Week 2 Discussion Management of Information Systems
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w2_lecture.pptxWeek 2 Learning Objectives
Identify various business functions and the role of ISs in these functions
Explain how ISs in the basic business functions relate to each other
Articulate what supply chains are and how information technology supports management of supply chains
Enumerate the purposes of customer relationship management systems
Explain enterprise resource planning systems
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Identify various business functions and the role of ISs in these functions
Explain how ISs in the basic business functions relate to each other
Articulate what supply chains are and how information technology supports management of supply chains
Enumerate the purposes of customer relationship management systems
Explain enterprise resource planning systems
List major hardware components of computers and explain their functions
Classify computers into major categories, and identify their strengths and weaknesses
Identify and evaluate key criteria for deciding what computers or related devices to purchase
Discuss the possible health hazards of computer use
Effectiveness and Efficiency
Information technology makes work more effective, more efficient, or both
Effectiveness: the degree to which a goal is achieved
Efficiency: the relationship between resources expended and benefits gained in achieving a goal
Efficiency = Benefit / Costs
One system is more efficient if its operating costs are lower for the same or better quality product
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Information technology makes work more effective, more efficient, or both
Effectiveness is the degree to which a goal is achieved
Efficiency is the relationship between resources expended and benefits gained in achieving a goal
Efficiency = Benefit / Costs
One system is more efficient if its operating costs are lower for the same or better quality product
Productivity is efficiency of human resources
Productivity improves when fewer workers are required to achieve the same goal
Productivity tools are software applications that improve productivity
Information Systems contribute to both effectiveness and efficiency of businesses
A Customer relationship management (CRM) system helps serve customers better and faster
Service continues after delivery of goods as customer service and more marketing
CRM systems are often combined with supply chain management (SCM) systems to create an enterprise resource planning (ERP) system
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Figure 3.1 2. Information systems in different business functions are interdependent © Cengage Learning 2015
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Information systems business functions are interdependent
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Figure 3.3 Accounting information systems include features that reflect up-to-date performance of the organization in financial terms © Cengage Learning 2015
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Accounting
Accounting’s purpose is to track every financial transaction
Accounting systems are required by law and for proper management
Accounting systems are needed to ensure a company is making a profit
Accounts payable and accounts receivable track income and outgoing payments
The general ledger is used to produce a balance sheet which is a picture of the financial situation, and a profit-and-loss report
An accounting information system receives information from transaction processing systems (TPSs)
TPSs automatically route purchases to accounts payable and automatically route sales to accounts receivable.
Reports can be generated on demand or on a schedule
A work order is an authorization to perform work for a specific purpose
Cost-accounting systems accumulate data about costs involved in producing specific products
Accounting Information Systems are used for managerial purposes for budgeting and cost control
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Figure 3.4 Financial information systems help manage cash and investment portfolios © Cengage Learning 2015
Firm’s health is measured by its finances
Financial information systems help managers track company finances
Financial managers’ goal is to manage money as efficiently as possible by:
Collecting payables as soon as possible
Making payments at the latest time allowed
Ensuring funds are available for daily operations
Investing funds not used for current activities
Cash management systems (CMSs) deal specifically with cash
Electronic funds transfer (EFT): relocates cash from one bank account to another electronically
Investment Analysis and Service help investors buy an asset and sell it at a higher value
When investing in securities, you must know current prices in real time
Nearly instantaneous information systems can provide investors and clients with financial news, stock prices, commodity prices, and currency exchange rates
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Figure 3.5 Engineering information systems assist engineers in designing new products and simulating how they operate © Cengage Learning 2015
Engineering Information systems
Time to market is the time between generating an idea for a product and completing a prototype
Brainstorming is a process of a group of colleagues meeting and collaborating to generate creative solutions and new ideas
Minimizing time to market is key to maintaining competitive edge
Information systems can contribute significantly to minimizing time to market
Computer-aided design (CAD): tools to create, modify, and store designs and drawings electronically
Rapid prototyping: creating one-of-a-kind products to test design in three dimensions
