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Systems
Learning Objectives
By the end of the lecture you should be able
to:
Data
Information
Using Information
What Is a System?
System: A set of components that work
together to achieve a common goal
Subsystem: One part of a system where
the products of more than one system are
combined to reach an ultimate goal
Closed system: Stand-alone system that
has no contact with other systems
Open system: System that interfaces with
other systems
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Examples of IT and IS
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Examples of IT and IS
Examples of IT
Hardware (PC, UNIX server)
Software (e-mail, Internet, Windows, Word)
Consumer devices (mobiles)
Examples of IS
File systems, databases, e-mail servers /
clients
e-commerce
SAP, student records
12
Why is IS Important?
Worldwide changes:
Global economy
Knowledge- or information-based society
Business enterprise
Digital firm
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Global Economy
Growing percentage of economy relies
upon import and export
Need to operate globally
IS can provide global trading infrastructure
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Information Economy
70%
60%
% SERVICE
50%
% WHITE COLLAR
40%
% BLUE COLLAR
30%
% FARMING
20%
10%
YEAR
15
19
97
19
80
19
70
19
60
19
40
19
50
19
30
19
20
19
10
19
00
0%
Changes to Society
16
Business Enterprise
Change from hierarchical organisations
Now flat, decentralised
Relies on instant information
Flexibility with customer focus, with
increasing importance
17
18
Digital Firm
An organisation where:
Nearly all relationships with customers,
suppliers and employees is digital
Business processes accomplished through
digital networks
Paperless Office
Flexible
Dependent upon on IT
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Impacts of IS
20
Impacts of IS
Efficiency
Cost
Accountability
Ethical and social issues
21
22
23
Knowledge Workers
24
Barriers of IS
25
Limitations of IS
26
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Value Chain.
It evaluates which value each particular activity adds to the
organizations products or services.
This idea was built upon the insight that an organization is more than a
random compilation of machinery, equipment, people and money.
Only if these things are arranged into systems and systematic
activates it will become possible to produce something for which
customers are willing to pay a price.
Porter argues that the ability to perform particular activities and to
manage the linkages between these activities is a source of
competitive advantage.
(Ref: M. Porter, "Competitive Advantage: Creating and Sustaining
Superior Performance" (1985)
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Infrastructure
Support
Activities
Primary
Activities
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
& Sales
Service
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Primary Activities
Primary activities are directly concerned with the
creation or delivery of a product or service.
inbound logistics,
operations,
outbound logistics,
marketing and sales,
and service.
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Inbound Logistics
Here goods are received from a company's suppliers. They are stored until they are needed on
the production/assembly line. Goods are moved around the organization.
Operations
This is where goods are manufactured or assembled. Individual operations could include room
service in an hotel, packing of books/videos/games by an online retailer, or the final tune for a
new car's engine.
Outbound Logistics
The goods are now finished, and they need to be sent along the supply chain to wholesalers,
retailers or the final consumer.
Service
This includes all areas of service such as installation, after-sales service, complaints handling,
training and so on.
31
Secondary Activities
There are four main areas of support
activities:
procurement
technology development (including R&D),
human resource management, and
infrastructure (systems for planning,
finance, quality, information management
etc.).
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Procurement
This function is responsible for all purchasing of goods, services and
materials. The aim is to secure the lowest possible price for purchases of
the highest possible quality.
Technology Development
Technology is an important source of competitive advantage. Companies
need to innovate to reduce costs and to protect and sustain competitive
advantage. This could include production technology, Internet marketing
activities, lean manufacturing, Customer Relationship Management (CRM),
and many other technological developments.
Firm Infrastructure
This activity includes and is driven by corporate or strategic planning. It
includes the Management Information System (MIS), and other mechanisms
33
for planning and control such as the accounting department.
Margin
Margin implies that organizations realize a
profit margin that depends on their ability
to manage the linkages between all
activities in the value chain.
organization is able to deliver a product /
service for which the customer is willing to
pay more than the sum of the costs of all
activities in the value chain.
