Introduction to Information Systems Chapter 10 PDF

Introduction to Information Systems Rainer, Prince, Sanchez-Rodriguez, Splettstoesser Hogeterp, Ebrahimi Fifth Canadian Edition Chapter 10 Information Systems within the Organization Copyright ©2021 John Wiley & Sons Canada, Ltd. L...

Introduction to Information Systems Rainer, Prince, Sanchez-Rodriguez, Splettstoesser Hogeterp, Ebrahimi Fifth Canadian Edition Chapter 10 Information Systems within the Organization Copyright ©2021 John Wiley & Sons Canada, Ltd. Learning Objectives 1. Explain the purpose of transaction processing systems 2. Explain the types of support information systems can provide for each functional area of the organization 3. Identify advantages and drawbacks to businesses implementing an enterprise resource planning (ERP) system 4. Describe the three main business processes supported by ERP systems Copyright ©2021 John Wiley & Sons Canada, Ltd. 2 Chapter Outline 1. Transaction Processing Systems 2. Functional Area Information Systems 3. Enterprise Resource Planning (ERP) Systems 4. ERP Support for Business Processes Copyright ©2021 John Wiley & Sons Canada, Ltd. 3 Opening Case: Capstone Mining Implements ERP and Experiences Significant Improvements in Operations Think about: Why might companies with subsidiaries all need compatible (or the same) IS systems? How do consultants facilitate the implementation and support of IS systems? Copyright ©2021 John Wiley & Sons Canada, Ltd. 4 10.1 Transaction Processing Systems (TPS) Terminology: Transaction Transaction Processing System (TPS) o Source data automation o Batch processing o Online Transaction Processing (OLTP) Copyright ©2021 John Wiley & Sons Canada, Ltd. 5 Transaction Processing Systems (TPS) Characteristics of a TPS include: Continuous “real-time” data collection Efficiently handles high volumes of data and large variations in those volumes Avoids errors and downtime Records results accurately and securely Maintains privacy and security Copyright ©2021 John Wiley & Sons Canada, Ltd. 6 FIGURE 10.1 How transaction processing systems manage data Copyright ©2021 John Wiley & Sons Canada, Ltd. 7 Elbow-Partner Chat You will have 3 minutes to discuss and review the following questions with a partner or small group. Be prepared to share your answers and findings with the class. 1) Define TPS in your own words. 2) What are the key functions of a TPS? Copyright ©2021 John Wiley & Sons Canada, Ltd. 8 10.2 Functional Area Information Systems (FAIS) Information Systems for Accounting and Finance Information Systems for Marketing Information Systems for Production/Operations Management Information Systems for Human Resource Management Reports Copyright ©2021 John Wiley & Sons Canada, Ltd. 9 Information Systems for Accounting and Finance Financial planning and budgeting Managing financial transactions Investment management Control and auditing Copyright ©2021 John Wiley & Sons Canada, Ltd. 10 Financial Planning and Budgeting Financial and economic forecasting Budgeting Copyright ©2021 John Wiley & Sons Canada, Ltd. 11 Managing Financial Transactions Global stock exchanges Managing multiple currencies Virtual close Expense management automation (EMA) Copyright ©2021 John Wiley & Sons Canada, Ltd. 12 Control and Auditing Control and auditing o Budgetary control o Internal auditing Financial ratio analysis Copyright ©2021 John Wiley & Sons Canada, Ltd. 13 Information Systems for Production/ Operations Management (POM) In-house logistics and materials management o Inventory management o Quality control Planning production and operations (and MRP, MRPII) Computer-integrated manufacturing (CIM) Product life cycle management Copyright ©2021 John Wiley & Sons Canada, Ltd. 14 Information Systems for Human Resource Management Recruitment Human resources development Human resources planning and management o Payroll and employees’ records o Benefits administration o Employee relationship management Copyright ©2021 John Wiley & Sons Canada, Ltd. 15 IT’s About Business 10.1: Three Square Markets Puts IS inside Their Employees Consider: What are the many different ways you could use a microchip that was embedded in your hand? Such chips are usually inserted in the skin between the thumb and forefinger. Would you consider having a microchip inserted? Why or why not? Copyright ©2021 John Wiley & Sons Canada, Ltd. 16 FIGURE 10.3 Examples of information systems supporting the functional areas Copyright ©2021 John Wiley & Sons Canada, Ltd. 17 Reports Routine reports Ad-hoc (on-demand) reports o Drill-down reports o Key indicator reports o Comparative reports Exception reports Copyright ©2021 John Wiley & Sons Canada, Ltd. 18 Elbow-Partner Chat You will have 3 minutes to discuss and review the following questions with a partner or small group. Be prepared to share your answers and findings with the class. 1) Define a Functional Area Information System (FAIS) and list its major characteristics. 