Transcript MANAGEMENT SUPPORT SYSTEMS

MANAGEMENT INFORMATION SYSTEMS
Part 1
SOME DEFINITIONS AND WAYS OF INFORMATION
SYSTEM DEVELOPMENT
Prof. Witold Chmielarz, PhD ,
Velimir Tasic MSc, Oskar Szumski, PhD
Faculty of Management University of Warsaw
Poland in the world
POLAND
Warsaw
COURSE OBJECTIVES
• Introduction of the main directions of the systems development, a
new trends, and a new logical architectures of the systems
• Characteristics of the main management information systems, their
components and features
• Presentation of the concepts and practical applications of various
types of information systems in the business organizations
• Illustration how management information systems have been
helpful in enhancing effectiveness of organizations
• Demonstration the use of IT in designing and implementing MIS
• Analyzing of e-business as one of the modern ideas of MIS
• Presentation of modern MIS applications in specific areas in
Poland
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COURSE BRIEF CONTENTS (only part with WCH)
Sessions
Coverage
1
DEFINITIONS AND WAYS OF
INFORMATION SYSTEM
DEVELOPMENT
2
CHARACTERISTICS AND
FEATURES OF MIS
3
INTEGRATED ENTERPRISE
SYSTEMS
4
e-COMMERCE AND e-BANKING
References
Turban E., at al…, Laudon K. C.,
Laudon J. P, Chmielarz W.
Turban E., at al…, Laudon K. C.,
Laudon J. P
Turban E., at al…, Laudon K. C.,
Laudon J. P
Laudon K. C., Laudon J. P, Chmielarz
W.
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REFERENCES (textbooks):
Main:
1.
Turban E., at al…: Information Technology for Management.
Transforming Organizations in the Digital Economy, John Wiley
and Sons Inc. 6-th ed., 2011,
2.
Laudon K. C., Laudon J. P.: Management Information Systems,
Pearson Education Inc., Prentice Hall, NY, 9-th ed. 2010.
3.
Internet:
http://www.wz.uw.edu.pl/wykladowcy,profil,9,pliki,13.html
Additionally:
1.
Chmielarz W.: Selected Problems of IT Development, Wydawnictwo
Naukowe WZ UW, Warsaw, 2005,
2.
Bocij P., Chaffey D., Greasley A., Hickie S.: Business Information
Systems, 2-nd ed., Prentice Hall, Harlow, 2003,
3.
Turban E., Lee J., King D., McKay J., Viehland D., Cheung C., Lay L.:
Electronic Commerce. A Managerial Perspective, Pearson Education, 4th ed., 2008
4.
Wallace T., M.; Kremzar M., H.: ERP: Making It Happen, The
Implementers’ Guide to Success with Enterprise Resource Planning;
John Wiley & Sons, Inc., New York, 2001
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...From Aphorismus Book...
...Wisdom is nontransferable. The sage’ knowledge which he try to
transfere, sounds always like nonsense...
(... Mądrości nie można przekazać. Wiedza, którą próbuje przekazywać
mędrzec, brzmi zawsze jak głupota...),
...Study period is the time when you are instructing by somebody
you don’t want to know, about something you don’t want to
know...
(... Okres nauki to czas gdy jesteś pouczany przez kogoś kogo nie chcesz
znać, o czymś czego nie chcesz wiedzieć ... )
…Knowledge is powerless unless it prepares you to do the right thing
at the right time…
(…Wiedza nic nie daje, jeżeli nie przygotowuje cię do podjęcia właściwej
decyzji we właściwym czasie…)
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Subject:
…Management Information System – refers to (means) a
collection of computerized and net technologies whose
objective is to support managerial work and especially
decision making…
…System designed to provide past, present, and future
information appropriate for planning, organizing, and
controlling the operations of functional areas in an
organization…
(Turban E., at all: IT for Management ... 2008)
Some definitions (glossary)…
• Data items – refer to an elementary description of facts and figures
relatively important for users, data item – an elementary description of
things, events, activities, and transactions, that are recorded, classified,
and stored but not organized to convey any specific meaning: can be
numeric, alphanumeric, figures, sounds or images
• A database – consists of stored data items organized for retrieval
• Information – is processed, meaningful data… data that have been
organized, so they have meaning and value to the recipient
• Data items typically are processed into information by means of an
application, represents a more specific use and a higher added value than
simple retreieval and summarizing from a database
• Knowledge – data and/or information that have been organized and
processed to convey (distribute) understanding, experience, accumulated
learning, and expertise (what to do with information)
• Wisdom – the ability to make sensible (rational) decisions and give good
advice because of the experience, intuition and knowledge that you have
(how to use knowledge, how to do it in rational way)
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Some definitions (glossary)…
• Data items – a student first name, name, grade in a class, the
number of hours an employe worked in a certain week, etc.
• Information – a student’s grade point average (GPA), the
application transforminf data in information might be a Webbased inventory management system, a univerity online
registration, or e-commerce (internet-based buying and selling)
system
• Knowledge – GPA of a student applying to Erasmus Students
Exchange can be compared with GPA of the other students
applying to this sholarship and be over average of all students
from faculty (average is only criteria of selection)
• Wisdom – see above case – inspite of level of GPA you know from
your experience or partner’s knowledge that in Italy or Spain in
most cases courses are in Italian or Spanish, so you first of all send
there students speak these languages…
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Some definitions (glossary)…
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System – group of elements integrated with common purpose of
achieving an objective (...) by transforming input resources to
output resources…
Information system – group of programs integrated in three areas:
programme, logical and technical…, a physical process, that
supports an organization in collecting, processing, storing nad
analyzing data, and disseminating information to achieve
organizational goals.
Information Technology – the technology component of an
information system (a narrow definition), or the collection of the
computing systems in an organization (the broad definition)
Information infrastructure – the physical arrangement of: harware,
software, databases, networks, and information management personnel
…Decision making – a process of choosing among alternative courses
of action for the purpose of attainings a goal or goals…
What should be done? When? How? Where? By whom?
Model (in decision making) – a simplified representation or
abstraction of reality; can be used to performs virtual experiments
and analysis
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Some definitions (glossary)…
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A computer-based information system is an information system that uses
computer and net technology to perform some or all of its intnded tasks.
The basic components of the system are hardware, software, database(s),
telecommunication networks, procedures and people.
Hardware is a set of devices that accept data and information, process
them, and display or raport them.
Software is a set of programs that enable the hardware to process data.
A database is a collection of related files, tables, relations, and so on that
stores data and the associations among them.
A network is a connecting system (wireline or wireless) that permits
different computers to share resources.
Procedures are the set of instructions about how to combine the above
components in order to process information and generate the desire
output.
People (users or final users, maybe curtomers) are those individuals
who work with the information system, interface with it, or use its
outputs
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Some definitions (glossary)…
• Information system:
– Set of interrelated components
– Collect, process, store, and distribute information
– Support decision making, coordination, and control
• Information vs. data
– Data are streams of raw facts
– Information is data shaped into meaningful form
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Some definitions (glossary)…
• Information system: three activities produce information
organizations need
•
•
– Input: Captures raw data from organization or external
environment
– Processing: Converts raw data into meaningful form
– Output: Transfers processed information to people or activities
that use it
Feedback:
Output returned to appropriate members of organization to help
evaluate or correct input stage
Computer/Computer program vs. information system
Computers and software are technical foundation and tools
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Functions of an Information System
An information system contains information about an organization and its surrounding environment.
Three basic activities—input, processing, and output—produce the information organizations need.
Feedback is output returned to appropriate people or activities in the organization to evaluate and
refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and
regulatory agencies, interact with the organization and its information systems.
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Information Systems Are More Than Computers
Using information systems effectively requires an understanding of the organization,
management, and information technology shaping the systems. An information system
creates value for the firm as an organizational and management solution to challenges
posed by the environment.
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Organizational dimension of information systems
Hierarchy of authority, responsibility:
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Senior management
Middle management
Operational management
Knowledge workers
Data workers
Production or service workers
Separation of business functions:
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Sales and marketing
Human resources
Finance and accounting
Manufacturing and production
Unique business processes
Unique business culture
Organizational politics
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Management dimension of information systems
–
–
Managers set organizational strategy for responding to
business challenges,
In addition, managers must act creatively:
• Creation of new products and services
• Occasionally recreating the organization
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Technology dimension of information systems
– Computer hardware and software
– Data management technology
– Networking and telecommunications technology
(Networks, the Internet, intranets and extranets, World Wide
Web)
– IT infrastructure: provides platform that system is built on
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THE INTEGRATION AND CONVERGENCE THEORY OF
INFORMATION SYSTEMS DEVELOPMENT
The main objective of this part of course is to present the idea
of the development of MIS consisting in the integration and
convergence approach by the analysis of three main paths of
development:
• increasing complexity of logical systems architecture,
• functional integration of Information Systems, tailored to the
current needs of the organization and the user within the
organization,
• expansion of spatial network infrastructure.
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• Integration – in the ideological sense – consists in combining functional
elements using by means of relations, so as to constitute specific
structural components of the whole. Integration is here understood as
a process of consolidation and merging of particular different-class
characters and forms of interrelated elements in order to create a
functional entity, resulting in the usefulness and efficiency which are
greater than each of the parts acting separately
• Convergence in the development process – consists in the formation of
similar features with regard to construction, function and appearance
of various groups of systems functioning under the same
environmental conditions, regardless of adopted specific innovative
solutions.
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C
o
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v
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c
e
TSP/APD
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1970
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Integration
1990
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2010
Year
1
C
o
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v
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r
g
e
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c
e
MIS
TSP/APD
1950
1960
1970
1980
Integration
1990
2000
2010
Year
1
C
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v
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DSS
MIS
TSP/APD
1950
1960
1970
1980
Integration
1990
2000
2010
Year
1
C
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v
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g
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EIS/ESS
DSS
MIS
TSP/APD
1950
1960
1970
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Integration
1990
2000
2010
Year
1
C
o
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v
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g
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c
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EIS/ESS
DSS
MIS
TSP/APD
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1960
1970
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Integration
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2010
Year
1
BIS
C
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v
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ES
EIS/ESS
DSS
MIS
TSP/APD
Internal integration - just combine different types of systems
Convergence - increasingly sophisticated systems to ever higher level
of development
1950
1960
1970
1980
Integration
1990
2000
2010
Year
Economic environment
MIS
Internet
Interior of organization
User
User interface
Database
Management System
Database
Ba
Applications:
- accounting
and finance,
- inventory
control,
- production
management,
- Human
relations.
Available for
decision
maker:
•knowledge,
•intuition,
•education,
•data.
Economic environment
DSS
Internet
Interior of organization
User
User interface
Database System
Management
Model Base System
Management
Database
Model
Base
Ba
Applications:
- accounting and
finance,
- inventory
control,
- production
management,
- Human
relations.
Available for
decision maker:
• knowledge,
• Intuition,
• education,
• data,
• models,
methods.
Base of
Procedures
Economic environment
EIS/ESS
Internet
Interior of organization
User
User interface
Model Base System
Management
Database System
Management
Database
Ba
Applications:
- accounting and
finance,
- inventory
control,
- production
management,
- Human
relations.
Available for
decision maker:
• knowledge,
• Intuition,
• education,
• data,
• models,
methods.
• prezentation,
vizualization,
extension.
Model Base
Base of
procedures
Economic environment
ES
Internet
Interior of organization
User
User interface
Model BaseSystem
Management
Database System
Management
Database
Ba
Applications:
- accounting and
finance,
- inventory
Available
for decision
control,
maker:
- production
management,
• intuition,
- Human
• education,
• data,relations.
• models, methods,
• prezentation,
vizualization, extension,
• knowledge.
Knowlede Base
System
Management
Knowledge
Base
Ba
Model
Base
Base of
Procedures
Economic environment
BIS
Internet
Interior of organization
User
Mechanizms of data
wholesale management
User interface
Model Base System
Management
Database System
Management
Applications:
- accounting and finance,
- inventory control,
- production
Database
management,
- Human relations.
Mechanizms Business
Analytics
Knowledge Base
System
Management
Model
Base
Marts – branch wholesale
Knowledge
Base
Ba
Decison maker has at his disposal more then he needs!!!
Base of
Procedures
Economic environment
BIS
Internet
Interior of organization
User
Mechanizms of data
wholesale management
User interface
Model Base System
Management
Database System
Management
Applications:
- accounting and finance,
- inventory control,
- production
Database
management,
- Human relations.
Mechanizms Business
Analytics
Knowledge Base
System
Management
Model
Base
Marts – branch wholesale
Knowledge
Base
Ba
Base of
Procedures
Types of decision
• Structured decisions are repetitive and routine (strictly determined),
and they involve a definite procedure for handling them so that they do
not have to be treated each time as if they were new.
• Unstructured decisions are those in which the decision maker must
provide judgment, evaluation, and insight to solve the problem
(probablistic, undetermined). Each of these decisions is novel,
important, and non routine, and there is no well-understood or agreedon procedure for making them.
• Many decisions have elements of both types of decisions and are
semistructured, where only part of the problem has a clear-cut answer
provided by an accepted procedure. In general, structured decisions are
more prevalent at lower organizational levels, whereas unstructured
problems are more common at higher levels of the firm.
INFORMATION REQUIREMENTS OF KEY DECISIONMAKING GROUPS IN A FIRM
STAGES IN DECISION MAKING
• Intelligence consists of discovering, identifying, and
understanding the problems occurring in the organization why a problem exists, where, and what effects it is having
on the firm
• Design involves identifying and exploring various
solutions to the problem
• Choice consists of choosing among solution alternatives
• Implementation involves making the chosen alternative
work and continuing to monitor how well the solution is
working
Six elements in business intelligence environment
• Data from the business environment: Businesses must deal with both
structured and unstructured data from many different sources, including
mobile devices and the Internet. The data need to be integrated and
organized so that they can be analyzed and used by human decision
makers
• Business intelligence infrastructure: The underlying foundation of
business intelligence is a powerful database system that captures all the
relevant data to operate the business. The data may be stored in
transactional databases or combined and integrated into an enterprisedata warehouse or series of interrelated data marts
• Business analytics toolset: A set of software tools are used to analyze
data and produce reports, respond to questions posed by managers, and
track the progress of the business using key indicators of performance
Six elements in business intelligence environment
• Managerial users and methods: Business intelligence hardware and
software are only as intelligent as the human beings who use them.
o Managers impose order on the analysis of data using a variety of
managerial methods that define strategic business goals and specify how
progress will be measured.
o These include business performance management and balanced scorecard
approaches focusing on key performance indicators and industry strategic
analyses focusing on changes in the general business environment, with
special attention to competitors.
o Without strong senior management over-sight, business analytics can
produce a great deal of information, reports, and online screens that focus
on the wrong matters and divert attention from the real issues.
o You need to remember that, so far, only humans can ask intelligent
questions.
Six elements in business intelligence environment
•
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Delivery platform - MIS, DSS, ESS. The results from business intelligence and
analytics are delivered to managers and employees in a variety of ways,
depending on what they need to know to perform their jobs. MIS, DSS, and ESS,
deliver information and knowledge to different people and levels in the firm—
operational employees, middle managers, and senior executives. In the past, these
systems could not share data and operated as independent systems. Today, one
suite of hardware and software tools in the form of a business intelligence and
analytics package is able to integrate all this information and bring it to managers’
desktop or mobile platforms.
User interface: Business people are no longer tied to their desks and desktops.
They often learn quicker from a visual representation of data than from a dry
report with columns and rows of information. Today’s business analytics software
suites emphasize visual techniques such as dashboards and scorecards. They also
are able to deliver reports on Blackberrys, iPhones, and other mobile handhelds as
well as on the firm’s Web portal. BA software is adding capabilities to post
information on Twitter, Facebook, or internal social media to support decision
making in an online group setting rather than in a face-to-face meeting.
