ACS-1803 Midterm Study PDF

ACS-1803 Midterm Study Lecture 1 *[Data, Information, Knowledge]* ***Data*** \~ raw facts ***Information*** \~ collection of facts organized in a way that they have value ***Knowledge*** \~ understanding of a set of information (insights) *[Types of Data]* A table of text and colors Descripti...

ACS-1803 Midterm Study Lecture 1 *[Data, Information, Knowledge]* ***Data*** \~ raw facts ***Information*** \~ collection of facts organized in a way that they have value ***Knowledge*** \~ understanding of a set of information (insights) *[Types of Data]* A table of text and colors Description automatically generated with medium confidence *[Process of Transforming Data into Information]*  *[Characteristics of Valuable Information]* - If an organizations information is not accurate or complete - People can make poor decisions, costing thousands, or even millions of dollars - Depending on the type of data you need: - Some characteristics become more important than others 1. ***Accessible*** \~ information should be easily obtainable by authorized users 2. ***Accurate*** \~ information is error free - *GIGO (garbage in garbage out);* inaccurate information is generated b/c inaccurate data is fed into the transformation process 3. ***Complete*** \~ information contains all important facts 4. ***Economical*** \~ information should be relatively economical to produce, and decision maker must balance the value of information with the cost of producing it 5. ***Flexible*** \~ information can be used for a variety of purposes 6. ***Relevant*** \~ information is important to the decision maker (information may be important to one decision maker, but not the other) 7. ***Reliable*** \~ information can be trusted by users; information comes from a reliable source 8. ***Secure*** \~ information should be secure from unauthorized users 9. ***Simple*** \~ information should not be overly complex; too much information can cause information overload which could cause problems for the decision maker determining what is important 10. ***Timely*** \~ information is delivered when it is needed; information is relevant to present situation; weather from last week will not help you decide how to dress for today's weather 11. ***Verifiable*** \~ able to check if information is correct; can be done so by checking many sources *[The Value of Information]* - Directly linked to how it helps decision makes achieve their organization's goals - *Valuable information:* - Can help people and their organizations perform tasks more efficiently and effectively - What is the difference between effectiveness and efficiency? Effective =\> gets the job done *Something can be effective but not efficient; if it is efficient, it is also effective* Example: you take Tylenol b/c of a headache, it is effective, but not efficient b/c it takes time for it to work; it does not relieve the pain instantly *[Why Learn about Information Systems (IS) in Organizations?]* - IS is a key to unlocking the potential of any new or modified system - IS used by sales representatives, managers, financial advisors - Information systems: - Indispensable tools to help you achieve your career goals - Businesses can use IS to increase revenues and reduce costs *[What is Information System?]* - A *set of interrelated components* that ***collect, manipulate, disseminate*** data and information and provide ***feedback*** to meet an objective *[Role of IS in Business Today]* - New products, services, and business models - ***Business model:*** describes how a company produces, delivers, and sells product or service to create wealth - *IS/Technology* is a major tool for enabling new products, services, and business models - ***Customer and supplier intimacy:*** - *Serving customers well leads to customers returning, which raises revenues & profits* \~ Example: high-end hotels that use computers to track customer preferences and used to monitor and customize environment - *Intimacy w/ suppliers allow them to provide vital inputs, which lower costs* \~ Example: Walmart's IS which links sales records to contract manufacturer - ***Improved decision making*** - Without accurate information: \~ Managers must use *forecasts, best guesses, luck* \~ Results in *overproduction/underproduction, misallocation of resources, poor response times* \~ poor outcomes raise costs, lose customers - ***Operational excellence:*** - Improvement of efficiency to attain higher profitability - IS/technology is an important tool in achieving greater efficiency and productivity - ***Competitive Advantage*** - Delivering better performance - Charging less for superior products - Responding to customers and suppliers in real time - Apple, Walmart, UPS *[Input, Processing, Output, Feedback]* **Input:** gathering and capturing raw data **Processing:** converting data into useful outputs **Output:** production of useful information, usually in the form of documents and reports **Feedback:** information from the system that is used to make changes to *input* or *processing activities* *[Manual and Computer-based IS]* - An information system can be manual or computerized A diagram of a person and a typewriter Description automatically generated  Manual IS Computerized IS - Example: - Investment analyst manually draw charts and trend lines to assist them in making investment decisions - ***Management Information System (MIS):*** - Follow stock indexes and markets and suggest when large blocks of stock should be purchased or sold *[Management Information Systems (MIS)]* - Single set of hardware, software, databases, telecommunications, people, and procedures - Composed of Application, Technical, and Organizational components - Configured to collect, manipulate, store, and process data into information - ***Hardware:*** - Consists of *computer equipment* used to perform *input, processing, and output* activities - ***Software:*** - Consists of the *computer programs* that govern the operation of the computer - ***Database:*** - Organized *collection of facts and information*, typically consisting of related data files - Telecommunications, Networks, and the Internet: - The electronic transmission of signals for communications - ***Networks***: - Connect computers and equipment to enable electronic communication - ***Internet:*** - World's largest computer network, consisting of thousands of interconnected networks, all freely exchanging information - ***People:*** - The *[most important element]* in most management IS - ***Procedures:*** - Include *strategies, policies, methods, and rules* for using the MIS *[Components on an MIS]* Application Components (Application Software, Databases) - Outer: menu screens, input screen, query screens, reports - Application components are most directly related to the business situation that the system supports Technical Components (Hardware, Telecommunications) - Hardware, system software, telecommunication technology - These "house" the application components Organizational Components (People, Processes) - Who does what, where, and how with the system, in the organization? (Procedures) Lecture 2.1 \~ Data Management *[Data Management Concepts]* - Why manage data? - Without data and the ability to process the data: an organization could not successfully complete most business activities - Data consists of raw facts - To transform data into useful information: - It must first be organized in a meaningful way i.e. **Database** - ***Database Management System (DBMS)*** - A collection