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bus237 - Chapter 7
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32
Business
Undergraduate 1
04/04/2012

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Term
Evolution of the 3 categories of IS
Definition
Calculations systems
Functional systems
Integrated systems
Term
Calculations Systems
Definition
Eliminate tedious human calculations
Lavor-saving devices
Produce little info

e.g. payroll; general ledger; inventory
Term
Functional Systems
Definition
Facilitated the work of single department/function

Functions added to calculation system programs to provide more value e.g. payroll expanded to HR

Works independently from each other
- Inefficient working in cooperation with other processes across entire business
[Because of working independently -- sometimes refer to as functional silos]
Term
Integrated/Cross Functional Systems
Definition
- Operate across departmental boundaries
- Increased functionality to support business process
Term
Basic Types of Functional Systems
Definition
Marketing
Production
HR
Account and Finance
Term
Marketing and Sales Systems
Definition
IS that support marketing and sales efforts
- PM
-- assess product marketing efforts
-- sales forecasting to assess customer demand and plan marketing strategies
- customer management
-- generate follow-on business
-- lead tracking to manage potential and existing customers
Term
Operating Systems
Definition
- Used by non-manufacturing companies
- Important operations systems
-- Order entry
-- Order management
-- Inventory management
-- Customer service
Term
Manufacturing Systems
Definition
- Used by companies that transform materials into products
- Support production and planning (2 types)
-- push production planning
--- organization creates sched. and pushes goods
through manufacturing and sales
-- pull production planning
--- responds to customer demand
--- reduction in inventory triggers production
- Scheduling systems - help organizations to determine the optimal methods
- Manufacturing operations systems - control manufacturing plans and machines
Term
Human Resources Systems
Definition
Designed to manage:
- payroll
- compensation
- recruiting
- assessing employee performance, skills, and training
- HR planning
Term
Accounting and Finance Systems
Definition
Support organization's account activities:
- General ledger (recording transactions)
- Financial reporting
- Accounts receivable
- Accounts payable
- Cost accounting
- Budgeting
- Cash management
- Treasury management
Term
Problems with functional systems
Definition
Data duplication
- results from each application having their own database

Business processes disjointed across functions (silos)
- produces lack of integrated enterprise info cuz of limited info available at any one source

Inefficient decisions
- operationally, tactically, and strategically
- because it is based on limited knowledge

[INCREASED OVERALL COSTS AND LOST OPPORTUNITIES TO ORGANIZATIONS]
Term
Business process design/redesign
Definition
Central idea: Organization should not simply automate or improve existing functional systems
Term
Paving the cowpath
Definition
Process of making efficient what already exists because while it makes things easier, it does not fundamentally change the way things are done
Term
Challenges of Business Process Design
Definition
Expensive and difficult
Time consuming
Emmployees may resist change
Ultimate outcome is uncertain
Term
Benefits of Industry Standard Processes
Definition
Software vendors designed integrated applications with built-in industry standard processes
- integrate activities across departments
- save costs of tailor-made process design
e.g. Oracle, SAP
Term
Cross-functional systems
Definition
Designed to overcome problems in functional systems
e.g. CRM (Customer Relationship Management); ERP (Enterprise Resource Planning)
Term
CRM (Customer Relationship Management)
Definition
- Support the business processes of attracting, selling, managing, delivering and supporting customers
- Direct value chain activities that involve the customer
- Integrates four phases of the customer life cycle: marketing, customer acquisition, relationship management and loss/churn
- All customer data stored in single database
Term
ERP (Enterprise Resource Planning)
Definition
- Support all the primary business processes as well as HR and Accounting support processes
- Enterprise-wide systems that integrate sales, order inventory, manufacturing and customer service activities
Term
Characteristics of ERP
Definition
- Provides cross-functional, process view of organization
- Has a formal approach based on formal business models
- Maintains data in centralized database
- Offers large benefits but is difficult fraught with challenges and can be slow to implement
- Often VERY expensive
Term
Benefits of ERP
Definition
Efficient business processes
Inventory reduction
Lead-time reduction
Improved customer service
Greater, real-time insight into organization
Higher profitability
Term
Inter-organizational systems
Definition
Cross-organizational system
- involve selling and purchasing
- integrate multiple-company operations
Term
Types of Inter-Organizational Systems
Definition
E-commerce
SCM (Supply chain Management)
Term
E-Commerce
Definition
Busing and selling of goods and services over public and private computer networks
- Merchant companies
-- that take title to the goods they sell
-- buy goods and resell them
-- sell services that they provide
(e.g. Business-to-consumer (B2C), business-to-business (B2B), business-to-government (B2G))

- Non-merchant companies
-- arrange for the purchase and sale of goods w/o ever owning or taking title to those goods
-- sell services provided by others
(e.g. Auctions, Clearinghouses - provide goods and services at a stated price and arrange for delivery of the goods but never take the title, Exchanges - match buyers and sellers)
Term
Web 2.0
Definition
Used to describe applications and platforms on the web

Focuses on providing services (not simply software applications)

Recognizes the importance of the user as a part of the system, providing data and info that makes the service better

Creation of unique and difficult-todevelop data improves large numbers of people use the system
Term
Benefits of E-Commerce
Definition
Greater market efficiency (Customer side)
- Disintermediation: eliminate middlemen
- Increased information on price and terms: enables customers to pay the lowest price and serves to ultimately remove inefficient vendors

Knowledge of price elasticity (Seller side)
- Losing-bidder auction prices -> shape of the price elasticity curve [customers' willingness to pay at a certain $]
- Price experimentation
- More accurate information obtained directly from customers : better info with direct interaction than managing prices by watching competitors' pricing
Term
Issues with E-Commerce
Definition
- Channel Conflict (retailer and manufacturer)
- Price conflict (retailer and manufacturer)
- Logistics expense (set up a specific department for specific actions)
- Customer service expense (concerned about "all" customer issues)
Term
SCM (Supply chain management)
Definition
Inter-organizational systems that enable companies to efficiently handle the flow of good from suppliers to customers
Term
Supply Chain
Definition
Network of organizations and facilities that transforms raw material into products delivered to customers
Term
4 major factors that affect supply chain performance
Definition
facilities, inventory, transportation and information
Term
3 fundamental information systems involve in Supply Chain Management
Definition
1. SRM (Supplier relationship management)
2. CRM (Customer relationship management)
3. Inventory
Term
SRM (Supplier relationship management)
Definition
Business process for managing all contacts between an organization and its suppliers

Supplier is any organization that sells something to the organization that has the SRM application

Supports both the in-bound logistics primary activity and the procurement support activity

Support basic business processes
- source, purchase, and settle
Term
Benefits of Information Systems on Supply Chain Performance
Definition
- Reduce costs of buying and selling
- Increase supply chain speed
- Reduce size and cost of inventories
- Improve delivery scheduling - enable JIT (Just-in-time)
- Full bullwhip effect
- Do not optimize supply chain profitability
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