2/6/2024

Learning Objectives
2.1 What are business processes? How are they related to
IS?

2.2 How do IS serve the different management groups in a

Chapter 2 business, and how do IS improve business performance?

Global E-Business 2.3 Why are systems for collaboration and social business so
and Collaboration important, and what technologies do they use?

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What is a Business Process ? What is a Business Process ?

• A set of logically related tasks that define how specific business activities
are performed to produce a product or service.

• Business processes may be related to functional area or be cross-

functional. Important processes are typically cross functional that is they
span several departments.

• Business processes may be assets or liabilities: They can be a

source of strength if they enable the company to innovate or to execute
better than its rivals. They can be liabilities if they are based on outdated
ways of working that slow responsiveness and efficiency.

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Figure 2.1 The Order Fulfillment Process How IS Improves Business Processes ?

• Increasing efficiency of existing processes

– Automating steps that were manual

• Enabling entirely new processes

– Changing flow of information

– Replacing sequential steps with parallel steps

– Eliminating delays in decision making

– Supporting new business models

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Decision Types Decision Type and Management Level

• Decisions are made at all levels of the firm. Decisions are classified
according to type: Structured decisions are more prevalent at lower organizational levels,
and unstructured decision making is more common at higher levels.
 Unstructured decisions: the decision maker must provide judgment,
evaluation, and insights into the problem definition.

 Structured decisions: repetitive and routine, and decision makers can

follow a definite procedure for handling them to be efficient

 Semi-structured decisions: only part of the problem has a clear-cut

answer provided by an accepted procedure.

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A single organization may use a number of different information Transaction processing systems (TPS)
systems. • Computer programs developed to process large amounts of data for
routine business transactions such as billing, ordering, payroll, shipping….

• TPS perform and record the transaction, as well as all of its effects, and
Unstructured decisions
produce the transaction related documents such as invoices, purchase
orders, or payroll checks.

Semi structured • TPS serve operational managers as they replace labor intensive and time
decisions
consuming administrative tasks.

• TPS serve predefined, structured tasks and decision making.

Structured • Data collected feeds the MIS and DSS systems employed by Middle
decisions
Management

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Examples of TPS Systems for Business Intelligence

– Business intelligence is a contemporary term for data and

software tools for organizing, analyzing, and providing access
to data to help managers and other enterprise users make
more informed decisions.

1. Management information systems (MIS)

2. Decision support systems (DSS)

3. Executive support systems (ESS)

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1. Management Information Systems Figure 2.3 How Management Information

(MIS) Systems Obtain Their Data from the
• The primary purpose of MIS is to process data into information. They
Organization’s TPS
typically provide answers to routine questions that have been specified in
advance and have a predefined procedure for answering them. MIS serve
middle managers.

• MIS provide standardized reports (customer orders, customer complaints,

sales and production…). Managers use MIS reports to evaluate daily
activities, discover problems, make decisions, control performance, etc.
For example, sales reports can be used to analyze trends of products that
are performing well (or bad). This information can be used to make future
inventory orders i.e. increase orders for well-performing products and
reduce the orders of products that are not performing well.
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Figure 2.4 Sample M IS Report

Examples of MIS
Consolidated Consumer Products Corporation Sales by
Product and Sales Region: 2019
Product Product Sales Actual Planned Actual
Code Description Region Sales Versus
Planned
4469 Carpet Cleaner Northeast 4,066,700 4,800,000 0.85
South 3,778,112 3,750,000 1.01
Midwest 4,867,001 4,600,000 1.06
West 4,003,440 4,400,000 0.91
Blank Total Blank 16,715,253 17,550,000 0.95
5674 Room Northeast 3,676,700 3,900,000 0.94
Freshener South 5,608,112 4,700,000 1.19
Midwest 4,711,001 4,200,000 1.12
West 4,563,440 4,900,000 0.93
Blank Total Blank 18,559,253 17,700,000 1.05

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2. Decision Support Systems (DSS) Voyage-Estimating DSS for a global

shipping company
• DSS focus on problems that are unique and rapidly changing, for which
• An example of DSS is the voyage-estimating system used by shipping
the procedure for arriving at a solution may not be fully predefined in
companies that transport big cargoes. These firms own some vessels, rent
advance.
others, and bid for shipping contracts in the open market. This DSS
• DSS help middle management make unstructured and semi-structured system calculates financial and technical voyage details including
decisions. ship/time costs (fuel, labor, capital), freight rates for various types of cargo,
• DSS may use external information as well TPS / MIS data and port expenses, cargo capacity, speed, port distances, loading patterns
• DSS can be either fully computerized or human-powered, or a (location of cargo for different ports).
combination of both. .
• The DSS helps managers answer the following questions: what vessels to
• DSS can be as simple as an excel spread sheet to a complicated system
send to particular destination to maximize profit ? what is the optimal
involving large databases and sophisticated mathematical models.
loading pattern for cargo, and the optimal rate at which vessels should
travel to maximize efficiency ? and so forth.
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Figure 2.5 Voyage-Estimating DSS for a global

3. Executive Support Systems (ESS)
shipping company
• ESS are designed to facilitate senior management in making key strategic
decisions that affects the overall profitability and success of the firm, help
them monitor organizational performance, track activities of competitors,
recognize changing market conditions, identify problems and opportunities.

• ESS address unstructured decisions (nonroutine, novel) requiring

judgment, evaluation, and insight.

• Incorporate data about external events (e.g., new tax laws 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 (digital dashboard)

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Systems for Linking the Enterprise

• How a business can manage all the information in these different systems
(TPS, MIS, DSS, ESS)? How these systems “talk” with one another and
work together?

