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Chapter 7

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Business Administration
BUS 237
Maryam Ficociello

Chapter 7 Q1. What are the fundamental type of IS within organizations? - Zipcar is an example of a company that uses information systems that enable the introduction of a new or enhanced service - For grand &toy, the information systems supporting their activities help the company lock in their customers and create entry barriers for other office supply companies - The three categories of IS that have evolved over time : Calculation systems Calculation Systems: the very first IS. The goal of such systems was to relieve workers of tedious, repetitive calculations. These systems were labour saving devices that produced little information - The very information system was calculation systems---this system computed patrol, printed paycheques; they applied debits and credits to the general ledger and balanced the company’s accounting records - Also tracks invent quantity Functional Systems Functional Systems: The second era of IS. The goal of such systems was to facilitate the work of a single department or function. Over time, in each functional area, companies added features and functions to encompass more activities and to provide more value and assistance - Functional systems operate in isolation - For example, payroll expanded into human resources, general ledger became financial reporting and inventory was merged into operations or manufacturing Integrated, Cross- Functional Systems - The problem with functional applications is their isolation. In fact, these systems are sometimes called functional Silos Cross-departmental system: The third era of computing systems. In this era, systems are designed not to facilitate the work of a single department or function but rather to integrate the activities of a complete business process Cross Functional System: Synonym for cross departmental systems Interorganizational systems: IS processing of routine transactions between two or more organizations - The most common of these include e-commerce and supply chain management systems Chapter 7 Q2. What are functional systems and why are they changing? - Pg 212, reorganized Porter Value chain model. Page 213, reorganized Porter value chain model and its relationships to functional systems Marketing and Sales Systems - Product management is the primary functional system for marketing - Other sales examples aside from product management, include lead tracking (records prospects and keeps track of sales contacts with potential customers), sales forecasting(vital for planning production or managing inventories and also for financial reporting by publicly held companies ), customer management (to generate follow up business from existing customers) and customer service Operations Systems Operations Systems: - Order entry can take place in house where company employees enter orders or it can be done on e-commerce sites such as retailer amazon.ca - Order management tracks orders through the fulfillment process, handling back orders and order changes as well as providing order status - Inventory Management analyze sales activity and generate product orders as required - Customer Service provides information about the status of the orders and are used to process complaints, to respond to product or service issues and to receive returned goods Manufacturing systems Manufacturing information systems: IS that support one or more aspects of manufacturing processes, including planning, rescheduling, integration with inventory, quality control and related processes ` - The 2 different types of planning systems Push production planning: A plan for producing products whereby the company analyzes past sales levels, makes estimates of future sales and creates a master production schedule. Products are produced according to that schedule and pushed into sales (and customers) - A production plane schedule that pushes goods through manufacturing and sales—for example, `we are going to produce 500 widgets: make them and sell them Pull production planning: A manufacturing process whereby products are pulled through manufacturing by demand. Items are manufactured in response to signals from customers or other production processes that products or components are needed - Pull production planning responds to customer’s demands - Scheduling systems help organizations determine the optimal methods. - Manufacturing operations systems control manufacturing plants and machines Chapter 7 Human Resources Systems - Functional systems for HR include payroll and related compensation systems, such as sick leave and vacation time accounting - Other HR systems include recruiting personnel and assessing employee performance Accounting Systems Accounting functional systems: - Examples of accounting systems include general ledger, financial reporting, accounts receivables, and accounts payable systems. Other important accounting systems include cost accounting, budgeting, cash management and management of the organization`s stocks and bonds, borrowing and capital investments via treasury management - Key improvement of accounting systems is reduction in time required to provide results Why are functional systems changing? - Benefit to departments that use functional systems are limited because they operate in isolation - Problems with functional systems (page 216)  Data are duplicated because each application has its own database—for example, customer data may be duplicated inconsistent when accounting and sale & marketing applications are separated. With duplicated data, there is a lack of data integrity  Disjointed systems lead to lack of integrated enterprise information—for example, some order information is in the order entry system, some is in the finished goods inventory system and some is in the manufacturing system  Inefficiency is another consequence of isolated systems Q3. What is the importance of Industry Standard Processes Business Process Design: The creation os new, usually cross departmental business practices during IS development. With process design, organizations do not create new information systems to automate existing business practices. Rather they use technology to enable new, more efficient business processes - the process of making efficient what already exists is referred to as “paving the cowpath” Challenges of Business Process Design - Process design projects are expensive and difficult - Business processes are complex and require many people to agree on the changes to be made Benefits of industry standard Processes - Many business process design projects failed because they were tailor made—custom fit to an organization so just one company bore the cost of the design effort Chapter 7 Industry standard processes: Processes build into business applications from companies like Oracle or SAP SAP R/3: A software product licensed by German Company SAP that integrates business activities into inherent processes across an organization Q4. What are CRM Systems? - One type of cross functional system in use today is customer relationship management (CRM) Customer Relationship Management (CRM) customer relationship management (CRM): An IS that maintains data about customers and all their interactions with the organization - Small to medium sized businesses, Maximize software is a Canadian company focused on contact management - Larger CRM vendors include Oracle/Siebal systems and CDC pivotal Corp - The difference between CRM systems and traditional functional applications is that CRM systems address all activities and events that touch the customer and provide a single repository for data about all customer interactions - Customer Life Cycle on page 220 Customer Life Cycle: Taken as a whole, the processes of marketing, customer acquisition, relationship management and loss/churn that must ne managed by CRM systems - The purpose of relationship management applications is to maximize the value of the existing customer base—the goal of such applications is ensure that sales management has sufficient information to prioritize and allocate sales time and effort - Integrated CRM applications store data in a single database, thus CRM processes can be linked to one another Q5. What are ERP systems? Enterprise Resource Planning (ERP) Systems: Integration of all the organization’s principal processes. ERP is an outgrowth of MRP II manufacturing systems and most ERP users are manufacturing companies - ERP is an outgrowth of materials resource planning (MRP)—primary ERP users are manufacturing companies - The mo
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