Business Intelligence and Analytics for Decision Support
Business Intelligence Users
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BIS
C
o
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v
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n
c
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ES
EIS/ESS
2
DSS
MIS
TSP/APD
IC
1950
1960
1970
1980
Integration
1990
2000
2010
Year
1
BIS
C
o
n
v
e
r
g
e
n
c
e
ES
EIS/ESS
2
DSS
MIS
TSP/APD
MRP
IC
1950
1960
1970
1980
Integration
1990
2000
2010
Year
1
BIS
K
C
o
n
v
e
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g
e
n
c
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ES
EIS/ESS
2
DSS
MIS
TSP/APD
MRP II
MRP
IC
1950
1960
1970
1980
Integration
1990
2000
2010
Year
1
BIS
C
o
n
v
e
r
g
e
n
c
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ES
EIS/ESS
2
DSS
MIS
TSP/APD
ERP
MRP II
MRP
IC
1950
1960
1970
1980
Integration
1990
2000
2010
Year
Functional integration - more and more utility functions
Convergence - in each, next step newer technology and better
adjust to needs of user
Diffusion patterns between tracks
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BIS
C
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v
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g
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c
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ES
EIS/ESS
DSS
2
CRM
MIS
ERP II
TSP/APD
ERP
MRP II
SCM
MRP
IC
1950
1960
1970
1980
Integration
1990
2000
2010
Year
1
BIS
C
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n
v
e
r
g
e
n
c
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ES
EIS/ESS
DSS
2
CRM
MIS
ERP II
TSP/APD
ERP
MRP II
SCM
MRP
IC
1950
1960
1970
1980
Integration
1990
2000
2010
Year
Inventory
balance
IC
Production
balance
Inventory
balance
IC
MRP
Production
Balance
Financial
Balance
Inventory
Balance
IC
MRP
MRP II
Production
Balans
Service Balans
Financial
Balans
Inventory
Balance
IC
MRP
MRP II
ERP
Production
Balance
Service Balans
Financial
Balance
Inventory
Balance
IC
MRP
Logistic Balans,
specializations and
mutations
MRP II
ERP
ERP
II
Production
Balance
Service Balans
Financial
Balance
Inventory
Balance
IC
MRP
Logistic Balans,
specializations and
mutations
MRP II
ERP
ERP
II
C
o
m
m
u
n
i
c
a
t
i
o
n
B
a
l
a
n
s
eERP
1
BIS
C
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v
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g
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c
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ES
EIS/ESS
DSS
2
CRM
MIS
ERP II
TSP/APD
ERP
MRP II
SCM
3
MRP
IC
Private, corporate nets
1950
1960
1970
1980
Integration
1990
2000
2010
Year
1
BIS
C
o
n
v
e
r
g
e
n
c
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ES
EIS/ESS
DSS
2
CRM
MIS
ERP II
TSP/APD
ERP
MRP II
SCM
3
MRP
IC
Commercial nets
Private, corporate nets
1950
1960
1970
1980
Integration
1990
2000
2010
Year
Integration - the traditional systems and other networks
Convergence - the expansion of the subsequent users, connected with
increasing availability and ease of use
1
BIS
C
o
n
v
e
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g
e
n
c
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ES
EIS/ESS
DSS
2
CRM
MIS
ERP II
TSP/APD
ERP
MRP II
SCM
3
MRP
IC
Internet
Commercial nets
Private, corporate nets
1950
1960
1970
1980
Integration
1990
2000
2010
Year
1
BIS
C
o
n
v
e
r
g
e
n
c
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ES
EIS/ESS
DSS
2
CRM
MIS
ERP II
TSP/APD
ERP
MRP II
SCM
3
MRP
IC
Internet
Commercial nets
Private, corporate nets
1950
1960
1970
1980
Integration
1990
2000
2010
Year
Corporate solutions
based on EDI
standards, huge
organizations
Corporate networking
Private, corporate nets
Commercial solutions
for large and
medium-sized
companies
Organizational nets
Commerce nets
Corporate solutions
based on EDI
standards, huge
organizations
Corporate networking
Private, corporate nets
Commercial solutions
for large and
medium-sized
companies
Organizational nets
Comprehensive and
global solution for all
(organizations,
customers, society)
Social nets
Commerce nets
Corporate solutions
based on EDI
standards, huge
organizations
Corporate networking
Private, corporate nets
Internet
BIS
C
o
n
v
e
r
g
e
n
c
e
ES
EIS/ESS
DSS
CRM
MIS
ERP II
TSP/APD
ERP
MRP II
SCM
MRP
IC
Internet
C
o
r
p
o
r
a
t
e
1
2
P
l
a
t
f
o
r
m
3
Commercial nets
Private, corporate nets
1950
1960
1970
1980
Integration
1990
2000
2010
Year
Conclusions
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The solution which under the conditions of the development of internet
systems started to be applied in lieu of internal integration was external
integration through external corporate portals.
A corporate portal is …a platform which integrates systems and information
technology, data, information and knowledge in an organization and its
environment in order to provide users with a personalised and convenient access
to data, information and knowledge, in accordance with the needs, at any time
and in any place, in a secure manner and through a unified web interface ….
The main objective of a corporate portal are improvements with regard to
access to data, information and knowledge and their sources according to user
requirements; regardless of time and location of the web interface, and in a
secure manner.
The main feature of corporate platforms is the integration of data from
internal resources with external data, their conversion into common and
jointly processed formats; integration of heterogeneous applications;
integration of communication between particular users and providing them
with personalized information and knowledge.
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•
•
•
•
The emergence of corporate portals is connected with the development of
internet network technologies, and the portals operate mainly in an intranet
corporate environment. Through this environment – web interface - they are
distributed to users, as required information and knowledge.
The impression is that a corporate platform is both an integration instrument
and at the same time a convergence tool - on the level, cooperation of both
complementary and parallel systems is possible.
The author believed that this tendency was a process of intensifying of a
previously examined complexity of the logical architecture structure in
particular types of the systems, and therefore it does not require further
analysis.
Also, the author did not illustrate the development of particular internet tools
in such a great detail as in the article, assuming that they are still developing
very intensively.
Nevertheless, there is a clearly visible - possible thanks to a corporate platform
- tendency to connect everything with everything (multi-dimensional
integration) in terms of transmissivity of the idea of interaction between
various information systems on all presented development paths.
Thank you very much for your attention!
Witold Chmielarz
Questions - [email protected]
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MANAGEMENT INFORMATION SYSTEMS
Part 2
CHARACTERISTICS AND FEATURES OF MIS
Prof. Witold Chmielarz, PhD ,
Oskar Szumski, PhD
65
Faculty of Management University of Warsaw
Characteristics and Features of MIS
Towards Knowledge Based Systems
66
Knowledge in MIS
67
LEARNING OBJECTIVES
•
Assess the role of knowledge management and knowledge management
programs in business
•
Describe the types of systems used for enterprise-wide knowledge
management and demonstrate how they provide value for organizations
•
Describe the major types of knowledge work systems and assess how they
provide value for firms
•
Evaluate the business benefits of using intelligent techniques for
knowledge management
•
Analyzing of the concept of knowledge management application
68
A brief content:
•
•
•
•
Basic definitions
Intro to Knowledge Management (KM)
Approaches to KM
Problems with KM implementation
69
…Management Information System – refers to a
collection of computerized and net technologies
whose objective is to support managerial work and
especially decision making…
(Turban E., at al: IT for Management ... 2008)
70
Some basis definitions…
• System – group of elements integrated with common
purpose of achieving an objective (...) by transforming
input resources to output resources…
• Information system – group of programs integrated in
three areas: programme, logical and technical…
• An application program – a set of computer instructions
written in a programming language, the purpose of
which is to provide functionality to a user…
71
Some basic definitions…
•
Decision making – a process of choosing among
alternative courses of action for the purpose of
attainings a goal or goals:
What should be done?
When?
How?
Where?
By whom?
72
Intro to Knowledge Management (KM)
…A process that helps organizations identify, select, organize,
disseminate, and transfer important information and expertise
that are part of the organization’s memory and that typically
reside within the organization in an unstructured manner…
•
•
•
Creating of knowledge enables effective and efficient problem solving,
dynamic learning, strategic planning and decision making
Focus on identyfing knowledge, explicating it in formal manner and
exploiting by reuse,
For success of organization must be exchangable among persons, and able
to grow…
E.Turban et al.: Information Technology for Management;
73
Knowledge Management (KM)
• Knowledge management: Set of business processes developed
in an organization to create, store, transfer, and apply
knowledge
• Knowledge management value chain: each stage adds value to
raw data and information as they are transformed into usable
knowledge:
– Knowledge acquisition
– Knowledge storage
– Knowledge dissemination
– Knowledge application
(Laudon, Laudon, Chapt 11)
74
Knowledge acquisition
• Documenting tacit and explicit knowledge:
– Storing documents, reports, presentations, best
practices
– Unstructured documents (e.g., e-mails)
– Developing online expert networks
• Creating knowledge
• Tracking data from TPS and external sources
(Laudon, Laudon, Chapt 11)
75
Knowledge storage
• Databases
• Document management systems
• Role of management:
– Support development of planned knowledge storage
systems
– Encourage development of corporate-wide schemas
for indexing documents
– Reward employees for taking time to update and store
documents properly
(Laudon, Laudon, Chapt 11)
76
Knowledge dissemination
•
•
•
•
•
Portals
Push e-mail reports
Search engines
Collaboration tools
A deluge (dissemination, too) of information?
– Training programs, informal networks, and shared
management experience help managers focus
attention on important information
(Laudon, Laudon, Chapt 11)
77
Knowledge application
• To provide return on investment, organizational
knowledge must become systematic part of management
decision making and become situated in decision-support
systems
– New business practices
– New products and services
– New markets
(Laudon, Laudon, Chapt 11)
78
The Knowledge Management Value Chain
Knowledge management today involves both information systems activities and
a host of enabling management and organizational activities.
79
New organizational roles and responsibilities
• Chief knowledge officer executives
• Dedicated staff / knowledge managers
• Communities of practice (COPs)
• Informal social networks of professionals and employees
within and outside firm who have similar work-related
activities and interests
• Activities include education, online newsletters, sharing
experiences and techniques
• Facilitate reuse of knowledge, discussion
• Reduce learning curves of new employees
• Establish paths of carrier
80
Relations – data – information – knowledge - wisdom
• Data – are a collection of facts, measurements, and statistics
• Information – is organized or processed data that are timely and
accurate (ready for use),
• Knowledge – is information that is contextual (connected with
particular conditions), relevant (closely connected with situation)
and actionable (supported by cases), shows how to use information
and data under current, given, defined situation in effective,
acceptable formal (visible knowledge) way,
• Wisdom – abbility to make sensible decisions and good advice
because of the experience and knowledge, how to use knowledge
and information in reasonable (optimal) way (hidden knowledge,
too)
81
Wisdom – Knowledge triangle
Wisdom – collection of reasonable knowledge
Knowledge – collection of usable information
Information – collection of processed data
Data – collection of facts
82
Charactristics of knowledge
• Extraordinary and increasing results – knowledge is not subject to
diminishing results. When it is used, it is not consumed. Its
consumers can add to it, thus increasing its value.
• Fragmentation, leakage and need to refresh – knowledge is
dynamic, it is information in action. Thus an organization must
continually refresh its knowledgebase to maintain it as a source of
competitive advantage,
• Uncertain value – it’s difficult to estimate the impact of an
investment in knowledge. There too many intengible aspects
• Uncertain value of sharing – it’s difficult to estimate the value of
sharing knowledge, or even who will benefit most,
• Rooted in time – the utility and validity of knowledge may change
with time.
83
Transforming information into knowledge
• To transform information into knowledge, firm must expend
additional resources to discover patterns, rules, and contexts
where knowledge works
• Wisdom: Collective and individual experience of applying
knowledge to solve problems - involves where, when, and how
to apply knowledge
• Knowing how to do things effectively and efficiently in ways
other organizations cannot duplicate is primary source of profit
and competitive advantage that cannot be purchased easily by
competitors
(Laudon, Laudon, Chapt. 11)
84
Introduce the concept of organizational learning
(selflearning), which describes the process of gathering,
creating, and applying knowledge
• Organizational learning
• Process in which organizations learn
• Gain experience through collection of data, measurement,
trial and error, and feedback
• Adjust behavior to reflect experience:
• Create new business processes
• Change patterns of management decision making
85
Some additional definitions
• Intellectual capital (or intellectusl assets) – the valuable knowledge
of employees, evolves with time and experience, which puts
connections among new situations and events in context.
• Tacit knowledge – usually in the domain of subjective, cognitive
and experimental learning (personal and difficult to formalize).
The cumulative store of an experiences, expertise, know-how,
trade secrets, skill sets, usually localized in the brain of individual
• Explicit knowledge – deals with more objective, rational, and
technical knowledge (date, procedures, software, documents).
Codyfied knowledge (documented) in the form can be distributed
to others or transformed into process without interpersonal
interaction (can leave person – leaky knowledge)
Organizations now recognize the need too integrate explicit and
tacit knowledge in formal information systems
(taken from: Laudon, Laudon, Chapt. 11)
86
Important dimensions of knowledge
– Knowledge is a firm asset
• Intangible
• Creation of knowledge from data, information, requires organizational
resources
• As it is shared, experiences network effects
– Knowledge has different forms
•
•
•
•
May be explicit (documented) or tacit (residing in minds)
Know-how, craft, skill
How to follow procedure
Knowing why things happen (causality)
(taken from: Laudon, Laudon, Chapt. 11)
87
Important dimensions of knowledge
• Knowledge has a location
• Cognitive event
• Both social and individual
• “Sticky” (hard to move), situated (enmeshed in firm’s
culture), contextual (works only in certain situations)
Knowledge is situational
• Conditional: Knowing when to apply procedure
• Contextual: Knowing circumstances to use certain tool
(see: Laudon, Laudon & Dass, Chapt. 11)
88
Approaches to KM
• Process approach – attempts to codify organizational knowledge
through formalized controls, processes and technologies,
frequently involves the use of information technologies to enhance
the quality and speed of knowledge creation and distribution in the
organizations
• Practice approach – assumes that a great deal of organizational
knowledge is tacit in nature and that formal controls, processes
and technologies are not suitable for transmitting this type of
understanding. The focus of this approach is to build the social
environments or communities necessary to the sharing of tacit
knowledge.
(see: Laudon, Laudon, Chapt. 11)
89
Approaches to KM
1.
2.
3.
•
Best practices – the activities and methods that the most effective
organizations use to operate and manage various functions. They
include:
A good idea that is not yet proven, but makes intuitive sense,
A good practice, an implemented technique, metodology,
procedure, or process that has improved business results,
A local best practice, a best approach for all or a large part of the
organization based on analysing hard data. The scope within
organization of the best practice is identified; can be used only in
a single department or geographical region, or across the
organization.
Hybrid approaches – in reality involve both process and practice
approaches.
(see: Laudon, Laudon, Chapt. 11)
90
Three major types of knowledge management systems:
• Enterprise-wide knowledge management systems
• General-purpose firm-wide efforts to collect, store, distribute, and
apply digital content and knowledge
• Knowledge work systems (KWS)
• Specialized systems built for engineers, scientists, other knowledge
workers charged with discovering and creating new knowledge
• Intelligent techniques
• Diverse group of techniques such as data mining used for various
goals: discovering knowledge, distilling knowledge, discovering
optimal solutions
91
Major Types of Knowledge Management Systems
There are three major categories of knowledge management systems, and each can be broken down further
into more specialized types of knowledge management systems.
92
Three major types of knowledge in enterprise
• Structured documents
• Reports, presentations
• Formal rules
• Semistructured documents
• E-mails, videos
• Unstructured, tacit knowledge
80% of an organization’s business content is
semistructured or unstructured
93
Enterprise-wide content management systems
• Help capture, store, retrieve, distribute, preserve
• Documents, reports, best practices
• Semistructured knowledge (e-mails)
• Bring in external sources
• News feeds, research
• Tools for communication and collaboration
94
An Enterprise Content Management System
An enterprise content management system has capabilities for classifying, organizing, and
managing structured and semistructured knowledge and making it available throughout the
enterprise
95
Knowledge network systems
• Provide online directory of corporate experts in well-defined
knowledge domains
• Use communication technologies to make it easy for employees to find
appropriate expert in a company
• May systematize solutions developed by experts and store them in
knowledge database
• Best-practices
• Frequently asked questions (FAQ) repository
96
An Enterprise Knowledge Network System
A knowledge network maintains
a database of firm experts, as
well as accepted solutions to
known problems, and then
facilitates the communication
between employees looking for
knowledge and experts who have
that knowledge.
Solutions
created
in
this
communication are then added
to a database of solutions in the
form of FAQs, best practices, or
other documents.