• One solution is to implement enterprise applications which are systems

that span functional areas, execute business different processes and
include all levels of management.

• 4 major Enterprise Applications:

1. Enterprise systems (ERP)
A digital dashboard delivers comprehensive and accurate information for
2. Supply chain management systems
decision making, often using a single screen. The graphical overview of
key performance indicators helps managers quickly spot areas that need 3. Customer relationship management systems

attention. 4. Knowledge management systems

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Figure 2.6 Enterprise Application Enterprise Systems (ERP)

Architecture
• ERP systems integrate data from many business processes into a single
system eliminating complex, expensive links between computer systems
in different areas of the business.

• ERP includes modules for accounting, inventory management,

production planning, customer sales orders, and more.

• Information that was previously fragmented in different systems could be

shared across the firm

• ERP reduce costs and increase efficiency, improve firm flexibility by

speeding the flows of information, and increase the visibility by enabling
managers to get an overall view of operations.
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Supply Chain Management (SCM) Systems Customer Relationship Management

(C RM) Systems
• While ERP covers nearly all functional areas of a business, SCM is more
specialized, dealing only with supply chain planning and execution (raw • A CRM system coordinates the business processes that deal with

materials ordering, goods receipt, quality inspection, shipping products to customers (sales, marketing, and customer service)

customers). • CRM combine customer data from multiple sources to help firms identify

• Information about orders, production and inventory levels is shared profitable customers, acquire new customers, improve service and

between partners (suppliers, customers, distributors, and logistics support, and target products more precisely to customer preferences. It

companies) in a real time basis. The goal is to move the correct amount of lets you know important customer data such as birthdays, locations, age

product from source to point of consumption as quickly as possible and and industry, which you can use to personalize communication as well as

at lowest cost. offerings. With the right offers made to the right customers at the optimal
time, you can make better deals
• SCM module is sometimes a part of ERP software
• Some ERP systems include a CRM component
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Knowledge Management Systems Intranets and Extranets

(K MS) • Enterprise applications are typically expensive. Companies that do not
have the resources to invest in enterprise applications can still achieve
• KMS is concerned with creating new knowledge, storing and
some measure of information integration by using intranets and extranets.
applying that knowledge inside the organization.
• Intranets and extranets, as technology platforms, represent an alternative
• KMS collect valuable knowledge and make it available for tools for increasing integration and expediting the flow of information within

whomever needs it, wherever and whenever he needs. the firm, and with customers and suppliers.

Example: if you have an expert in your company it is a good • Intranets: A private network accessible only to employees to securely

idea to record the knowledge that person has in case he share specific parts of its IS.

leaves the company • Extranets: Company Web sites accessible only to authorized vendors and
suppliers
• KMS are expensive and tend to be used by larger companies
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E-Business, E-Commerce, and Collaboration and Teamwork

E-Government
• Information Systems can’t make decisions, hire, sign contracts, agree on
• E-business: Use of digital technology and Internet to drive major business
deals, etc.
processes
• To perform these tasks, people need to collaborate.
• E-commerce
• In addition to the types of systems we have just described, businesses
– Subset of e-business
need special systems to support collaboration and teamwork.
– Buying and selling goods and services through Internet
• Collaboration is working with others to achieve shared and explicit
• E-government: Using Internet to deliver information and services to
goals. Collaboration focuses on task or mission accomplishment and
citizens, employees, and businesses. E-government services may include
usually takes place in a business or other organization and between
paying taxes, renewing driving licenses, sending electronic requests for
businesses.
information or complaints, etc.
• Collaboration and teamwork have evolved with technology
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What is a Social Business ? Collaboration and Social Business Tools

• Collaboration tools:
• Many firms today develop collaboration by embracing social business —
the use of social networking platforms (Linkedin, Facebook, Tiktok, Twitter,  E-mail, instant messaging, wikis…

etc.) and internal social tools (Facebook workplace, Yammer, Chatter…).  Virtual worlds: A virtual world is a computer-simulated environment that
enables multi users communication by means of avatars that can interact
• Firms use these social media networks to grow their audiences, conduct
with each other in a 3D environment. Virtual worlds bring together
target market research, and engage their employees, customers, and
geographically dispersed people in a unified virtual location. Firms use
suppliers.
virtual worlds for meetings, interviews, guest speaker events, and
• The goal of social business is to deepen interactions with groups inside employee training. They can be also used to promote innovative thinking
and outside the firm, to speed up information sharing, innovation, and and prototyping (e.g., building objects using 3D shapes and modifying the
decision making. appearance of existing objects)

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Collaboration and Social Business Facebook accounts for business

Platforms
• Multifunction softwares that allow teams to share information, files, and
documents . They include:

 Virtual meeting systems (Zoom, Microsoft teams…)

 Cloud collaboration services (Google Drive, Google Docs, etc.)

 Microsoft SharePoint and IBM Notes

 Enterprise social networking platforms (Linkedin, Facebook, Tiktok, • Facebook Workplace is a paid app with News Feed, Groups within the
Twitter, etc.) and internal social tools (Facebook workplace, Yammer, company and with people from other firms with whom we work regularly, chat
Chatter…). direct messaging, translation, file storing, live video, group video, audio
calling, etc
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Figure 2.7 Requirements for Building a Collaborative Culture

Collaboration • Collaboration does not arise spontaneously. It must be enabled and
cultivated.

• Collaborative culture is an essential factor—simply having collaborative

technology will not result in collaboration.

• 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 teams

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