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Chapter 7

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CRIM 101
Kamal Masri

Chapter 7- Information Systems for Competitive Advantage What are the fundamental types of IS within Organizations?  Information systems affect competitive advantage by making primary and support activities more productive than those of other companies.  2 questions: which IS system to invest in and which IS contributes to competitive advantage? Evolution of IS Systems  Calculation systems o First systems, 1950 – 1980 o Eliminated repetitive calculations o First computed payroll and printed paycheques o Applied debit, credit to general ledger and balanced company’s account records o Inventory Quantities o Single purpose scope o Ex: Mainframe, punch cards  Functional Systems o Assisted single department/ business function o Payroll  H.R o General ledger  Financial reporting o Inventory merged into operations/ manufacturing o More features/capabilities added within each field o Problem: “Functional silos”  systems were not inter related to one another o Ex: Mainframe, standalone PC, networks and LANs  Integrated, Cross Functional systems o Created to assist with single functions while integrating activities across various business processes  Cross – departmental/ cross functional  Networked PCs, client servers, internet, intranet  Integration is difficult because  Requires many departments to work together o May have no clear authority o Interorganizational systems – systems used by two/more related companies  E-Commerce/ supply chain management What are functional systems and why are they changing?  Chart 213  Marketing And Sales Systems o Primary functional system = Product management o Assess how well product-marketing efforts are working for each product and allows adjustment o Other functions –  lead tracking, sales forecasting, customer management, customer service  Operational systems o Used by distributors and retailers o Systems: order entry  Can be done in the store or online o System: Order management  Track orders through fulfillment process, handling back orders and order changes as well as providing order status o System: Inventory management systems –  analyze sales activity and generate product orders (IMS) o System: Customer service –  Provide information about order statuses and are also used to process complaints, to respond to product/service issues, receive returns  Manufacturing systems o Support the transformation of materials into products  Process inventory data for raw materials, work in process, finished goods  production planning  2 manufacturing philosophies  Push production planning – organization creates production plan/schedule and pushes goods through manufacturing and sales o Make first, sell after  Pull production planning – company sells goods in response to customer o demand as their inventories fall, they will produce more  One – of production o Organization will plan its activities to build that one item o Additional systems:  Manufacturing scheduling  Determining optimal methods for manufacturing (less idle time for workers/machines  cheaper)  Human Resources Systems o Main system – payroll, sick leave, vacation time accounting o Other systems – recruitment, performance evaluation, training o Larger organizations use HR systems to classify employees upon skills, training, etc to ensure optimal positional placement  Accounting Systems o Supports all accounting activities o Acc. Receivable, acc. Payable, etc o Stocks, borrowing, capital investments  treasury management o Significantly improved timeliness for accounting information, near real time  Why are functional systems changing? o Duplicate data due to independent databases  Lack of data integrity, may be conflicting o Business processes disjointed and difficult to integrate activities  Different departments may categorize same items differently o Problems lead to integrated enterprise information, queries must be made across various databases for one report with possible incorrect data o Inefficient because departments only have their isolated data to work with o All lead to higher costs What is the importance of industry standard processes?  Business process design/ business process redesign – organizations s should not just automate/improve existing functional systems but try to change the way things are done through IS o Hopes to integrate several different areas in an entire value chain  Another attempt was to establish more efficient business processes that integrate activities of all departments involved in value chain o Takes advantage of as many cross departmental links as possible  Challenges of Business Process Design o Expensive & difficult  Due to business process being complex and requires many people agreeing on a decision  Due to employees resisting change  Benefits of Industry standard processes o Splits cost of business process design amongst many organizations  After purchase, companies will conform activities around industry standard processes o Occasionally, purchased cross developmental software is not the main benefit towards software purchase but the tried and tested cross departmental processes that it comes with and provides o Disadvantages  Industry standards may be different than what is being done  changes will be difficult  Using the same procedures as other companies will affect competitive advantage What are Customer relationship management (CRM) Systems?  Supports business processes of attracting, selling, managing, delivering, supporting customers  Maximizer Software for small/medium sized businesses, Oracle/Siebel Systems and CDC/ Pivotal Corp for larger companies  Difference CRM systems and traditional functional applications o CRM systems address all activities and events that touch the customer, provides unified repository for data about all customer interactions  Customer life cycle – marketing, customer acquisition, relationship management, loss/churn  Websites that require contact information before showing promotions build lead tracking applications  Systems ensure sales management has sufficient information to prioritize and allocate sales time and effort o Ie. To ensure $10,000 worth of support given to a customer with a life time value of $500 What are Enterprise Resource Planning (ERP) Systems? 
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