Allows a model to be produced in hours rather than days or weeks
Computer-aided manufacturing (CAM): systems that instruct machines how to manufacture parts and assemble products
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Figure 3.12 Customer relationship management systems help marketing, sales, and customer service departments target interested and profitable customers © Cengage Learning 2015
Customer Relationship Management
Customer relationship management (CRM) systems are designed to support
Marketing
Sales
and, Customer service
CRM systems capture the entire customer experience with an organization
All company employees who deal with the customer have access to this information
To promote products successfully, organizations must perform market research
Market research helps discover populations and regions that are most likely to purchase a product
Activities may include:
Conducting interviews with consumers and retailers
Building statistical models to predict sales volumes of different products
Targeted marketing promotes to people most likely to purchase products
Database technology allows all companies to use targeted marketing, even small companies can direct promotional dollars to customers most likely to buy
“Big data” refers to challenges of storing and mining vast quantities of data
In telemarketing, marketing over the telephone, the caller has a large database of consumer data
Computer telephony integration (CTI): allows computer to use telephone line as input and caller ID can be used to locate customer data
Data mining uses large data warehouses to find trends and shopping habits of various demographic groups
Targeted marketing and Web technologies enable retailers to personalize online shopping
Software can track Web page click streams to determine customer preferences
Customer Service
Can enable accurate and efficient gathering of various dimensions of consumer information in real-time, such as:
When and where consumers shop and what they buy
Smartphone implementation of location-based services “leads” prospective customers to businesses and increases sales and promotes business location
Salesforce Automation equips traveling salespeople with information technology to improve productivity
Laptops, tablet computers, or smart phones
Makes sales presentations more efficient
Allows salespeople to present different options for products and services at the customer location
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Figure 3.6 Manufacturing and inventory control information systems help reduce cycle times and the cost of maintaining inventory © Cengage Learning 2015
Material requirements planning (MRP) is inventory control
MRP determines when inventory needs to be restocked,
can predict future need based on demand forecasts,
and takes customer demand as input, then works back to calculate resources needed to produce goods
Bill of materials (BOM) is a list of all raw materials and subcomponent demands to produce a product
Economic order quantity (EOQ) is a optimal quantity of a raw material that minimizes overstocking and saves cost, without missing production deadlines
EOQ considers cost, discounts for large quantities, cost of warehousing material, cost of alternative uses of money, among other.
Manufacturing resource planning (MRP II) combines MRP with other related activities to plan the entire manufacturing process
MRP uses the master production schedule
The Master production schedule (MPS) specifies how production capacity is to be used to meet customer demands
Information systems are designed to control manufacturing processes as well as monitor them
Controlling processes helps ensure quality
Shipping can be performed by a manufacturer or a shipping company
Many variables affect cost and speed of shipping, including:
Length of routes
Sequence of loading and unloading
Type of shipped materials (e.g., perishable, hazardous, or fragile)
Fuel prices
Road tolls
Sophisticated software that optimizes shipping efficiency helps a company stay competitive
There is a need to optimize:
Shipping time,
Cost of labor,
Equipment use,
and maintenance
Vehicles equipped with computers, global positioning systems (GPS), and satellite communication have increased efficiency
Radio frequency identification (RFID) is a technology containing circuitry that allows recording of information about a product
Electronic product code (EPC) is a code on an RIFD tag that provides more information than the universal product code (UPC)
Information may include date of manufacturing, plant location, expiration date, destination, etc. This code ensures genuineness of products
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Figure 3.1 Business activities consist of customer relationship management, supply chain management, and supporting functions © Cengage Learning 2015
Supply Chain Management
A supply chain consists of procurement of raw materials, processing materials into goods, and delivering goods
Processing raw materials into goods is also known as manufacturing
Supply chain management (SCM) includes monitoring, controlling, and facilitating supply chains
CAD computer aided design systems often transfer data automatically to CAM computer aided manufacturing systems
IT helps in manufacturing activities such as
Scheduling plant activities to optimize the use of resources
Planning material requirements based on current and forecasted demand
Reallocating materials and resources from one order to another
Managing inventories
Grouping similar work orders for efficiency
And considering the qualifications of each resource to accomplish its task
An Enterprise Resource Planning (ERP) system includes CRM marketing, sales, and customer service and SCM materials purchase, producing goods, packing and shipping, and billing and collections.