of programs that enables users to store, modify, and extract information from a database *[Levels of Data within a Database]* A close-up of a chart Description automatically generated *[Data Entities, Attributes, and Items]* ***Entity:*** - Things we store information about (i.e. **persons, places, objects, events** etc.) - Have **relationships** to **other entities** (i.e. the entity *Student* has a relationship to the entity *Grades* in a University Student database) - General class of people, places, or things (objects) for which data is collected, stored, and maintained ***Attribute:*** - Pieces of information (characteristics) about an entity (i.e. Student ID, name, etc. for the entity *Student*) ***Data item:*** - Specific value of an attribute The key field is the employee number. The attributes include last name, first name, hire date, and department number. *[Data Entities, Attributes, Items, Keys]*  *[Defining Database -- Keys]* A screenshot of a computer Description automatically generated *[Primary, Foreign, Composite & Compound Keys]* ***Primary Key:*** uniquely identifies records (rows) in that table ***Foreign Key:*** an attribute in a table that acts as a reference to the primary key of another table ***Composite Key:*** two or more attributes that uniquely identify a record (row) -- "*firstName + lastName", "CourseID + Section"* ***Compound Key:*** a composite key for which each attribute that makes up the key is a *foreign key* in its own right -- e.g. *"studentID + CourseID"* *[File Approach to Storing Data]* - Often same information was stored in multiple master files - Made it more difficult to effectively integrate data and obtain an organization-wide view of data - Same information may not be consistent between files  *[File Approach Characteristics]* - Each application has its own set of files - **Inflexibility:** committed to processing particular queries - **Uncontrolled Redundancy:** if these separate applications need to process the same data there are duplicate copies of the data, wastage of valuable storage space - Need to put data to several files - Data inconsistency (one fact may have more value than one value -- various versions may occur) - **Poor Enforcement of System Standards:** data names, formats, access restrictions,... etc. are not standardized across an organization. This makes modification difficult and hinders sharing of data - **Limited Data Sharing:** each application has private file providing little opportunity for users to share existing data. Any new applications would not be able to use existing files leading to low productivity - **Program** -- Data Dependency: description of files, records, data items are embedded w/in application programs. Any modifications to a data file require that the application programs using that file must also be changed. In other words, program maintenance will be excessive *[Database Approach Characteristics]* - A centralized Database Management System (DBMS) exists, which handles all data management activities - The DBMS does not fragment data into separate files, but regards data as being stored in a large conceptual repository -- [database.] The DBMS handles the *addition, storage, update, and retrieval* of data A diagram of a database management system Description automatically generated *[Database Approach -- Advantages]* - Improved strategic use of corporate data - Reduced Data Redundancy - Improved Data Integrity - Easier modification and updating - Data and program independence - Better access to data and info - Standardization of data access - Improved data safeguarding - Efficient use of resources *[Database Approach -- Disadvantages]*  *[File Processing vs Database Approach]* Lecture 2.2 \~ Data Management *[Storing Data in a File -- Example]* School Information System - The director of XYZ School would like to assess the initial design of the system using the following student, course, and grade information: - Student\# 1234; Student: A. Lam; Address 491 Castle, Wpg; Phone: 204-258-6987; Major: Economics; Course: 1803, Computers, Grade: A; Course: 1901, Pascal, Grade: B; Course 2002, Finance, Grade A - Student \#: 9876; Student: R. Kelly; Address: 22 Miller Cres, Wpg; Phone: 204-258-7563; Major: Biology; Course: 2002, Finance, Grade: B; Course: 3421, Entomology, Grade: B; Course 4523, Zoology, Grade: C - Student \#: 4567; Student: J. Ng; Address: 399 High St.; Phone: 204-785-2145; Major: Business; Course: 1304, Accounting, Grade: C; Course: 2233, Marketing, Grade: A. *[Example: School Database]* Data items: - Student Number, - Student Name, - Student Steet address, - Student City, - Student Phone, - Student Major area (only one), - For each course the student takes, the Course Number, Course Name, Enrollment Date, and Grade A white squares with black text Description automatically generated *[Inefficient Data Storage]*  ***Problems:*** - Data redundancy - Inefficient storage - Will take more space - Process for storing data will take longer - Inefficient data retrieval -- data take longer to be found - Other problems -- anomalies - Update - Insertion - Deletion ***Solution??? Normalization!*** *[Data Entities, Attributes, and Items]* **Normalization** - Process of streamlining complex groups of data to: - Minimize redundant elements - Minimize awkward many-to-many relationships - Increase stability and flexibility **Referential integrity rules** - Used by relational databases to ensure the relationship b/w coupled tables remain consistent - For example: when one table has a foreign key that points to another table, you may not add a record to the table with foreign key unless there is a corresponding record in the linked table *[Normalizing the School Database]* - Determine the relationships when you have all the fields listed - Group related fields into one table - Use logic, think about relationships - On this example, all fields with a one-to-one relationship go in one table, and all fields that have a one-to-many relationship in another table - Determine what fields will be links b/w the tables - Create your Data Model *[Relationships]* - When stored on Disk, *Student Number* is the common column linking the data STUDENT with the data in the GRADES table - And entity relationship (ER) diagram of this set up would be: A diagram of a diagram Description automatically generated *[School Database]*  A screenshot of a computer Description automatically generated This is a normalized database. *[Normalized Tables]*  *[Keys]* Primary Key -- Student Table: student number Foreign Key -- Grade Table: student number Compound Primary Key -- Grade Table: student number + course number + grade *[Designing Databases -- Data Model]* ***Data Model*** - A map or diagram that represents entities and their relationships - Used by Database Administrators to design tables w/ their corresponding associations *[Designing Databases -- Associations]* - Define the relationships one entity has to another - Determine necessary key structures to access data - Come in *3 relationship types:* A diagram of a table Description automatically generated ***Entity Relationship Diagram (ERD)*** - Diagramming tool used to express entity relationships - Useful in developing complex databases - Example: - Each Home Stadium has a Team (one-to-one) - Each Team has Players (one-to-many) - Each Team participates in Games - For each Player and Game there are Game Statistics  *[Relational Database]* - Data set up as a centralized collection of tables - Tables are linked by common