97
Major knowledge management system vendors include
powerful portal and collaboration technologies:
• Portal technologies: Access to external information
• News feeds, research
• Access to internal knowledge resources
• Collaboration tools
• E-mail
• Discussion groups
• Blogs
• Wikis
• Social bookmarking
98
Learning management systems
• Provide tools for management, delivery, tracking, and assessment of
various types of employee learning and training
• Support multiple modes of learning - CD-ROM, Web-based classes,
online forums, live instruction, etc.
• Automates selection and administration of courses
• Assembles and delivers learning content
• Measures learning effectiveness
99
Knowledge work systems
• Systems for knowledge workers to help create new knowledge and
ensure that knowledge is properly integrated into business
Knowledge workers
• Researchers, designers, architects, scientists, and engineers who create
knowledge and information for the organization
• Three key roles:
• Keeping organization current in knowledge
• Serving as internal consultants regarding their areas of expertise
• Acting as change agents, evaluating, initiating, and promoting change
projects
100
Requirements of knowledge work systems
• Substantial computing power for graphics, complex calculations
• Powerful graphics, and analytical tools
• Communications and document management capabilities
• Access to external databases
• User-friendly interfaces
• Optimized for tasks to be performed (design engineering, financial
analysis)
101
Requirements of Knowledge Work Systems
Knowledge work systems require strong links to external knowledge bases in addition to specialized hardware
and software.
102
Examples of knowledge work systems
• CAD (computer-aided design): Automates creation and revision of
engineering or architectural designs, using computers and sophisticated
graphics software
• Virtual reality systems: Software and special hardware to simulate
real-life environments
• E.g. 3-D medical modeling for surgeons
• VRML: Specifications for interactive, 3D modeling over Internet
• Investment workstations: Streamline investment process and
consolidate internal, external data for brokers, traders, portfolio
managers
103
• Intelligent techniques: Used to capture individual and
collective knowledge and to extend knowledge base
• To capture tacit knowledge: Expert systems, case-based reasoning,
fuzzy logic
• Knowledge discovery: Neural networks and data mining
• Generating solutions to complex problems: Genetic algorithms
• Automating tasks: Intelligent agents
• Artificial intelligence (AI) technology: computer-based systems
that emulate human behavior
104
Management Information Systems
characteristics and features
105
Transactional Systems Processing (TSP)
Definition:
• …Transaction Processing Systems (TSP) - perform the frequent
routine external and internal transactions that serve the operational
level of organisation…
• …An information system that processes an organization’s basic
business transactions such as purchasing, billing and payroll…
• Previously based on batch processing – where processes inputs at
fixed intervals as a file and operates on it all at once; interactive
processing operates on a transaction as soon as it occurs
106
Transactional Systems Processing (TSP)
• Data processing – manipulation or transformation numbers and
letters for the purpose of increasing their usefulness :
• data gathering,
• data manipulation:
 classifying,
 sorting,
 selecting etc).
• TSP, D(data) PS or A(analytic)IS – the first single
simple systems made mainly for gathering and
processing data not for decision making, operating
separately in the frames of the firm; in the beginning
often without common database
107
Transactional Systems Processing (TSP)
• System tended to grow independently, and not according to some
grand plan.
• Each functional area tended to develop systems in an isolation
from other functional areas.
• Accounting, finance, manufacturing, human resources, and
marketing all developed their own systems and data files.
• Each application, of course, required its own files and its own
computer program to operate.
• For example, the human resources functional area might have a
personnel master file, a payroll file, a medical insurance file, a
pension file and so forth until tens, perhaps hundreds, of files and
programs existed.
• In the company as a whole, this process led to multiple master file
created, maintained, and operated by separate divisions or
departments.
108
Transactional Systems Processing (TSP)
• These were undoubtedly the first attempts of creating a tool which
indirectly could be used to support business management.
• The basic advantage of such a tool was the speed of performing
simple, standard large-scale operations.
• The basic problem which occurred then was the low level of
technological development, which caused the fact that processing,
before it could take place, entailed a number of complicated steps
and procedures connected with the imperfection of the existing
hardware and software.
• Additionally, this process was accompanied by considerable costs.
The lack of reliability and failure rate reached in total 80% of the
total working time of such a machine.
• Designing and processing of the program which operated on the
data which were entered in the computer’s memory data was very
complex.
109
Transactional Systems Processing (TSP)
• The limitations were numerous:
 the problem connected with entering the programme and the data to be
processed by the computer,
 processing of the data and saving the results,
 distribution of the results among the engaged individuals etc. (processing
speed, memory capacity, problems with design and construction of software,
etc.).
• Each of the constructed systems was separate, which sometimes
resulted in entering the same data within an organization in a multiple
way and frequently in different formats.
• Other difficulties were: using unreliable input media with the longterm processing and separating the user from processing the data on a
computer which he could only prepare.
• The systems were effective in the case of mass numerical calculations
whose findings were interpreted „manually”. Their usefulness in
supporting management was reduced to speeding up numerical
calculations.
110
Transactional Systems Processing (TSP) - summarizing
Transaction processing systems
– Perform and record daily routine transactions necessary
to conduct business (examples: sales order entry, payroll,
shipping)
– Allow managers to monitor status of operations and
relations with external environment
– Serve operational levels
– Serve predefined, structured goals and decision making
111
Transactional Systems Processing (TSP) - contemporary
definition and interpretation as a part of ERP
• Definition: a Transactional Processing system (TPS) supports the
monitoring, collection, storage, processing, and dissemination of
the organization’s basic business transactions.
• It also provides the input data for other information systems.
Sometimes several TPSs exist in one company.
• TPSs are considered critical to the success of the organization
since they support core operations, such as purchasing of
materials, billing customers, preparing a payroll and shipping
goods to customers.
Examples: in retail stores, data flows from POS (point-of-sale)
terminals to a database where they are aggregated.
When a sale is completed, an information transaction reduces the
level of inventory on hand, and the collected revenue from the sale
increases the company’s cash position.
Now this is very similar now to a part of MIS category
112
A Payroll TPS
A TPS for payroll processing captures employee payment transaction data (such as a
time card). System outputs include online and hard-copy reports for management and
employee paychecks.
113
How Management Information Systems Obtain Their Data
from the Organization’s TPS
In the system illustrated by this diagram, three TPS supply summarized
transaction data to the MIS reporting system at the end of the time period.
Managers gain access to the organizational data through the MIS, which provides
them with the appropriate reports.
114
Management Information Systems
• Management Information Systems from the very beginning of their
existence were designed for record keeping of past and current routine
information for planning, organizing and controlling operations in
functional areas of a business’s activities.
• Management Information Systems are defined by R. M. Stair as “... an
organized collection of people, processing procedures, databases, and
applications used to provide standardized information for managers and
decision makers ...”
• According to E.Turban "... Management Information System is a formal,
computer system, created in order to ensure a selection and integration of
distributed information from various sources to provide timely data needed
for decision making in management. They are the most effective in
routine, structured systems, where there are predictable types of decisions
...”
• These systems have had – so far – the greatest influence on the
formation of management information systems.
115
Management Information Systems
The basic logical architecture structure of MIS consisted of:
• end-user with interface - the collection of programmes, usually of an operation
system, responsible for communication with a user, which imposes certain standards
of perception and use of other software,
• databases with the database management system – collection of data stored
according to certain organizational principles, interrelated, linked by certain defined
dependencies, stored in a strictly defined way in the structures corresponding to a
certain assumed data model.
• the software which helps to define, construct, manipulate and share database for
applications and users is called a database management system.
• an additional element of the software may be a query language facilitating the
communication with a database in terms of accepting queries, its formalization and
making its result available to the decision-maker,
• applications – subsystems, application software consisting of a collection of
instructions, whose task is to provide a user with a defined functionality (financial
and accounting subsystem, warehouse subsystem, production control subsystem,
etc.).
116
The main elements of MIS – some definitions
•
A database (DB) – is a collectionof files serving as a data resource for
computer based information systems (MIS),
•
A batabase management system (DBMS) is a software program (or group of
programs) that managesand provides access to a database
•
Data warehouse – is a repository of historical data (millions of records),
subject oriented and organized, integrated from various sources, that can
easily be accessed and manipulated for decision support for example by: data
mining – process of searching for unknown information or relationships in
large databases using tools as neural computing or case-based reasoning (so,
sometimes only mechanizms of data mining are treated as kind of intelligence
– see products of SAS Institute, nothing more)
•
An application program – a set of computer instructions written in a
programming language, the purpose of which is to provide functionality to a
user…
117
Management Information Systems
• This simple construction of logical architecture has found its
application in tens of thousands of systems operating on the
market, and it became the basis for building more complex
systems, both in terms of adding new elements and handling a
number of new features
• The user who is making a decision – a manager – aided by means
of systems of such kind has:
 professional knowledge,
 qualifications and skills,
 intuition of an economist
 access to gathered, structured, specific data obtained from the
documents which were used in the course of conducting
business activity.
118
Management Information Systems
The way to access, handle and distribute the resulting information is
still relatively simple, but in order to use it we need IT knowledge:
• information used in the decision-making process is obtained in the
form of reports (processed documents),
• the way of presentation and deep analyses leading to their selection
and initial processing depends on the programming language and
the database management system,
• in order to obtain the information with a specific cross-section and
with a specified range you need at least basic knowledge about the
structure of a database,
• there is a relative redundancy of the basic information obtained
from a database in relation to the data required in order to make a
managerial decision based on the information,
• there are no direct mechanisms of processing the information
obtained from the database into the patterns which could be used as
the basis for taking a decision.
119
Next step of MIS development - Integrated Systems – where may be
knowledge inside them…
•
•
•
•
Basic characteristics :
functional complexity – i.e. the inclusion of its whole range of functions
and processes going on in the organization (that does not disturb the
selling of one part of the system in practice)
structural compound – from one side a complex functional stimulation
(the size of the system would be enough!), from the other a joining of
various types of system as a whole one.
considerable ease of use – all new technical gadgets are quickly added to
existing systems or new versions are created which differ by, for example
a more attractive user interface (“Windows-style” interfaces)
common usage – all companies want to survive - minimize costs. If
management information system is used in the correct way, the
substantial effects cause an increase of technological interest, and with
this comes an increase in common usage of such systems (it is the kind of
the highest intelligence)
120
Integrated Information Management Systems
•
•
•
•
•
Following conditions must be satisfied:
common information handling for the whole organization - the
information is collected only once, and sent to every processes to
use it,
unique collection system, transforming and information sending,
unique media collection and information handling,
common tools and system development procedures,
unique user dialogue procedures.
121
Beginning…
In 1964 – Inventory Control System – the first information system
with integrated functions of:
• purchase,
• storage,
• distribution of commodities;
in next years firstly created mainly for inwentory management in
warehouses and for serial industrial production, particulary in
electro-machinery branch
122
And integrated system now – ERP - functional diagram (SAP Sources)
Only by „intelligence” usage of this system you can obtain proper results for your company?
123
Management Information Systems - summarizing
– Serve middle management
– Provide reports on firm’s current performance, based on data
from TPS
– Provide answers to routine questions with predefined
procedure for answering them
– Typically have little analytic capability
124
Decision Support Systems
•
…Decision Support Systems couple the intellectual resources of
individuals with the capabilities of the computer to improve the
quality of decisions…
•
…It is a computer based support system for management decision
makers who deal with semistructural problems…
•
…It is a comptuer based information system that combines models
and data in an attempt to solve semistructured problems with
extensive user involvment…
Turban E. and R. Spraque
125
Decision Support Systems
•
•
•
•
•
The basic definition of the decision support systems describes it as
…information systems based upon computer and communication
infrastructure supporting the activities of people involved in the decisionmaking process…
The support is understood as the help provided to the decision-maker in
arriving at a decision, not taking a decision instead of him or replacing him
in the decision-making process.
The main difference in relation to the management information systems is in
the fact that thanks to DSS-class systems the decision-maker has at its
disposal tools for developing a decision, apart from intuition, knowledge,
skills and information.
The tools usually take the form of programmes (software packages)
consisting of mathematical, statistical and econometric models (or their
combinations), focusing on the issues related to corporate management. It
means that apart from the deterministic conditions in which the decisions
were taken on the basis of verified data (or their combination) from the
database.
The managers can use the systems to make decisions in probabilistic
situations with incomplete, random, sometimes partly erroneous or
conflicting data.
126
Decision Support Systems - new components
Model base – containing routine, standard and specialised models used for
decision-making in an enterprise. From a mathematical point of view, there may
appear models based on linear or non-linear dependencies, simulation,
optimization models and the ones based on game theory or resulting from good
management practices. From an organizational point of view models are often
divided into in-built (imposed on a user) and constructed by the user from the
complete components (subsystems and procedures (rules)), limited only by
nomenclature of the tool supporting this process,
Management system of model database – the software containing all tools
which are necessary to handle and manipulate ready models, maintain the model
base and their modified versions, create new models from elements and construct
them according to system principles, integrate the models into one entity or
combine new models with already existing ones, mechanisms coordinating the
demand for processed models with the database systems, parameters and external
data, to coordinate and integrate with the devices further expanding the
possibilities of using the model base. Communication with the model base is
performed by means of an interactive language of the model base ((specifying
enquiries and requests of the end user), and the models are maintained in
appropriate directories.
127
Decision Support Systems - new components
Procedure base (solver) – programme or software package used to solve
particularly complex mathematical problems arising from the constructed models
(linear, non-linear, multi-criteria programming, fuzzy systems, etc.). Addressing a
problem is either permanently assigned to a tested, standard model being used or –
after possible consultations (usually an option) with a user, adapted to a brand new
model which is created by means of mechanisms of model base management,
Database and model parameters – the database, which can contain data which is
necessary to run and use a model, derived from historical and current data recorded
in the database (model data: parameters and coefficients), external data downloaded
and entered “manually” from economic environment (sometimes together with a
converter into the format of data used in the model), normalization standards, etc.).
128
Decision Support Systems - all components
1. Data Management – includes the database, which contains relevant
data for the situation and is managed by software called database
management system (DBMS)
2. Management system of model database – includes financial,
statistical, management science or other models that provide the
system’s analytical capabilities and an appropriate software
management
3. Communication Subsystem - the user can communicate with and
command the DSS through this subsystem. It provides the user
interface
4. Procedure management of procedure base. This optional
subsystem can support any of the other subsystem, mainly Model
Management
(See: Laudon, Laudon, Chapt. 12)
129
Data Management Subsystem (Database+ Management System)
1.DSS database (the same as in MIS structure)
2.Database management system (see MIS)
3.Query facility
The Database – collection of interrelated data organized in such a way that
it corresponds to the needs and structure of an organization and can be
used by more than one person for more than one application.
Database Management System – is a software program to establish, update
and use a model base; to screen each request for information and determine
that the person making the request is indeed an autorised user.
Administrator can obtain reports about that activity of users. An effective
DBMS can provide support for many managerial activities, general
navigation among records, support for a diverse set of data relationships,
and report generation are typical examples.
Query facility – provides the basis for access to data. It accepts request for
data, determines how these request can be filled, formulates the detailed
request, returns the results to user
130
Management system of model database
1.
2.
3.
4.
5.
Model base
ModelBase management system
Model language
Model directory
Model execution, integration and command
All of them
are elements of:
BI or
KM systems
Model base – contains routine, standard and special statistical, financial, managerial
and other models that provide the analysis capabilities in the DSS. The ability to
invoke, run, change, combine and inspect models. The models in the Model base can
be divided into four main blocks: strategic, tactical, operational and basic (model
buiding blocks and subroutines)
Model base management – contains all tools for model management: modeling
commands – creation, maintenance-update, database interface, modeling language
Model language - special set of commands which can make possible to conctruct the
model ( next step natural language?)
Model directory – catalog of all models in the system, whenever used
Model execution, integration and command – rules of data management, dialog
131
management and knowledge management
(Compare with: Laudon, Laudon & Dass, Chapt. 12)
Decision Support Systems
•
such architecture allowed for the first time to develop, not the data to
make a decision, but, (in a model-based decision-making process) the
suggestions of a decision which would be best from the point of view of
an assumed criterion or a collection of possible decisions user options.
•
under the circumstances, we should focus not on the technological
solutions which were developed at the beginning of the period, but
rather on the creation of an alternative for a decision-maker – a
decision developed on the basis of the available (or selected) data
versus a decision, which was suggested by the computer on the basis of
the applied model problem solution.