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Figure 3.13 Human resource management information systems help managers optimize promotion and recruitment, training, evaluation, and compensation activities © Cengage Learning 2015
Human resource management information systems help managers optimize promotion and recruitment, training, evaluation, and compensation activities
Human resource management (HRM) can be classified into five main activities:
Employee record management
Promotion and recruitment
Training
Evaluation
Compensation and benefits management
Employee Record Management
HR departments must keep personnel records:
To satisfy laws
For payroll and tax calculation and deposit
For promotion consideration
For periodic reporting
Human resource ISs are now digitized
Saves space to store records, time to retrieve them, and costs of both
Promotion and Recruitment
HR can select best-qualified person for position by searching database of applicants and existing employees for specific criteria
Automating the selection process significantly minimizes time and money for recruitment
Intranet: intraorganizational network that supports Web applications
Allows HR manager to post position vacancy announcements that get wide exposure
Training - One important HR function is improving employee skills
Multimedia software training is replacing classrooms and teachers
May include virtual reality simulated environments
Information technology reduces training costs dramatically
Evaluation
Employee ability must be periodically evaluated by supervisors
May include evaluation of technical ability, communication skills, professional conduct, and general behavior
Often a subjective process, which is a problem
Evaluation software assists in standardizing the evaluation process
Provides tools such as step-by-step guides, checklists, scales, weighted calculations, etc.
Compensation and Benefits
Compensation includes salary, hourly pay, commissions, and bonuses
Programs calculate pay and taxes
Automatically generate paychecks and perform direct deposits
Software can help manage benefits
Benefits database accessible through intranet or Internet
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Figure 3.14 A shared supply chain management system monitors the movement of raw and finished goods © Cengage Learning 2015
Supply Chain Management Systems
Overall inventory in the U.S. is decreasing while U.S. gross domestic product (GDP) is increasing
Money saved from reduced inventory can be spent elsewhere
Reduction in inventory attributed to the use of ISs, especially SCM systems
Streamline operations throughout chain
ERP systems can also serve as SCM systems, connecting multiple organizations
The Importance of Trust
SCM systems work best when all businesses in the chain are sharing information
Risk of disclosing important information to competitors is present
Risk of taking advantage of demand figures by charging higher prices is present
Effective SCM requires:
Technology
Trust
Culture change
Continuous Attention to Inventory
Small enterprises do not use SCM systems
Affect more powerful organization to which small enterprise is linked
Inventory turns: the number of times the business sells its inventory per year
When SCMs of companies are not linked, demand requirements are unknown
Supply companies must overstock inventory
One company “sits” with lean inventory while other stands with “overstock”
Collaborative Logistics
Web allows organizations from different industries to collaborate
Businesses combine freight and share trucks
Can optimize logistics by connecting SCM systems
SCM systems can allow collaborative warehousing to share warehouse space
Companies collaborating with retailers
Use store sales data to compile a “perfect order”
Enterprise Resource Planning
Many companies replace old, disparate information systems with enterprise applications
Enterprise resource planning (ERP) system: manages daily operations and facilitates planning
Current ERP market includes four vendors:
SAP
Oracle
Sage
Infor
Challenges and Disadvantages for ERP Systems
Challenges of ERP systems
They are complex
They often require special tailoring for specific organizations
They may not support a company’s unique sets of business processes
They are expensive
A process that becomes a weak link in one area may negatively affect other integrated processes
Providing the Missing Reengineering
Most reengineering projects of the 1990s failed
In the late 1990s and early 2000s
ERP systems forced changes in processes; helped realize many of those reengineering ideas
ERP systems allow better planning and managing of processes at the organizational level instead of at the organizational unit level
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Figure 4.1 Most computer systems have the same basic components © Cengage Learning 2015
Computer Hardware Components
In general, every computer has the following components:
Input devices
Central processing unit (CPU)
Internal memory
Storage
Output devices
Input devices: receive signals from outside of computer and transfer them into the computer
Central processing unit (CPU)
Accepts instructions and data
Decodes and executes instructions
Stores results (output) in memory
Internal memory (or primary memory): stores data and instructions before and after CPU processes them
RAM: random access memory
ROM: read-only memory
Motherboard: circuit board containing the CPU and primary memory
Storage: magnetic disks, magnetic tapes, optical discs, DVDs, and flash memory
Allows permanent storage
Output devices: deliver information from the computer to the user
Monitors and printers are the most common output devices
Audio devices also deliver output
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Figure 4.2 Measuring amounts of digital data © Cengage Learning 2015
A Bit a Binary digit represented by 0 or 1
A Byte is a combination of eight bits
Computer memory and storage capacity are measured in megabytes (MB), gigabytes (GB), terabytes (TB), etc.