columns of data - Tables are designed together to minimize repetition - This is the most common database structure *[The Relational Model]* - A three-dimensional model compared to the tradition two-dimensional database models - Rows (first dimension) - Columns (second dimension) - Relationships (third dimension) - The third dimension makes this model so powerful because any row of data can be related to any other row or rows of data *[Example 1]* A table with numbers and numbers Description automatically generated *[Example 2]*  - Capture relationship b/w two separate tables with a common column (attribute) in each table *[Data Modeling and Database Characteristics]* - When building a database, an organization must consider: - ***Content**:* what data should be collected and at what cost? - ***Access:*** what data should be provided to which users and when? - ***Logical structure:*** how should data be arranged so that it makes sense to a given user? - ***Physical organization:*** where should data be physically located? *[Data Modeling Illustration]* *[Providing a User View]* **Schema:** - The skeleton structure that ***represents the logical view of the entire database*** - It defines how the data is organized and how the relations among them are associated - It formulates all constraints that are to be applied on the data - Used to describe the entire database - [Serves as the *"blueprint"* to the design of the DBMS] and focuses on the relationships b/w entities - can be part of the database or separate schema file - 3 examples of schemas are shown: 1. External Level Subschema (end user view) is focused on the end user level. It serves as a map to the Conceptual View to the design of the DBMS 2. Conceptual Schema (design view) and the 3. Internal Level Schema (data dictionary view) is used by the database analysts and design specialists to map the DBMS A diagram of a student Description automatically generated  A diagram of a student Description automatically generated *[DBMS, DB Application System, MIS -- A Summary]* - IS needs raw data which is stored on disk as a ***relational database*** - The relational database is managed by ***DBMS software.*** The system calls DBMS (behind the scenes) and the DBMS extracts data from the database - ***DBMS*** is a group of programs used as interface b/w a database and application programs, or a database and the user - ***Database (Application) System*** is the combination of the database, the DBMS, and the application programs that access the database - ***Management Information System (MIS)*** is the **database system** coupled w/ a set of hardware, software, telecommunications, people, and procedures. Programs which are part of the IS then transform the raw data tot useful information  *[Database Management System (DBMS)]* A software that sets up the database structure ('skeleton' on disk according to a certain model, fills the structure w/ data and retrieves data to provide meaningful information) **Parts of DBMS:** - ***Data Dictionary:*** defines each field and record, explains what each field means and who is authorized to update it - ***Query Language:*** used to extract data that satisfy certain criteria from a database - Used to develop **query** retrieval commands and **reports** -- which are the **two main forms of output** from a DBMS *[Data Dictionary]* - Provides several pieces of info about each attribute in the database including - Name - Key (is it a key or part of a key?) - Data type (date, alphanumeric, numeric, etc.) - Valid value (the format or numbers allowed) - Can be used to enforce business rules which are captured by the database designer to prevent illegal or illogical values from entering the database (e.g. who has authority to enter certain kinds of data in specific files) *[Data Dictionary -- Example]* *[DBMS Functions]* - A DBMS enables interactions with the database through activities such as: *[DBMS -- Data Entry]* A diagram of a computer process Description automatically generated *[DBMS -- Queries]* ***Query*** -- a way to extract data from a database - Focuses on providing appropriate parameters to select the info requires ***SQL (Structured Query Language)*** - A language to select and extract data from a database - The industry standard language for relational databases ***QBE (Query by Example)*** - A technique that allows a user to design a query on a screen by dragging and placing the query field in the desired locations *[DBMS -- Query Language]* *[DBMS -- Report]*  *[Data Reporting -- Reports]* Example: School Information System 3 different users tell you their information needs: - Person 1: - A report displaying student number, student name, address, and city for all students - A report showing student name, student phone, student major, ordered by student name - Person 2: - Student name, course name and grade that each student took last term - Major, st. name and phone number for all students - Person 3: - Course name, course number, student name grade for each student - Course name, course number for each course offered by enrolment date over the past 3 years *[Report -- Courses by Enrolment]* *[Query Reporting]* - A report displaying student number, student name, address, and city for all students - Student name, course name, and grade that each student took last term *[Using MS Access as a DBMS]* - MS Access can be used **as an information system developer tool** - We use it to build a customized information system for some specific purpose - The system will have up-front: its own menus, input screens, output (query) screens, and reports - In the background, it will have a database with related tables, and programs that take raw data from the database and convert it to the required queries and reports - It will also have controls, i.e. mechanisms to ensure that the output is correct, and that the data is safe from accidental or deliberate destruction - The IS will be set up on computers and a network and will provide an effective method for users to interface with the database w/o ever knowing they are utilizing MS Access *[What is Big Data?]* - *Extremely large and complex data collections* - Traditional data management software, hardware, and analysis processes are incapable of dealing w/ them *[Characteristics of Big Data]* A diagram of a data flow Description automatically generated with medium confidence *[Table 3.3 Big Data Generators]*  *[What is the Importance of Big Data?]