•
emerging opportunities of examining the effects of making various
decisions, as well as the projection (forecasting) the future, or in a
spatial layout are also important in this case.
132
Features of DSS
• Support for decisions makers mainly in semistructured and
unstructured situations
• Support is provided for various managerial levels
• Support is provided to individuals and groups, for several independent
or sequential decisions, to all phases of the decision making process
• Supports a variety of decision-makers processes and styles
• DSS is adaptive over time
• DSS should be easy to use (userfrendliness, flexibility, strong graphic
capabilities)
133
Features of DSS
• DSS attempts to improve the effectiveness of decision making accuracy, timeliness, quality), then its efficiency - cost, including the
charges for computer time
• The decision maker has control over all steps the decisin-making
process in solving the problem
• DSS leads to learning, which leads to new demands and the refinement
of the system, which leads to additional learning (continuos process)
• DSS is relatively easy to construct (with user assistance)
• DSS usually utilizes models (standards, custom-made)
• Advanced DSS are equiped with the knowledge component – enables
the efficient and effective solution of very difficult problems
134
The Major Benefits of DSS
1.Abbility to support the solution of complex problem
2.Fast response to unexpected situations that result in changed conditions. A DSS
enables a thorough, quantitative analysis in a very short time. Even frequent
changes in a scenario can be evaluated objectively in a timely manner
3.Ability to try several different strategies under different configurations
4.New insights and learning. The user can be exposed to new insights through the
composition of the model and an extensive sensitivity „what-if” analysis. Training
inexperiencedmanagers and other employees as well
5.Facilitated communication. Data collection and model construction experiments
are being executed with active users’ participation
6.Improved management control and performance. DSS can increase management
control over expenditures and improve performance of the organization
7.Cost savings. Routine applications of a DSS may result in cost reduction or
reducing the cost of wrong decisions
8.Objective decisions – more consistent and objective than decisions made intuitively
9.Improving managerial effectiveness, allowing managers to perform a task in less
time and less effort
135
MIS and DSS
MIS
• The main impact on structured tasks, where standard operating
procedures, decision rules and information flows can be predefined
• Tha main payoff – improving efficiency by reducing costs, turaround
time, and so on.
• The relevance for managers’ decisions making – indirect – for example by
providing reports and access to data
DSS
• The main impact on decisions in which there is sufficient structure for
computer and analytic aids to be of value but where managers’ judgement
is essential
• The payoff – extending the rangeand capability of computerized
managers’decision processes to help them improve their effectiveness,
• The relevance for managers is the creation of a SUPPORTIVE TOOL,
under their own control, that does not attempt to automatic the decision
process, predefine objectives, or impose solutions
136
Information Systems for Senior Management
EIS and ESS
Definition:
Information Systems for Managers - provide senior managers with
a system to assist them in taking strategic and tactical decisions.
Their purposeis to analyse, compare and highlight trends to help
govern the strategic direction of a company
There are commonly integrated with operational systems, giving
managers the facility to „drill down” to find out further
information on a problem
137
Information Systems for Senior Managers
Two categories:
• Executive Information Systems (EIS) – is a computer-based system
that serves the information needs of top executives. Rapid access to
timely information and direct access to management reports. Very
user-friendly, supported by graphics, and provides exceptions
reporting and drill-down capabilities (break down data for details:
daily report corporate rates can be drilled down to find the daily
sales in a region, or by product, or by salesperson.
• Executive Support System (ESS) – is a comprehensive support
system that goes beyond EIS to include communications, office
automation, analysis support and intelligence issues resolving.
There were somewere between a Final User and the other part of a
DSS –additional tools for better decision making process –
intelligent access to model base!
(Compare with: Laudon, Laudon, Chapt. 12)
138
Executive Support Systems
– Support senior management
– Address nonroutine decisions requiring judgment, evaluation,
and insight
– Incorporate data about external events (e.g. new tax laws or
competitors) as well as summarized information from internal
MIS and DSS
– Example: ESS that provides minute-to-minute view of firm’s
financial performance as measured by working capital,
accounts receivable, accounts payable, cash flow, and
inventory
139
Executive Information Systems
• In fact, the new elements introduced by EIS systems were only the
expansion of the user interface or database management system in
order to offer more possibilities to organize and select data
(preferably without the knowledge of the database structure) and
graphic visualization of the obtained results.
• Graphic visualization e.g. in the form of a structural or dynamic
chart meant that a decision-maker at a first glance was able to
evaluate the structure of the analysed phenomenon at a particular
stage of its development.
• Additionally, efforts were made – perhaps for the first time in the
history of the IT system development – to ensure the inflow of
external data in order to allow comparisons with the situation of
other companies in a given sector in the country or abroad.
140
Executive Support Systems
• ESS systems, which are a kind of a mirror reflection of EIS
systems (some researchers considered them to be the next stage of
the development of MIS) allowed for an easier manipulation of the
results obtained by means of model processing, which was
sometimes reduced to a possible transfer of the results of the
processing into a spreadsheet.
• Sometimes, however, the designers created their own software
based mainly in the user’s interface.
141
Characteristics
Quality of information:
• Flexible
• Produces correct information, timely informaton, relevant
information, complete information, validated information.
User interface:
• Includes sophisticated graphic user interface
• Allows secure and confidental access to information
• Includes a user friendly interface
• It’s a short response time
• It’s accessible from many places
• Minimizes keyboard use
• Provides quick retrieval of desired information
• It’s tailored to management styles of individual executives
• Contains self-help menu
142
Technical Capability
•
•
•
•
•
•
•
•
•
•
•
•
Access to aggregate information
Extensive use of external data
Written interpretation
Highlights problem indicators
Ad hoc analysis
Information presented in hierarchical form
Incorporates graphics and text in the same display
Shows trends, ratios and deviations
Provides access to historical and the most current data
Organized around critical success factors
Provides often forecasting capability
Produces information at variuos levels of details
143
Benefits
•
•
•
•
•
•
•
•
•
•
•
Facilitates accesss to information
Allows the user be more productive
Increases the quality of decision making
Provides a competetive adventage
Saves time for the user
Increases communication quality and capacity
Provides better control in the organization
Allows the anticipation of problems/opportunities
Allows planning
Allows finding the cause of a problem
Meets the needs od executives
144
Model of an Executive Support System
This system pools data from diverse internal and external sources and makes
them available to executives in easy-to-use form.
145
Expert Systems
Definition:
Expert systems – is a computer system that applies
reasoning methodologies or knowledge in a specific domain
to render advice or recommendations – much like a human
expert
Two generations:
• Supported by mechanisms of DSS (from early 80.)
• Supported by knowledge base and knowledge management
(from the end of 80. – beginning of Business Information
Systems)
146
•
Definition: W.A. Freyenfeld described the expert system as ...a system
which contains specialised knowledge of a particular area of human
activity organized in a way which made it possible to enter into a
dialogue (with a user) concerning this field, on the basis of which the
system can offer advice or suggestions, and explain the reasoning,
which is at the core of the problem...
•
The first ES systems (designed already in the seventies) did not
contain anything new with regard to their architecture – they were
based on the construction of the conditional jump (if you… –…then)
or unconditional jump (go to …) which exists in many programming
languages.
Nevertheless, the first, not very sophisticated, systems which helped
to find solutions of health problems (e.g. MYCIN) were formed
almost entirely based on this principle.
They were related to a specific industry or a problem, and, due to the
so-formed functionality, its application was very limited.
•
•
147
•
•
•
We may observe that the second generation of expert
systems, which had its foundation in the ideas of the so–
called systems of artificial intelligence, has creatively
developed a logical architecture construction of the previous
systems.
Additionally, the designers distinguished (artificially,
externally in relation to the corporate structures)
econometric, statistical, forecasting models etc. and they
distincted models based on the latest, at the time,
management achievements (Business Process Reengineering
- BPR) – models of best practices of corporate management,
analyses and optimization in a colloquial sense, functions
and processes taking place in an enterprise, in the existing or
modified organization structure of an enterprise.
There appeared new structural elements
148
Some usable definitions…
• Knowledge base – a collection of facts, rules, and procedures,
related to a specific problem, organized in one (the same)
place
• Knowledge discovery in databases – the process of extracting
knowledge from volumes of data in databases (e.g. in data
warehouse; includes data-mining
• Knowledge Management System – a system that organizes,
enhances and expedites intra- and inter-firm knowledge
management; centered around a corporate base or depository
149
Modern Expert Systems – structure and components
Components:
• Knowledge acquisition subsystem
• Knowledge Base
• Inference Engine
• User Interface
• Explanation justifier
• Knowledge Refining (Improving) Subsystem
Compare with: Laudon, Laudon & Dass, Chapt. 11, 12)
150
Modern Expert systems – structure and components
•
Knowledge acquisition subsystem – accumulation, transfer and
transformation (conversion) of problem solving expertise from
some knowledge source to a computer program for constructing
or expanding the knowledge base. Sources: human experts,
textbooks, databases, special research reports and pictures.
•
Knowledge Base – contains knowledge necessary for
understanding, formulate and solving problem. Consists of:

facts - such as the problem situation and theory of the problem area
and
special rules that direct the use of knowledge to solve specific problems
in a particular domain,
procedures – for using combined facts (or related) in frameworks of
rules


151
Moodern Expert Systems – structure and components
Inference Engine – brain of the ES, control structure or
maybe the ruler interpreter; a computer program that
provides a methodology for reasoning about information in
the knowledge base and for formulating conclusions.
It has three major elements:
•
•
•
an interpreter – (rule interpreter) – which executes chosen items, by
applying the corresponding knowledge rules base,
a scheduler – which maintains control over the agenda. It estimates the
effects of applying inference rules in light of item priorities or other criteria,
a consistency enforcer – which attempts to maintain a consistent
representation of the emerging solution.
152
Modern Expert Systems – structure and components
User Interface – expert system contain a language processor for
friendly, problem-oriented communication between the user and
the computer. Could be carried out in natural language or
supplemented by menus or graphics
Explanation Subsystem (Justifier) – can trace responsibility for
conclusions:
•
•
•
•
Why was a certain question asked by the expert system?
How was a certain conclusion reached?
Why was a certain alternative rejected?
What is a plan to reach the solution?
Knowledge Refining (Improving) System - can analyse their
performance, learn from it and improve it for future consultations
153
Architecture of integrated „Ideal” Expert (almost BIS) System
User
High level query language
Access through the use of natural language, pictures etc.
Knowledge base
system
management
Intelligent
interface system
Management of problem
solving and conclusion
forming system
Knowledge
base
Access to
software level
Rule base
Intelligent
interface
system +
network
service system
Application
software level
Model base +
model base
management
system
Data base + Data
base management
system
Mechanism of intelligent access
Mechanism object
data base
Logic of communication
language
Relational
mechanism of
component
management
Operating system
and tools
software level
Adaptation and learning
mechanism
Structure of the highest level of integration
Hardware
level
154
Expert systems
• Capture tacit knowledge in very specific and limited
domain of human expertise
• Capture knowledge of skilled employees as set of rules in
software system that can be used by others in organization
• Typically perform limited tasks that may take a few
minutes or hours, e.g.:
• Diagnosing malfunctioning machine
• Determining whether to grant credit for loan
155
Rules in an Expert System (or BI)
An expert system contains a number of rules to be followed. The rules are
interconnected; the number of outcomes is known in advance and is limited; there are
multiple paths to the same outcome; and the system can consider multiple rules at a
single time. The rules illustrated are for simple credit-granting expert systems.
156
How expert systems work
• Knowledge base: Set of hundreds or thousands of rules
• Inference engine: Strategy used to search knowledge base
• Forward chaining: Inference engine begins with information entered
by user and searches knowledge base to arrive at conclusion
• Backward chaining: Begins with hypothesis and asks user questions
until hypothesis is confirmed or disproved
157
Inference Engines in Expert Systems
An inference engine works by searching through the rules and “firing” those rules that are
triggered by facts gathered and entered by the user. A collection of rules is similar to a series
of nested IF statements in a traditional software system; however the magnitude of the
statements and degree of nesting are much greater in an expert system
158
Successful expert systems
•
Countrywide Funding Corporation in Pasadena, California, uses expert
system to improve decisions about granting loans
• Con-Way Transportation built expert system to automate and optimize
planning of overnight shipment routes for nationwide freight-trucking
business
• Most expert systems deal with problems of classification
• Have relatively few alternative outcomes
• Possible outcomes are known in advance
• Many expert systems require large, lengthy, and expensive development
and maintenance efforts
• Hiring or training more experts may be less expensive
Could an expert system be used to diagnose a medical condition?
What might be the drawbacks to using an expert system for medical diagnosis?
Is it possible that a functioning expert system can be programmed to make some
bad decisions very rapidly?
159
Expert Systems Areas (1)
• Interpretetion systems – infer about situation from observation:
speech understanding, image analysis, signal interpretation and
many types of intelligence analysis
• Prediction systems – include weather forecasting, demographic
predictions, economic forecasting, traffic predictions, crop
estimates, military, marketing or financial forecasting
• Diagnosytic systems – include medical, electronic, mechanical and
software diagnosis
• Design systems – develop configurations of objects that satisfy the
constraints of the design problem: circuit layout, building design,
plant layout
• Planning systems – deal with short- and long-term planning in
areas: project management, routing, communication, product
development, military applications and financial planning.
• Monitoring systems – compare the observations of system
behaviour with standards
160
Expert Systems Areas (2)
• Debugging systems - for create specifications or recommendations
for correcting a diagnosed problem
• Control systems – adaptively govern the overall behaviour of a
system: repeatedly interpret the current situation, predict the
future, diagnose the causes of anticipated problems, formulate a
remedial plan and monitor its execution to ensure success.
161
Benefits of Expert Systems
•
•
•
•
•
•
•
•
•
•
•
Increasd output and productivity,
Increased quality
Strong flexibility
Easier equipment operations ability to solve complex problem
Elimination of the need for expensive equipment
Operations in hazardous environments
Increased capabilities of the other computerized systems
Integration of several experts’ opinions
Ability to work with incomplete or uncertain information
Provision of training
Enhancement (improvement) of problem solving
162
Managerial Advanteges of ES
• From the point of view of a decision-maker, expert systems
provide him or her with a new tool for decision-making:
 apart from the structured data from a database, model solutions based
on the model base
 there appears a third possibility: suggested solutions built on best
practices of management.
• In each of these three cases the managers also use their expertise,
skills and intuition in making business decisions.
• This way, he or she has better chances to make a decision-making
process easier, and the final decision will provide the organization
with the greatest possible benefits and it will protect the enterprise
from losses.
163
Artificial Intelligence Systems
„. AIS are like YETI, nobody, never has seen them, but everybody has
heard about them ...”
…Artificial Intelligence Systems – would be called intelligent; is the
study of how to make computers do things at which, at the
momment, people are better; subfield of computer science
concerned with symbolic reasoning and problem solving…
Three objectives of AIS:
• Make machines smarter (primary goal),
• Understand what intelligence is (that’s Nobel laureate purpose),
• Make machines more useful (the company purpose).
164
Artificial Intelligence Systems
…Artificial Intelligence - capability of a device, such as a computer,
to perform functions or tasks that would be regarded as intelligent, if
they were observed in humans…
•
•
•
•
•
•
•
•
Meanings of intelligent behaviour for IS:
learn or understand from experience
make sense out of ambigous or contradictory messages
respond quickly and successfully to a new situation
use reason in solving problems
deal with perplexing (uneasy) situations
understand and infer in ordinary, rational ways
acquire and apply knowledge,
recognize the relative importance of diffrerent elements in a
situation
(Turban at al. Compare with: Laudon, Laudon, Chapt. 12)
165
AIS – some benefits
• Pattern recognition for character, speech and visual recognition
• Systems that learn are more natural interfaces to the real world
than systems that must be programmed
• Hihg fault tolerance
• Generalization – in work with noisy, incomplet or previously
unsen input – generates reasonable response
• Adaptivity – learns in new environment.
