MANAGEMENT INFORMATION SYSTEM

Chapter 8Information In Action

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OVERVIEW

Information as a critical Success Factor Transaction Processing Systems Organizational Information Systems Marketing IS Human Resource IS Financial IS Executive IS Data Warehouse OLAP

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INFORMATION AS A CRITICAL SUCCESS FACTOR

Critical success factor (CSF) was coined by Ronald Daniel to identify

a few key activities that spell success or failure for any type of organization.

Transaction processing system (TPS) is the information system that gathers

data describing the firm’s activities, transforms the data into information, and makes the information available to users both inside and outside the firm.

1st business application to be installed on computers. Also electronic data processing (EDP) system

and accounting information system.

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A MODEL OF A TRANSACTION PROCESSING SYSTEM

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SYSTEM OVERVIEW

Distribution system is a TPS used by distribution firms.

Distribution firms distribute products or services to their customers.

We will use data flow diagrams, or DFDs, to document the system.

Figure slide 6 represents the highest level.

Figure slide 7 identifies the three major subsystems.

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A CONTEXT DIAGRAM OF DISTRIBUTION SYSTEM

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A FIGURE 0 DIAGRAM OF THE DISTRIBUTION SYSTEM

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MAJOR SUBSYSTEMS OF DISTRIBUTION SYSTEM

Systems that fill customer orders.Order entry system enters customer

orders into the system.Inventory system maintains the

inventory records.Billing system prepares the customer

invoices.Accounts receivable system collects the

money from the customers. Systems that order replenishment

stock.Purchasing system issues purchase

orders to suppliers for needed stock.Receiving system receives the stock.Accounts payable system makes

payments.

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A FIGURE 1 DIAGRAM OF THE SYSTEM THAT FILLS CUSTOMERS ORDERS

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A FIGURE 2 DIAGRAM OF SYSTEMS THAT ORDER REPLENISHMENT STOCK

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MAJOR SUBSYSTEMS OF DISTRIBUTION SYSTEM (CONT’D)

Systems that perform general ledger processes. General ledger system is the accounting

system that combines data from other accounting systems for the purpose of presenting a composite financial picture of the firm’s operations.

General ledger is the file that contains the combined accounting data.

Updated general ledger system posts records that describe various actions and transactions to the general ledger.

Prepare management reports system uses the contents of the general ledger to prepare the balance sheet, income statement, and other reports.

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DIAGRAM OF THE SYSTEMS THAT PERFORM GENERAL LEDGER PROCESSES

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ORGANIZATIONAL INFORMATION SYSTEMS

Organizational information systems are developed to meet the needs for information

relating to those particular parts of the organization.

Marketing information system (MKIS) provides information that relates to the firm’s

marketing activities. Consists of a combination of input and output

subsystems connected by a database.

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MODEL OF MARKETING INFORMATION SYSTEM

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MARKETING INFORMATION SYSTEM Output subsystems provide information

about critical elements in marketing mix. Marketing mix consists of four main

ingredients that management manages in order to meet customers’ needs at a profit. Product subsystem provides information about

the firm’s products. Place subsystem provides information about the

firm’s distribution network. Promotion subsystem provides information

about the firm’s advertising and personal selling activities.

Price subsystem helps the manager make pricing decisions.

Integrated-mix subsystem enables the manager to develop strategies that consider the combined effects of the ingredients.

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MARKETING INFORMATION SYSTEM (CONT’D)

Database is populated with data from the three MKIS input subsystems.

Input subsystems Transaction processing system gathers

data from both internal and environmental sources and enters the data into the database.

Marketing research subsystem gathers internal and environmental data by conducting special studies.

Marketing intelligence subsystem gathers environmental data that serves to keep management informed of activities of the firm’s competitors and customers and other elements that can influence marketing operations.

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OTHER ORGANIZATIONAL INFORMATION SYSTEM

Human Resources information system (HRIS) provides information to managers

throughout the firm concerning the firm’s human resources.

Manufacturing information system provides information to managers

throughout the firm concerning the firm’s manufacturing operations.

Financial information system provides information to managers

throughout the firm concerning the firm’s financial activities.

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HUMAN RESOURCE INFORMATION SYSTEM

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MANUFACTURING INFORMATION SYSTEM

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FINANCIAL INFORMATION SYSTEM

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THE EXECUTIVE INFORMATION SYSTEM

Executive information system (EIS) is a system that provides information to

upper-level managers on the overall performance of the firm; also called Executive support system (ESS).

Drill-down capability allows for executives to bring up a

summary display and then successively display lower levels of detail until executives are satisfied that they have obtained as much detail as is necessary.

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EXECUTIVE INFORMATION SYSTEM MODEL

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CUSTOMER RELATIONSHIP MANAGEMENT

Customer relationship management (CRM) is the management of the relationships

between the firm and its customers so that both the firm and its customers receive maximum value from the relationship.

CRM system accumulates customer data over a long

term–5 years, 10 years, or more-and uses that data to produce information for users.

Uses a data warehouse.

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DATA WAREHOUSING Data warehouse

describes data storage that has the following characteristics: Storage capacity is very large. Data are accumulated by adding new records, as

opposed to being kept current by updating existing records with new information.

Date are easily retrievable. Date are used solely for decision making, not for

use in the firm’s daily operations. Data mart

is a database that contains data describing only a segment of the firm’s operations.

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THE DATA WAREHOUSING SYSTEM

Data warehousing is the creation and use of a data

warehouse or data mart.Primary data sources are TPS and data

obtained from other sources, both internal and environmental; any data identified as having potential value in decision making.

Staging area is where the data undergoes extraction, transformation, and loading (abbreviated as ETL process)

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DATA WAREHOUSING SYSTEM (CONT’D) Extraction

process combines data from the various sources. Transformation

process cleans the data, puts it into standardized format, and prepares summaries.

Data stored in both detail and summary form. Loading

process involves the entry of the data into the data warehouse repository.

Metadata “Data about data” Data that describes the data in the data repository Tracks data as it flows through the data warehouse

system

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OLAP On-line analytical processing (OLAP)

enables the user to communicate with the data warehouse either through a GUI or a Web interface and quickly produce information in a variety of forms, including graphics.

Relational OLAP (ROLAP) uses a standard relational database management

system. ROLAP data exists in detailed form. Analyses must be performed to produce summaries. Constrained to a limited number of dimensions.

Multidimensional OLAP (MOLAP) uses a special multidimensional database management

system. MOLAP data are preprocessed to produce summaries at the

various levels of detail and arranged by the various dimensions.

Faster summary ability, can use many dimensions–10 or more.

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ROLAP AND MOLAP ARCHITECTURES

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DATA MINING Data mining

is the process of finding relationships in data that are unknown to the user.

Hypothesis verification begins with the user’s hypothesis of how

data are related. Retrieval process guided entirely by user. Selected information can be no better than

user’s understanding of the data. Traditional way to query a database.

Knowledge discovery is when the data warehousing system

analyzes the warehouse data repository, looking for groups with common characteristics.