* - Data can be fetched from any source an analyzed to solve problems that lead to: - Cost reduction - Time reduction - New product development - Smart decision making - The combination of big data with high-powered analytics can have great impact on business strategy such as: - Finding the root cause of failures, issues and defects in real time operations - Generating coupons at the point of sale seeing the customer's habit of buying goods - Recalculating entire risk portfolios in just minutes - Detecting fraudulent behaviour before it affects an organization *[Challenges of Big Data]* - How to choose what subset of the data to store - Where and how to store data - How to find the nuggets of data that are relevant to decision making at hand - How to derive value from the relevant data *[Data Warehouses, Data Marts, and Data Mining]* ***Data warehouse:*** - Database that holds business information from ***many sources*** in the enterprise ***Data mart*** - Subset of a data warehouse - Contains all ***data*** that is ***relevant to one part of*** the whole ***organization (e.g. sales)*** ***Data mining:*** - Information-analysis ***tool*** that involves the automated discovery of ***patterns*** and ***relationships in data warehouse*** *[Data Warehouse]* - Holds historical data - Stores data from different types of businesses (spreadsheets, flat files, etc.) - Data is "cleaned up" to remove inconsistencies - Use of data cleaning tools to merge data into one database - Data warehouse covers information about ALL different processes, products, and customers to support decision-making *[Data Warehouses, Data Marts, and Data Mining]* *Data Mining Example:* - *Grocery chain used the data mining capacity to analyze local buying patterns* - They discovered that when men bought diapers on Thursdays and Saturdays, they also tended to buy snacks - Further analysis showed that these shoppers typically did their weekly grocery shopping on Saturdays - On Thursdays, however, they only bought a few items. The retailer concluded that they purchase the snacks to have it available for the upcoming weekend. The grocery chain could use this newly discovered information in various ways to increase revenue - For example, they could move the snacks display closer to the diaper display. And they could make sure drinks and diapers were sold at full price on Thursdays ***Predictive analysis*** - *[Form of data mining]* that **combines historical data with assumptions about future** conditions to predict outcomes of events - Used by retailers to upgrade occasional customers into frequent purchases - Software can be used to analyze a company's customer list and a year's worth of sales data to find new market segments *[Data Mining Applications]* - ***Branding and positioning of products and services*** - Enable the strategist to visualize product behaviour in different markets, while condensing the data in dimension that are easily analyzed - ***Customer Churn*** - Predict current customers who are likely to switch to a competitor - ***Direct Marketing*** - Identify customer prospects most likely to respond to direct marketing practice - ***Fraud detection*** - ***Market Segmentation*** - ***Trend analysis (sales, spending, promotions, etc.)*** Lecture 3 \~ Management Information Systems Frameworks *[The Nature of Managerial Work]* ***Management*** - The process of directing tasks and directing resources to achieve organizational goals - Management functions: *[planning], organizing, directing, motivating, [controlling]...* ***[Planning: done at different Levels]*** - *Long-term mission and vision* - *Strategic goals* - *Tactical objectives* ***[Most important planning activities]*** - *Scheduling* - *Budgeting* - *Resource allocation* ***Control*** - Managers control activities by comparing plans to results A list of progress reports Description automatically generated with medium confidence ***Decision Making*** - Both planning and control call for decision making ***The higher the level of management:*** - The less routine the manager's activities - The more open the options - The more decision-making involved Managers need to make decisions, often under uncertainty; each level of management has different information needs There is often a need for efficiency and effectiveness ***Efficiency:*** - Doing things right: with minimum input ***Effectiveness:*** - Doing right things, to satisfy main org. goal Example: killing a mosquito w/ sledgehammer -- effective, but not efficient *[New Realities in Business]* - More organizations are becoming information-based - More network-based, rather than hierarchical organizations - People drawn into process teams to accomplish projects - Companies are beginning to pay more attention to customers and their preferences - Instead of **mass production**, we have more **customization** - Information technology (hardware and application software) makes customization possible on a large scale *[The Organizational Pyramid]* ***Senior (Executive) Managers:*** - Strategic/ Executive Information Systems (EIS) - Make long-term decisions about products / services to produce \[control direction\] ***Middle (Tactical) Managers:*** - Tactical/ Management Information Systems (MIS) ***Operational (Transaction Processing) Managers:*** - Operational/ Transaction Processing Systems (TPS) - Monitor firm's daily activities \[control activity\] - Daily scheduling, inventory handling *[Levels of the Organization]* *[Basic Systems Architecture Model]*  *[Three Organizational Systems]* A diagram of a diagram of a diagram Description automatically generated *[Who, What, Why: Organizational Level]*  The operational level of an organization uses IS to make processes more efficient by Automating Routine and repetitive activities *[A Framework for Operational/TPS]* - Operational/Transaction Processing Systems (TPS) collect, validate, and record transactional data - E.g., order is accepted by a warehouse (on credit) - Record data about what was ordered (order entry) - Adjustment inventory level - Produce packing slip and shipping label - Generate an invoice to be sent to customer - Characteristics of Operational/TPS: - Repetitiveness - Predictability - Emphasis on past - Very detailed data - Accuracy of data input is very high (checking) - Data come entirely from internal sources - Format of data input and information output is highly structured - Operational systems are often used by clerical workers and low-level management *[System Description: TPS]* **TPS**s are a special class of information system designed to process business events and transactions *Architecture Components* - **Source Documents** -- these contain the event or transaction information to be processed by system - **Data Entry Methods** - **Manual** -- a person entering a source document by hand - **Semiautomated** -- using a capture device to enter the source document (e.g. a barcode scanner) - **Fully Automated** -- no human intervention, one computer talks or feeds another computer (e.g. automatic orders from inventory systems) - **Processing** -- transactions can be either - **Online** -- processed individually in *real-time* - **Batch** -- grouped and processed together *at a later time* *[System Architecture: TPS]* *[TPS Methods: Batch vs. Online]* **Batch:** - Transactions are accumulated over time, and prepared for entry or processing as a single unit or a batch **Online:** - Transaction input into the system as they occur *[TPS Example: Point-of-Sale Systems]* - E.g. electronic cash registers - For a **retailing business** \[transaction level\] - Can decrease inventory at check-out - Data entered in various ways - E.g. bar code scanning - Quicker check-out procedures - Decreased clerical costs *[TPS Example: Payroll System]* Diagram of a computer process Description automatically generated *[Operational/TPS Report Example (1)]*  *[Operational/TPS Report Example (2)]* A screenshot of a computer Description automatically generated *[Operational//TPS Report Example (4)]*  *[Who, What, Why: Managerial Level]* The **Managerial level of an organization uses information systems** to **improve effectiveness** by automating the monitoring and control of organizational activities *[Framework for Tactical/Management Information Systems (MIS)]* - In operational systems, transaction data are captured and stored (in a database); - In Tactical/Management Information Systems, transaction data is summarized, aggregated, and analyzed for **additional insight** for middle managers - Generate a variety of reports: \~ **summary reports:** totals, averages, key