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Classification of Computers
Computers vary in size and power
Classified by power
Power is determined mainly by processing speed and memory size
More powerful computers are more expensive
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Classification of Computers
Computers vary in size and power
When classified by power,
Power is determined mainly by processing speed and memory size
More powerful computers are more expensive
Supercomputers are the most powerful computers at any given time
Largest in physical size and most expensive
Designed for complex arithmetic calculations
Generally impractical for business purposes
Parallel processing is multiple processors running simultaneously
Also known as multiprocessing
Clustering uses the CPU power of multiple computers
Mainframe computers store large amounts of data and business transactions
They areLess expensive and less powerful than supercomputers
Mainframes are often used by banks, universities, and insurance companies as a central computer
A significant amount of world’s business data resides on mainframes
Mainframes use multiple processors
Servers are midrange category of computers
The are smaller and less powerful than mainframes
The serve hundreds of users that connect from desktops, laptops, and other servers
Servers use multiple processors
Personal Computers (PCs)
PCs are a collective name for several types of computers
PCs are notebook computers, desktops, netbooks, and handheld computers
A workstation is a more powerful PCs used for CAD, CAM, complex simulation, graphical rendering, and scientific applications
The power of PCs can double approximately every two years
Mobile Devices are the
Notebook computer (or laptop), which is compact, light, and powered by rechargeable battery. Current models include wireless technology
Personal digital assistant (PDA) is handheld computer that may have a Stylus, a pen-like device used to enter data through a touch screen
A Smartphone is a PDA that is also a mobile phone
A Tablet computer is a mobile computing device that uses a touch screen to execute commands. It contains a wide range of applications
Examples are the Apple iPad, Microsoft Surface, and Kindle Fire
Technology convergence is building several technologies into a single piece of hardware
Technology convergence is prominent in handheld units. A smartphone is a prime example it brings together cellular telephone, data and networking, media, and cloud storage
A Peek Inside the Computer
Professionals must know about computer components to understand their power and capabilities
They use this knowledge to make good decisions in purchasing or recommending a computer
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A Peek Inside of the Computer
Professionals must know about computer components to understand their power and capabilities
They use this knowledge to make good decisions in purchasing or recommending a computer
A CPU is a Central Processing Unit
CPU functions are integrated into one or more microprocessors
A Machine cycle is four operations performed by the CPU that are fetch, decode, execute and store
A CPU clock is a special circuitry on the processor that synchronizes all tasks
Clock rate is number of pulses per second
A machine cycle takes several clock pulses
A data word (or word) is the maximum number of bits that the control unit can fetch from primary memory in a single machine cycle
Current microcomputers have 32- or 64-bit words
ALU is the arithmetic, logic unit, the part of the CPU that performs arithmetic and logical operations
A Bus is a communication system that transfers data between computer components.
Throughput is number of bits per second that the bus can accommodate
MIPS (millions of instructions per second) is a common measure of computer speed
Input Devices
Computers must receive input to produce output
Input devices include machines and devices used to enter instructions and data into computer
Common input devices include:
Keyboard
Mouse
Trackball
Microphone
Scanner
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Computers must receive input to produce output
Input devices include machines and devices used to enter instructions and data into computer
Common input devices include:
Keyboard
Mouse
Trackball
Microphone
Scanner
Touch screen
Source Data Input devices
Copy data directly from sources such as bar codes, credit cards, and checks
Optical mark recognition devices detect positions of marks or characters
Optical character recognition (OCR) devices try to interpret handwritten and printed text
Radio-frequency identification (RFID) Is the fastest growing source data technology
Universal Product Code (UPC) is bar code found on a product in a grocery store
Magnetic-ink character recognition (MICR): automates check processing
Magnetic strips on credit cards and debit cards
Bar codes used on packages received through shipping companies
Imaging - Converts documents into images
Saves paper
More efficient retrieval and filing
Scanned document images can be:
Indexed and linked to relevant records in databases
Easily retrieved
Original paper documents can be destroyed after scanning
Speech Recognition
Process of translating human speech into computer-readable data and instructions
Also called voice recognition
System receives input from microphone or telephone and processes it with software
Interactive voice recognition (IVR) system: employed by many companies for customer service
Output Devices
