obr76817_ch07_270-306.indd Page 270 8/13/10 2:58 PM user-f494 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Management Challenges MODULE III Business Applications Module III Development Processes Information Technologies Foundation Concepts BUSINESS APPLICATIONS H W ow do internet technologies and other forms of IT support business I processes, e-commerce, and business decision making? The four chapters Lyou how such business applications of information of this module show systems are accomplished inStoday’s networked enterprises. describes how information systems integrate O • Chapter 7: e-Business Systems • • • and support enterprisewide business processes, as well as the business functions N of marketing, manufacturing, human resource management, accounting, and , finance. Chapter 8: Enterprise Business Systems outlines the goals and components of customer relationship management, enterprise resource planning, and supply J chain management, and discusses the benefits and challenges of these major enterprise applications. A Chapter 9: e-CommerceM Systems introduces the basic process components of e-commerce systems, and discusses important trends, applications, and issues in I e-commerce. E Chapter 10: Supporting Decision Making shows how management information systems, decision support systems, executive information systems, expert systems, and artificial intelligence technologies can be applied to decision-making situa5 tions faced by business managers and professionals in today’s dynamic business environment. 0 5 1 B U 270 obr76817_ch07_270-306.indd Page 271 8/13/10 2:58 PM user-f494 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Management Challenges CHAPTER 7 Business Applications Module III Development Processes e-BUSINESS SYSTEMS Ch apt er Highligh t s Section I e-Business Systems Introduction Cross-Functional Enterprise Applications Real World Case: Toyota Europe, Campbell Soup Company, Sony Pictures, and W. W. Grainger: Making the Case for Enterprise Architects Enterprise Application Integration Transaction Processing Systems Enterprise Collaboration Systems Section II Functional Business Systems Introduction Marketing Systems Real World Case: Nationwide Insurance: Unified Financial Reporting and “One Version of the Truth” Manufacturing Systems Human Resource Systems Accounting Systems Financial Management Systems Real World Case: Cisco Systems: Telepresence and the Future of Collaboration Real World Case: OHSU, Sony, Novartis, and Others: Strategic Information Systems—It’s HR’s Turn Information Technologies Foundation Concepts W I L L ea r n i n g O bj ect i v e s S After reading and studying this chapter, you should be O able to: N 1. Identify the following cross-functional enterprise systems, and give examples of how they can pro, vide significant business value to a company: J A M I E 5 0 5 1 B U a. Enterprise application integration b. Transaction processing systems c. Enterprise collaboration systems 2. Give examples of how Internet and other information technologies support business processes within the business functions of accounting, finance, human resource management, marketing, and production and operations management. 271 obr76817_ch07_270-306.indd Page 272 13/08/10 7:37 PM user-f501 272 ● /Users/user-f501/Desktop Module III / Business Applications SECTION I Introduction e-Business Systems Contrary to popular opinion, e-business is not synonymous with e-commerce. E-business is much broader in scope, going beyond transactions to signify use of the Internet, in combination with other technologies and forms of electronic communication, to enable any type of business activity. This chapter introduces the fast-changing world of business applications of information technology, which increasingly consists of what is popularly called e-business applications. Remember that e-business, a term originally coined by Lou Gerstner, CEO of IBM, is the use of the Internet and other networks and information technologies to support e-commerce, enterprise communications and collaboration, and Web-enabled business W processes, both within a networked enterprise and with its customers and business partners. E-business includes e-commerce, which I and marketing and servicing of products, services, involves the buying and selling and information over the Internet L and other networks. We will cover e-commerce in Chapter 9. S In this chapter, we will explore some of the major concepts and applications of e-business. We will begin by O focusing in Section I on examples of cross-functional enterprise systems, which serve as a foundation for more in-depth coverage of enterN prisewide business systems such as customer relationship management, enterprise re, management in Chapter 8. In Section II, we will source planning, and supply chain explore examples of information systems that support essential processes in the functional areas of business. J on the next page. We can learn a lot from this case Read the Real World Case about the challenging work ofA enterprise architects. See Figure 7.1. M CrossFunctional Enterprise Applications Many companies today are using information technology to develop integrated crossI cross the boundaries of traditional business functions functional enterprise systems that in order to reengineer and improve E vital business processes all across the enterprise. These organizations view cross-functional enterprise systems as a strategic way to use IT to share information resources and improve the efficiency and effectiveness of business processes, and develop 5 strategic relationships with customers, suppliers, and business partners. See Figure 7.2, which illustrates a cross-functional business process. 0 functional mainframe-based legacy systems to inteCompanies first moved from grated cross-functional client/server applications. This typically involved installing 5 enterprise resource planning, supply chain management, or customer relationship manage1 PeopleSoft, Oracle, and others. Instead of focusing ment software from SAP America, on the information processing Brequirements of business functions, such enterprise software focuses on supporting integrated clusters of business processes involved in U the operations of a business. Now, as we see continually in the Real World Cases in this text, business firms are using Internet technologies to help them reengineer and integrate the flow of information among their internal business processes and their customers and suppliers. Companies all across the globe are using the World Wide Web and their intranets and extranets as a technology platform for their cross-functional and interenterprise information systems. Enterprise Application Architecture Figure 7.3 presents an enterprise application architecture, which illustrates the interrelationships of the major cross-functional enterprise applications that many companies have or are installing today. This architecture does not provide a detailed or exhaustive application blueprint, but it provides a conceptual framework to help you obr76817_ch07_270-306.indd Page 273 8/13/10 2:58 PM user-f494 REAL WORLD CASE W 1 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Toyota Europe, Campbell Soup Company, Sony Pictures, and W.W. Grainger: Making the Case for Enterprise Architects hen technology infrastructure lines up with business projects like musicians in a marching band, you know