A business is a formal organization whose aim is to produce products or provide services for a profit— that is, to sell products at a price greater than the costs of production.
The decision of what to produce is called a strategic choice because it determines your likely customers, the kinds of employees you will need, the production methods and facilities needed, the marketing themes, and many other choices.
The actual steps and tasks that describe how work is organized in a business are called business processes. A business process is a logically related set of activities that define how specific business tasks are performed.
Why Firms invest in Information Systems
firms invest in information systems for the following business objectives:
• To achieve operational excellence ( productivity, efficiency, agility)
• To develop new products and services
• To attain customer intimacy and service ( continuous marketing, sales, and service; customization and personalization)
• To improve decision making ( accuracy and speed) • To achieve competitive advantage
• To ensure survival
Transaction Processing Systems (TPS)
Transaction processing systems ( TPS) provide this kind of information. A transaction processing system is a computerized system that performs and records the daily routine transactions necessary to conduct business, such as sales order entry, hotel reservations, payroll, employee record keeping, and shipping.
Management Information Systems
management information systems ( MIS) also designates a specific category of information systems serving middle management. MIS provide middle managers with reports on the organization's current performance. This information is used to monitor and control the business and predict future performance.
Decision Support Systems (DSS)
Decision- support systems ( DSS) support non-routine decision making for middle management. They focus on problems that are unique and rapidly changing, for which the procedure for arriving at a solution may not be fully predefined in advance. They try to answer questions such as these: What would be the impact on production schedules if we were to double sales in the month of December? What would happen to our return on investment if a factory schedule were delayed for six months?
Executive Support Systems (ESS)
Executive support systems ( ESS) help senior management make these decisions. ESS address non-routine decisions requiring judgment, evaluation, and insight because there is no agreed- on procedure for arriving at a solution. ESS present graphs and data from many sources through an interface that is easy for senior managers to use.
enterprise applications, which are systems that span functional areas, focus on executing business processes across the business firm, and include all levels of management. Enterprise applications help businesses become more flexible and productive by coordinating their business processes more closely and integrating groups of processes so they focus on efficient management of resources and customer service.
Enterprise Resource Planning
Enterprise Systems Firms use enterprise systems, also known as enterprise resource planning ( ERP) systems, to integrate business processes in manufacturing and production, finance and accounting, sales and marketing, and human resources into a single software system.
Supply chain management systems are one type of inter-organizational system because they automate the flow of information across organizational boundaries.
Knowledge Management Systems
Knowledge Management Systems Some firms perform better than others because they have better knowledge about how to create, produce, and deliver products and services. This firm knowledge is difficult to imitate, unique, and can be leveraged into long- term strategic benefits. Knowledge management systems ( KMS) enable organizations to better manage processes for capturing and applying knowledge and expertise. These systems collect all relevant knowledge and experience in the firm, and make it available wherever and whenever it is needed to improve business processes and management decisions. They also link the firm to external sources of knowledge.
e- business, refers to the use of digital technology and the Internet to execute the major business processes in the enterprise.
e- commerce. E- commerce is the part of e- business that deals with the buying and selling of goods and services over the Internet. It also encompasses activities supporting those market transactions, such as advertising, marketing, customer support, security, delivery, and payment.
E- government refers to the application of the Internet and networking technologies to digitally enable government and public sector agencies' relationships with citizens, businesses, and other arms of government.
Virtual Meeting Systems
In an effort to reduce travel expenses, many companies, both large and small, are adopting videoconferencing and Web conferencing technologies. Companies such as Heinz, General Electric, Pepsico, and Wachovia are using virtual meeting systems for product briefings, training course, strategy sessions, and even inspirational chats.
Microsoft SharePoint Microsoft SharePoint is the most widely adopted collaboration system for small and medium- sized firms that use Microsoft server and networking products. Several larger firms have adopted it as well. SharePoint is a browser- based collaboration and document management platform, combined with a powerful search engine that is installed on corporate servers.
Information Systems Department (IT)
information systems department is the formal organizational unit responsible for information technology services. The information systems department is responsible for maintaining the hardware, software, data storage, and networks that comprise the firm's IT infrastructure.
Chief Information Officer (CIO)
chief information officer ( CIO). The CIO is a senior manager who oversees the use of information technology in the firm.
Chief Security Officer
chief security officer ( CSO) is in charge of information systems security for the firm and is responsible for enforcing the firm's information security policy ( see Chapter 7). ( Sometimes this position is called the chief information security officer [ CISO] where infor-mation systems security is separated from physical security.)
Systems analysts constitute the principal liaisons between the information systems groups and the rest of the organization. It is the systems analyst's job to translate business problems and requirements into information requirements and systems.
Chief Privacy Officer (CPO)
The CPO is responsible for ensuring that the com-pany complies with existing data privacy laws.
Chief Knowledge Officer
chief knowledge officer ( CKO) is responsible for the firm's knowledge management program. The CKO helps design programs and systems to find new sources of knowledge or to make better use of existing knowledge in organizational and management processes.
How do systems serve the various levels of management in a business?
Systems serving operational management are transaction processing systems ( TPS), such as payroll or order processing, that track the flow of the daily routine transactions necessary to conduct business. Management information systems ( MIS) and decision- support systems ( DSS) support middle management. Most MIS reports condense information from TPS and are not highly analytical. DSS support management decisions that are unique and rapidly changing using advanced analytical models and data analysis capabilities. Executive support systems ( ESS) support senior management by providing data that are often in the form of graphs and charts delivered via portals using many sources of internal and external information.
How do enterprise applications and intranets improve organizational performance?
Enterprise applications are designed to coordinate multiple functions and business processes. Enterprise systems integrate the key internal business processes of a firm into a single software system to improve coordination and decision making. Supply chain management systems help the firm manage its relationship with suppliers to optimize the planning, sourcing, manufacturing, and delivery of products and services. Customer relationship management ( CRM) systems coordinate the business processes surrounding the firm's customers. Knowledge management systems enable firms to optimize the creation, sharing, and distribution of knowledge. Intranets and extranets use Internet technology and standards to assemble information from disparate systems and present it to the user in a Web page format. Extranets make portions of private corporate intranets available to outsiders.
What is the role of the information systems function in a business?
The information systems department is the formal organizational unit responsible for information technology services. It is responsible for maintaining the hardware, software, data storage, and networks that comprise the firm's IT infrastructure. The department consists of specialists, such as programmers, systems analysts, project leaders, and information systems managers, and is often headed by a CIO.