In our XXI century AIS were divided into:
• BIS – Business Information Systems,
• APS – Automation of Production Systems (robots included)
166
Information Technology in KM
Expert Systems based on Knowledge Management Systems
(early stage of BIS) are developed using three sets of
technologies: communication, total integration and database
managemnt systems (not only storage and retrieval but
data-mining et. ceatera)
Artificial Intelligence Systems – methods and tools are
embeded in a number of KM systems. AI can assist
identifiying expertise, eliciting knowledge, interfacing
through natural languages intelligent search through
intelligent systems
(see: Laudon, Laudon, Chapt. 11)
167
Information Technology in KM
AI methods used in KM systems may to do the
following:
•
•
•
•
•
•
Assist in and enhance searching knowledge
Help establish knowledge profiles
Help determine the relative importance of knowledge
Identify patterns of data
Forecast future results using existing knowledge
Provide advice directly from knowledge by using ES
(see: Laudon, Laudon, Chapt. 11)
168
Knowledge Discovery in Databases (KDD)
• KDD is a process used to search for an extract useful
information from volumes of documents and data.
• It includes tasks known as knowledge extraction, data
archeology, data exploration, data pattern processing, and
so on.
• All of these activities are conducted automatically and allow
quick discovery, even by nonprogrammers.
• Data often are deeply buried within very large databases,
data warehouses, text documents, or knowledge repositories,
all of which may contain data, information, and knowledge
gathered by many years
• Data mining – the process of searching for previously
unknown information or relationships in large databases.
169
Business Intelligence Systems (BIS)
BI is …an analytical information system built on the basis of data
warehouse together with data collection mechanisms, using different
analytical tools, in particular tools for multidimensional analysis and
data mining…
The definition indicates the directions of changes, which occurred since
the emergence of DSS or ES systems.
BIS is an umbrella term that combines architectures, tools,
databases, applications, and methodologies for example:
• data warehouse (with its „source” data),
• business analytics (a collection of tools for manipulationg,
mining, and analyzing the external data in data warehouse),
• business performance management (for monitoring and
analysis of performance),
• user (intelligent) interface
170
Components of Business Intelligence Systems
Data warehouse
environment
Data
Sources
Business Analytics
Environment
Technical staff
Build the data warehouse
Organizing
Data
Summarizing
warehouse
Standarizing
Future component
Intelligent Systems
Performance and
strategy
Business Users
Accesss
Manipulation
Results
Managers Executives
Business Performance
Management (BPM)
Strategies
User interface
Browser, portal

171
Case-based reasoning (CBR) in BI
• Descriptions of past experiences of human specialists, represented as
cases, stored in knowledge base
• System searches for stored cases with problem characteristics
similar to new one, finds closest fit, and applies solutions of old case
to new case
• Successful and unsuccessful applications are grouped with case
• Stores organizational intelligence: Knowledge base is continuously
expanded and refined by users
• CBR found in
• Medical diagnostic systems
• Customer support
172
How Case-Based Reasoning Works
Case-based reasoning represents
knowledge as a database of past
cases and their solutions.
The system uses a six-step process
to generate solutions to new
problems encountered by the user.
173
Data Warehousing (see: Data Base in MIS)
• Data flow from operational systems (CRM, ERP etc.) to a data
warehouse (DW) – which is a special database, or repository of
data, that has been prepared to support decision-making
applications, ranging from simple reporting and quering to
complex optimization
• The DW is constructed with methodologies, mainly metadata or
data marts (branch databases) which are databases for
departments (e.g marketing) or specific functions
• Originally included only a historical data that were organized and
summarized for end-users (for easily view or manipulate data)
• Today some data warehouses include current date (by net) for real
time decision support (collected in so called Data Marts (branch
DB or Micro DB)
174
Development of Database Mechanisms
• A clear extension of a database, connected with the multitude and
variety of the data processed in the systems, towards creating a data
warehouse.
• Basically, data warehouse is an expanded corporate database with the
mechanisms of data extraction from heterogeneous (including external)
data sources and the solutions for their processing into a common
database, which would be suitable for analysts and users making
business decisions, supported by the domain or industry database (mart)
and mechanisms of cooperation with analytical tools.
• The main tasks of the database, apart from the standard reporting and
defining reports and ad-hoc queries from the user, are: statistical
analyses, interactive analytical processing, data mining as well as – to a
limited extent - business modelling.
• So – as the above shows – there occurred a qualitative change at the level
of the main source of information in the system.
175
Business Analytics (se:e Models Base in DSS)
• There are many software tools for users to create on-demand
reports and queries and analyze data. (common name OLAP
online analytical processing)
• Users could analyse different dimensions of data and trends.
Business users easily identify performance trends by using trend
analysis and graphic tools There are three groups categories of
tools:
 Reporting and queries – we have to do with all types of queries, discovery
of information,multidimensional vew,drilldown to details and so on
 Advanced Analytics – include many statistical, finacial, mathematical and
other models used in analyzing data and information
 Data, Text and Web Mining – data mining is a process of searching for
unknown or nonobvious relationship or information in large databases
using intelligent tools (neural computing or advanced statistical methods)
on quantitative data, text, or web data.
176
Development of Model Base Mechanism
• When we compare the present system with the previous ones we
observe another qualitative change with regard to the support model
compared to the previous classes of systems.
• The so-called Business Analytics are all kinds of tools and analytical
applications used for the broadly defined corporate performance
management.
• Among the tools and applications used for performance management,
we may distinguish:
 universal analytical tools,
 the tools used for the analysis of spatial data stored in the spatial information
systems database
 analytic applications designed for specific areas of business management:
financial management and strategy management, customer relationship
management, human resources management, supply chain management
177
Business Performance Management (interpretation and advices)
The final component of the BI process is based on the balanced
scorecard methodology, which is a framework for defining,
implementing and managing and enterprise’s business strategy by
linking objectives with factual measures
User interface: Dashboard and Other Information
Broadcasting Tools
Dashboards (like in car) organize and present information in the
way that is easy to read. They present graphs, charts, and tables that
show actual performance vs. desired level of metrices at the first
glance (digital cockpits, corporate portals, visualizations tools).
178
The role of knowledge today in the U.S. economy
• Sales of enterprise content management software for knowledge
management expected to grow 15 percent annually through 2012
• Information Economy
• 55% U.S. labor force: knowledge and information workers
• 60% U.S. GDP from knowledge and information sectors
• Substantial part of a firm’s stock market value is related to
intangible assets: knowledge, brands, reputations, and unique
business processes
• Knowledge-based projects can produce extraordinary rate of
interest
179
The Benefits of BIS
•
•
•
•
•
•
•
Time savings (60%)
Single version of the truth (59%)
Improve strategies and plans (57%)
Improved tactical decisions (56%)
More efficient process (55%)
Cost savings ((37%)
Improved customers and partners relationships (36%)
(Eckerson)
•
•
•
•
Faster, more accurate reporting (81%)
Improved decision making (78%)
Improved customer service (36%)
Increased revenue (49%)
(Thompson)
180
U.S. Enterprise Knowledge Management software revenues, 2005-2012
The growth of sales of knowledge management software in the U.S. along with
sales predictions through 2012
Enterprise knowledge management software includes sales of content management and
portal licenses, which have been growing at a rate of 15% annually, making it among the
fastest-growing software applications
(taken from Laudon&Laudon, Chapter 181
11)
Case study: Application of i-CASE Tools in Ursus Factory
INTELLIGENT-CASE (Computer Aided Systems Engineering)
TOOLS FOR ELIMINATION OF BARRIERS TO THE
SYSTEM IMPLEMENTATION
182
Purpose of presentation:
The main purpose of presentation is analysis and identification of the
possibilities of overcoming barriers to the implementation of
integrated systems with the use of specialised software supporting the
implementation process (I-CASE class)
Brief contents:
• identification of the basic implementation problems
• discussion the possible steps to overcoming these barriers with the
use of I-CASE tools and knowledge contained in reference models
• introduction the first concept of a knowledge management system
supporting implementation process
183
Delays in the process of implementation
65%
21%
14%
Base d on mode rn te chnol ogy
Discont inued
0%
Delayed
48%
24%
28%
Ve ry compl e x, i nnovati ve
T imely
0%
Early
20%
18%
C ompl e x
61%
1%
7%
12%
Me di um, compl i cate d
75%
6%
Smal l , standard proje ct
2%
6%
81%
11%
Ve ry smal l , standard proje ct
0%
2%
83%
15%
0%
•
•
20%
40%
60%
80%
100%
Empirical research shows that there is a simple relationship between the complexity and
innovativeness of a project and the feasibility of its implementation.
The more innovative and complex a project is, the more likely it is that its
implementation will be delayed or even discontinued. In the case of integrated systems,
this rule applies now to as many as 70% - 80% of the projects.
184
Average scale of effectiveness of management information
system implementation 1996-2008
Year
Success coefficient
Partial failure*
Total failure
Failures together
1996
16%
53%
31%
84%
1998
27%
33%
40%
73%
2000
26%
46%
28%
74%
2002
28%
49%
23%
72%
2004
34%
51%
15%
66%
2006
29%
53%
18%
71%
2008
35%
46%
19%
65%
2010
32%
50%
18%
68%
Source: J. Johnson, CHAOS Rising, Standish Group, Materiały konferencyjne II-giej Krajowej
Konferencji Jakości Systemów Informatycznych, Computerworld, czerwiec 2005, s. 11; Standish Group,
The Standish Group Report 2007, West Yarmouth, Massachusetts, 2008 (intro version).
*higher budget, or longer time, or more narrow scope of implementation
185
The procedure in order to overcome barriers and threats to the
system implementation: :
• Identify the areas where such barriers appear, and the reasons why
they appear
• Define the methods of removing these barriers
• Identify the barriers which can be eliminated or at least significantly
reduced using the methods of knowledge management contained in
the intelligent tools
• Identify the tools and methods used to assist the designer and
implementator in this respect
• Create a concept of automation of the process of preventing barriers
to integrated systems implementation
186
Organisational barriers
Role of I-CASE tools in solving them
1. Problems with the correct assessment of a company’s condition
Preliminary training of end-users in CASE methodology helps them understand
the consultants’ expectations as to the scope and quality of the required data
2. Problems with the correct analysis of the needs
In-depth training of end-users in CASE methodology is recommended.
Subsequently, the main procedures describing the elementary business processes
at the client’s company should be prepared by the client in cooperation with the
consultants. Ideally, the client should develop such procedures using its own
resources (as much as possible) with as little assistance from the consultants as
possible. In this way, end-users are forced to get to know the tool well and, first
and foremost, study the existing and planned procedures in depth. This
approach has the following advantages: involvement of the client in the
implementation from the very beginning, understanding of the main ideas and
assumptions of the implementation – a common platform of understanding,
making the client partly responsible for the implementation and reduction of
involvement of the consultants
(on the base of my own research of implementation of IFS in 12 locations and branches in Poland)
187
Organisational barriers
Role of I-CASE tools in solving them
3. Problems with preparation of a reliable implementation schedule (plan)
CASE is used indirectly – the use of this tool for problems 1 and 2 has resulted
in obtaining good quality „as is” and „to be” analyses and ensured compliance
with the methodology
4. Problems with defining the necessary conditions of efficient implementation
5. Problems with application of implementation methodology
6. Problems with correct preparation of documentation
Problems with preparation of documentation – the application of CASE has
measurable advantages – the whole processes are automatically documented as
they are developed. All changes to the processes introduced during the
implementation are also documented. Moreover, the tools of certain vendors
allow automatic configuration of the system for end-users. As a result, a
considerable part of the documentation is automated.
7. Problems with users and their selection
188
Organisational barriers
Role of I-CASE tools in solving them
8. Problems with consultants and their selection
The use of CASE allows significant reduction of the time needed for
implementation and the time of work of the consultants. As a result, the
existing resources (the consultants) are utilised better
9. Problems with training
Problems with training. In this case, the use of CASE tools may be the
best solution. On the basis of the previously developed business processes
(item 2), the training needs of the client are defined, and the end-user
training is focused on the aforementioned processes only. In this case, it is
sufficient to study the implementation plan and determine when end-users
should be trained in the particular processes. Training is based on
previously prepared (item 2) models of business processes. This approach
allows elimination of unnecessary elements from training, thus increasing
the absorption of the remaining material. As a result, training becomes
more effective and can be shorter.
10. Problems with project execution
189
Psychological barriers
Role of I-CASE tools in solving them
11. Problems with reaching understanding between the consultants and end-users
Problems with understanding – end-users and other employees of the client
involved in the implementation, including the management (items 1 and 2),
obtain knowledge about the CASE tool used. Subsequently, a ready-made
(predefined) solution is presented and discussed. In this way, the existing and
modified business models containing all basic processes functioning at a given
company become a platform of understanding
12. A lack of understanding of the implementation needs
Presentation of processes subject to changes with the use of CASE helps the
employees understand the objectives and needs of the implementation
13. Hostile attitude of employees
If the implementation process becomes faster and more efficient, the results
are achieved earlier, which has an encouraging effect and increases faith in
success.
190
Financial and technological barriers
Role of I-CASE tools in solving them
14. A lack of financial means
15 . Pseudo-savings
16. Excessive customisation – tailoring of the system to the client’s needs
Excessive customisation – presentation of the existing and planned
business processes allows end-users to understand their nature and find
the optimum solution, which increases the chances for avoiding
unnecessary and costly customisations
17. A lack of security
191
Some conclussions
•
•
•
•
The analysis presented above shows that there are several
important factors which allow elimination of problems occurring
during system implementation:
the main one is the use of CASE tools, which is useful in 10 out of
17 cases.
the second important element is the application of the remaining
part of implementation methodology (which is often integrated
with a CASE tool).
the third factor concerns the HR issues to be considered during the
implementation.
the fourth one is finance factor
192
Transformation data into knowledge process
•
•
•
•
•
•
Data accumulation in database
Next by preliminary processing, it is
stored in data warehouses
The data undergoes transformation to
prepare it for a detailed analysis
Analysis is performed with the use of
automatic search tools
A comparison of data found with models
(of behaviour, reactions) stored in
intelligent systems
The ultimate outcome of such
comparisons is an assessment of
usefulness of generalised information
for management purposes and
accumulation of such information, along
with data, in the knowledge base
Table of identified
barriers
Table of reasons of
barriers occurence
Transformation
matrix
I-CASE
Blackboard of methods
of prevention or
reduction of the barriers
Decision
making
193
Architecture of system- concept
User
•
•
Questioner
•
Identyfier
DataBase
•
•
Selector
•
Evaluator
I-CASE
•
Stop
Solver
Solutions
Base
•
Interactive questioning mechanizm.
User language
Data collection. Problems described
by attributes and functions
Data categorisation (which are new
one)
Comparing with Database collection
(adding new)
Problem and proper solving method
connection
Automatic solving problem or switch
to proper I-CASE tool (when we
have no ready solution)
Modyfying system or making new
part of it
Solutions Base – methods collection
194
Summary of the case
It’s still work in progress
The first part:
• identification of basic limitations of integrated system implementation,
• identification reasons of the problems,
• identification methods of their solving is over
The second part:
The conception is in the state of construction.
Development of this concept:
• will lead to construction of a tool supporting the decision-making process
for the end-user
• allowing automatic selection of a method minimising the limitations of the
integrated systems implementation process.
195
Thank you very much for your attention!
Witold Chmielarz
Questions - [email protected]
196
MANAGEMENT INFORMATION SYSTEMS
Part 3
INTEGRATED ENTERPRISE SYSTEMS
Prof. Witold Chmielarz, PhD ,
Oskar Szumski, PhD
Faculty of Management University of Warsaw
LEARNING
OBJECTIVES
• Evaluate how enterprise systems help businesses achieve
operational excellence.
• Describe how supply chain management systems
coordinate planning, production, and logistics with
suppliers.
• Explain how customers relationship management systems
help firms achieve customer intimacy.
• Identify the challenges posed by enterprise applications.
• Describe how enterprise applications are used in
platforms for new cross-functional services.
BIS
C
o
n
v
e
r
g
e
n
c
e
ES
EIS/ESS
DSS
CRM
MIS
ERP II
TSP/APD
ERP
MRP II
SCM
MRP
IC
Internet
C
o
r
p
o
r
a
t
e
1
2
P
l
a
t
f
o
r
m
3
Commercial nets
Private, corporate nets
1950
1960
1970
1980
Integration
1990
2000
2010
Year
TRENDS IN MANAGEMENT INFORMATION SYSTEMS
DEVELOPMENT AND NEW CLASSIFICATION
Computerized Tools of MIS
•
•
•
•
•
Transaction Processing Systems (TPS) 1965
Management Information Systems (MIS) 1970
Decision Support Systems (DSS) 1975
Expert Systems (ES) 1980
Executive Information Systems &Executive Support
Systems – 1980+
• Artificial Neural Networks 1985 (?) (ES II generation,
Knowledge Based IS, Business Intelligence Systems)
• Integrated Enterprise Information Systems 1990
• Transformed into Digital Economy Systems 2000+
201
The Integration in the Development of MIS
The relationship between the basic IS can be presented as:
· perceiving them through a perspective of separate IS,
· alternating meaningful and alter,
· tendency to evolution and adaptation as regards reality,
· interaction and coordination between systems as regards specific
applications.