you have a good enterprise architect on staff. Enterprise architecture focuses on four crucial C’s: connection, collaboration, communication, and customers. Imagine needing to manually log onto five different systems to create and track an order, or spending 20 hours to research a project because you didn’t know that the information already existed in another department. These situations result from fragmentation and siloed thinking; the goal of enterprise architecture, on the other hand, is to create unity. Enterprise architecture’s goal is IT that enables business strategy today and tomorrow, says Peter Heinckiens, chief enterprise architect at Toyota Europe. “The ‘tomorrow’ part is especially important,” he says. The enterprise architect must map, define, and standardize technology, data, and business processes to make that possible. This means that the architect must have both a macro and micro view: It is necessary to understand the business strategy and translate this into an architectural approach (macro view), but also be able to work with individual projects and deliver very concrete guidance to these projects that focus on the suc- F IGUR E 7.1 W I L S O N , J A M I E 5 0 5 1 B U Enterprise architects create unity out of siloed thinking and disparate applications. Source: © Corbis/Photolibrary. cessful delivery of the individual project within that macro view. “The enterprise architect transforms tech-speak into the language of business solutions, and he knows what technology is needed to enable business strategy,” says Heinckiens. In other words, an architect knows how to bridge silos. An oft-used metaphor compares the enterprise architect’s role to that of the city planner, who also provides the road maps, zoning, common requirements, regulations, and strategy— albeit for a company, rather than for a city. And this role is increasingly important as enterprise architecture itself becomes more important. “Enterprise architecture’s roots are in the desire to serve what is best for the enterprise versus the individual department or project,” says Andy Croft, Campbell Soup Company’s vice president of IT-shared services. Croft, who has the enterprise architect role at Campbell’s, speaks of the days when incompatible e-mail systems made employees within the same company unable to share information via e-mail. Each department thought it needed its own brand of PC—even its own network or security system. Finally, Croft says, “People lifted their heads and thought, maybe it’s more important to be able to work together rather than [sic] me having the ‘best.’” Enterprise architecture gained traction from the bottom up. That siloed view on projects may come in the form of “I want to use this package” or “I want to build this application,” according to Heinckiens. As an architect, he advises, it’s important to take a step back: Try to understand what problem the proposed project will solve. Is there already a solution that covers the proposed area being researched? Does the proposed project fit into the wider picture? “Structurally, business units are silos—and therefore often have a limited view—but the enterprise architect ensures that the pieces of the wider-picture puzzle fit together,” says Heinckiens. As an illustration, some projects use data that nobody else in the company will be interested in, whereas other projects use data that are useful and relevant to everyone in the company. It is the enterprise architect’s job to figure out how to make the latter type available to the rest of the company, and one part of that task is creating compliance standards. “It is important that this discussion takes place,” says Heinckiens. “Then you see other discussions start to happen.” For example, who owns this data? Who should receive permission to access this data? What is a customer? For the marketing department, after-sale department, and finance department, the definition of customer is totally different, even though they refer to the same person. In many companies, this process is ultimately formalized. At Campbell’s, it’s called a blueprint. Before a new project can be started, each technology area must review a proposed project to ensure that it fits into the overall strategy. Achieving that impressive lockstep between business and IT takes time and practice, of course. Not only that, but an 273 obr76817_ch07_270-306.indd Page 274 13/08/10 7:37 PM user-f501 274 ● /Users/user-f501/Desktop Module III / Business Applications enterprise architect must be a voice that many kinds of people can understand, says Tim Ferrarell, CIO and senior vice president of enterprise systems at W. W. Grainger, a $6.4 billion distributor of heavy equipment. Ideally, Ferrarell says, this person “can think at a strategic level and all the way down to the operating level and understand how to move up and down that chain of abstraction,” he says. “And know how to deal with conflicts and trade-offs.” Is that all? Actually, no. That person also has to gain the confidence of the senior leadership team, he says. Execs must believe that the enterprise architect understands how the company works, where it wants to go, and how technology helps or hinders, he says. Then, effective working relationships can bloom. In 2006, Grainger went live with a companywide SAP project: 20 SAP modules and 30 additional applications that would touch 425 locations. To help guard against what could go wrong in a big-bang cutover, Ferrarell took his team of about 20 enterprise architects off their regular jobs and assigned them to design and integration roles on the SAP project. The SAP implementation was such an all-encompassing program that it made sense to repurpose the enterprise architects into key roles in the project. Their broad business and technical knowledge made them very valuable team members, says Ferrarell. Grainger’s senior business-side managers knew these architects and their business savvy firsthand, he explains. The trust was there, which helped get IT the intense cooperation needed during and after the complicated launch. Their architects played a significant role, not only in shaping the need for completion of the ERP project, but in ensuring that its design would enable their business requirements. The SAP project succeeded, Ferrarell says, in part due to the institutional knowledge and business-IT translation skills the enterprise architects brought to it. Other companies, though, have to be convinced of the enterprise architect’s criticality. Sony Pictures Entertainment launched an enterprise architect role modestly in 2002, focused at first on technology issues only, says David Buckholtz, vice president of planning, enterprise architecture and quality at the media company. He had to start small: Sony Pictures Entertainment didn’t even have a corporatewide IT department until the late 1990s, Buckholtz says. The company grew from acquisitions and other deals that parent company Sony Corporation of America made in the 1980s and 1990s, such as the acquisition of Columbia TriStar movie studio (The Karate CASE STUDY QUESTIONS 1. What does the position of enterprise architect entail? What qualifications or experiences would you think a good enterprise architect should have? Support your answer with examples from the case. 2. Consider the different companies mentioned in the case and their experiences with enterprise architecture. Does this