Lecture outline (5 C) The networked enterprise and IT based management

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS There are different kinds of systems as there are different interests, specialties, and levels in an organization. Single information system cannot provide the entire information needed by an organization. The following Figure describes the kinds of systems found in an organization. The organizational structure is divided into strategic, management, and operational levels. Again it is further divided into functional areas, such as sales and marketing, manufacturing and production, finance and accounting, and human resources. Different Information Systems have been introduced to serve these different organizational needs. Types of information systems Organizations can be divided into strategic, management, and operational levels and into four major functional areas: sales and marketing, manufacturing and production, finance and accounting, and human resources. Information systems serve each of these levels and functions.

Organizational structure

Different Kinds of Systems

Office and user productivity systems: - Office Automation to improve productivity - There are office information systems
o

Document processing systems using Microsoft office suite to process documents converting to pdf (Portable document format) Document management systems (DMSs) to help store, organize and retrieve Various communications systems email, online conferencing, collaborative (workshop) computing, telecommunicating, massaging

o An accounting system

Three main categories of information systems that serve different organizational levels:
o o o

Operational-level systems, Management-level systems, Strategic-level systems.

Operational-level System
o

Assist operational managers by maintaining records of the elementary activities and transactions of the organization. These are sales, receipts, cash deposits, payroll, credit decisions, and the flow of materials in a factory. The primary purpose of systems at this level is to answer routine questions and to follow the flow of transactions through the organization.

o How many parts are in inventory?

o o o o

What happened to Piyasiris payment? There information must be easily available. Example of operational-level systems: A system to record bank deposits or withdrawal from automatic teller machines (ATM)

Recording the number of hours worked each day by employees on a factory floor.

Management-level systems: o

Serve the monitoring, controlling, decision-making, administrative activities of middle managers.

and

o The principal question addressed by such systems is:

o

Are things working well? Management-level systems typically provide periodic reports rather than instant information on operations. Some management-level systems assist non-routine decision making. They tend to focus on less-structured decisions for which information requirements are not always clear. These systems often answer what-if questions: What would be the impact on production schedules if we were to double sales in the month of December?

o What would happen to our return on investment if a factory schedule were delayed for six months? o Answers to these questions frequently require new data from outside the organization, as well as data from inside that cannot be easily drawn from existing operational-level systems.
Strategic-level systems o

Help senior management address strategic issues and long-term trends, both in the firm and in the external environment.

o Their principal concern is matching changes in the external environment with existing organizational capability. What will employment levels be in five years? What are the long-term industry cost trends, and where does our firm fit in? What products should we be making in five years?

o Information systems also serve the major business functions, such as sales and marketing, manufacturing and production, finance and accounting, and human resources. o A typical organization has operational-, management-, and strategic-level systems for each functional area.
o

The sales function generally has a sales system on the operational level to record daily sales figures and to process orders. A management-level system follows monthly sales figures by sales division and reports on divisions where sales exceed or fall below anticipated levels. A system to forecast sales trends over a five-year period serves the strategic level.

o A system of accounting

Four Major Types of Information Systems These are specific types of information systems that correspond to each organizational level. The organization has executive support systems (ESS) at the strategic level;

management information systems (MIS) decision-support systems (DSS) at the management level; Transaction processing systems (TPS) at the operational level.

 Systems at each level in turn are expected to serve each of the major

functional areas.
The typical systems found in organizations are designed to assist workers

or managers at each level and in the functions of sales and marketing, manufacturing and production, finance and accounting and human resources.

TPS, DSS, MIS, and ESS, showing the level of the organization and business function that each supports.

Interrelationships among systems The various types of systems in the organization have interdependencies. TPS are major producers of information that is required by the other systems,

 Which, in turn, produce information for other systems.

These different types of systems have been coupled in most organizations.

o Integrated Enterprise Systems These are designed to integrate all systems in the enterprise o Inter-enterprise systems

A system that links enterprises, such as a business and its customers, suppliers, and partners Electronic Data Interchange (EDI) o Transfer data electronically between different Cos using networks Internet. o Key customers or suppliers can link with the organizations computer. o Data on purchase orders invoices are exchanged.
o

Can replace traditional paper documents.

o This is much faster o This can be used for inventory management

EDI to electronically track the process of orders. The system can even be set up to continually restock inventory as needed selecting real-time inventory information systems
o

o
o

Enterprise-wide systems
RESOURCE PLANNING

ENTERPRISE

(ERP)

A large, integrated system that ties together all types of business activities planning, manufacturing, sales, marketing, distribution, customer services, finance instead of each department having its own separate system.
o o

ERP combines them all into a single, integrated application

Data is stored in a central database and ERP system provides a standard access medium to all employees who need to access to data. o Example:

When an order is placed by a buyer, the employee has all information to complete the order e.g., customers credit information and history, Cos inventory levels, schedule of transport

Those who are in billing process and parceling can access to same information without reentering data. When one dept finishes with the order, ERP system automatically route it to the next dept.
Todays ERP applications are available via the web, uses inside and

outside of the Company can get easy access. What is networked enterprise or virtual enterprise network?
A Virtual Enterprise (VE) is a temporary alliance of enterprises that come

together to share skills or core competencies and resources in order to better respond to business opportunities.
This cooperation is supported by computer networks. It is a manifestation of Collaborative Networks and Distributed

Collaborative Working.

a temporary network of independent companies, suppliers, customers even rivals, linked by information technology to share costs, skills and access one anothers markets. It will have neither central office nor organizational chart no hierarchy, no vertical integration (Byrne);

Future enterprises can do well at inter-organizational collaboration as they

evolve successful joint strategies and drive the development of whole industries. The executives understand the power of virtual enterprise networks as a means of achieving competitive advantage. Mobilizing and organizing people so that their endeavors are maximized.
Huge multinational corporations (Big Fish) and small innovative

companies (small fish) can Get together and find innovations. The innovation is the key to success in the 21st century, and that huge corporations like IBM are engaged in seeking innovation. Porter's strategy suggests that to take SMEs to the next level, their leaders have to find some way to move beyond their current customer bases and begin to work with the bigger, more demanding, Big Fish enterprises.

The small fish directly should engage collaborative business networks that have sufficient scale and resources to interest and engage the Big Fish.

Small fish in a Virtual Enterprise Network engaging Big Fish The small fish can use Virtual Enterprise Networks to develop the kind of strategic partnerships they need with the Big Fish to rise them to the next level of competitive success.

 Big Fish and small fish simply don't get along in the real world, because

Big Fish constantly swallow and consume small fish without even noticing it.
The Virtual Enterprise Network creates a living, mutually beneficial

relationship among dissimilar organisms, where the participants, big and small, can thrive together in the 21st century world of extreme competition. The goal of a Virtual Enterprise Network is to connect Small and Medium Enterprises (SMEs) into peer networks, supported by appropriate collaboration practices and technologies, to give them the capabilities and competitive advantages of large global enterprises, particularly in: --Sales --Marketing --Product Development --Human Capital and IT Capital What do we mean by "Virtual" Enterprise Network? Virtual It is the opposite of Physical, new (non-physical) enterprises forming and dissolving from other (physical) enterprises, each with different processes, systems and cultures, with the need to build trust, common aims and working practices very quickly. Research on Networked Enterprises
The field of Networked Enterprise includes research on ICT and on new

processes, organizational models and strategies which can improve the way future business are networked and interoperate and future products and services are created and managed.