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Management Information Systems, 10/e

Raymond McLeod Jr. and George P. Schell

2007 by Prentice Hall

Management Information Systems, 10/e Raymond McLeod and George Schell

Chapter 8
Information in Action

2007 by Prentice Hall

Management Information Systems, 10/e Raymond McLeod and George Schell

Learning Objectives
Know that a firm s ability to develop effective information systems can be a key factor in its success. Recognize that the transaction processing system processes describes the firm s basic daily operations. Be familiar with the processes performed by a transaction processing system for a distribution firm. Recognize that organizational information systems have been developed for business areas and organizational levels. Be familiar with architectures of marketing, human resources, manufacturing, and financial information systems.
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Learning Objectives (Cont d)


Know the architecture of an executive information system. Understand what customer relationship management is and why it requires a large computer storage capability. Recognize how a data warehouse differs from a database. Understand the architecture of a data warehouse system. Know how data are stored in a data warehouse data repository. Know how a user navigates through the data repository. Know what on-line analytical processing (OLAP) is. onKnow the two basic ways to engage in data mining.

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Information as a Critical Success Factor


Critical success factor (CSF) was coined by Ronald Daniel to identify a few key activities that spell success or failure for any type of organization. Transaction processing system (TPS) is the information system that gathers data describing the firm s activities, transforms the data into information, and makes the information available to users both inside and outside the firm.
 1st business application to be installed on computers.
Also electronic data processing (EDP) system and accounting information system. system.
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Figure 8.1 A Model of a Transaction Processing System

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System Overview
Distribution system is a TPS used by distribution firms. Distribution firms distribute products or services to their customers. We will use data flow diagrams, or DFDs, to document the system. Figure 8.2 represents the highest level. Figure 8.3 identifies the three major subsystems.
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Figure 8.2 A Context Diagram of Distribution System

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Management Information Systems, 10/e Raymond McLeod and George Schell

Figure 8.3 A Figure 0 Diagram of the Distribution System

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Management Information Systems, 10/e Raymond McLeod and George Schell

Major Subsystems of Distribution System


Systems that fill customer orders.
 Order entry system enters customer orders into the system.  Inventory system maintains the inventory records.  Billing system prepares the customer invoices.  Accounts receivable system collects the money from the customers.

Systems that order replenishment stock.


 Purchasing system issues purchase orders to suppliers for needed stock.  Receiving system receives the stock.  Accounts payable system makes payments.
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Figure 8.4 A Figure 1 Diagram of the System that Fills Customers Orders

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Figure 8.5 A Figure 2 Diagram of Systems That Order Replenishment Stock

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Major Subsystems of Distribution System (Cont d)


Systems that perform general ledger processes.
 General ledger system is the accounting system that combines data from other accounting systems for the purpose of presenting a composite financial picture of the firm s operations.  General ledger is the file that contains the combined accounting data.  Updated general ledger system posts records that describe various actions and transactions to the general ledger.  Prepare management reports system uses the contents of the general ledger to prepare the balance sheet, income statement, and other reports.
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Figure 8.6 A Figure 3 Diagram of the Systems that Perform General Ledger Processes

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Organizational Information Systems


Organizational information systems are developed to meet the needs for information relating to those particular parts of the organization. Marketing information system (MKIS) provides information that relates to the firm s marketing activities.
 Consists of a combination of input and output subsystems connected by a database.
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Figure 8.7 A Model of Marketing Information System

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Marketing Information System


Output subsystems provide information about critical elements in marketing mix. Marketing mix consists of four main ingredients that management manages in order to meet customers needs at a profit.
 Product subsystem provides information about the firm s products.  Place subsystem provides information about the firm s distribution network.  Promotion subsystem provides information about the firm s advertising and personal selling activities.  Price subsystem helps the manager make pricing decisions.  Integrated-mix subsystem enables the manager to develop Integratedstrategies that consider the combined effects of the ingredients.