approach seem to work better in certain types of companies or industries than in others? Why or why not? 3. What is the value derived from companies with mature enterprise architectures? Can you see any disadvantages? Discuss. Kid and Ghost Busters) and the acquisition of Merv Griffin Enterprises (Wheel of Fortune and Jeopardy). “We’re in a creative industry and people made a lot of decisions on their own,” he says. Hence, no central IT until relatively recently and no strong belief in the importance of central IT, he says. Buckholtz was hired from General Electric to start an enterprise architecture team because Sony Pictures wanted more efficiency and savings from IT, he says. At first, he concentrated on classifying existing and future technology investments. Categories include technologies in development where Sony is doing proofs of concept; technologies in pilot; current and supported; supported but older versions; those headed to retirement; and those that are obsolete and no longer supported except “under extreme duress,” Buckholtz says, laughing. He began this way to demonstrate that IT could be busiW nesslike: investing well, conscious of risk, and planning for I the future. is how you plan enterprise architecture when you Ldon’t“This have business support yet. We had to build up to that.” S Once the architecture group has the enterprise IT house under control, it can look for ways to work with different Obusiness technology groups to build credibility beyond bits Nand bytes, he says. One technique Buckholtz used was to install architects in different business groups to work on projects , on business turf but using IT’s budget. A free trial, in a sense. By 2005, Buckholtz’s group had started a high-profile project with the digital media team to map out how Sony PicJtures would digitize content for downloading to mobile phones and other devices. He counts it as a success that the digital Amedia group continues to use that road map today. “We identiMfied high-value work and we were all committed to it,” he says. “It was not a group off somewhere, passing down standards.” I As the economy tightens. Sony Pictures must make its dischain as efficient as possible, he adds. Movies, after all, Etribution are a discretionary expense for consumers, and if they pull back on luxuries, Sony Pictures will feel it. Enterprise architects continuously reinforce to business-side counterparts the expected 5returns on IT projects as the temptation to cut spending grows. 0 “We make sure we close the loop and quantify harddollar costs and benefits for the CFO,” Buckholtz says. 5 Source: Adapted from Diann Daniel, “The Rising Importance of the EnterArchitect,” CIO.com, March 31, 2007; and Kim S. Nash, “The Case for 1prise Enterprise Architects,” CIO.com, December 23, 2008. B U REAL WORLD ACTIVITIES 1. Service-oriented architecture (SOA) is a recent approach to systems development and implementation that has much in common (and some differences, as well) with enterprise architecture. Go online and research the similarities and differences. Prepare a report to summarize your work. 2. Have you considered a career as an enterprise architect? What bundle of courses would you put together to design a major or a track in enterprise architecture? Break into small groups with your classmates to outline the major areas that should be covered. obr76817_ch07_270-306.indd Page 275 8/13/10 2:58 PM user-f494 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Chapter 7 / e-Business Systems ● 275 F IGUR E 7.2 The new product development process in a manufacturing company. This is an example of a business process that must be supported by cross-functional systems that cross the boundaries of several business functions. Customer Feedback Market Research Market Test Component Design Product Test Product Release Process Design Equipment Design Production Start Manufacturing Marketing R & D/Engineering Source: Adapted from Mohan Sawhney and Jeff Zabin, Seven Steps to Nirvana: Strategic Insights into e-Business Transformation (New York: McGraw-Hill, 2001), p. 175. visualize the basic components, processes, and interfaces of these major e-business W applications, and their interrelationships to each other. This application architecture also spotlights the roles these business systems play in supporting the customers, supI pliers, partners, and employees of a business. L Notice that instead of concentrating on traditional business functions or supporting only the internal business processes of a company, enterprise applications focus on S accomplishing fundamental business processes in concert with a company’s customer, O stakeholders. Thus, enterprise resource planning supplier, partner, and employee (ERP) concentrates on the N efficiency of a firm’s internal production, distribution, and financial processes. Customer relationship management (CRM) focuses on acquiring , and retaining profitable customers via marketing, sales, and service processes. Partner relationship management (PRM) aims to acquire and retain partners who can enhance the sale and distribution of a firm’s products and services. Supply chain management J (SCM) focuses on developing the most efficient and effective sourcing and procureA for the products and services that a business needs. ment processes with suppliers Knowledge management (KM) M applications provide a firm’s employees with tools that support group collaboration and decision support. I and SCM applications in detail in Chapter 8 and cover We will discuss CRM, ERP, KM applications in ChapterE10. Now let’s look at a real-world example of some of the challenges involved in rolling out global, cross-functional systems. Suppliers Supply Chain Management Sourcing • Procurement Enterprise Resource Planning Internal Business Processes Customer Relationship Management Marketing • Sales • Service Customers Partners 5 0 5 1 B U Partner Relationship Management Selling • Distribution Employees This enterprise application architecture presents an overview of the major cross-functional enterprise applications and their interrelationships. Knowledge Management Collaboration • Decision Support F IGUR E 7.3 obr76817_ch07_270-306.indd Page 276 8/13/10 2:58 PM user-f494 276 ● /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Module III / Business Applications Ogilvy & Mather and MetLife: The Interpersonal Challenges of Implementing Global Applications Atefeh Riazi’s quarter-million frequent-flier miles are testament to the fact that it’s not such a small planet after all. As CIO at Ogilvy & Mather Worldwide, Riazi has spent the past years rolling out global applications, such as collaborative workflow systems, creative asset management, knowledge management, messaging, and security for the New York City–based marketing giant. Most recently, Riazi has been trying to convince the Asian, European, and Latin American offices to replace their legacy systems with North America’s SAP enterprise resource planning system for finance, human resources, and production. A common enterprise system, she says, would provide Ogilvy’s 400 offices in more than 100 countries with access to real-time information so they can make quick decisions, better respond to market changes, and cut costs. The fact is that globalization adds new dynamics to the workplace, and CIOs who stick to the true-blue American business formula will fail. They must abandon the