MANAGEMENT INFORMATION SYSTEMS

Chapter 2
Global E-business and Collaboration

Mohammad Najjar, PhD, MBA, BSc

Operations & Supply Chain Management
Learning Objectives

1. Define and describe business processes

2. Evaluate the role played by systems serving the various levels
of management
3. Explain how enterprise applications improve organizational
performance
4. Explain the importance of collaboration and teamwork in
business and how they are supported by technology
5. Assess the role of the information systems function in a
business

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Information Systems

 Problem: Need to capture employee knowledge as 40% of

workforce nears retirement
 Solutions: New technology for collaborative knowledge sharing

For example,
 Microsoft SharePoint Server 3010 provided companywide
platform for collaboration, knowledge acquisition and transfer,
and social tools. SharePoint demonstrates the IT’s role in
collaboration and documenting knowledge

 However, there is a need to change organizational culture and

business processes to use information systems effectively
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Information Systems

• In the previous chapter, we agreed that information systems

make a difference in an organization’s ability to innovate,
execute, and in the case of business firms, grow profits

• For instance, the case study in the book, Oracle won the
America’s Cup because it had learned how to apply new
technology to improve the processes of designing and sailing a
competitive sailboat.

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Information Systems

To increase efficiency (operate efficiently),

• Firms must collect many different pieces of information about

suppliers, customers, employees, invoices and payments, and of
course their products and services

• Firms must organize work activities or business processes

• Then, information systems make it possible for firms to manage

all their information, make better decisions, and improve the
execution of their business processes

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Business Processes
Business Processes: refer to the manner in which work is organized
and coordinated. It include:

• Collection of activities, steps, or tasks, required to produce a

product or service

• These activities are supported by flows of material, information,

knowledge among the participants in business processes

• May be tied to functional area or be cross-functional

• To a large extent, the performance of a business firm depends

on how well its business processes are designed and
coordinated. 6
Business Processes

• Examples of functional business processes

– Manufacturing and production
• Assembling the product
– Sales and marketing
• Identifying customers
– Finance and accounting
• Creating financial statements
– Human resources
• Hiring employees

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Business Processes

For example, fulfilling a customer order involves a complex set of

steps that requires the close coordination of the sales, 8
accounting, and manufacturing functions.
Business Processes

In the order fulfillment,

• To efficiently perform all these steps requires a great deal of

information.

• The required information must flow rapidly both within the

firm from one decision maker to another; with business
partners, such as delivery firms; and with the customer.

• Computer-based information systems make this possible.

Business Processes and
Information Systems
Information technology enhances business processes by:

• Increasing efficiency of existing processes

- Automating steps that were manual
- e.g. checking a client’s credit, or generating an invoice
and shipping order

• Making it possible for many more people to access and

share information
• Replace sequential steps with parallel steps
• Eliminate delays in decision making
• Support new business models
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Systems for Different
Management Groups
• Because there are different interests, specialties, and levels in
an organization, there are different kinds of systems.

• A typical firm has different systems supporting the decision-

making needs of each of the main management groups , i.e.
operational management, middle management, and senior
management

• Therefore, no single system can provide all the information an

organization needs.

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Systems for Different
Management Groups
Management information systems (MISs) as the study of
information systems in business and management, two types:

• Transaction Processing Systems

• Business Intelligence Systems

• Management Information Systems

• Decision-support Systems

• Executive Support Systems

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Systems for Different
Management Groups
Transaction Processing Systems (TPS)

• Perform and record daily routine transactions necessary to

conduct business (e.g. sales, payroll, flow of materials in a
factory, shipping, number of parts in inventory, Ahmad’s
payment status, etc.)

• Serve operational managers and staff by monitoring the

status of internal operations

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Systems for Different
Management Groups
Transaction Processing Systems (TPS)

• Major producer of information for other systems, (e.g. the

payroll system, along with other accounting TPS, supplies
data to the company’s general ledger system, which is
responsible for maintaining records of the firm’s income and
expenses and for producing reports such as income
statements and balance sheets. It also supplies employee
payment history data for insurance, pension, etc.)

• Structured goals and decision making based on a

predefined criteria (e.g. assigning a credit to a customer
follows a predefined criteria)
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 Systems for Different
Management Groups
Transaction Processing Systems (TPS)

A TPS for payroll

processing captures
employee payment
transaction data (such
as a time card). System
outputs include online
and hard-copy reports
for management and
employee paychecks.