data \~ total regular and overtime hours worked for each plant for the week, by job classification - **Tactical MIS** - Provide insight for managers into regular operations of the organizations so they can control, organize, and plan more effectively - Right info to the right person at the right time - Information typically provoked in reports *[System Description: MIS]* A screenshot of a computer screen Description automatically generated *[System Architecture: MIS]*  *[Reporting Activity: Management by Exception]* - Managers review only exceptions from expected results that are of a certain size or type to save time A purple and green paper with numbers and text Description automatically generated with medium confidence *[Reporting Activity: Drill-down (EIS)]* *[Tactical/MIS Report Examples]* - Example: list of weekly sales \$, by salesperson, by product and by sales region {such information would be difficult to produce w/o a compute} - Exception reports: warn managers when results from a particular operation exceed or do not meet an organizational standard - List of all plants that have logged more overtime hours than expected for the week - List of all sales personnel whose sales fall in the top and bottom 10% of the organization - ***Ad Hoc reports: "spur-of-the-moment"; unplanned*** - Needed by manager to *[solve a unique problem]* - E.g. a list of the total number of employees absents during the week, arranged by plant and by job title, along with the hours or days missed - If an exception report was shown high overtime earnings at some plants, then a manager might ask for a report showing the production record of each plant for the week; to help investigate why there was an overtime problem *[Tactical/MIS Report Example (1)]* *[Tactical/MIS Report Example (2)]*  *[Who, What, Why: Executive Level]* A diagram of a business model Description automatically generated *[Framework for Strategic/ Executive Information Systems (EIS)]* - Strategic Systems/ Executive Information Systems - Provide top managers w/ information that assists them in making ***long-range planning decisions for the organization*** - Used to set *[long-term organizational goals]* - Middle managers then need to allocate resources to meet these organizational goals - Produced regularly, but more often on ad hoc basis - One important characteristic of Strategic/ Executive IS is that **a significant portion of the information produced by such systems comes not from internal, but external resources** (market intelligence) - Compare key performance information of our company w/ that of the entire industry *[System Description: EIS]* **Strategic Systems**, also called **Executive Information Systems (EIS) or Executive Support Systems (ESS)** or, are special purpose information systems to support executive decision-making **System Details** - These systems use **graphical user interfaces** to display consolidated information and can deliver bout: - **Soft Data** -- textual news stories or non-analytical data - **Hard Data** -- facts, numbers, calculations, etc. **Supported Activities** - The activities supported by these kinds of systems include: - *Executive decision making* - *Long-range Strategic Planning* - *Monitoring of Internal and External Events* - *Crisis Management* - *Staffing and Labour Relations* *[System Architecture: EIS]* *[Strategic / EIS Dashboard Reporting]* - "A picture says a thousand words"  *[Strategic / EIS Report Example (1)]* A screenshot of a computer Description automatically generated *[Strategic / EIS Report Example (2)]* *[Review: Categorize Each Decision as Strategic, Tactical, or Operational]* a. Rejecting credit for a company with an overdue account -- *Operational* b. Analyzing sales by product line within each geographic region, this year to date vs. last year to date -- *Tactical* c. Using a simulation model to forecast profitability of a new product, using projected sales, data, competitive industry statistics, and economic trends -- *Strategic* d. Comparing planned vs. actual expenses for department staff -- *Tactical* e. Allocating salespeople's time to the highest potential market prospects -- *Tactical* *[The Organization Pyramid -- Summary]*  Lecture 4 \~ Management Information Systems Frameworks *[Functional Area Information Systems]* **Functional Area Information Systems** - Cross-organizational information systems are designed to support a specific functional area **Supported Activities** - The following functional organizations have systems to support their operational and managerial activities - *Accounting and Finance* - *Human Resources* - *Marketing and Sales* - *Operations (Manufacturing)* ***Accounting and Finance*** - Systems used for managing, controlling and auditing the financial resources of the organization - Examples: inventory management, accounting payable, expense accounts, cash management, payroll processing ***Human Resources*** - Systems used for managing, controlling and auditing the human capital in an organization - Examples: recruiting and hiring, education and training, benefit management, employee termination, workforce planning ***Marketing*** - Systems used for managing new product development, distribution, pricing, promotional effectiveness, and sales forecasting of the products and services offered by the organization - Examples: market research and analysis, new product development, promotion and advertising, pricing and sales analysis, product location ***Production and Operations*** - Systems used for managing controlling and auditing the production and operation resources of the organization - Examples: inventory analysis, cost and quality tracking, material and resource planning, customer service tracking, customer problem tracking, job costing, resource utilization A diagram of a pyramid Description automatically generated Lecture 4.1 \~ Functional Area Systems -- Accounting Transaction Systems *[Functional Area Information Systems]*  *[Transaction Cycle]* The transaction cycle is a process: - Begins with capturing data about a transaction - Ends with an information output, such as financial statements *[Accounting Transaction Cycle]* - The two major transaction cycles 1. Revenue cycle 2. Expenditure cycle A diagram of a company\'s process Description automatically generated 1. The ***revenue cycle:*** involves activities of selling goods or services and collecting payment for those sales 2. The ***expenditure cycle:*** involves activities of buying and paying for goods or services used by the organization *[Baseline Accounting Transaction Cycle]* - Each transaction cycle is expanded to show the transactions in the cycle  *[Flow Chart Diagram for Sales Cycle Activities]* *[Swim Lane Diagram for Sales Cycle Processes]*  *[Business Process Modeling Notation (BPMN)]* - Some documentation tools, such as UML Diagrams may use over 100 different symbols. Introduced in 2011, BPMN 2.0 *provides a business process mapping standard for bridging the gap b/w IT professionals and business users, such as accountants.