2) Compare and contrast the three (3) basic types of reports. Copyright ©2021 John Wiley & Sons Canada, Ltd. 19 10.3 Enterprise Resource Planning (ERP) Systems ERP II Systems Benefits and Limitations of ERP Systems Implementing ERP Systems Enterprise Application Integration (EAI) Copyright ©2021 John Wiley & Sons Canada, Ltd. 20 ERP II Systems ERP II systems are interorganizational ERP systems that provide Web-enabled links between a company’s key business system and its customers, suppliers, distributors, and other relevant parties Copyright ©2021 John Wiley & Sons Canada, Ltd. 21 FIGURE 10.4 ERP II system Copyright ©2021 John Wiley & Sons Canada, Ltd. 22 TABLE 10.2 ERP Modules: Core ERP Modules Financial management Operations management Human resource management Copyright ©2021 John Wiley & Sons Canada, Ltd. 23 TABLE 10.2: ERP Modules: Extended ERP Modules Customer relationship management (CRM) Supply chain management (SCM) Business analytics E-business Copyright ©2021 John Wiley & Sons Canada, Ltd. 24 Major Benefits of ERP Systems Improved organizational flexibility and agility Provides decision support Improved business processes for increased quality and efficiency Copyright ©2021 John Wiley & Sons Canada, Ltd. 25 Major Limitations of ERP Implementations Since ERPs are based on best practices companies may need to change their methods of achieving business objectives by changing their business processes Such practices are not the “best” for every company and may result in a loss of competitive advantage ERP systems can be complex, expensive, and time- consuming to implement Copyright ©2021 John Wiley & Sons Canada, Ltd. 26 Major Causes of ERP Implementation Failure Failure to involve affected employees in the planning and development phases and in change management processes Trying to do too much too fast in the conversion process Insufficient training in the new work tasks required by the ERP system Failure to perform proper data conversion and testing for the new system Copyright ©2021 John Wiley & Sons Canada, Ltd. 27 Implementing ERP Systems On-premise ERP implementation o Vanilla approach o Custom approach o Best-of-breed approach Software-as-a-Service (SaaS) Copyright ©2021 John Wiley & Sons Canada, Ltd. 28 Three major advantages of using a cloud-based ERP system The system can be used from any location that provides Internet access Companies using cloud-based ERP avoid the initial hardware and software expenses that are typical of on- premise implementations Cloud-based ERP solutions are scalable, meaning it is possible to extend ERP support to new business processes and new business partners (e.g., suppliers) by purchasing new ERP modules Copyright ©2021 John Wiley & Sons Canada, Ltd. 29 Three major disadvantages of using cloud-based ERP systems It is not clear whether cloud-based ERP systems are more secure than on-premise systems Companies that adopt cloud-based ERP systems sacrifice their control over a strategic IT resource Lack of control over IT resources when the ERP system experiences problems Copyright ©2021 John Wiley & Sons Canada, Ltd. 30 Elbow-Partner Chat You will have 3 minutes to discuss and review the following questions with a partner or small group. Be prepared to share your answers and findings with the class. 1) Define ERP and ERP II and describe their functions. 2) Differentiate between core ERP modules and extended ERP modules. Copyright ©2021 John Wiley & Sons Canada, Ltd. 31 10.4 - ERP Support for Business Processes The Procurement, Fulfillment, and Production Processes o The Procurement Process o The Fulfillment Process o The Production Process Copyright ©2021 John Wiley & Sons Canada, Ltd. 32 FIGURE 10.5 Departments and documents flow in the procurement process Copyright ©2021 John Wiley & Sons Canada, Ltd. 33 FIGURE 10.6 Departments and documents flow in the fulfillment process Copyright ©2021 John Wiley & Sons Canada, Ltd. 34 FIGURE 10.7 Departments and documents flow in the production process Copyright ©2021 John Wiley & Sons Canada, Ltd. 35 FIGURE 10.8 Integrated processes with ERP systems Copyright ©2021 John Wiley & Sons Canada, Ltd. 36 Interorganizational Processes: ERP with SCM and CRM SCM and CRM help multiple firms in an industry coordinate activities such as the production and sale of goods and services ERP SCM has the capability to place automatic requests to buy products such as fresh perishable products from suppliers in real time ERP CRM generates forecasting analyses of product consumption based on critical variables such as geographical area, season, day of the week, and type of customer Copyright ©2021 John Wiley & Sons Canada, Ltd. 37 Copyright Copyright © 2021 John Wiley & Sons Canada, Ltd. or the author. All rights reserved. Students and instructors who are authorized users of this course are permitted to download these materials and use them in connection with the course. No part of these materials should be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by law. Advice on how to obtain permission to reuse this material is available at http://www.wiley.com/go/permissions. Copyright ©2021 John Wiley & Sons Canada, Ltd. 38