Deliver results of computer processing
Popular output devices include:
Monitors
Printers
Speakers
In the future, digital smell output is possible
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Output Devices - Deliver results of computer processing
Popular output devices include:
Monitors
Printers
Speakers
In the future, digital smell output is possible
Monitors - Pixel (picture element): small dots that make up the images on a monitor
CRT (cathode-ray tube): inner side of screen has layer of phosphoric dots, i.e., the pixels
Electron gun receives instructions from computer and sweeps the pixels
Flat-panel monitor: advantages include lower power use, sharper images, and slim profile
Liquid crystal display (LCD) monitor: uses a liquid crystal filled screen
Monitor price depends on:
Size, measured as the diagonal length of the screen
Brightness → brighter is better
Contrast ratio → higher is better
Pixel pitch → closer pixels are better
Resolution: a measure of picture sharpness
Number of pixels in the width and height of the screen
Printers
Nonimpact printer: does not mechanically impact the paper
Laser printer is most common in business
Others include ink-jet and electrothermal printers
Speed is measured in pages per minute (ppm)
Density measured in dots per inch (DPI)
Impact printer: reproduces image by using mechanical impact
Dot-matrix printer: tiny pins strike ink ribbon against paper
3D printer print 3d object
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Figure 4.7 Characteristics of digital storage media for business purposes © Cengage Learning 2015
Storage
Data must be stored on nonvolatile medium
Data is retained even when the storage device is not connected to electrical power
Storage devices differ in the technology used to maintain data and physical structure
Evaluate storage devices by comparing:
Cost
Capacity
Access speed
Access mode
Business Considerations in Evaluating Storage Media
When purchasing storage devices, managers must consider:
The purpose of data storage
The amount of data to be stored
The required speed of data storage and retrieval
The unit space and portability of the device
And, the cost
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Considerations in Purchasing Hardware
Equipment’s power: speed, memory size, and capacity
Expansion slots and ports: numbers and types
Ports: sockets that connect external devices to a computer
Monitor type and resolution
Ergonomics
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Considerations in Purchasing Hardware
Equipment’s power: speed, memory size, and capacity
Expansion slots and ports: numbers and types
Ports: sockets that connect external devices to a computer
Monitor type and resolution
Ergonomics
Compatibility
With existing hardware, software, and networks
Backward compatibility: newer hardware works with older hardware
Hardware footprint: area that it requires
Reliability of vendor, warranty policy and post-warranty support
Power consumption and noise
Cost
Scalability and Updating Hardware
Principle of scalability
Resources—in this case, hardware—can accommodate a growing amount of work either with or without upgrading
Not all hardware is scalable
Hardware replacement is needed to avoid performance gaps between hardware and software
Leasing hardware is a valid option to avoid short useful lifetime of hardware
Summary
Effectiveness is the degree to which a task is accomplished
Efficiency is the ratio of output to input
Productivity is the measure of people’s efficiency
Information systems have been integrated into accounting services
Financial information systems help managers track cash
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Effectiveness is the degree to which a task is accomplished
Efficiency is the ratio of output to input
Productivity is the measure of people’s efficiency
Information systems have been integrated into accounting services
Financial information systems help managers track cash
Computer-aided design (CAD) systems help engineers design new projects
Computer-aided manufacturing (CAM) systems direct machines that assemble parts
Supply chain management (SCM) systems optimize workload, speed, and cost in supply chains
Customer relationship management (CRM) includes the entire cycle of relationships with customers
Human resource management systems facilitate staff selection and record keeping
Multiple companies’ SCM systems can be linked, facilitating cooperation, which requires trust
An enterprise resource planning (ERP) system can encompass all business processes, but is expensive and challenging
Understanding hardware is important for purchasing decisions
Computers are classified according to power
All computers have a CPU to process instructions
Clock rate measures the speed of a CPU
Data word: the number of bits the computer can process in a single cycle
Computer power: measured by its speed, memory size, and number of processor cores
RAM: volatile memory
ROM is nonvolatile; it does not require power
Imaging devices help process text and graphics
When evaluating external storage, consider transfer rate, capacity, portability, and form of data organization supported
Data is organized sequentially on tapes
Direct access storage devices such as RAM, magnetic disks, and optical discs allow random access
Databases require direct access storage devices
When purchasing hardware, professionals should consider cost, power, scalability, compatibility, etc.
Information technology may pose health risks such as carpal tunnel syndrome