idea of force-fitting their visions into worldwide offices and move toward a global infrastructure built collaboratively by staff from around the world. W Take the company that rolls out a global system with high-bandwidth requirements. That system might notIbe feasible for IT directors in the Middle East or parts of Asia, where the cost of bandwidth is higher than in New York. Is the standardized L system multilingual? Can it convert different currencies? Can it accommodate comS plex national tax laws? For global projects, working O virtually is critical, but it’s also one of the biggest challenges. “You’re dealing with different languages, different cultures, different N time zones,” says George Savarese, vice president of operations and technology services at New York City–based , MetLife. His 6 p.m. Monday meeting, for instance, falls at 8 a.m. in South Korea and 9 p.m. in Brazil. Savarese adds, however, that telephone and e-mail alone won’t cut it. “You really have to be there, in their space, understanding where it’sJat,” he says, adding that he spends about half of each month abroad. A “Globalization challenges your people skills every day,” says Ogilvy’s Riazi. For MKingdom often rely heavily on qualitative research; example, workers in the United they take their time in makingI decisions, as opposed to Americans, who tend to be action-oriented. So, in a recent attempt to get offices in the United States and the E on a common system rollout, Riazi hit a wall of reUnited Kingdom to collaborate sistance because she didn’t spend enough time going over analytical arguments with the people in the U.K. office. Having international teams5run global projects goes a long way toward mending fences. Ogilvy, for instance, manages a financial reporting project out of Ireland. 0 “The IT director there has a European point of view, so we’re not going to be blindsided by something that isn’t a5workable solution,” she says. “We have let control go,”1she says of Ogilvy’s New York headquarters. “A lot of global companies cannot let go of that control. They’re holding so tight. It’s B destructive.” U Source: Adapted from Melissa Solomon, “Collaboratively Building a Global Infrastructure,” CIO Magazine, June 1, 2003. Enterprise Application Integration How does a business interconnect some of the cross-functional enterprise systems? Enterprise application integration (EAI) software is being used by many companies to connect their major e-business applications. See Figure 7.4. EAI software enables users to model the business processes involved in the interactions that should occur between business applications. EAI also provides middleware that performs data conversion and coordination, application communication and messaging services, and access to the application interfaces involved. Recall from Chapter 6 that middleware is any software that serves to glue together or mediate between two separate pieces of obr76817_ch07_270-306.indd Page 277 8/13/10 2:58 PM user-f494 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Chapter 7 / e-Business Systems ● 277 F IGUR E 7.4 Enterprise application integration software interconnects front-office and back-office applications. Enterprise Application Integration EAI Front Office Customer Service Field Service Product Configuration Sales Order Entry Back Office Distribution Manufacturing Scheduling Finance software. Thus, EAI software can integrate a variety of enterprise application clusters by letting them exchange data according to rules derived from the business process models developed by users. For example, a typical rule might be: Whave the order application tell the accounting system to send a When an order is complete, bill and alert shipping to send I out the product. Thus, as Figure 7.4 illustrates, EAI software can integrate the front-office and L back-office applications of a business so they work together in a seamless, integrated S way. This is a vital capability that provides real business value to a business enterprise that must respond quickly O and effectively to business events and customer demands. For example, the integration of enterprise application clusters has been shown to draN matically improve customer call center responsiveness and effectiveness. That’s be, to all of the customer and product data that customer cause EAI integrates access representatives need to quickly serve customers. EAI also streamlines sales order processing so products and services can be delivered faster. Thus, EAI improves cusJ with the business because of its responsiveness. See tomer and supplier experience Figure 7.5. A M I showing how EAI middleware connects several business F IGURE 7.5 An example of a new customer order process information systems within a company. E Call Center How EAI works: 1 An order comes in via the call center, mail, e-mail, the Web, or fax. 5 Billing 0 5 1 B U mail 2 Customer information captured in the order process is sent to a “new customer” process, which distributes the new customer information to multiple applications and databases. 3 Once the order is validated (customer, credit, items), relevant details are sent to order fulfillment—which may pick the requested items from inventory, schedule them for manufacture, or simply forward them. 4 Fulfillment returns status and shipment info to the order-entry system... 5 ...and to the call center, which needs to know about outstanding orders. 1010101000101010001010100101 01010100010101000101010010 0011010100010101 submit 1 5 Finance 2 EAI 4 Routing Manufacturing Shipping Orders & Fulfillment 3 obr76817_ch07_270-306.indd Page 278 8/13/10 2:58 PM user-f494 278 ● /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Module III / Business Applications Coty, Unilever, and iWay: Dealing with Integration Challenges It’s one thing to integrate data across applications in an IT infrastructure. The methods and practices are tried and true. But implementing data integration across a serviceoriented architecture poses new challenges. Coty, the fragrance and personal-care products company, found that the iWay approach was just what it needed to integrate Unilever’s cosmetics business, which it acquired in late 2005, in just six months. Failure to meet that goal would delay the benefits to customers of dealing with one company and product line, and would force Coty to maintain two sales forces, supply chains, and software infrastructures. Soon after the acquisition, CIO David Berry heard complaints from big customers such as Federated Department Stores that its buyers had to talk to two sales reps after the acquisition or deal with three systems to push one order through. Orders of Unilever’s Chloe or Calvin Klein fragrances had to be sent through a JD Edwards system in Lille, France. Coty’s hot-selling Celine Dion or Jennifer Lopez fragrances had to be ordered W through its homegrown warehouse management system in Kassel, Germany. Orders for other products went through Oracle Cash-toOrder systems in Coty’s NorthI Carolina distribution center. But connecting JD Edwards Lto Oracle applications or Oracle apps to SAP is what iWay connectors and adapters do. Berry realized he needed to identify the processes S for example, two invoices from Coty, and force that led to the customer getting, them into a single process. O They got iWay’s Service Manager to understand the differences between Coty’s N order entry systems and perform the data transformations between them once a business analyst drew process,flow lines on Service Manager’s graphical map of the JD Edwards and SAP systems. The Coty order entry system worked in tandem with the Unilever order entry system until their results could be combined to yield J one invoice. The implementation had its A share of rough spots. Coty discovered at one point that a day’s orders, sent into the iWay system, never emerged at the distribution M center. The orders had been improperly formatted so they couldn’t be translated into the right destination format, but iWay neglected to inform anyone of the hang-up. I “It was like looking for a needle in a haystack. We needed to improve the visibility into the system,” says GaryEGallant, vice president of information management for the Americas at Coty. He found a way to get the system to send a message to administrators when orders were hung up in a “retry” queue. 