* BPMN 2.0 doesn't require extensive training to use, making it a better choice for accounting professionals to understand and use to communicate with IT professionals. On the other hand, BPMN 2.0 provides greater detail than flowcharting to meet the needs of IT professionals for successful system implementation. So, BPMN provides a balance b/w simplicity and complexity to facilitate communication b/w the accounting and IT professionals *[Baseline Accounting Transaction: Expenditure (Purchasing) Cycle]* The typical transactions common to most accounting systems are shown in this baseline model. Notice how the data is input on the left and flows through to output (reports) on the right. *[Purchasing Cycle]* - Create purchase orders - Receive items - Enter bills - Pay bills A blue sign with red circles Description automatically generated *[Swim Lane Diagram for Purchasing Cycle]*  Lecture 4.2 \~ Functional Area Systems -- Accounting Information Systems *[Functional Area information Systems]* A screenshot of a diagram Description automatically generated  *[Functional Area IS: Accounting]* - Accounting Information System (AIS) integrates, monitors/documents information from different aspects of the business operations that have to do with: - Accountability for the assets/liabilities of the enterprise - The determination of the results of operations that ultimately leads to the computation of comprehensive income, - The financial reporting aspects of business operations - Evidence of financial transactions must be, in the end, contained in one main accounting system that is capable of producing (at least) two (2) main financial statements that are required for business: ***(1) the balance sheet and (2) the income statement*** *[Types of Information]* Types of information needed for decisions: - Some is financial - Some is nonfinancial - Some comes from internal sources - Some comes from external sources *An effective AIS needs to be able to integrate information of different types and from different sources* *[3 Basic Functions Performed by an AIS]* 1. To collect and store data about the organization's business activities and transactions efficiently and effectively 2. To provide management w/ information useful for decision making 3. To provide adequate internal controls ***Collect and Store Data*** -- to collect and store data about the organization's business activities and transactions efficiently and effectively: - Capture transaction data on source documents - Record transaction data in journals, which present a chronological record of what occurred - Post data from journals to ledgers, which sort data by account type ***Provide Management with Information*** -- to provide management with information useful for decision making: - In manual systems, this information is provided in the form of reports that fall into two main categories: - *Financial statements* - *Managerial reports* ***Provide Adequate Internal Controls*** -- to provide adequate internal controls: - Ensure that the information produced by the system is reliable - Ensure the business activities are performed efficiently and in accordance with management's objectives - Safeguard organizational assets *[Basic Accounting Terminology]* *[Debits and Credits]* - An ***Account*** shows the effect of transactions on a given asset, liability, equity, revenue, or expense account - ***Double-entry*** accounting system (two-sided effect) - Recording done by debiting at least one account and crediting another - ***DEBITS must equal CREDITS*** If ***Debit*** entries are ***greater than*** Credit entries, the account will have a debit balance If ***Credit*** entries are ***greater than*** Debit entries, the account will have a credit balance *[Basic Accounting Equation]* Relationship among the assets, liabilities and stockholders' equity of business: A diagram of a business Description automatically generated The equation must be in balance after every transaction. For every ***Debit*** there must be a ***Credit*** *[Data Processing Cycle: Data Input]* - Historically, most businesses used paper ***source documents*** to collect data and then transferred that data into a computer - Today, most data are recorded directly through data entry screens *[Record Transaction Data in Journals]* - After transaction data have been captured on source documents, the next step is to record the data in a journal - A journal entry is made for each transaction showing the accounts and amounts to be debited and credited - The **general journal records infrequent or non-routine transactions** - Specialized journals simplify the process of recording large numbers of repetitive transactions ***[The AIS Processing Cycle]*** - The AIS processing cycle consists of 4 major steps: 1. Journalizing 2. Post Transactions to Ledgers 3. Preparing a Trial Balance 4. Preparing Financial Statements ***[Journalizing]*** **General Journal** -- a chronological record of transactions **Journal Entries** are recorded in the General Journal  ***[Post Transaction to Ledgers]*** **Posting** -- the process of transferring amounts from the journal to the *General Ledger* accounts A close-up of a general ledger Description automatically generated - Ledger -- example:  - **General Ledger** - Is the **summary level** information for all accounts. Detail information is **not kept** in this account - Example: Suppose XYZ Co. has 3 customers. Anthony Adams owes XYZ \$100. Bill Brown owes \$200. And Cory Campbell owes XYZ \$300. The balance in accounts receivable in the general ledger will be \$600, but you will not be able to tell how much individual customers owe by looking at that account. The detail isn't there. - **Subsidiary Ledger** - Contain the **detail** accounts associated with the related general ledger account. The **accounts receivable subsidiary ledger** will contain 3 separate t-accounts -- one for Anthony Adams, one for Bill Brown, and one for Cory Campbell - Examples of Subsidiary Ledger: - **Accounts receivable** - **Inventory** - **Accounts payable** - Relationship between General and Subsidiary ledger: A green and blue account ledger Description automatically generated with medium confidence - Ledgers are used to summarize the financial status, including the current balance, of individual accounts - The general ledger contains summary-level data for every asset, liability, equity, revenue and expense account of an organization - A subsidiary ledger records all the detailed data for any general ledger account that has many individual subaccounts - What are some commonly used subsidiary ledgers? - Accounts receivable - Inventory - Accounts payable - What is the general ledger account corresponding to a subsidiary ledger called? A control account - A control account contains the total amount for all individual accounts in the subsidiary ledger - *A control account is a [general ledger] account containing only summary amounts. The details for each control account will be found in a related (but separate) [subsidiary ledger]*  **What is the Chart of Accounts?