Information Systems (Steven Alter, 2002, Prentice Hall)
Chapter 1 Businesses perate !hrou"h Systems
Business Processes an# the $alue Chain %&'usiness is 'ecomin" 'usiness as usual 'ecause or"ani(ations that cannot a#apt to this environment are increasin"ly noncompetitive unless they are fortunate enou"h to have uni)ue pro#ucts, s*ills or a location that others cannot match+ ,e still encounter many companies -hose pro#ucts an# services seem lac*luster, 'ut other than luc*y e.ceptions, companies that cannot meet to#ay/s hi"h e.pectations -ill "ra#ually 'e ta*en over or -ill "o out of e.istence+ 0our !hemes 1+ Businesses operate throu"h systems in -hich people perform 'usiness processes usin" technolo"y an# information+ !he 'asic i#eas for thin*in" a'out these systems are the same re"ar#less of -hether the Internet is involve#+ 2+ Business professionals participate in all the ma1or phases of 'uil#in" an# maintainin" these systems, an# therefore nee# *no-le#"e an# s*ills necessary for effective participation+ 2+ A#vances in I! have 'een an# continue to 'e a #rivin" force in 'usiness innovation in "eneral an# e&'usiness in particular+ 3+ !he success of I!&ena'le# systems is in no -ay "uarantee# even -hen the latest technolo"y is use#+ Businesses operate throu"h systems an# the systems are compose# of su'systems+ A system has its purpose, 'oun#ary, environment, inputs an# outputs+ Here is the #efinition of the 'usiness process4 5A 'usiness process is a relate# "roup of steps or activities in -hich people use information an# other resources to create value for internal or e.ternal customers6 !his process has time, space, input, output, 'e""in" an# en#+ Su' processes are parts of a process that are processes in their o-n ri"ht of process+ A process/s value a##e# is the amount of value it creates for its internal or e.ternal customer+ 0or e.ample, at 7ell Computer, the process 5 assem'le a computer6 starts -ith the computer/s component parts an# en#s -ith a completely assem'le# computer+ !he value a##e# is the #ifference 'et-een the value of the components an# the value of the assem'le# computer+ Business processes re)uirin" coor#inate# -or* from many functional areas4 Creatin" a ne- pro#uct Creatin" a coor#inate# plan for an entire 'usiness 0ulfillin" customer or#ers Business processes typically -ithin a functional area %n"ineerin" Sales an# 8ar*etin" Pro#uction Accountin" an# 0inance Human 9esources $alue Chain !he set of processes a firm uses to create value for its customers is often calle# its value chain+ !he value chain inclu#es primary processes that #irectly create the value the firm/s customer perceives an# support processes that a## value in#irectly 'y ma*in" it easier for others to perform the primary processes+ %.ample (a hypothetical restaurant) :fi"ure 1+;< Supply Chain Systems !he supply chain is the transactions, coor#ination, an# movement of "oo#s 'et-een the firm/s suppliers an# the firm+ Supply chain mana"ement systems can create stan#ar#i(e# electronic lin*s an# lon"&term a"reements -ith suppliers+ An# the system can improve service processes 'y maintainin" customer recor#s an# hastenin" response+ %&'usiness can 'e #efine# as the practice of performin" an# coor#inatin" critical 'usiness processes throu"h the e.tensive use of computer an# communication technolo"ies an# computeri(e# #ata+ !he #istinction 'et-een B2B an# B2C is cite# fre)uently in #iscussin" e&commerce opportunities+ B2B ('usiness&to&'usiness) refers to usin" the Internet as a primary channel for sellin" pro#ucts to other 'usinesses+ B2C ('usiness&to&consumer) refers to usin" the Internet as a primary channel for sellin" pro#ucts to consumer+ :!a'le 1+2< Case 1 (7ell) !ra#itionally pc manufactures pro#uce computers 'ase# on #eman# estimation+ !hose manufactures ma#e contract -ith #istri'utors that sol# the computers to in#ivi#uals or 'usinesses+ 7ell eliminates mi##leman/s char"es an# ris* of lar"e inventories 'y ta*in" or#ers #irectly from the customers an# 'uil#in" computers accor#in" to the customer/s Purchase 0oo# Seat Customers Store 0oo# !a*e r#ers Coo* 0oo# Serve foo# Create Bill 9eceive Payment specification+ 7ell uses electronic lin*s to its suppliers that tell them e.actly -hen the parts are nee#e#+ An# 7ell also uses outsourcin" efficiently+ Chapter ; !ypes of Information Systems Supply Chain Systems 9e"ar#less of -hether the firm is a manufacturer or a retailer, its supply chain for ra- materials an# components shoul# assure relia'le, lo-&cost ac)uisition of -hatever it nee#s+ Supply chain systems start -ith information a'out -hat inventory is availa'le, -hen previously or#ere# material -ill arrive, an# -hen material -ill pro'a'ly 'e nee#e# 'ase# on manufacturin" sche#ules or sales forecasts+ !his information is use# to4 7etermine material re)uirements for future -ee*s or months =enerate ne- or#ers Sen# the or#ers to suppliers 'tain commitment #ates for li*ely receipt+ $erify that the or#ere# material actually arrive#+ 8aterial re)uirement plannin" (89P) systems attempte# to inte"rate purchasin" an# pro#uction activities+ %lectronic #ata interchan"e (%7I) system connects lar"e companies an# their suppliers electronically+ Since electronic #ata transmission is virtually instantaneous, the supplier/s information system can chec* for availa'ility an# respon# )uic*ly -ith a confirmation+ !he more current i#ea of supply chain mana"ement (SC8) "oes 'eyon# automatin" #ata transfers+ It is the overall system of coor#inatin" closely -ithy suppliers so that 'oth the firm an# its suppliers reap the 'enefits of smaller inventories, smoother pro#uction, an# less -aste+