We can observe the important role of the integrated systems which
support office work and production, and also – now only sometimes a complete lack of network systems here. Nonetheless, the already
drawn conclusion that the main direction of development of most
systems is their complex integration in direction of management
support system.
202
The Benefits Resulting from Linking – MIS & ES
In this case Expert Systems supply:
supervision and review of the process of registration, retrieval and
execution of information processes,
simplification of a correct base management for operators,
optimization of questions and search paths as well as the amount of
transfer data,
intelligent-interfaces-like operation in commercial deposition
structured databases.
In such a kind of the architecture management information system
(MIS) - provides information for ES as well as simplifies core data
manipulation.
203
Integration: MIS & ES
User
Interface
Data Base and Data
Reports
Data Base
Applications
Screens
Base Management
Data
Models
System
Conckusions
Mechanism
Data
Gathering
Expert
System
Rules Base
Data Base
Transactions
Expert System
Fig.1. Combinaton Architecture Expert System and Management Information System (Intelligent
Data Base)
204
Integration ES & DSS
Cooperation gives the following effects:
• possibility of logical explanation of undertaken decisions and results
collected,
• faster accomplishment of operations, when the acquired results of the DSS
are input data for ES,
• proper identification of the reverse situation,
• an increase in possibility of choice for the user – using a system of two
types of compound databases as regards the required needs of the logical
decision process,
• generation of variant solutions (DSS) and linking to them alternative
functions, which should be undertaken for their retrieval.
There are three possibilities:
• Expert System as independent component of the Decision Support System
• Expert System expanding the decision making process in the Decision
Support System
• Expert System unified with the Decision Support System
205
Integration ES & DSS
User
User Interface
Data Base
Management
System
Model Base
Management
System
Expert System
Data
Base
Model
Base
Fig.3. Expert System as Independent Component of Decision Support System
Here ES is quite a separate element of the combined system
and the final user can use it only under particular
circumstances – only even it is quite impossible to solve a
particular problem operating206 on the database or model
base.
Integration ES & DSS
User
User Interface
Data Base
Management
System
Model Base
Management
System
Expert System
Data Base
Model
Base
Fig. 4. Expert System Expanding Decision Making Process in Decision Support System
The system has links not only with management systems but - directly - with date and
model bases, too. It means that the user has in fact three independent possibilities: to
work with database, with the model base and with the ES.
ES has no background, so the model and database in this situation acts as an
additional support for its characteristics.
207
Integration ES & DSS
User
User Interface
Expert System
Intelligent
Data Base
Management
System
Conclusion
Mechanism
Model Base
Management
System
Supervisory
Programme
System Management systemem
Data
Base
Knowledge
Base
Model
Base
Fig. 5. Expert System Unified with Decision Support System
Total unification of ES and DSS into an intelligent expert
or knowledge system.
208
Integration EIS & DSS
The basic method of integrating systems, which inform management
and DSS is using them with the recent information generated by EIS
as input information.
In more complicated cases we expect to see a loop of the reverse
compound through a special intelligent interface which will allow for
the creation of questions to DSS, and in the opposite direction it will
send interpretations and recommendations obtained from DSS.
In short we can split this process into two parts:
• After introductory treatment in EIS data will be used as input data to
DSS,
• EIS is used for further interpretations of solutions achieved with the
help of DSS.
209
Integration EIS & DSS
User
Environment
External
Information
Reccomendations
for User
Querries
Executive
Information
System
User Interface
Responses
Reccomedations
Data
Base
Data Base
Management
System
Model Base
Management
System
Model
Base
Fig. 6. Connections Architecture between Executive Information System and Decision Support
System
210
Integration ES & EIS
• It seems that these two systems are seldom (only sometimes)
linked in practice
• EIS can return with questions to the ES in the hope of solving
particular, specialist problems which they have and changes of
obtaining appropriate solutions.
• EIS can also refer to the knowledge base or procedures base of
ES in situations when their user of interface is equipped with
communication mechanism, which allows them such a function.
• Now and again ES acts as a regular provider of reports (with a
substantial grade) generated on the basis of data sent from EIS.
211
Integration ES & EIS
User
Environment
External
Informations
Recommendations
for User
Information
Executive
Information
System
User Interface
(ES Class)
Odpowiedzi
Interpretations
Rekomendac
je
Data
Base
Data Base
Management
System
Knowledge
Base
Management
System
Knowledge
Base
Fig. 7. Connection Architecture between Executive Information System and Expert System
212
Integration EIS & MIS
It is the oldest and most natural system of linking two IS. It
makes full use of all the database mechanism and at the same
time only extracts information, which is needed by the
management in a given moment. In this way, there arises an
extra method independent of the user interface on a management
level.
Its basic characteristics:
• possible ongoing observation of events in the company and its
surroundings (EIS - as an intelligent interface to the database
system),
• reverse - memory of the interpretation of the EIS results in the
database.
213
Integration EIS & MIS
User
Executive
Information
System
User Interface
Data Base
Management
System
Data
Base
Fig. 8. Executive Information System Architecture Connected with Management Information
System
214
Integration Between Systems of the Same Type
This kind of linking applies mainly to:
• ES - information exchange between systems from various
categories or branches or
• DSS - strengthening of the functions of humble (small, weak)
systems through specialized transformation systems
215
Integration Within Unified Enterprise Systems
•
•
•
•
Therefore the basic characteristics of such systems are:
functional complexity – i.e. the inclusion of its whole range of functions and
processes going on in the organization (that does not disturb the selling of one
part of the system in practice)
structural compound – from one side a complex functional stimulation (the size
of the system would be enough!), from the other a joining of various types of
system as a whole one, finally making use of various technological integration.
considerable ease of use – all new technical gadgets are quickly added to existing
systems or new versions are created which differ by, for example a more
attractive user interface. A common imposed idea about solving office problems
with Windows put big pressure on systems creators, in the direction of building
“Windows-style” interfaces - i.e. such that ensured ease of use for users who are
accustomed to it.
common usage – all companies who want to survive on the ever narrowing more
competitive market look for salvage in cost minimization. Such salvage is
provided by the management and production support computer system. If it is
used in the correct way, the substantial effects cause an increase of technological
interest, and with this comes an increase in common usage of such systems.
216
Integrated Management Information Systems
Benefits:
• More productive than forming a whole system (faster in construction and
correction),
• Eliminates completely manual handling of information,
• Owning a larger functionality than the simple sum of the applications functions
(synergy).
Scenarios:
• Integration of already existing applications,
• Building a new applications integrated with existing ones,
Typical problems:
• Cooperation needs a common language,
• Organizational problems: there are various levels/platforms:
hardware,
operation system
networks
• Organizations have various structures and development strategies and therefore
functional applications,
• During application connection a complicated structure arises as regards the
application2application connection 217
Integrated Enterprise Systems
•
•
•
•
•
Following conditions must be satisfied:
common information handling for the whole organization, without
a dispensable surplus, which denotes, that the information about
every thing is collected only once, ideally from the source, and sent
to every processes which is ready to use it,
unique collection system, transforming and information sending,
unique media collection and information handling,
common tools and system development procedures,
unique user dialogue procedures.
218
Integrated Enterprise Systems Development
•
•
•
•
•
•
•
•
•
1957 in the USA - American Production & lnventory Control Society (APICS)
was established - for maintaining standards of computers application in
production’ organizations management
In late 50. APICS made assesments for the first standard MRP (Material
Requirements Planning). This standard let us compute accurate quantity of row
materials (resources) adequately for flexible demand on commodities
(assortment of products, articles) in time.
The main goal of MRP:
Inventory reduction (in warehouses and interoperational inventories),
Accurate defining supply time of row materials and semi-finished articles supply
Precise ddetermining of production costs,
Better usage of technical (production) infrastructure,
Faster reaction under environmental changes,
Control of individual stages of production.
1964 – Inventory Control System – the first information system with integrated
functions of purchase, storage and distribution of commodities; in next years
firstly created mainly for inwentory management in warehouses and for serial
industrial production, particulary in electro-machinery branch,
219
Integrated Enterprise Systems Development
• 1989 APICS create new standard MRP II (Manufacturing
Resource Planning commonly used in all great integrated
information systems
• Standard MRP II was extended (in relation with the previous one)
about elements connected with sale (retail and wholesale) and
functions supported strategic production management
• In 90. – all functions and processes were included in standard
MRP II
• Now it takes into account all spheres of management of the firm
connected with preparation of production, production planning
and management and sale or distribution production goods
• Besides of row materials - in MRP
II there were human relations,
220
financial flows, auxiliary materials etc.
Integrated Enterprise Systems Development
• Mid-90 standard ERP (Enterprise Resource Planning – not
approved) - Main purpose – complete integration of all levels of
management of the company
• ERP included all proceses of production and distribution, which
integrating various areas of firm activity, implementing critical –
for success - information flows and let direct react for market
changes
• Information updating - in real time and information for decision
making process is accesable in that momment
• Additionally – procedures for simulationg variuos operations with
possible analysis of their results (financial included).
221
Integrated Systems Development
ERP areas:
• Customer service – database about clients, orders processing,
orders service, EDI – transfer of e-documents, internet access,
• Production – wholesale servis, production costs calculating,
purchasing materials rows, establishing time-table of production,
forecasting of capabilities, calculating of critical level of
inventories, process production control etc.,
• Finance – accounting, accounting documents flow
control,
preparing reports according to customer needs, etc.,
• Logistic chain itegration - connection with next subsystems CRM
(Customer Relationship Management), SCM (Supply Chain
Management), VRM (Vendor Relationship Manegement)
222
System evolution direction – total complexity
Internet area
ERP II
ERP
MRP II
MRP
Inventory
Control
1960
1970
1980
223
1990
2000
Enterprise Integrated Systems
• Built around thousands of predefined business processes that reflect best
practices
• Finance/accounting: General ledger, accounts payable, etc.
• Human resources: Personnel administration, payroll, etc.
• Manufacturing/production: Purchasing, shipping, etc.
• Sales/marketing: Order processing, billing, sales planning, etc.
• To implement, firms:
• Select functions of system they wish to use
• Map business processes to software processes
• Use software’s configuration tables for customizing
Business Value of Integrated Enterprise Systems
• Increase operational efficiency
• Provide firmwide information to support decision making
• Enable rapid responses to customer requests for
information or products
• Include analytical tools to evaluate overall organizational
performance
How Enterprise Integrated Systems Work
Enterprise
systems
feature
a
set
of
integrated
software
modules and a central
database that enables
data to be shared by
many different business
processes and functional
areas throughout the
enterprise
Integrated Enterprise Systems Development
ERP areas:
• Customer service – database about clients, orders processing,
orders service, EDI – transfer of e-documents, internet access,
• Production – wholesale servis, production costs calculating,
purchasing materials rows, establishing time-table of production,
forecasting of capabilities, calculating of critical level of
inventories, process production control etc. ustalanie.,
• Finance – accounting, accounting documents flow
control,
preparing reports according to customer needs,etc.
• Logistic chain itegration - connection with next subsystems CRM
(Customer Relationship Management), SCM (Supply Chain
Management), VRM (Vendor Relationship Manegement)
227
Evolution of ERP Systems
228
Structure of ERP Systems
229
Modules overview of ERP Systems
230
ERP Diagram
231
Market share 2010 according to Gartner Dataquest
No.
Vendor
Revenue
(million $)
1.
SAP
4726
28.7
2.
Oracle Applications
1674
10.2
3.
The Sage Group
1221
7.4
4.
Microsoft Dynamics
616
3.7
5.
SSA Global Technologies
464
2.8
6.
Lawson Software
391
2.4
7.
Epicor
384
2.33
232
Market share
(%)
ERP Advantages and Disadvantages
•
•
•
•
•
Benefits:
ERP automate business processes and enable process changes, what brings
a lot benefits in operational activities such like: cost reduction, cycle time
reduction, productivity improvement, quality improvement, customer
service improvement,
with a centralized database and build in data analysis capabilities, the
system is helping in managerial activities for example: better resource
management, improves decision making and planning, improves
performance,
ERP systems with their large-scale business involvement and internal and
external integration capabilities can assist in achieving strategic benefits
such as: support business growth, build business innovations, build cost
leadership, generate product differentiation (including customization),
build external linkages (customers and suppliers), enabling e-commerce,
ERP systems has integrated a standard application architecture, which
provides an infrastructure that can build business flexibility for current
and future changes, IT cost reduction, increased IT infrastructure
capability,
the integrated information processing capabilities of ERP can support
organizational changes, facilitate business learning, build common vision,
change employee behavior, increase employee moral and satisfaction.
233
ERP Advantages and Disadvantages
•
•
•
•
•
•
•
Personnel turnover; companies can employ new managers lacking education
in the company's ERP system, proposing changes in business practices that
are out of synchronization with the best utilization of the company's selected
ERP.
Customization of the ERP software is limited. Some customization may
involve changing of the ERP software structure which is usually not
allowed.
Re-engineering of business processes to fit the "industry standard"
prescribed by the ERP system may lead to a loss of competitive advantage.
ERP systems can be very expensive especially for multinational companies.
ERP vendors can charge sums of money for annual license renewal that is
unrelated to the size of the company using the ERP or its profitability.
Technical support personnel often give replies to callers that are
inappropriate for the caller's corporate structure. Computer security
concerns arise, for example when telling a non-programmer how to change
a database on the fly, at a company that requires an audit trail of changes so
as to meet some regulatory standards.
ERPs are often seen as too rigid and too difficult to adapt to the specific
workflow and business process of some companies—this is cited as one of
the main causes of their failure.
234
ERP Advantages and Disadvantages
•
•
•
•
•
•
•
•
•
Systems can be difficult to use.
Systems are too restrictive and do not allow much flexibility in
implementation and usage.
The system can suffer from the "weakest link" problem—an inefficiency
in one department or at one of the partners may affect other participants.
Many of the integrated links need high accuracy in other applications to
work effectively. A company can achieve minimum standards, then over
time "dirty data" will reduce the reliability of some applications.
Once a system is established, switching costs are very high for any one of
the partners (reducing flexibility and strategic control at the corporate
level).
The blurring of company boundaries can cause problems in
accountability, lines of responsibility, and employee morale.
Resistance in sharing sensitive internal information between departments
can reduce the effectiveness of the software.
There are frequent compatibility problems with the various legacy
systems of the partners.
The system may be over-engineered relative to the actual needs of the
customer.
235
ERP Life Cycle
236
Trends of ERP development
•
•
•
•
•
•
ERP initiatives are most common:
Upgrade. In 2008, a meaningful percentage of companies were going through major and
minor upgrades of their ERP environment.
Rationalize and standardize. Many diversified companies that have grown by acquisition
now face a significant challenge in that they have multiple ERP vendors and installations
running. To improve process consistency and reduce internal support costs, many
companies have embarked on a long-term strategy to standardize on a singleinstance/single-vendor ERP strategy.
Multitier (multileyer). The multitier ERP strategy seems to run counter to the notion of
ERP standardization but is a viable strategy for companies with a number of smaller
subsidiaries.
Integrate. Improving integration among applications is the leading application strategy
priority among enterprise companies, representing a critical priority among 33% of
companies. Integration of applications is moving from a traditional batch, flat-file mode to
virtually real-time, message-based integration using SOA technologies.
Expand. ERP systems have been historically hard to use and are typically deployed to a
limited set of core users who enter and retrieve data from the systems on a daily basis.
Alternative user interfaces - including Web-based self-service, Adobe forms, Microsoft
Office, and other technologies - are more readily available now to roll out certain ERP
capabilities to a broader set of less frequent users across the enterprise. Newer role-based
user experience designs as well as vastly improved BI capabilities are becoming more
evident, making these systems more accessible and approachable.
Replace. Replacement becomes a necessity at some point, due to the technology
obsolescence of older legacy systems and high levels of customization that compromise the
upgrade path. ERP systems, however, typically have a useful life of 15 to 20 years or more
when proactively maintained.