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Marketing Information System (Cont d)


Database is populated with data from the three MKIS input subsystems. Input subsystems
 Transaction processing system gathers data from both internal and environmental sources and enters the data into the database.  Marketing research subsystem gathers internal and environmental data by conducting special studies.  Marketing intelligence subsystem gathers environmental data that serves to keep management informed of activities of the firm s competitors and customers and other elements that can influence marketing operations.
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Other Organizational Information System


Human Resources information system (HRIS) provides information to managers HRIS) throughout the firm concerning the firm s human resources. Manufacturing information system provides information to managers throughout the firm concerning the firm s manufacturing operations. Financial information system provides information to managers throughout the firm concerning the firm s financial activities.
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Figure 8.8 A Model of a Human Resource Information System

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Figure 8.9 A Model of Manufacturing Information System

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Figure 8.10 A Model of Financial Information System

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The Executive Information System


Executive information system (EIS) is a system that provides information to upper-level uppermanagers on the overall performance of the firm; also called Executive support system (ESS). (ESS). DrillDrill-down capability allows for executives to bring up a summary display and then successively display lower levels of detail until executives are satisfied that they have obtained as much detail as is necessary.
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Figure 8.11 An Executive Information System Model

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Figure 8.12 Drill-Down Technique Drill-

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Customer Relationship Management


Customer relationship management (CRM) is CRM) the management of the relationships between the firm and its customers so that both the firm and its customers receive maximum value from the relationship. CRM system accumulates customer data over a long term 5 years, 10 years, or more-and uses morethat data to produce information for users.
 Uses a data warehouse.
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Data Warehousing
Data warehouse describes data storage that has the following characteristics:
 Storage capacity is very large.  Data are accumulated by adding new records, as opposed to being kept current by updating existing records with new information.  Date are easily retrievable.  Date are used solely for decision making, not for use in the firm s daily operations.

Data mart is a database that contains data describing only a segment of the firm s operations.
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The Data Warehousing System


Data warehousing is the creation and use of a data warehouse or data mart. Primary data sources are TPS and data obtained from other sources, both internal and environmental; any data identified as having potential value in decision making. Staging area is where the data undergoes extraction, transformation, and loading (abbreviated as ETL process)
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Data Warehousing System (Cont d)


Extraction process combines data from the various sources. Transformation process cleans the data, puts it into standardized format, and prepares summaries.
 Data stored in both detail and summary form.

Loading process involves the entry of the data into the data warehouse repository. Metadata
 Data about data  Data that describes the data in the data repository  Tracks data as it flows through the data warehouse system
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Figure 8.13 A Model of a Data Warehousing System

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Storing Data in the Warehouse Data Repository


Dimension tables store the identifying and descriptive data.
 Dimension provides the basis for viewing the data from various perspectives or dimensions. dimensions.

Fact tables are separate tables containing the quantitative measures of an entity.
 Combined with dimension table data, various analyses can be prepared.  Users can request information that involves any combination of the dimensions and facts.
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Figure 8.14 A Sample Dimension Table

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Figure 8.15 A Sample Fact Table

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Storing Data

(Cont d)

Information package identifies all of the dimensions that will be used in analyzing a particular activity. Star schema-for each dimension, a key identifies schemathe dimension and provides the link to the information package that results in a structure that is similar to the pattern of a star.
 The warehouse data repository contains multiple star schemas, one for each type of activity to be analyzed.

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Figure 8.16 Information Package Format

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Figure 8.17 A Sample Information Package

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Figure 8.18 Star Schema Format

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Figure 8.19 A Sample Star Schema

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Information Delivery
Drill down-the process of navigating down downthrough the levels of detail. Roll up-enables the user to begin with a detail updisplay and then summarizes the details into increasingly higher summary levels. Drill across-moving from one data hierarchy to acrossanother. Drill through-going from a summary level to the throughlowest level of detail.
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Figure 8.20 Navigating Through the Warehouse Data Repository

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Figure 8.21 Drilling Across Hierarchies Produces Multiple Views

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OLAP
OnOn-line analytical processing (OLAP) enables the user OLAP) to communicate with the data warehouse either through a GUI or a Web interface and quickly produce information in a variety of forms, including graphics. Relational OLAP (ROLAP) uses a standard relational ROLAP) database management system.
 ROLAP data exists in detailed form.  Analyses must be performed to produce summaries.  Constrained to a limited number of dimensions.

Multidimensional OLAP (MOLAP) uses a special MOLAP) multidimensional database management system.
 MOLAP data are preprocessed to produce summaries at the various levels of detail and arranged by the various dimensions.  Faster summary ability, can use many dimensions 10 or more.
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Figure 8.22 ROLAP and MOLAP Architectures

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Figure 8.23 An Example of a Report than Could Be Produced with ROLAP

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Figure 8.24 An Example of a Report that Could Be Produced with MOLAP

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Data Mining
Data mining is the process of finding relationships in data that are unknown to the user. Hypothesis verification begins with the user s hypothesis of how data are related.
 Retrieval process guided entirely by user.  Selected information can be no better than user s understanding of the data.  Traditional way to query a database.

Knowledge discovery is when the data warehousing system analyzes the warehouse data repository, looking for groups with common characteristics.
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