5 identify customer-facing services, isolate them, and Berry used this approach to use iWay to translate between0them. The result was what appeared to customers to be a fully integrated Unilever/Coty by the six-month deadline. 5 1 B U Source: Adapted from Charles Babcock, “Two Ways to Deal with SOA’s Data Integration Challenge,” InformationWeek, July 9, 2007. Transaction Processing Systems Transaction processing systems (TPS) are cross-functional information systems that process data resulting from the occurrence of business transactions. We introduced transaction processing systems in Chapter 1 as one of the major application categories of information systems in business. Transactions are events that occur as part of doing business, such as sales, purchases, deposits, withdrawals, refunds, and payments. Think, for example, of the data generated whenever a business sells something to a customer on credit, whether in a retail store or at an e-commerce site on the Web. Data about the customer, product, salesperson, store, and so on, must be captured and processed. This need prompts additional transactions, such as credit checks, customer billing, inventory changes, and increases in accounts receivable balances, which generate even more data. Thus, transaction obr76817_ch07_270-306.indd Page 279 8/13/10 2:58 PM user-f494 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Chapter 7 / e-Business Systems ● 279 processing activities are needed to capture and process such data, or the operations of a business would grind to a halt. Therefore, transaction processing systems play a vital role in supporting the operations of most companies today. Online transaction processing systems play a strategic role in Web-enabled businesses. Many firms are using the Internet and other networks that tie them electronically to their customers or suppliers for online transaction processing (OLTP). Such real-time systems, which capture and process transactions immediately, can help firms provide superior service to customers and other trading partners. This capability adds value to their products and services, and thus gives them an important way to differentiate themselves from their competitors. Syntellect’s Online Transaction Processing For example, Figure 7.6 illustrates an online transaction processing system for cable pay-per-view systems developed by Syntellect Interactive Services. Cable TV viewers can select pay-per-view W events offered by their cable companies using the phone or the World Wide Web. The pay-per-view order is captured by Syntellect’s interactive voice responseIsystem or Web server, then transported to Syntellect database application servers. L There the order is processed, customer and sales databases are updated, and the approved order is relayed back to the cable company’s S the video of the pay-per-view event to the customer. video server, which transmits Thus, Syntellect teams with Omore than 700 cable companies to offer a very popular and very profitable service. N , F IGUR E 7.6 The Syntellect pay-per-view online transaction processing system. Cable Company A Video Server San Francisco END CLR SND ABC JKL 7 MNO 6 5 4 PRS DEF 3 2 1 GHI TUV 8 WXY 9 PWR * RCL 0 FCN # STO J A M I E Cable Company B New York Video Server MUTE Host System Phone System Interactive Voice Response System 5 0 5 Syntellect Interactive Services 1 B Fax U Servers Host System The Internet Web Servers Middleware Communication Servers Database Servers Application Servers Communication Servers obr76817_ch07_270-306.indd Page 280 8/13/10 2:58 PM user-f494 280 ● /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Module III / Business Applications F IGU RE 7.7 2 1 The transaction processing cycle. Note that transaction processing systems use a five-stage cycle of data entry, transaction processing, database maintenance, document and report generation, and inquiry processing activities Data Entry Transaction Processing Batch Online/ Real-Time 4 Document and Report Generation 5 Inquiry Processing 3 The Transaction Processing Cycle Database W Maintenance I L S O Transaction processing systems, such as Syntellect’s, capture and process data describN ing business transactions, update organizational databases, and produce a variety of , understand this as a transaction processing cycle of information products. You should several basic activities, as illustrated in Figure 7.7. • Data Entry. The first stepJof the transaction processing cycle is the capture of • • • business data. For example, transaction data may be collected by point-of-sale A of bar codes and credit card readers at a retail terminals using optical scanning store or other business. Transaction data can also be captured at an e-commerce M Web site on the Internet. The proper recording and editing of data so they are I for processing is one of the major design challenges quickly and correctly captured of information systems discussed E in Chapter 12. Transaction Processing. Transaction processing systems process data in two basic ways: (1) batch processing, where transaction data are accumulated over a 5 periodically, and (2) real-time processing (also called period of time and processed online processing), where data 0 are processed immediately after a transaction occurs. All online transaction processing systems incorporate real-time processing 5 capabilities. Many online systems also depend on the capabilities of fault tolerant computer systems that can1continue to operate even if parts of the system fail. We will discuss this fault tolerant concept in Chapter 13. B Database Maintenance. An organization’s databases must be updated by its U so that they are always correct and up-to-date. transaction processing systems Therefore, transaction processing systems serve to assist in maintaining the corporate databases of an organization to reflect changes resulting from day-to-day business transactions. For example, credit sales made to customers will cause customer account balances to be increased and the amount of inventory on hand to be decreased. Database maintenance ensures that these and other changes are reflected in the data records stored in the company’s databases. Document and Report Generation. Transaction processing systems produce a variety of documents and reports. Examples of transaction documents include purchase orders, paychecks, sales receipts, invoices, and customer statements. Transaction reports might take the form of a transaction