Information Systems Strategy

Chapter 3
ORGANIZATIONAL
INFORMATION SYSTEM &
BUSINESS INTELLIGENCE
Business Intelligence (BI)
 BI uses IS to gather & analyze
information from internal and external
sources to make better business
decisions
WHY BI
 1. Responding to threats & opportunities
 Globalization, competitive pressure, consumer demands

& government regulations

=>Make better decisions
Why BI
 2. Continuous planning process
 Continuously monitor & analyze business process

=> Make ongoing adjustments in organizational

management & planning
Organizational Decision Making Levels
Kind of Information System Group Served

Strategic Level Senior

Managers

Management Level Middle

Managers

Knowledge and Data

Knowledge Level Workers

Operational Level Operational

Managers

Manufacturing Finance Accounting Human Resources

Organizational Decision Making Levels
 1. Operational Level
 Routine, day to day business process

 Interactions with customers occur

 Repetitive activities eg: sales transaction processing

Organizational Decision Making Levels
 1. Operational Level
 Decisions are highly structured & recurring eg:

ordering stock
 Can be directly programmed into IS eg: inventory

management system alerts when stock falls below certain

level
 Typically used to optimize process
 Operational IS
Functional Area Systems
Sales and Marketing  Order tracking
 Order processing
Manufacturing  Machine control
 Plant scheduling
 Material movement control
Finance  Securities trading
 Cash management
Accounting  Payroll
 Accounts payable
 Accounts receivable
Human Resources  Compensation
 Training and development
 Employee record keeping
Organizational Decision Making Levels
 2. Managerial level
 Managers (such as functional / marketing/ finance

managers etc). Also called mid level managers.

 Focus on monitoring & controlling operational level

activities.
 Provide information to higher levels of organization
Organizational Decision Making Levels
 2. Managerial level
 Decisions moderately complex eg: how to allocate
advertising budget
 Decisions semistructured : not clear cut problem and
solutions
 Require expertise & judgement

 IS – analyze sales , performance & forecasts.

Organizational Decision Making Levels
 3. Executive / Strategic Level
 Long term strategic issues eg: where to export, how etc

 Executives: president, CEO, vice president

 Complex problems with broad & long term impact.

 Unstructured decisions : no procedures eg; launch new

product.
TPS
Types of TPS Major functions of system Major application systems
Sales and Marketing  Sales management  Sales Order Information System
systems  Market research  Market Research System
 Promotion  Pricing System
 Pricing
 New products
Manufacturing/Productio  Scheduling  Materials Resource Planning
n systems  Purchasing Systems
 Shipping/receiving  Purchase Order Control Systems
 Engineering  Quality Control Systems
 Operations
Finance/Accounting  Budgeting  General Ledger
systems  General ledger  Accounts Receivable/Payable
 Billing  Budgeting
 Cost accounting  Funds Management Systems
 TPS
Types of TPS Major functions of system Major application systems
Human Resource systems  Personnel records  Payroll
 Benefits  Employee Records
 Compensation  Benefit Systems
 Labor relations  Career Path Systems
 Training
Other types  Admissions  Registration Systems
 Grade records  Student Transcript System
 Course records  Curriculum Class Control
 Alumni Systems
 Alumni Benefactor
System
MIS
Transaction Processing System
Management Information Systems

Order
processing
system
Sales Data

Order file

Unit product
Materials cost data
resource MIS Reports Managers
planning
systems

Production
master file Product
change data

General Ledger
system
Expense
data
Accounting file
DSS
Ship file (e.g. speed,
capacity)
Personal
computer
Port distance
restrictions file

Analytical models
database Fuel consumption cost
file
Graphics

Reports Ship charter hire history

cost file

Port expense file

Figure 3.4
DSS
Functional Area MIS DSS

Sales and Sales Management Sales Region Analysis

Marketing
Manufacturing Inventory Control Production Scheduling

Finance Annual Budgeting Cost Analysis

Accounting Capital Investment Pricing/profitability

Analysis Analysis
Human Resources Relocation Analysis Contract Cost Analysis
Expert System (ES)
 Try:

 www.exsys.com

 www.easydiagnosis.com
Integration within IS

Executive
support
system (ESS)

Management Management
systems systems
(MIS) (DSS)

Knowledge Transaction
systems processing
(KWS and system (TPS)
OAS) Figure 3.6
END OF CHAPTER 3