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Potential IS Contributions
Primary
Activities
Planning Models
Skills & Experience Databases
Technology -
Computer-Aided Design
Procurement -
Automated
Warehouse
Automated
Check
Clearing
Point of
Sale
Scanners
E-Commerce
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
& Sales
Customer
Care
Service
36
Business process
Business processes are simply a set of
activities that transform a set of inputs into
a set of outputs (goods or services) for
another person or process using people
and tools.
37
BPR
BPR is the
redesign of business processes,
the associated systems and
organizational structures to achieve a
dramatic improvement in business
performance
38
Why BPR?
The business reasons:
poor financial performance
external competition
erosion of market share or
emerging market opportunities.
39
BPR
It is the examination and change of five
components of the business:
Strategy
Processes
Technology
Organization
Culture
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Business
Reengineering
Level of Change
Incremental
Radical
Process
Change
Improved New
Version of Process
Brand New
Process
Starting Point
Existing Processes
Clean Slate
Frequency of
Change
One-time or
Continuous
Periodic One-time
Change
Time Required
Short
Long
Narrow, Within
Functions
Past and Present
Broad, CrossFunctional
Future
Typical Scope
Horizon
Participation
Path to
Execution
Primary Enabler
Risk
Bottom-up
Top-down
Cultural
Cultural Structural
Statistical Control
Information Technology
Moderate
High
42
Enabling technology
Information technology allows operations, strategies and
competitive advantages not possible before.
43
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IS Planning Process
Assess the
current state of
affairs with
regard to IT
assets
Create a set of
blueprints
that represent
the desired state
of affairs
Create a prioritized
schedule of projects
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Section Contents
Organizational Mission
Statement
Inventory of Information
Requirements
IS Development Constraints
Section Contents
Presents the set of long-range (2 5
year) needs and strategies of the IS
department prioritized in keeping with
the information requirements previously
described.
Implications of IS
Corporate Plan
Available
Organizational
Resources
Support
From Top
Management
Development Project
Selection Decision
Degree of
Perceived Need
Within the
Firm
Established
Evaluation
Criteria
48
New
System
5
2
How
Physical
Physical
What
Logical
Logical
3
49
Description
Technical
Operational
Human Factors
50
Description
Economic
51
Description of Criteria
Strategic Fit
52
Qualitative Benefits
Different types of IS
54
Types of IS
55
MANAGEMENT LEVEL
KNOWLEDGE LEVEL
GROUPS SERVED
SENIOR MANAGERS
MIDDLE MANAGERS
KNOWLEDGE &
DATA WORKERS
OPERATIONAL
LEVEL
OPERATIONAL
MANAGERS
SALES &
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MARKETING
Operational-level
Elementary activities and routine transactions
Data current and accurate
Knowledge-level
Support knowledge and data workers
Integrate new knowledge into the business
Office automation
57
Management-level
Periodic monitoring, control, decision-making
and administration
Is the business working well?