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Systems for Different
Management Groups
Business intelligence
- Software for organizing and analyzing data
- Used to help managers and users make improved decisions

Business intelligence systems

- Management information systems
- Decision support systems
- Executive support systems

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Systems for Different
Management Groups
Management Information Systems
- Designates a specific category of information systems serving
middle management.
- Provide reports on firm’s current performance. The basic
transaction data from TPS are compressed and usually
presented in reports that are produced on a regular schedule.
- Provide answers to routine questions that have been specified
in advance (summaries and comparisons)
- Typically have little analytic capability, (e.g. MIS reports might
list the total pounds of lettuce used this quarter by a fast-food
chain or compare total annual sales figures for specific products
to planned targets) 17
Systems for Different
Management Groups

In the system illustrated by this diagram, three TPS supply summarized transaction
data to the MIS reporting system at the end of the time period. Managers gain
access to the organizational data through the MIS, which provides them with the 18
appropriate reports.
Systems for Different
Management Groups

This report, showing summarized annual sales data, was produced by the MIS
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Systems for Different
Management Groups
Decision Support System (DSS)
- Serve middle management
- Support non-routine decision making
Example: What is the impact on production schedule if
December sales doubled, shipment is delayed, etc?
- Although DSS use internal information from TPS and MIS, they
often bring in information from external sources, such as
current stock prices or product prices of competitors, logistical
issues such as checkpoints, political situation, etc.
- They focus on problems that are unique
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Systems for Different
Management Groups
Decision Support System (DSS)
- These systems use a variety of models to analyze the data and
are designed so that users can work with them directly
- Model driven DSS
e.g. Voyage-estimating systems
- Data driven DSS
e.g. Intrawest’s marketing analysis systems

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Systems for Different
Management Groups
Decision Support Systems (DSS):
For Voyage-estimating systems, example:
American metals company that exists primarily to carry bulk
cargoes of coal, oil, and finished products. The firm owns some
vessels, charters others, and bids for shipping contracts in the
open market to carry general cargo. A voyage-estimating system
calculates financial and technical voyage details. Financial
calculations include ship/time costs (fuel, labor, capital), freight
rates for various types of cargo, and port expenses. Technical
details include a myriad of factors, such as ship cargo capacity,
speed, port distances, fuel and water consumption, and loading
patterns (location of cargo for different ports). 22
Systems for Different
Management Groups
Decision Support Systems (DSS): Voyage-estimating systems

This DSS operates on a powerful PC. It is used daily by managers who must develop bids on 23
Systems for Different
Management Groups
Executive Support Systems (ESS)
- Support senior management
- Address non-routine decisions
Requiring judgment, evaluation, and insight
- Incorporate data about external events (e.g. or competitors) as
well as summarized information from internal MIS and DSS
- ESS present graphs and data from many sources through an
interface that is easy for senior managers to use.
- Answer Questions: What will employment levels be in five
years? What are the long-term industry cost trends? What
products should we be making in five years? 24
Enterprise Applications

The challenge is to make all these systems work together

• Corporations are put together both through normal “organic”

growth and through acquisition of smaller firms.
• Over a period of time, corporations end up with a collection of
systems, most of them older, and face the challenge of getting
them all to “talk” with one another and work together as one
corporate system.

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Enterprise Applications

The challenge is to make all these systems work together

Solution: is to implement enterprise applications, which are

systems that span functional areas, focus on executing business
processes across the business firm, and include all levels of
management.
Enterprise applications are used to ensure that TPS, MIS, DSS, and
ESS work together smoothly. Enterprise applications are used to
manage the information used in the systems discussed previously

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Enterprise Applications

Four major applications:

• Enterprise systems
• Supply chain management systems
• Customer relationship management systems
• Knowledge management systems

• Each of these enterprise applications integrates a related set of

functions and business processes to enhance the performance
of the organization as a whole.

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Enterprise Applications

Enterprise Systems or Enterprise Resource Planning (ERP)

• Integrate business processes in manufacturing and

production, finance and accounting, sales and marketing,
and human resources into a single software system.

• Pull information from many parts of the firm and enable

processes both across the firm, at different organizational
levels, as well as with suppliers and customers.

• Information that was previously fragmented in many

different systems is stored in a single comprehensive data
repository where it can be used by many different parts of
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the business.
Enterprise Applications

Enterprise Systems or Enterprise Resource Planning (ERP)

Example, when a customer places an order, the order data flow

automatically to other parts of the company that are affected
by them. The order transaction triggers the warehouse to pick
the ordered products and schedule shipment. The warehouse
informs the factory to replenish whatever has been depleted.
The accounting department is notified to send the customer an
invoice. Customer service representatives track the progress of
the order through every step to inform customers about the
status of their orders. Managers are able to use firm-wide
information to make more precise and timely decisions about
daily operations and longer-term planning
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Enterprise Applications

Supply Chain Management (SCM) Systems

- Manage firm’s relationships with suppliers

- Share information about:

Orders, production, inventory levels, delivery of products
and services

- Goal:
Right amount of products to destination with least amount
of time and lowest cost

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Enterprise Applications

Customer relationship management (CRM) systems:

- Provide information to coordinate all of the business

processes that deal with customers
-Sales
-Marketing
-Customer service

- Helps firms identify, attract, and retain most profitable

customers

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Enterprise Applications

Knowledge management systems (KMS)

- Support processes for capturing and applying knowledge
and expertise
How to create, produce, deliver products and services
- Collect internal knowledge and experience within firm and
make it available to employees
- Link to external sources of knowledge

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Intranets and Extranets

• Enterprise applications create deep-seated changes in the way

the firm conducts its business, offering many opportunities to
integrate important business data into a single system.
• They are often costly and difficult to implement.