237
Supply Chain Management Systems
The supply chain
• Network of organizations and processes for:
• Procuring raw materials
• Transforming them into products
• Distributing the products
• Upstream supply chain:
• Firm’s suppliers, suppliers’ suppliers, processes for
managing relationships with them
• Downstream supply chain:
• Organizations and processes responsible for delivering
products to customers
Supply Chain Management Systems
Nike’s Supply Chain
This figure illustrates the major entities in Nike’s supply chain and the flow of information
upstream and downstream to coordinate the activities involved in buying, making, and moving a
product. Shown here is a simplified supply chain, with the upstream portion focusing only on the
suppliers for sneakers and sneaker soles.
Supply Chain Management Systems
• Information and supply chain management
• Inefficiencies cut into a company’s operating costs
• Can waste up to 25% of operating expenses
• Just-in-time strategy:
• Components arrive as they are needed
• Finished goods shipped after leaving assembly line
• Safety stock
• Buffer for lack of flexibility in supply chain
• Bullwhip effect
• Information about product demand gets distorted as it
passes from one entity to next across supply chain
Supply Chain Management Systems
• Supply chain management systems
• Supply chain planning systems
• Model existing supply chain
• Demand planning
• Optimize sourcing, manufacturing plans
• Establish inventory levels
• Identifying transportation modes
• Supply chain execution systems
• Manage flow of products through distribution centers
and warehouses
Supply Chain Management Systems
• Global supply chains and the Internet
• Before Internet, supply chain coordination hampered by difficulties
of using disparate internal supply chain systems
• Enterprise systems supply some integration of internal supply chain
processes but not designed to deal with external supply chain
processes
• Intranets and Extranets
• Intranets: To improve coordination among internal
supply chain processes
• Extranets: To coordinate supply chain processes
shared with their business partners
Intranets and Extranets for Supply Chain Management
• Intranets
integrate
information
from
isolated
business
processes within the
firm to help manage its
internal supply chain.
• Access to these private
intranets can also be
extended to authorized
suppliers, distributors,
logistics services, and,
sometimes, to retail
customers to improve
coordination of external
supply chain processes.
Supply Chain Management Systems
• Global supply chain issues
• Global supply chains typically span greater geographic distances and
time differences
• More complex pricing issues (local taxes, transportation, etc.)
• Foreign government regulations
• Internet helps companies manage many aspects of global
supply chains
• Sourcing, transportation, communications, international finance
Business Value of Supply Chain Management Systems
• Match supply to demand
• Reduce inventory levels
• Improve delivery service
• Speed product time to market
• Use assets more effectively
• Reduced supply chain costs
• Increased sales
The Future Internet-Drive Supply Chain
The future Internet-driven supply chain operates like a digital logistics nervous system. It provides
multidirectional communication among firms, networks of firms, and e-marketplaces so that
entire networks of supply chain partners can immediately adjust inventories, orders, and
capacities.
Customer Relationship Management Systems
• What is customer relationship management?
• Knowing the customer
• In large businesses, too many customers and too
many ways customers interact with firm
• Customer relationship management (CRM) systems
• Capture and integrate customer data from all over the
organization
• Consolidate and analyze customer data
• Distribute customer information to various systems
and customer touch points across enterprise
• Provide single enterprise view of customers
Customer Relationship Management (CRM)
CRM systems examine customers from a multifaceted perspective.
These systems use a set of integrated applications to address all aspects of the customer
relationship, including customer service, sales, and marketing.
Customer Relationship Management Systems
• CRM software packages
• More comprehensive packages have modules for:
• Partner relationship management (PRM)
• Employee relationship management (ERM)
•
Most packages have modules for
• Sales force automation (SFA): Sales prospect and contact
information, and sales quote generation capabilities; etc.
• Customer service: Assigning and managing customer service
requests; Web-based self-service capabilities; etc.
• Marketing: Capturing prospect and customer data, scheduling
and tracking direct-marketing mailings or e-mail; etc.
How CRM Systems Support Marketing
Customer relationship management software provides a single point for users to manage
and evaluate marketing campaigns across multiple channels, including e-mail, direct mail,
telephone, the Web, and wireless messages.
CRM Software Capabilities
The major CRM software
products support business
processes in sales, service,
and marketing, integrating
customer information from
many different sources.
Included are support for
both the operational and
analytical aspects of CRM.
Customer Relationship Management Systems
• Operational CRM:
• Customer-facing applications such as sales force automation, call
center and customer service support, and marketing automation
• Analytical CRM:
• Analyze customer data output from operational CRM applications
• Based on data warehouses populated by operational CRM systems
and customer touch points
• Customer lifetime value (CLTV)
Analytical CRM Data Warehouse
Analytical CRM uses a customer data warehouse and tools to analyze customer data collected
from the firm’s customer touch points and from other sources.
Customer Relationship Management Systems
• Business value of customer relationship management
• Increased customer satisfaction
• Reduced direct-marketing costs
• More effective marketing
• Lower costs for customer acquisition/retention
• Increased sales revenue
• Reduced churn rate
• Churn rate:
• Number of customers who stop using or
purchasing products or services from a company.
• Indicator of growth or decline of firm’s customer
base
Enterprise Applications: New Opportunities and Challenges
• Enterprise application challenges
• Highly expensive to purchase and implement enterprise applications
– total cost may be 4 to 5 times the price of software
• Requires fundamental changes
• Technology changes
• Business processes changes
• Organizational changes
• Incurs switching costs, dependence on software vendors
• Requires data standardization, management, cleansing
Enterprise Applications: New Opportunities and Challenges
• Next generation enterprise applications
• Enterprise solutions / suites:
• Replacing stand-alone enterprise, CRM, SCM systems
• Make these applications more flexible, Web-enabled, integrated
with other systems
• Open-source and on-demand applications
• SaaS, Salesforce.com
• Service platform: Integrates multiple applications to deliver a
seamless experience for all parties
• Order-to-cash process
• Portals:
• Increasingly, new services delivered through portals
Thank you very much for your attention!
Witold Chmielarz
Questions - [email protected]
257
ERP example –
IFS Applications
Basic modules
–
–
–
–
–
–
–
–
–
–
–
–
Master Production Scheduling (MPS)
Item Master Data (Technical Data)
Bill of Materials (BOM) (Technical Data)
Production Resources Data (Manufacturing Technical Data)
Inventories & Orders (Inventory Control)
Purchasing Management
Material Requirements Planning (MRP)
Shop Floor Control (SFC)
Capacity planning or Capacity Requirements Planning (CRP)
Standard Costing (Cost Control)
Cost Reporting / Management (Cost Control)
Distribution Resource Planning (DRP)
Additional functionalities
•
•
•
•
•
•
•
•
•
Business Planning
Lot Traceability
Contract Management
Tool Management
Engineering Change Control
Configuration Management
Shop Floor Data Collection
Sales Analysis and Forecasting
Finite Capacity Scheduling (FCS)
Related systems
•
•
•
•
•
•
•
•
•
•
General Ledger
Accounts Payable (Purchase Ledger)
Accounts Receivable (Sales Ledger)
Sales Order Management
Distribution Requirements Planning (DRP)
[Automated] Warehouse Management
Project Management
Technical Records
Estimating
Computer-aided design/Computer-aided manufacturing
(CAD/CAM)
IFS App Component Chart
Example – IFS App for automotive industry
Example – IFS App for aviation
Example – IFS App for Defence
Example – IFS App for telecommunications
Thank you very much for your attention!
Witold Chmielarz
Questions - [email protected]
270
MANAGEMENT INFORMATION SYSTEMS
Part 4
e-COMMERCE AND e-BANKING
Prof. Witold Chmielarz, PhD ,
Oskar Szumski, PhD
Faculty of Management University of Warsaw
LEARNING OBJECTIVES
• Identify the unique features of e-commerce, digital markets, and
digital goods.
• Describe how Internet technology has changed business models.
• Identify the various types of e-commerce and explain how e-commerce
has changed consumer retailing and business-to-business transactions.
• Evaluate the role of m-commerce in business, and describe the most
important m-commerce applications.
• Identify the principal payment systems for electronic commerce.
Information Society – Ultimate Goal of Development
• …An information society is a society in which the creation,
distribution, diffusion, use, integration and manipulation
of information is a significant economic, political, and
cultural activity…
• …The knowledge economy is its economic counterpart
whereby wealth is created through the economic
exploitation of understanding…
E-Commerce is only small part of it…
e-Commerce Definitions
• …Electronic Commerce (E-Commerce) is an artificial socioeconomic structure, functioning based on widely used virtual nets,
dynamic complexity and specific infrastructure.
From this definition, it can be derived, that this structure cannot
be directly transferred to the physical world, but some elements as
payments and commodities originate from this world. In some
areas of science,
E-Commerce is defined as virtual commerce, although the prior is
considerably wider as it includes processes such as telephone
transactions…
(B. Kubiak, Korowicki A. 1999)
• ...An emerging concept that describes the process of buying and
selling or exchanging of products, services, and information via
computer networks including the Internet ...
(Turban, at all 2000),
274
e-Commerce Definitions
• ...To include only business transactions that deal with customers
and suppliers, and it is often described in terms of the Internet,
implying that there are no other communications alternatives ...
(McLeod,...2001)
• ...The sharing of business information, maintainin business
relationships, and conducting business transactions by means of
telecommunications networks …
(Zwass, 1998)
• ...E-commerce – exchange the information across electronic
networks, at any stage in the supply chain, whether within an
organization, between businesses (B2B), between businesses and
consumers (B2C), or between the public and private sector,
whether paid or unpaid...
(UK government),
275
• E – Enterprise - the most fundamental element of the E-Commerce
is E- Enterprise
•
The most frequently it is be described as an institutional unit possessing
ability to exchange goods – capital, information, products and services, in
an electronic manner
•
In practice, it can be the source (producer), interacting part of trade chain,
as well as the organizer (online auctions for example) of transactions
taking place in the Internet.
• E – Marketplace is an online marketplace where buyers and sellers
meet to exchange products, services, or information
Electronic markets can be supplemented by intra-organizational (intranets) or
inter-organizational (extranets) information systems
276
• E - Transactions can be best defined as the ability of consumers to
purchase products and services in the e-marketplace using
Internet technologies and infrastructure.
The Internet is rapidly becoming the medium through which a large share of
communications and commerce takes place.
Online transitions are the new means of conducting business, which are taking
over the traditional ones.
Despite the recent dot.com bubble burst, online transactions have become one
of the main ways to do business, to buy goods and services.
They are an important mean of communication for governmental institutions.
277
e-Commerce from Perspectives:
•
Communication perspective – EC is delivery of information,
product/services, or payments over telephone lines, computer networks,
or any other electronic measns,
•
Business process perspective – EC is the application of technology toward
the automation of business transactional and work flow,
•
Service perspective – EC – is a tool that addresses the desire of firms,
consumers, and management to cut service costs while improving the
quality of goods and increasing the speed of service delivery,
•
An online perspective – the buying and selling of products and
information online.
(Kalakota and Winston, 1997)
278
Electronic Commerce and the Internet (Laudons…)
• E-commerce
• Use of the Internet and Web to transact business
• Digitally enabled transactions
• History of e-commerce
• Began in 1991 and grew exponentially; still growing at an annual
rate of 16 percent
• Rapid growth led to market bubble 1999
• While many companies failed, many survived with soaring revenues
2002
• E-commerce today the fastest growing form of retail trade in U.S.,
Europe, Asia
The Growth of E-Commerce
Retail e-commerce revenues have grown exponentially since
about 1991 and have only recently “slowed” to a very rapid
16% annual increase, which is projected to remain the same
until the end of 2012
Electronic Commerce and the Internet
Eight unique features of e-commerce technology:
1. Ubiquity - Internet/Web technology available everywhere:
work, home, etc., and anytime
2. Global reach - the technology reaches across national
boundaries, around Earth
3. Universal standards - one set of technology standards:
Internet standards
4. Richness - supports video, audio, and text messages (multi-)
Eight unique features (cont.)
5. Interactivity - the technology works through interaction with
the user
6. Information density - vast increases in information
density—the total amount and quality of information
available to all market participants
7. Personalization/Customization
modification of messages, goods
-
technology
permits
8. Social technology - the technology promotes user content
generation and social networking
Key concepts in e-commerce
Digital markets reduce
• Information asymmetry
• Search costs
• Transaction costs
• Menu costs
Digital markets enable
• Price discrimination
• Dynamic pricing
• Disintermediation
The Benefits of Disintermediation to the Consumer
The typical distribution channel has several intermediary layers, each of which adds to
the final cost of a product, such as a sweater.
Removing layers lowers the final cost to the consumer.
Key concepts in e-commerce
Digital goods
• Goods that can be delivered over a digital network e.g., music tracks, video, software, newspapers, books
• Cost of producing first unit almost entire cost of
product: marginal cost of producing 2nd unit is about
zero
• Costs of delivery over the Internet very low
• Marketing costs remain the same; pricing highly
variable
• Industries with digital goods are undergoing
revolutionary changes (publishers, record labels, etc.)
Internet business models
• Pure-play models - internet is primary mode of operation
• Clicks-and-mortar models (a type of business model that includes
both online and offline operations, which typically include a website
and a physical store. A click-and-mortar company can offer customers
the benefits of fast, online transactions or traditional, face to face
service=clicks&brick - see: Clicks&Bricks - offline and online
operations, but Bricks&Mortar – only offline operations)
Social Networks
• Online meeting place
• Social shopping sites
• Can provide ways for corporate clients to target customers through
banner ads and pop-up ads
Online marketplace:
• Provides a digital environment where buyers and sellers can meet,
search for products, display products, and establish prices for those
products
• Content provider
• Providing digital content, such as digital news, music,
photos, or video, over the Web
• Online syndicators: Aggregate content from multiple
sources, package for distribution, and resell to third-party
Web sites
• Service provider
• Provides Web 2.0 applications such as photo sharing and
interactive maps, and services such as data storage
• Portal
• “Supersite” that provides comprehensive entry point for
huge array of resources and services on the Internet
• Virtual storefront:
• Sells physical products directly to consumers or to
individual businesses
• Information broker:
• Provides product, pricing, and availability information
to individuals and businesses
• Transaction broker:
• Saves users money and time by processing online
sales transactions and generating a fee for each
transaction
Types of Electronic Commerce
• Business-to-consumer (B2C)
• Business-to-business (B2B)
• Consumer-to-consumer (C2C)
• Mobile commerce (m-commerce)
Types of e-Transactions:
•
Business-to-Customer (B2C) – includes retail transactions of products,
services or information from business to individual shoppers. The typical
example is a shopper at Amazon.com or Merlin.com.pl
• Business-to-business (B2B) – trade contacts based not only on search for
new customers and target markets, but also the search for:
–
–
–
–
–
partners to invest jointly,
building optimized supply chain,
trade information,
building cooperational nets, and
acquiring know-how.
This type of transaction is commonly supported by traditional means of
communication such as phone calls, meetings and faxes. Today, over 85%
of EC volume is B2B.
Cunningham, M. S. (2001). How to Build a Profitable E-Commerce Strategy. Cambridge: Perseus Pub.
290
Types of e-transactions:
•
Customer-to-customer (C2C) – in this type of transaction,
customers sell directly to other customers.
A great example of customer-to-customer is an online auction,
like Ebay.com or Allegro.pl, that faciliate trade among
individual customers.
•
Mobile Commerce (M-Commerce) – transactions and activities
conducted entirely or partially in a wireless environment.
291
What else? (types of e-transactions):
•
Customer-to-business (C2B) – this category includes individual
customers who use the Internet to sell goods to organizations, as
well as individuals who seek sellers to make bids on their products
or services.
Priceline.com, an online travel agency, where customers define
price that they want to pay, is a typical example of C2B.
292
What else? (types of e-transactions):
•
•
E-learning – training or education is provided online. Green
Industries Institute which will be analyzed in is an example of elearning.
E-Goverment – happens when governmental entity buys or
provides information, service or product to individual citizens
(G2C) or to businesses (G2B).
Full information and database of tax forms on Internal Revenue
Services (IRS) web site is an example of both G2C and G2B.
