Digital Dashboards Digital Dashboards Presentation of summary information Information from multiple sources Ability to drill down - what does this mean?

27. Summary of EIS Characteristics

28. Summary: Types of Information Systems Supporting each Level of the Organization • Executive Information Systems (EIS) • highly aggregated information at the executive level • Management Information Systems (MIS) • reporting and analysis at the managerial level • Transaction Processing Systems (TPS) • captures and records basic business events on a day-to-day basis at the operational level What are the trends as you go up the list?

29. Summary: Types of Information Systems Weaker EIS MIS TPS Controls and Security Stronger Operations Staff Transaction Processing Source: Business Driven Technology, by Haag, Baltzan, Phillips, McGraw Hill, 2006 (with modifications)

30. Summary: Decision Levels Decision Level Description Example Type of Information Executive Competitive advantage Market leader Long term New products that change the industry External events, rivals, sales, costs quality, trends. Management Improve operations New tools to cut costs or imp- rove efficiency Expenses, schedules, sales models, forecast Operations Day-to-day actions keep company running Scheduling employees, placing orders. Transactions, accounting, HRM, inventory

31. Case

32. Amazon.com and Business Intelligence • 35 million customers worldwide • Innovations for satisfaction (Name Some?) • Fraud protection • (How?)

33. Learning Objectives • Describe the characteristics that differentiate the operational, managerial, and executive levels of an organization. • Explain the characteristics or the three MIS systems designed to support each level of an organization: • Transaction Processing Systems (TPS) • Management Information Systems (MIS) • Executive Information Systems (EIS) • Describe the characteristics seven MIS systems that span the operational, managerial, and executive levels: • Decision Support Systems (DSS) • Intelligent Support Systems • Data Mining and Visualization Systems • Office Automation Systems • Collaboration Technologies • Knowledge Management Systems • Functional Area Information Systems

34. Question • How does the structure of activities and decisions vary going from: operational, to managerial, to executive levels of an organization?

35. Seven Information Systems that Span Organizational Boundaries

36. 1. Decision Support Systems Decision making support for recurring problems Used mostly by managerial level employees (can be used at any level) Interactive decision aid What-if analyses Analyze results for hypothetical changes

37. Types of Decisions You Face

38. Alliance between You and a DSS

39. Architecture of a DSS

40. Databases & Data Warehouses Operational Databases

41. How can DSS help your organization? • Accounting • Finance • Marketing • HR • Statistics

42. Common DSS Models Information Systems Today: Managing in the Digital World 7-42

43. Using DSS to Buy a Car Selling price – $22,500 Down payment – $2,500 Monthly payment – about $400 Interest rate information from the bank

44. Show Me The Money

45. Question • Identify a computer systems which you have interacted with in the recent past • Classify the system as: • TPS, MIS, EIS, or DSS • Explain the characteristics of that system which correspond to the category you choose

46. 2. Intelligent Systems Artificial intelligence Simulation of human intelligence Reasoning, learning, sensing, hearing, walking, talking, etc.

47. Decision Support vs. Artificial Intelligence Makes or recommends a decision for you Helps you analyze information

48. Three Types of Intelligent Systems a) Expert systems b) Neural networks c) Intelligent agents

49. a) Expert Systems Use reasoning methods Manipulate knowledge rather than information System asks series of questions Inferencing/pattern matching Matching user responses with predefined rules Rules are typically expressed using an if-then format Can you provide an example with respect to car loan approval?

50. b) Neural Network System Approximation of human brain functioning Training to establish common patterns Past information New data compared to patterns E.g., loan processing