Strategic-level
Long-term (e.g. 5 year) planning and strategy
Internal and external information
58
Examples
59
Types of IS
Transaction Processing Systems (TPS)
Knowledge Work Systems (KWS)
Office Automation Systems (OAS)
Management Information Systems (MIS)
Decision-support Systems (DSS)
Executive Support Systems (ESS)
60
Machine control
Compensatio
n
Order
processing
Plant scheduling
Cash
management
Accounts
payable
Training and
development
Accounts
receivable
Employee
records
Material
movement and
control
Sales and
Marketing
61
Manufacturing
Finance
Accountin
g
Human
Resources
62
Managerial workstations
63
Document imaging
E-mail / electronic
calendars
64
Manufacturing
Accountin
g
Relocation
analysis
Human
Resources
Decision-support Systems
Systemsthatcombinedata,modelsandanalysis
toolsfornon-routinedecision-making
Management-level Systems
Sales region
analysis
Sales and
Marketing
65
Production
scheduling
Manufacturing
Cost analysis
Pricing /
profitability
analysis
Contract
cost analysis
Finance
Accountin
g
Human
Resources
5-year operating
plan
Sales and
Marketing
Manufacturing
66
5-year budget
forecasting
Finance
Profit
planning
Accountin
g
Personnel
planning
Human
Resources
67
Interrelationships
68
ESS
MIS
KWS
OAS
DSS
TPS
Functional Examples
Examples of IS by function:
Sales and marketing
Manufacturing and production
Finance and accounting
Human resources
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Description
Organisational
Level
Order processing
Operational
Market analysis
Knowledge
Pricing analysis
Determine prices
Management
Sales trends
Prepare 5 year
forecasts
Strategic
70
71
System
Description
Organisational
Level
Machine control
Control actions of
equipment
Operational
Computer-aided
design (CAD)
Production planning
Facilities location
Decide where to
locate facilities
Strategic
72
System
Description
Organisational
Level
Accounts receivable
Operational
Portfolio analysis
Design firms
investments
Knowledge
Budgeting
Prepare short-term
budgets
Management
Profit planning
Plan long-term
profits
Strategic
Human Resources
73
System
Description
Organisational
Level
Training and
development
Operational
Career paths
Design employee
career paths
Knowledge
Compensation
analysis
Monitor wages,
Management
salaries and benefits
Human resources
planning
Plan long-term
workforce needs
Strategic
Summary
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At organisational levels
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Batch
Online (real-time, OLTP)
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Batch TPS
77
Update databases
Generate reports
Generate transactions for other systems
Pros
Relatively easy to program, install and
maintain
Batches can be processed during low-activity
periods
Cons
78
Information is delayed
79
Hybrid TPS
80
TPS Requirements
Capture, process and store transactions
Produce reports and information about
transactions
Produce transactions for other TPS
Be accurate and timely
Be efficient require less labor
Increase customer service
Increase competitive advantage
81
Data capture
Data validation
82
Processing
Data manipulation
Database updating
Generation of transactions for other systems
Archive Transaction
Create documents and reports
Management Issues
Uptime
83
Disaster Recovery
What plans are in place to recover lost
business data?
What plans are in place to resume business
processing in case of disaster?
Audit
Can you verify the integrity of the system?
How will you know if transactions are not
processed or are processed incorrectly?
84
TPS By Function
Order Processing
Procurement & Inventory Control
Accounting
85
Order capture
Variety of means
Configuration
Shipment planning and inventory
allocation
86
Procurement
Inventory Control
Receiving
Accounts Payable
87
Accounting
Accounts Payable
Accounts Receivable
Budget
Payroll
General Ledger
Asset Management
88
Disadvantages of Functionally
Organized
TPS
Data redundancy
89
90
91
MIS
Goals of an MIS
Provide managers with information
Regular, routine operations
Control, organize and plan better
92
93
Financial MIS
Will integrate information from multiple
sources
Functions
Costing
P&L
reporting
Auditing
Funds management
94
95
Manufacturing
Design and Engineering
Master Production Scheduling
Inventory Control
Materials Planning
Manufacturing and Process Control
Quality Control
Marketing
Market research
Web-based
Pricing
96
market research
97
TPS Vs MIS
Transaction Processing
Systems (TPS)
Support operation
Management and
control
Routine, normal
operations
98
Management Information
Systems (MIS)
Provide decisionmaking support for
routine, structured
decisions
Closely linked to and
fed by TPS
99
100
101
102
Intelligence gathering
Definition of problem
Data gathered on scope
Constraints identified
Design phase
Choice
Selection of an alternative
Implementation
103
104
Structured Problems
Can be addressed by an MIS
Three decision models or techniques
Optimization
Find
Satisficing
Find
Heuristics
Rule-based
105
solution generation
Mintzbergs Research
106
Mintzbergs Research
107
108
109
110
111
112
Dialogue Manager
Allows user interaction with DSS
113
114
115
116
Common characteristics
Meeting moderation/facilitation
Signed and anonymous comments
Structured deliberations
Presentation period
Comment period
Automated collation of comments
Voting
117
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