Business Processes and

Information Systems
 Objectives
1. What is the role of information systems in
today’s competitive business environment?

2. What exactly is an information system? What do

managers need to know about information
systems?

3. How are information systems transforming

organizations and management?
Business Process
• Is an activity or set of activities that will accomplish a specific
organizational goal
• Multiple departments are involved to accomplished on business
process.
• To measure success of a business process, organizations track
successful completion of different steps within the process,
i.e., benchmarks.
• If an organization is unable to perform certain business processes
internally due to cost or resources, the company might utilize
business process outsourcing (BPO)
 Sales Generate Sales Submit Order

Accounting
Check Credit Approve Credit Generate Invoice

Manufacturing
& Production Assemble Product Ship Product
How information technology improves
business processes
Why information system ?
• Automate many steps in business processes
• Change the flow of information
• Sharing of information
• Fast and accurate decision making
• Faster calculations and paperwork
• Analysis of customer purchase patterns and preferences
• More efficient business services
• Medical advances
• Instant global distribution of information
 Learning to Use Information Systems

Negative Impacts of Information Systems

• Automation leading to job elimination

• Privacy concerns
• System outages and shutdowns
• Health problems, repetitive stress injury
• Illegal distribution of intellectual property
 Why Information Systems?

What Is an Information System?

• Data: Streams of raw facts representing events such as business

transactions

• Information: Clusters of data that are meaningful and useful to

human beings
 Why Information Systems?

What Is an Information System?

A set of interrelated components that collect

(or retrieve), process, store, and distribute
information to support decision making and
control in an organization
Why Information Systems?

Information systems are more than computers

Figure 1-6
Why Information Systems?

Functions of an information system

Figure 1-4
 Why Information Systems?

A Business Perspective on Information Systems

Management Levels
• Senior managers: make long-range strategic decisions about
products and services
• Middle managers: carry out the programs and plans of senior
management
• Operational managers: monitor the firm’s daily activities
 Why Information Systems?

A Business Perspective on Information Systems

Key Elements of an Organization

• People
• Structure
• Operating Procedures
• Politics
• Culture
 Why Information Systems?

A Business Perspective on Information Systems

Information Technology (IT) Infrastructure

• Computer hardware
• Computer software
• Storage technology
• Communications technology
 Objectives

OBJECTIVES…..
1. What are the major types of systems in a business? What role do
they play?

2. How do information systems support the major business functions:

sales and marketing, manufacturing and production, finance and
accounting, and human resources?
 Objectives

3. Why should managers pay attention to business processes? Why

do firms need to integrate their business processes?

4. What types of information systems are used by companies that

operate internationally?
Challenges
Management Challenges

1. Integration: Different systems serve variety of functions,

connecting organizational levels difficult, costly

2. Enlarging scope of management thinking: Huge system

investments, long development time must be guided by common
objectives
3. Monitoring performance issues
4. Removing Duplication
5. Increase Visibility
Types of information systems
• Different interests, specialities and levels in an organization
• Single system is not able to provide information to all the levels
• Operational management, middle management and senior
management each uses systems to support the decisions in order to
run the organization.
Systems for different management group
• Transaction Processing System
• Management Information System
• Decision Support system
• Business Intelligence system
 Transaction Processing System(TPS)
• Elementary activities information
• Routine transactions
• Tasks, goals and resources are predefined and highly structured
• Two types batch and real time.
• Example: An order processing system is a TPS. When a company receives an order for a
product, a TPS checks inventory to determine whether the product is in stock. If it is,
the TPS alerts employees to retrieve the product from the warehouse, create and print
an invoice and then ship the product.
• Batch TPS: the system gathers transactions over a period of time and processes them all
at once.
• For e.g. a payroll TPS gathers employees' hours for a month and then processes all the
hours in one batch to calculate pay check amounts.
• Real-time processing: the system processes a transaction immediately.
• For e.g. when a traveller reserves a seat on a flight, a TPS uses real-time processing to
reserve the seat immediately so that no one else can select it.
 A symbolic representation for a payroll TPS
Major Types of Systems in Organizations

Figure 2-3
Management Information System (MIS)
• Used by middle level management.
• MIS serves managers daily, weekly, monthly and yearly data.
• Very little analytics component
• It gives managers feedback about their own performance; top
management can monitor the company as a whole.
• Information shows "actual" data over against "planned" results and
results from a year before, it measures progress against goals.
 How management information systems obtain their data
from the organization’s TPS
Major Types of Systems in Organizations

Figure 2-5
Major Types of Systems in Organizations

A sample report that might be produced by the MIS in Figure 2-5

Figure 2-6
Decision Support System (DSS)
• Non-routine decision making
• Focus on problems that are unique and non-routine
• Uses internal information from TPS and MIS.
• The need for decision-making speed has increased,
• computerized decision support system can encourage fact-based
decisions, improve decision quality, and improve the efficiency and
effectiveness of decision processes
• More analytical power
• Decision models
• Comparative analysis
Major Types of Systems in Organizations

Voyage-estimating decision-support system

Figure 2-7
Executive Support System (ESS)
• Decision making of top level management
• Non-routine decisions
• ESS presents advanced graphs and uses data from multiple sources
• Draw summarized information from internal MIS and DSS.
• They filter, compress and track critical data, displaying the data of
greatest importance to senior managers.
• It used business intelligence analytics for analysing the trends
• Digital dash boards for CEOs
Major Types of Systems in Organizations

Model of a typical executive support system

Figure 2-8
Major Types of Systems in Organizations

Types of information systems

Figure 2-1
 The four major types of information systems
Major Types of Systems in Organizations

Figure 2-2
Systems from a Functional Perspective

Table 2-2: Examples of Sales and Marketing Information Systems

System Description Organizational

Level
Order processing Enter, process, and Operational
track orders

Pricing analysis Determine prices for Management

products and
services
Sales trend Prepare 5-year sales Strategic
forecasting forecasts
Systems from a Functional Perspective

Table 2-3: Examples of Manufacturing and Production Information Systems

System Description Organizational

Level
Machine control Control the actions Operational
of machines and
equipment
Production Decide when and Management
planning how many products
should be produced
Facilities Decide where to Strategic
location locate new facilities
Systems from a Functional Perspective

Table 2-4: Examples of Finance and Accounting Information Systems

System Description Organizational

Level
Accounts Track money owed Operational
receivable the firm

Budgeting Prepare short-term Management

budgets

Profit planning Plan long-term Strategic

profits
• https://www.youtube.com/watch?v=Cn24E5mj_2Q