** A table with text on it Description automatically generated - **The chart of accounts is a list of all general ledger accounts used by an organization** - It is important that the chart of accounts contains sufficient detail to meet the information needs of an organization ***[Preparing Trial Balance]*** - A list of the individual accounts with their balances taken from the ledger - If the information is incorrectly journalized or posted, the trial balance will not be correct - Computational errors - Transposition or slide errors - Posting errors **Trial Balance** -- *a list of each account and its balance* -- used to prove equality of debit and credit balances  The Trial Balance lists the accounts in the same order as in the ledger ***[Preparing Financial Statements]*** Financial statements are prepared directly from the Adjusting Trial Balance - The **Balance Sheet** is a report that shows [what the company owns (**Assets**)] and [how it got] [the money for what it owns (**Liabilities** i.e. borrowing/owing]) plus [Stockholders' Equity (i.e. Investments, Retailed Earnings) at a single moment in time] - The **Income Statement** is a report that shows the [company's revenues and expenses] during a [particular period in time] Assume the following Adjusted A yellow and red balance sheet with red arrows Description automatically generated Trial Balance Income Statement A yellow and black balance sheet Description automatically generated *[Accounting Information System]* A diagram of a financial account Description automatically generated The General Ledger is a component of Financial Accounting Software and exists in the form of an electronic database. A computerized General Ledger may operate on its own, with no connections to any subsystems; it may be (installed) on its own, but connected to other subsystems such as Order Entry, Accounts Receivable, etc., which are also installed as separate modules; or; We might have a G/L system which is [internally integrated] with the other closely related subsystems. In the last case, the entire, integrated system is installed at once  A close-up of a text Description automatically generated There are **two main preparatory** steps in using accounting software after it is removed from the box (on a CD) 1. **Installing the system:** (a *computing* function). Copying the software to the computer's hard disk and getting it ready to run 2. **Initializing the system:** (an *accounting* function). Entering specifics on the Company into the system so as to make it ready for day-to-day use. This would involve: entering particulars on the Company (e.g. name address) and most importantly, identifying each account (card) by name and code number for all the Company's assets, liabilities, equities, revenues, and expenses. The latter is called ***establishing the Chart of Accounts*** - The system balances have to be entered for each account (unless the business is starting 'from scratch' on the date of initialization) - If the General Ledger is to be connected to the other subsystems, the current status of receivables, payables, inventory, etc., will have to be entered into such systems **Note:** when a business says it has a "computerized accounting system", it may be talking of only the computerized General Ledger or an integrated AIS, with the General Ledger at the centre (see conceptual model diagram)  Lecture 5.1 \~ Functional Area Systems -- Financial Information Systems *[System Examples: Functional Area Info Systems]* A diagram of a company\'s system Description automatically generated with medium confidence  *[Finance Information Systems]* - Finance area: acquires and manages cash for a business - Acquire through shares or loans - Invest cash wisely - Company must maintain liquidity - Meet short term obligations - Need to analyze considerable financial info Strategic Financial Systems a. Financial Conditional Analysis Systems b. Long Range Forecasting Systems c. Corporate Planning Systems Tactical Financial Systems a. Budgeting Systems b. Cash Management Systems c. Capital Budgeting Systems d. Investment Management Systems *[Tactical Systems in Finance]* a. **BUDGETING SYSTEMS** - Plan revenues and expenses line-by-line - Can summarize in various ways - Can compare this year's budget to last year's - Can compare actual expenses vs. budgeted (get actual results from General ledger System) - Comparing budgeted to actual results allows for *variances analysis* - E.g. Current budgeted expenses, actual expenses and variances by line item - E.g. Projected expenses for each budget line item for entire year based on expenses incurred to date - Spreadsheet-type systems are useful for budgeting (i.e. formulas) - Can use last year's budget as a base for next year and maybe 5 years b. **CASH MANAGEMENT SYSTEMS** - Ensure that business has sufficient cash to meet its needs for day-to-day operations and for acquisition of long-term assets - Important output is the [cash flow report]; can forecast cash flows for, say 6 months, flow = total cash receipts -- total cash payments c. **CAPITAL BUDGETING SYSTEMS** - Provide help with planning acquisition (disposal) of [major plants assets] that will be used by the business during many years - Provide outgoing and incoming cash for the life of the asset; use assumptions, consider the time value of money (net present value) - E.g. can help to decide whether to lease or buy a new printer d. **INVESTMENT MANAGEMENT SYSTEMS** - Oversee organization's investment in stocks, bonds, and other securities - Online databases provide immediate updates for stock and bond prices - E.g. Value Screen inputs the current price of each stock and calculates the gain or loss the company's investment portfolio would generate if sold now *[Strategic Systems in Finance]* - Support very high-level managers - Strategic systems relate to organizational goals - Often, such systems use internal data (which may have originated in organizational AIS) and external data (e.g. from online databases that contain economic, social, demographic, etc., info) a. **FINANCIAL CONDITION ANALYSIS SYSTEMS** - Provide insightful analyses of financial statements and data (e.g. ratios: current ratio, debt: equity ratio) - Online databases can allow for financial analysis of competitors, suppliers, buyers and other organizations b. **LONG RANGE FORECASTING SYSTEMS** - May use both internal and external data - Apply statistical techniques - May use graphics - Analyze trends c. **CORPORATE PLANNING SYSTEMS** - Use data from past, like forecasting systems - More elaborate; contain simulation models of various aspects of business - Models must have valid assumptions - Help you make some simulations about your business; helps you with planning; combine data from the past and current data to make projections Lecture 5.2 \~ Functional Area Systems -- Human Resources Systems *[System Examples: Functional Area Info Systems]* A chart with text on it Description automatically generated  *[Human Resource Management Systems (HRMS)]* - Combination of systems and processes that connect human resource management and information technology through human resource management software/hardware - Managing payroll - Recruitment and on-boarding - Gathering, storing, and accessing employee information - Keeping attendance records and tracking absenteeism - Performance evaluation - Benefits administration - Learning management - Employee self-service - Employee scheduling - Analytics and informed decision making *[Operational Systems in HR]* - Historically, **payroll** was the first - Now part of AIS; related to expenditure cycle - **Employee Information Systems** - Maintain info on every employee for various reporting purposes - Employee profile: basic personal data, education, previous experience, employment history in org., preferred location for work... - May contain [skills inventory] component; employee's work experience, work preferences, test scores, interests, special skills - **Attendance Recording Systems** - May use negative reporting (only when absent) - Include overtime credits etc. - **Employee Scheduling Systems** - Can get complex with shift work (e.g. nurses) - Must adhere to union regulations - **Performance Management Systems** - Collect and store textual data e.g., written comments of supervisor - Appraisal data can be filed out on special screens - Need careful documentation of employee performance and how performance was measured 9e.g., for