• Solution: Intranets and extranets is an alternative tool for

increasing integration. Intranets and extranets use Internet
technology to communicate internally to employees, allow
employees to communicate with one another and share
documents, and to help communication with suppliers and
customers.
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Intranets and Extranets

- Intranets:
Internal company Web sites accessible only by employees
- Extranets:
Company Web sites accessible externally only to vendors
and suppliers
Often used to coordinate supply chain

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 E-business, E-commerce, and
E-government
Systems and technologies we have just described are transforming
firms’ relationships with customers, employees, and suppliers into
digital relationships using networks and the Internet. Businesses are
now enabled by or based upon digital networks, i.e. e-businesses.
- E-business:
Use of digital technology and Internet to drive major business
processes
- E-commerce:
Subset of e-business.
Buying and selling goods and services through Internet
- E-government:
Governments use internet technology to deliver information and
services to citizens, employees, and businesses
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Systems for Collaboration

• Collaboration is working with others to achieve shared and

explicit goals.

• Can be:
– Short-lived or long-term
– Informal or formal (teams)
– One to one, or many to many

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Systems for Collaboration

• Teams are a formal approach to collaborate

• Teams are part of the organization’s business structure for

getting things done.

• Teams have a specific mission.

• The members of the team need to collaborate on the

accomplishment of specific tasks and collectively achieve the
team mission

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Systems for Collaboration

A number of factors are leading to a growing emphasis on

collaboration and teamwork in the firm:

– Changing nature of work

– Growth of professional work—“interaction jobs”
– Changing organization of the firm
– Firms operate in many locations
– Emphasis on innovation
– Changing culture of work

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Systems for Collaboration

• Business benefits of collaboration and teamwork

– Investments in collaboration technology can bring
organization improvements, returning high ROI
– needs a supportive business firm culture
– Benefits:
• Productivity: complete a complex task faster
• Quality: communicate errors, and correct actions faster
• Innovation: come up with more innovative ideas
• Customer service: teams can solve customer complaints
and issues faster
• Financial performance
– Profitability, sales, sales growth
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Systems for Collaboration
The function of middle managers is to
build the teams, coordinate their work,
and monitor their performance (instead of
command and control – old approach)

Successful
collaboration
requires an
appropriate
organizational
structure and
culture, along with
appropriate
collaboration
technology.

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Systems for Collaboration

• Building a collaborative culture and business processes

– “Command and control” organizations
• No value placed on teamwork or lower-level
participation in decisions
– Collaborative business culture
• Senior managers rely on teams of employees.
• Policies, products, designs, processes, and systems rely
on teams.
• The managers purpose is to build, coordinate, and
monitor teams.
 Systems for Collaboration
• Tools for collaboration and teamwork
– E-mail and instant messaging
– Wikis
– Virtual worlds
– Collaboration and social business platforms
• Virtual meeting systems (telepresence)
• Google Apps/Google sites
• Cyberlockers
• Microsoft SharePoint: SharePoint is a browser-based
collaboration and document management platform,
combined with a powerful search engine.
• Lotus Notes
• Enterprise social networking tools
Systems for Collaboration

• Two dimensions of collaboration technologies

– Space (or location)—remote or co-located

– Time—synchronous or asynchronous

• Six steps in evaluating software tools

1. What are your firm’s collaboration challenges?

2. What kinds of solutions are available?
3. Analyze available products’ cost and benefits.
4. Evaluate security risks.
5. Consult users for implementation and training issues.
6. Evaluate product vendors.
Systems for Collaboration

Collaboration technologies can be classified in terms of whether

they support interactions at the same or different time or place
or whether these interactions are remote or co-located.
The Information Systems
Department
• Information systems department:
• Formal organizational unit responsible for information
technology services
• Often headed by chief information officer (CIO)
• Other senior positions include chief security officer
(CSO), chief privacy officer (CPO)
• Programmers
• Systems analysts
• Information systems managers
The Information Systems
Department
• End users
– Representatives of other departments for whom
applications are developed
– Increasing role in system design and development
Source:

>> Management Information Systems, Managing

the Digital Firm, 13 Edition (2014), Laudon and
Laudon.

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