listing such as a payroll register, or edit reports that describe errors detected during processing. obr76817_ch07_270-306.indd Page 281 8/13/10 2:58 PM user-f494 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Chapter 7 / e-Business Systems ● 281 • Inquiry Processing. Many transaction processing systems allow you to use the Internet, intranets, extranets, and Web browsers or database management query languages to make inquiries and receive responses concerning the results of transaction processing activity. Typically, responses are displayed in a variety of prespecified formats or screens. For example, you might check on the status of a sales order, the balance in an account, or the amount of stock in inventory and receive immediate responses at your PC. Enterprise Collaboration Systems Really difficult business problems always have many aspects. Often a major decision depends on an impromptu search for one or two key pieces of auxiliary information and a quick ad hoc analysis of several possible scenarios. You need software tools that easily combine and recombine data from many sources. You need Internet access for all kinds of research. Widely scattered people need to be able to collaborate and work the data in different ways. Enterprise collaboration systems (ECS) are cross-functional information systems Wcoordination, and collaboration among the members of that enhance communication, business teams and workgroups. I Information technology, especially Internet technologies, provides tools to help us collaborate—to communicate ideas, share resources, L work efforts as members of the many formal and inand coordinate our cooperative formal process and projectS teams and workgroups that make up many of today’s organizations. Thus, the goal of enterprise collaboration systems is to enable us to work O together more easily and effectively by helping us to: N with each other. • Communicate: Share information , Coordinate: Organize our individual work efforts and use of resources. • • Collaborate: Work together cooperatively on joint projects and assignments. For example, engineers,Jbusiness specialists, and external consultants may form a virtual team for a project. The team may rely on intranets and extranets to collaborate A via e-mail, videoconferencing, discussion forums, and a multimedia database of workin-progress information atM a project Web site. The enterprise collaboration system may use PC workstations networked to a variety of servers on which project, corpoI rate, and other databases are stored. In addition, network servers may provide a variety of software resources, such E as Web browsers, groupware, and application packages, to assist the team’s collaboration until the project is completed. Tools for Enterprise Collaboration 5 The capabilities and potential of the Internet, as well as intranets and extranets, are 0 enterprise collaboration tools in business. However, driving the demand for better Internet technologies like 5Web browsers and servers, hypermedia documents and databases, and intranets and extranets provide the hardware, software, data, and 1 of the groupware tools for enterprise collaboration network platforms for many that business users want. Figure B 7.8 provides an overview of some of the software tools for electronic communication, electronic conferencing, and collaborative work U management. Electronic communication tools include e-mail, voice mail, faxing, Web publishing, bulletin board systems, paging, and Internet phone systems. These tools enable you to send electronically messages, documents, and files in data, text, voice, or multimedia over computer networks. This helps you share everything from voice and text messages to copies of project documents and data files with your team members, wherever they may be. The ease and efficiency of such communications are major contributors to the collaboration process. Electronic conferencing tools help people communicate and collaborate as they work together. A variety of conferencing methods enable the members of teams and workgroups at different locations to exchange ideas interactively at the same time, or at different times at their convenience. These include data and voice conferencing, obr76817_ch07_270-306.indd Page 282 8/13/10 2:58 PM user-f494 282 ● /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Module III / Business Applications F IGU RE 7.8 Electronic communications, conferencing, and collaborative work software tools enhance enterprise collaboration. Enterprise Collaboration Systems Electronic Communications Tools Electronic Conferencing Tools e-Mail Instant Messaging Voice Mail Faxing Web Publishing Paging Data Conferencing Voice Conferencing Videoconferencing Discussion Forums Chat Systems Electronic Meeting Systems Collaborative Work Management Tools Calendaring and Scheduling Task and Project Management Workflow Systems Document Sharing Knowledge Management W I L videoconferencing, chat systems, S and discussion forums. Electronic conferencing options also include electronic meeting systems and other group support systems where team O time and place in a decision room setting, or use the members can meet at the same Internet to work collaboratively N anywhere in the world. See Figure 7.9. , F IGU RE 7.9 QuickPlace by Lotus Development helps virtual workgroups set up Webbased work spaces for collaborative work assignments. J A M I E 5 0 5 1 B U Source: Courtesy of International Business Machines Corporation. obr76817_ch07_270-306.indd Page 283 8/13/10 2:58 PM user-f494 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Chapter 7 / e-Business Systems ● 283 Collaborative work management tools help people accomplish or manage group work activities. This category of software includes calendaring and scheduling tools, task and project management, workflow systems, and knowledge management tools. Other tools for joint work, such as joint document creation, editing, and revision, are found in the software suites discussed in Chapter 4. Exploring Virtual Worlds as Collaboration Tools For emergency responders working along Interstate 95, accidents aren’t a game; they’re a way of life (and death). So it seemed odd to a group of firefighters, cops, and medics when researchers from the University of Maryland suggested that they use a virtual world to collaborate on training for rollovers, multicar pileups, and lifethreatening injuries. The phrase virtual world is often associated with Second Life, the much-hyped 3-D environment hosted by Linden Lab that allows users to talk to friends, sell T-shirts, fly around on carpets, and even build amusement parks—in other words, to play. “It wasn’t until we started to doW elaborate demos that the first responders started to realize the true potential,” says Michael Pack, director of research with the University of I Maryland’s Center for Advanced Transportation Technology, who has since begun L project that could accommodate training for hundreds rolling out a virtual world pilot of emergency workers. S Industry analysts and developers of virtual worlds believe that by immersing usO ers in an interactive environment that allows for social interactions, virtual worlds have the potential to succeed where other collaborative technologies, like teleconferN encing, have failed. Phone-based meetings begin and end abruptly, at the mercy of , the person or service administering it. In a