grievance hearings) - May have tactical components; which supervisors give high number of poor evaluations, which labour sources provide unacceptable workers *[Tactical Systems in HR]* - **Position Control Systems** - Keep data on each job position in the organization e.g. task content - Can be useful for job redesign; which job positions require data entry? Which require statistical analysis? - **Recruiting Systems** - Provide list of planned retirements - List skills, preferences of current employees - Analyze turnover rates among various classes of employees - **Compensation and Benefit Systems** - "**cafeteria style benefits**" for employees to choose from - Considerable data storage here - Tactical: \~ how much to increase compensation plans to attract high quality employees? \~ what kind of benefits are different categories of employee choosing? - May be available on organizational intranet *[Strategic Systems in HR]* - **Long-term Workforce Planning** - What are the HR needs to meet organization's strategic plan for the next 5-10 years? - *Forecasting* supply and demand of required workforce - **Labour Negotiation Support Systems** - Must be timely and have ad hoc capacity - Assist in bargaining sessions with unions *[Human Resource Management System]* A screenshot of a computer Description automatically generated Lecture 5.3 \~ Functional Area System -- Marketing Information Systems *[System Examples: Functional Area Info Systems]*  A diagram of a diagram of a company Description automatically generated *[The Marketing Function]* - Marketing can be defined as "the process of planning and executing the **conception, pricing, promotion, sales and distribution** **of ideas, goods, and / services** to create exchanges that satisfy individual (customer) and organizational (business) goals" *[System Co-ordination Needed]* - To be successful, marketing systems must be coordinated with other organizational systems, e.g., - Order entry - Manufacturing - Inventory - Credit management *[Operational Systems in Marketing]* - **Customer Contact Management Systems** - Provide information on past contacts with specific customers - Output: call report: \~ no. of sales calls made by a salesperson \~ no. and dollar amount of sales made by this person - **Sales Force Automation (SFA) Systems** - Sales Process/Activity Management \~ Include a sequence of sales activities \~ Guide sales reps through each discrete steps in the sales process \~ Helps increase productivity by focusing sales efforts on most profitable customers  - **Telemarketing Systems** - Identify customers and automatically call them - Use electronic phone directories - Can make notes about calls - In a LAN-based systems, 200 telemarketers can use the same system at the same time - **Direct Mail Advertising Systems** - Create mailing labels - **Delivery Tracking and Routing Systems** - Help plan optimal delivery routes *[Tactical Systems in Marketing]* - Objective of tactical marketing managers: - To reach the sales set by top marketing executives - They must make tactical decisions such as: \~ how sales territories should be shapes \~ how to allocate salespersons to territories \~ what products should be offered to what customers *[Strategic Systems in Marketing]* - May contain both strategic and tactical elements - **Sales Forecasting Systems** - Forecasts sales for entire industry - For entire organization - For each product - For market segments for a product - Employ sophisticated [statistical models] and may produce considerable [graphic output] - **Market Research Systems** - Process results of survey and interviews - Provide analyses of statistical significance - Use considerable data from outside the company Lecture 5.4 \~ Functional Area Systems -- Production/Operational Systems *[Examples: Functional Area Info Systems]* A chart with text on it Description automatically generated  *[Computers in Manufacturing]* - In manufacturing, we have: - Raw materials inventory - Work-in-process inventory - Finished goods inventory - Systems keep track of **quantities** and **costs** of each *[Strategic/Tactical/Operational Systems]* - Master Production Scheduling System (Strategic) - Material Requirements Planning System (Tactical) - Capacity Requirements Planning System (Tactical) - Detailed Production Schedule (Operational) - Shop Floor Control (Operational) - Quality Control (Operational) - Inventory Control (Tactical) & (Operational) - Cost Accounting (Tactical) & (Operational) *[Strategic Manufacturing Systems]* - Assist top management with - Selecting plant site - Building a new plant - Designing and laying out a production facility - Assessing technologies to be used in production processes - May use both internal and external data *[Production Planning & Control]* - Raw **materials** acquisition (when, how much) - **Machine** and **worker** requirements - Detailed **production schedules** - Gathering **evaluation statistics** - Sensors, scanners, shop floor terminals - Quality control - Comparing performance data to plans - **Cost accounting** for mfg. goods *[Vendor Managed Inventory]* - Suppliers are gaining access to an organization's production planning schedules to assure an ability to fulfill orders - Producing organization is opening its systems to the customer to allow the customer to view inventory and production levels before placing orders *[Just-In-Time (JIT) Manufacturing]* **Raw materials arrives just when they are needed on the production floor** - Minimizes inventory - Requires complex IS (operational) - May have ***vendor managed inventory*** (supplier's computers tap into our inventory systems) *[Manufacturing Resource Planning (MRP II)]* - An integrated IS used by businesses - MRP II evolved from early **Materials Requirement Planning (MRP)** systems by including the integration of additional data, such as employee and financial needs - The system is designed to centralize, integrate, and process information for effective decision making in scheduling, design engineering, inventory management, and cost control in manufacturing - Both **MRP and MRP II** are seen as predecessors to **Enterprises Resource Planning (ERP)**, which is a process whereby a company, often a manufacturer, manages and integrates the important parts of its business *[MRP2 Evolution to ERP]* A diagram of a supply chain management Description automatically generated Lecture 8.1 \~ Systems that span Organizational Boundaries *[Decision Support Systems (DSS)]* - Is **mostly** used by middle-level (managerial/tactical) managers \*\*\*ON FINAL\*\* - Middle level managers deal with both ***structured*** and ***unstructured*** data - Middle level managers receive data from operational and executive managers to make decisions - Structured decision is a decision you make when you have all the facts - Starting a backpack business; how many backpacks should be made? Unstructured b/c you don't have all the facts ***Decision Support System*** **Special-purpose** information systems designed to support **managerial level** employees in organizational decision making Why Managerial? b/c at managerial levels it is where decisions are made ***System Details*** These systems use **computational software** to construct models for analysis (most common is MS Excel) to solve problems (e.g. sales or resource forecasts) ***Supported Activities:*** **"What-if" analysis** -- changing one or more variables in the model to observe the effect (e.g. what is the payment if the interest rate increases by 1%?)