293
IOS and e-Market Features
•
•
•
•
•
Customer relationship is determined in
advance with anticipation it will be an
ongoing relationship based on multiple
transactions
IOS may be built around private or
publicly accesible networks
Advance arrangements result in
agreements on the nature and format of
business documents that will be
exchanged and payments
Advance arrangements are made so
both parties know which communication
networks will be integral to the system
Joint guildelines and expectations of
each party are formulated so each knows
how the systemis to be used and when
transactions will be submited and
received by each business partner
THE BASE OF B2B
• Two types of relationships may exist:
 Customer/seller linkage is established in
time of transactions and may be for one
transaction only (just purchase),
 Customer/seller purchase agreement is
establish for a defined period (a
subscribtion transaction)
• Electronic markets are built around
publicly accesible networks
• Sellers determine, in conjunction with the
market maker which business
transactions they will provide
• Customers and sellers independently
determine which communication
networks they will use in participating in
the electronic market. The network used
may vary from transaction to transaction,
• No joint guideliness are drawn in advance
294
THE BASE OF B2C and the others
• Interactive marketing and personalization
• Web sites are bountiful source of details about customer
behavior, preferences, buying patterns used to tailor
promotions, products, services, and pricing
• Clickstream tracking tools: Collect data on customer
activities at Web sites
• Used to create personalized Web pages
• Collaborative filtering: Compares customer data to
other customers to make product recommendations
• Blogs
• Personal web pages that contain series of chronological
entries by author and links to related Web pages
• Has increasing influence in politics, news
• Corporate blogs: New channels for reaching customers,
introducing new products and services
• Blog analysis by marketers
• Customer self-service
• Web sites and e-mail to answer customer questions or to
provide customers with product information
• Reduces need for human customer-support expert
B2B e-commerce: New efficiencies and relationships
• Electronic data interchange (EDI)
• Computer-to-computer exchange of standard transactions such
as invoices, purchase orders
• Major industries have EDI standards that define structure and
information fields of electronic documents for that industry
• More companies increasingly moving away from private
networks to Internet for linking to other firms
• E.g., Procurement: Businesses can now use Internet to locate
most low-cost supplier, search online catalogs of supplier
products, negotiate with suppliers, place orders, etc.
Electronic Data Interchange (EDI)
Companies use EDI to automate transactions for B2B e-commerce and
continuous inventory replenishment. Suppliers can automatically send data
about shipments to purchasing firms.
The purchasing firms can use EDI to provide production and inventory
requirements and payment data to suppliers.
Private industrial networks (private exchanges)
• Large firm using extranet to link to its suppliers,
distributors and other key business partners
• Owned by buyer
• Permits sharing of:
• Product design and development
• Marketing
• Production scheduling and inventory management
• Unstructured communication (graphics and e-mail)
A Private Industrial Network
A private industrial network, also known as a private
exchange, links a firm to its suppliers, distributors, and other
key business partners for efficient supply chain management
and other collaborative commerce activities.
Net marketplaces (e-hubs)
• Single market for many buyers and sellers
• Industry-owned or owned by independent intermediary
• Generate revenue from transaction fees, other services
• Use prices established through negotiation, auction, RFQs, or fixed
prices
• May focus on direct or indirect goods
• May support long-term contract purchasing or short-term spot
purchasing
• May serve vertical or horizontal marketplaces
A Net Marketplace
Net marketplaces are online marketplaces where multiple
buyers can purchase from multiple sellers.
• Exchanges
• Independently owned third-party Net marketplaces
• Connect thousands of suppliers and buyers for spot purchasing
• Typically provide vertical markets for direct goods for single
industry (food, electronics)
• Proliferated during early years of e-commerce; many have failed
• Competitive bidding drove prices down and did not
offer long-term relationships with buyers or services
to make lowering prices worthwhile
M-Commerce
• M-commerce services and applications
• Although m-commerce represents small fraction of total
e-commerce transactions, revenue has been steadily
growing
• Location-based services
• Banking and financial services
• Wireless Advertising
• Games and entertainment
Global M-commerce Revenue 2000-2012
M-commerce sales represent a small fraction of total ecommerce sales, but that percentage is steadily growing.
M-Commerce
• Limitations in mobile’s access of Web information
• Data limitations
• Small display screens
• Wireless portals (mobile portals)
• Feature content and services optimized for mobile devices to steer
users to information they are most likely to need
e-Banking
e-Banking - form of bank services to facilitate access to customers’s
account with computer or the other electronic devices and connections
(Council of e-Banking)
e-Banking - complex of information systems for maintenance:
- home and office banking
- tele-banking
- credit cards
- automatic teller machines ATM
- virtual transactions.
(Janc, Kotlinski)
e- Banking - electronic net and information bank systems usage for
client’s convenience in tradictional and modern payment systems.
The ultimate purpose is creation bank-accounting system without the
paper
(Chmielarz)
307
e-Banking
•
Electronic banking (cyberbanking) – includes various banking activities
conducted from home, business, or on the road, instead of at physical
bank location.
•
E-banking – has capabilities ranging from paying bills to securing a loan
electronically
•
It started with the use of propriety software and private networks but was
not particularly popular until the emergence of the Internet
•
Allows customers to access their accounts and execute orders through a
simple-to-use Web site
•
It is inexpensive alternative to branch banking and a chance to enlist
remote customers
(Turban)
308
Some of the advanteges of e-banking:
•
•
•
•
•
•
•
•
•
•
Get current account balances at any time – you can easily check the status of
your checking, savings, and money market accounts
Obtain charge and credit card statements – you can even set up your account
to pay off cards automatically every month
Pay bills – electronic payments from your accounts are normally credited the
same day or the next. The cost of paying bills electronically may well be less
than the postage involved in sending out a large number of payments each
month
Download account transactions – it’s easy to import them directly with the
money transfer system
Transfer money between accounts
Balance your accounts
Send e-mail to your bank
A new meaning for „banker’s hours” – in any time, any place
Handle your finances when traveling
Additional services – for example free phone banking
309
Internet-banking: part of e-Banking services realized only by Internet
Virtual banking: part od e-banking realized ONLY and
EXCLUSIVELY by net (maybe Internet, too)
e-Banking
Internet
Banking
Virtual
Banking
310
e-Banking =
home-banking +
office banking +
selfbanking +
interbanking (clearing systems) +
POS (point of sales) +
finance transfere nets +
e-Payments
311
Phases of information systems in banks development –
some stages
• Archaic phase, where the communication is based one by one on the mail,
telegraph, telephone - from the second-half of the XIX century to the secondhalf of the XX century,
• Preliminary phase of communication computer-support - 1956-1964,
• Early phase of the electronic data processing systems based on batch
processing - 1965-1969,
• Phase of the intense development of Management Information Systems 1970-1977,
• Productive phase of systems as: Decision Support Systems, Expert Systems,
Executive Information Systems, video-data - 1978-1985,
• Phase of technological changes - 1986-90,
• Phase of application integration on the basis of computer techniques and the
telecommunications on the basis of the modem communication - 1990-1995,
• Phase of remote systems - electronic banking - from 1992,
• Phase of global systems - online and virtual banking - from 1996; to now
312
Electronic banking based on communication channels of
distribution can be divided as follows:
• Online banking (through viewer of web pages),
• Dedicated computer banking (by specialist providing software
installed locally on a computer),
• Telephone banking (verbal communication and IVR),
• Portable banking (communication using WAP technologies, SMS),
• Terminal banking (cash machines, self-service stands, POS),
• Television banking (access by digital television);
313
Online banking (Internet banking)
• Most important and most developing electronic banking
communication channel is online banking (internet banking)
• Its success is gained from Internet development all over the world.
• One of its main criteria is servicing bank accounts through World
Wide Web browsers
• It is not necessary to install specific software as in PC banking
314
Dedicated computer banking (PC banking)
•
Communication is set up between bank servers and dedicated software
installed on customer’s PC over modem line, ISDN, LAN etc.
•
Customer connected to bank system downloads data and execute
operations on his own PC
•
Generated operations are being sent to bank server. PC banking cannot
be know as internet banking even if user is connected to bank server via
internet broadband connection.
•
In technical literature there are lots of terms describing PC banking:
home banking, office banking and electronic corporate banking.
Telephone banking
• Another kind of communication channel is telephone banking,
which uses voice communication to act bank operations.
• There are two main brands of this communication. Call center as
two way voice communication and IVR (Interactive Voice
Response) as one way voice communication.
• Stationary and cell phones can be used for telephone banking, but
also it can be replaced by internet telephony
316
Portable banking
• Portable banking differs from another communication channels
with special non-voice technologies prepared for all kind of
communicators, cell phones, PDA etc.
• Its practical usage is customized now to SMS, WAP technology
and applications preinstalled on portable devices as Java
Terminal banking channel
• Terminal banking channel (self-banking) is used on terminals
provided by banks in public areas
• It is used for cash withdraws, checking account balance and
executing account operations (bank transfers)
• Other and more functional terminals are multimedia kiosks. It
gives ability to use many communication channels as internet
banking (access to WWW), telephone banking (free IVR and call
center phone) with possibility to cash withdraw
• It can be said that multimedia kiosk combines three of
communication channels, but main factor placing it to terminal
banking channel is that multimedia kiosks are offered in fixed
localizations
• For the simplest terminal banking channel we classify electronic
points of sale (POS)
• POS services purchase transactions in shops, trade markets which
have card readers
• Its functionality is limited to authorize payments
318
The types of models of electronic banking are next
important criterion of identification:
• multi-channel model (using the network of bank units and
electronic channels),
• model of the virtual bank (not-using the net of bank units),
• model of the financial bank-supermarket (aggregation of
financial services in the Internet)
319
• Multi-channel model (Bricks & Clicks) it is model of the offering all
channels of distribution. Most important feature is that this model
supports all kinds of distribution channels.
• Model of the virtual bank (Clicks only) relies on basing activity of the
bank exclusively on electronic banking. Therefore the most
important feature favouring the virtual banking is resignation from
bank departments. In this model, Internet and cash machines are
main channels of distribution.
• Definitely a model of the financial bank-supermarket is different. This
model consists taking the adviser and the financial intermediary in
the Internet. In this model its brand and the transaction online
service are basic capital of the bank - often determined as “front
end”. Bank is using outsourcing.
320
Bank’s cost transactions via different channels of distribution
Cost of one transaction US$
Channel
Traditional bank branch
1,07
Phone banking
0,54
ATM
0,27
Electronic banking
0,015
Internet banking
0,01
(Booz, Allen & Hamilton (banking sector - USA))
321
Electronic Commerce Payment Systems
Types of electronic payment systems:
• Digital wallet
• Stores credit card and owner identification information and enters
the shopper’s name, credit card number, and shipping information
automatically when invoked to complete a purchase
• Accumulated balance digital payment systems
• Used for micropayments ($10 or less)
• Accumulating debit balance that is paid periodically on
credit card or telephone bills
Electronic Commerce Payment Systems
• Stored value payment systems
• Enable online payments based on value stored in online digital
account
• May be merchant platforms or peer-to-peer (PayPal)
• Digital checking
• Extend functionality of existing checking accounts to be used for
online payments
• Electronic billing presentment and payment systems
• Paying monthly bills through electronic fund transfers or credit cards
Electronic Commerce Payment Systems
Digital payments systems for m-commerce:
• Three types of mobile payment systems in use in Japan
• Stored value system charged by credit cards or bank
accounts
• Mobile debit cards
• Mobile credit cards
The Internet - a real sales channel?
Yes, for it represents a really competitive edge:
– Opportunity to market products and services without any
middleman or intermediary, so with higher margins
– Adapted to non-perishable goods, but less to perishable ones
– The sectors that have benefited from e-commerce (from
DirectPanel, 2007):
 cultural products (CD’s, DVD’s)
 computer products
 tourism
 clothing
 electrical appliances
325
75% (penetration rate)
58%
57%
53%
39%
The Internet a pre-sales channel?
– Real estates agents soon realised the interest of websites to
advertise their offers. The purchase cannot be done online, but
helps a lot.
– Counselling matters, for prices may be high.
– e-Commerce spreads as confidence in the purchasing process is
built.
– New economic models are developed, which also marginally
benefits traditional sales channels
326
The Benefits of EC (to Organizations)
•
•
•
•
•
•
Expands the marketplace to national and international markets. With
minimal capital outlay, a company can easily and quickly locate more
customars, the best suppliers and business partners worldwide,
Decreases the costs of creating, processing, distributing, storing and retriving
paper-based information (administrative costs to 85%, electronic payments
are 95% cheaper and so on),
Allows reduced inventories and overhead by facilitationg current („pull”)
type supply management. In the system process starts from customer orders
and uses just-in-time manufacturing
This processing enables expensive customization of the products and services
which provides competitive advantage to its implementers.
Diminishing telecommunication cost (internet much cheaper than commerce
nets
Improved image, improved customer service, newfound business partners,
simplified processes, increased productivity, eliminating paper, expending
access to information, reduced transportation costs, increased flexibility.
327
The Benefits of EC (to Consumers)
•
Enables customers to shop or do other transactions 24 hours a day, all yer
around, from almost any location,
•
Provides customers with more choices, they can select from many vendors
and from mare products,
•
Frequently provides customers with less expensive products and services by
allowing them to shop in many places and conduct quick comparison,
•
In some cases, especially with digitized products, EC allows quick delivery,
•
Makes it possible to participate in virtual auctions,
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Allows customers to interact with other customers in electronic communities
and exchange ideas as well as compare experiensces,
•
Facilitates competition, which results in substantial discounts
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The Benefits of EC (to Society)
•
Enables more individuals to work at home and to do less traveling for
shopping, resulting in less traffic on the roads and lower air pollution,
•
Allows some merchandise to be sold at lower prices, so less affluent people
can buy more and increase their standard of living,
•
Enables people in Third World countries and rural areas to enjoy product
and services that othervise are not available for them,
This includes opportunities to learn professions and earn college degrees.
•
EC facilitates delivery of public services – health care, education,
distribution of government social services (cost reduction, improved
quality)
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The Limitations of EC - Technical
•
There is a lack of system security, reliability, and some communications
protocols,
•
The software development tools are still evolving and changing rapidly,
•
It’s difficult to integrate the Internet and EC software with some existing
applications and databases,
•
Vendors may need special Web servers and other insfastructures, in
additions to the network servers,
•
Some EC software might not fit with some hardware or may be
incompatible with some operating systems or other components
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The Limits of EC – Non-Technical
•
•
•
•
•
•
•
•
Costs and justifications – in house it may be very high, and mistake due to lack of
experience may result in delays (34, 8%),
Lack of trust and user resistance – customers do not trust an unknown faceless
seller, paperless transactions and electronic money (4,4%).
Other limiting factors:
Many legal issues are as yet unresolved, and government regulations and
standards are not refined enough for many circumstances,
EC, as a discipline, is still evolving and changing rapidly. Many people are looking
for more stable area before they enter into it,
There are not enough support services (clearance centers for EC transactions, tax
centers etc.),
In most applicationss there are not yet enough sellers and buyers for profitable EC
operations,
EC could result in a breakdown of human relations,
Access to the Internet is still expensive and/or inconvenient for many potential
customers.
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The Limits of New Technologies
• A certain feeling of intrusion and defiance.
• New channels of communication appeared thanks to
new technologies, which has resulted in a new
relationship with customers.
• From the customer’s point of view:
– Lack of familiarity with new technologies
– The web has sometimes become the only way of accessing and
giving information. What about the people who are not
connected?
• Changing consumption habits and modes takes time.
• Some reluctances may be explainable, other ones
illogical
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The Limits of New Technologies
• Sociological limits - fears:
– Fear of paying online is the number one hindrance
to the development of online commerce (this trend is
being reversed).
– In 2006, more than 90% of the people interviewed
considered online payments potentially unsafe. 38%
mentioned the fear not to have any interlocutor in
case of a problem.
– The opportunity to be able to buy anything,
anywhere, offsets the fear of paying online.
– Another fear among webusers: the fear of seeing
one’s banking data hacked.
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The Limits of New Technologies
Sociological limits - fears:
• Fear of viruses or infringement on privacy
• Fear of receiving executable files which would disrupt the
computer’s functions
• Fear of worms, likely to paralyse your computer
• Fear of Trojan horses likely to bypass your computer’s
security systems and allow it to be penetratedFear of
tracking: collecting information on a webuser with or
without his/her being aware of it
• Fear of spyware
• Multiplication of online questionnaireHacking of personal
data
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Examples of Electronic Payment Systems for e-Commerce
Thank you very much for your attention!
Witold Chmielarz
Questions - [email protected]
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