virtual world, conversations between employees can continue within the virtual space—just as they do in company hallways after a meeting ends. J overcome many technical and cultural obstacles before However, businesses must they adopt virtual worlds on A a major scale. Perhaps even more important than the technical challenges, companies must tackle the issue of workers’ online identities. Mknown as avatars, must be constructed in such a way that People’s 3-D representations, allows users of virtual worlds I to have faith that they’re talking to the right colleague. Security challenges abound; most companies using virtual worlds today do so on a E public or externally hosted platform with limited options to protect corporate data. Pack says training in a virtual world presents a desirable alternative to real-life exercises, which can be pricey and inefficient. “You’d go out in a field and flip a car 5 over and have people act as victims,” he says. Trainers couldn’t introduce many vari0 “It’s supposed to be as human as possible, so anyables (such as mounting traffic). thing goes,” he says. “We’ve 5 put together lots of scenarios, from fender benders to 20-car pileups. We put [the participants] in dangerous situations to see how they will respond.” In virtual worlds,1Pack and his team can program multiple scenarios into the software. For example, B if a first responder gets out of his car and fails to put on a reflective jacket, the system might respond with a car hitting that person’s avatar. “You want people to be U so comfortable in the virtual world that they’re not concentrating on how to use them,” Pack says. “They can’t be worried about how to turn left or talk to someone. They need to be worried about how to do their jobs, just like they would in the real world.” Source: Adapted from C. G. Lynch, “Companies Explore Virtual Worlds as Collaboration Tools,” CIO Magazine, February 6, 2008. obr76817_ch07_270-306.indd Page 284 13/08/10 7:38 PM user-f501 284 ● /Users/user-f501/Desktop Module III / Business Applications SECTION II Introduction Functional Business Systems Business managers are moving from a tradition where they could avoid, delegate, or ignore decisions about IT to one where they cannot create a marketing, product, international, organization, or financial plan that does not involve such decisions. There are as many ways to use information technology in business as there are business activities to be performed, business problems to be solved, and business opportunities to be pursued. As a business professional, you should have a basic understanding and appreciation of the major ways information systems are used to support each of the functions of business that must be accomplished in any company that wants to succeed. Thus, in this section, we will discuss functional business systems, that is, a variety of types of information systems (transaction processing, management information, deciW sion support, and so on) that support the business functions of accounting, finance, I marketing, operations management, and human resource management. Read the Real World CaseL on the next page. We can learn a lot about the many IT issues involved in unified financial reporting from this case. See Figure 7.10. IT in Business S As a business professional, it isOalso important that you have a specific understanding of how information systems affect N a particular business function (e.g., marketing) or a particular industry (e.g., banking) that is directly related to your career objectives. For , objective is a marketing position in banking should example, someone whose career have a basic understanding of how information systems are used in banking and how they support the marketing activities of banks and other firms. Figure 7.11 illustrates howJ information systems can be grouped into business function categories. Thus, information A systems in this section will be analyzed according to the business function they support by looking at a few key examples in each funcM an appreciation of the variety of functional business tional area. This should give you systems that both small and large I business firms may use. E Marketing Systems The business function of marketing is concerned with the planning, promotion, and sale of existing products in existing markets, and the development of new products and new markets to better attract 5 and serve present and potential customers. Thus, marketing performs an essential function in the operation of a business enterprise. Busi0 ness firms have increasingly turned to information technology to help them perform 5 vital marketing functions in the face of the rapid changes of today’s environment. Figure 7.12 illustrates how marketing information systems provide information tech1 nologies that support major components of the marketing function. For example, InterB net/intranet Web sites and services make an interactive marketing process possible where customers can become partnersU in creating, marketing, purchasing, and improving products and services. Sales force automation systems use mobile computing and Internet technologies to automate many information processing activities for sales support and management. Other marketing information systems assist marketing managers in product planning, pricing, and other product management decisions; advertising, sales promotion, and targeted marketing strategies; and market research and forecasting. Finally, enterprisewide systems like customer relationship management (discussed in Chapter 8) link to the portfolio of marketing information systems to provide and obtain data essential to the marketing function. Let’s take a closer look at three of these marketing applications. Interactive Marketing The term interactive marketing has been coined to describe a customer-focused marketing process that is based on using the Internet, intranets, and extranets to establish two-way transactions between a business and its customers or potential customers. obr76817_ch07_270-306.indd Page 285 8/13/10 2:58 PM user-f494 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Chapter 7 / e-Business Systems ● REAL WORLD CASE I 2 Nationwide Insurance: Unified Financial Reporting and “One Version of the Truth” n a span of three short years, between 2000 and 2002, Nationwide Insurance got a new CEO, CIO, and CFO. Jerry Jurgensen, elected by Nationwide’s board in 2000 to replace the retiring CEO, was hired for his financial acumen and his ability to transform a business’s culture. Michael Keller was named the company’s first enterprisewide CIO the following year. He had 25 years of IT experience managing big infrastructure and systems integration projects. In 2002, Robert Rosholt replaced the retiring CFO and joined the others in Nationwide’s Columbus, Ohio headquarters, bringing along deep experience in all things financial. The three were old buddies who had worked together at financial giant Bank One. Now they held the reins at Nationwide and their goal was to take its dozens of business units, selling a diverse set of insurance and financial products, to a higher level. But to get there, Jurgensen needed financial snapshots of how Nationwide was doing at any given moment. And getting them wasn’t so easy; in fact, it was almost impossible. W I L S O N , F IGUR E 7.10 J A M I E 5 0 5 1 B U Companies are deploying technology and reengineering processes in search of “one source of the truth” across the enterprise. Source: © Ryan McVay/Getty Images. 285 “When you’re dealing with 14 general ledger platforms and over 50 applications,” Rosholt says, “it was enormous work to get the financials out.” The problem lay knotted in a tangle of systems and applications, and some 240 sources of financial data flowing in and around Nationwide’s business units. The units had always run independently, and that’s how financial reporting was handled. “There was a variety of [financial reporting] languages,” Rosholt says, which affected Nationwide’s ability to forecast, budget, and report. “It was difficult,” says Rosholt, “to ask ‘How are we doing?’” Keller’s situation was no better. “One of the first questions I was asked when I joined was, How much money do we spend, total, on IT?” Keller recalls. “The answer was, we didn’t know. It took weeks to put that answer together.” Jurgensen wanted to be able to run Nationwide as if it were one unified enterprise. He wanted, in Rosholt’s words, “to do things that are common, and respect the things that are different. And that was a big change.” Indeed, the transformation the company embarked upon in early 2004 was daunting—a master data management makeover that would alter how every Nationwide business reported its financials, how accounting personnel did their jobs, how data were governed and by whom, and how the company’s information systems would pull all that together. The goal was simple: one platform; one version of the financial truth. Simple goal, but a difficult challenge. Good master data governance can happen only when the various constituencies that own the data sources agree on a common set of definitions, rules, and synchronized procedures, all of which requires a degree of political maneuvering that’s not for the faint of heart. Nationwide began its finance transformation program, called Focus, with its eyes wide open. The executive troika of Jurgensen, Rosholt, and Keller had pulled off a similar project at Bank One and thought it knew how to avoid the big mistakes. That, in part, is why Rosholt, who had ultimate say on the project, would not budge on its 24-month time line. “The most important aspect was sticking to discipline and not wavering,” he recalls. And that’s why the technology piece was, from the outset, the last question to be addressed. “It wasn’t a technology project,” insists Lynda Butler, whose position as vice president of performance management was created to oversee Focus (which stands for Faster, Online, Customer-driven, User-friendly, Streamlined). She says that Nationwide approached Focus first and foremost as a business and financial project. Nationwide considers the project, which made its deadline, a success, although everyone emphasizes that there’s more work to be done. Says Keller, “There’s a foundation to build on where there wasn’t one before.” “Fourteen general ledgers, 12 reporting tools, 17 financial data repositories and 300,000 spreadsheets were used in obr76817_ch07_270-306.indd Page 286 8/13/10 2:58 PM user-f494 286 ● /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Module III / Business Applications finance,” says Butler. “That’s not real conducive to ‘one version of the truth.’” Early in his tenure as CEO, Jurgensen’s concerns about the company’s financials weren’t limited to the timeliness of the data; he was also worried about its integrity and accuracy. For example, because Nationwide had such a variety of businesses, the company carried a lot of risk—some easily visible, some not. “So, if equity markets went down, we were exposed,” notes Butler. “But we didn’t realize that until the markets actually went down. We needed some enterprise view of the world.” Executives also knew that common data definitions among all the business units would provide comparable financial data for analysis—which was difficult, if not impossible, without those definitions. “We needed consistent data across the organization,” Rosholt says. “We were looking for one book of record.” CFO Rosholt went back to his Bank One roots and recruited Vikas Gopal, who had proven his mettle on similar projects, to lead the IT team. With no wiggle room on the time line, the team, with Rosholt’s encouragement, followed what it refers to as the “80/20” rule. It knew that it wasn’t going to get 100 percent of the desired functionality of the new system, so the team decided that if it could get roughly 80 percent of the project up and running in 24 months, it could fix the remaining 20 percent later. “If we went after perfection,” says Rosholt, “we’d still be at it.” Keeping in mind that no one would get everything he wanted, the Focus team interviewed key stakeholders in Nationwide’s business units to understand where their pain points were. “We went back to basics,” says Gopal. “We said, ‘Let’s talk about your financial systems, how they help your decision making.’ ” In other words, people were introduced to the concept of making trade-offs, which allowed the Focus team to target the system’s core functionalities and keep control over the project’s scope. It was only after the requirements, definitions, and parameters were mapped out that Gopal’s group began to look at technologies. Gopal had two rules to guide them: First, all financial-related systems had to be subscribers to the central book of record. Second, none of the master data in any of CASE STUDY QUESTIONS 1. The project that Nationwide undertook was quite clearly a success. What made this possible? Discuss three different practices that helped Nationwide pull this off. Use examples from the case where necessary. 2. The case notes that Nationwide had in mind a simple goal, but faced a difficult challenge. Why was this so difficult? 3. What is the business value derived from the successful completion of this project? What can executives at Nationwide do now that could not before? Provide some examples. the financial applications could ever be out of sync. So the Focus team’s final step was to evaluate technologies that would follow and enforce those rules. His team sought out best-of-breed toolsets from vendors such as Kalido and Teradata that would be able to tie into their existing systems. Gopal wasn’t overly “worried about [technology] execution” because he had assembled this type of system before and knew that the technology solutions on the market, even in the most vanilla forms, were robust enough for Nationwide’s needs. What did worry him was Nationwide’s legion of financial employees who didn’t relish the idea of changing the way they went about their work. At the beginning of the program, Nationwide formed a “One Finance Family” program that tried to unify all the finance folks around Focus. Executives were also able to identify those employees who were most affected through weekly “change meetings” and provide support. W The Focus team had to remain resolute. The overarchI ing theme, that there would be no compromise in data qualand integrity, was repeated early and often, and executives Lity made sure that the gravity of the change was communicated Sbefore anyone saw any new software. Finally, in March 2005, with three waves of planned deOployments ahead of it, the team started rolling out the new NFocus system. By fall 2005, there was light at the end of the tunnel. The team could see the new business processes and , financial data governance mechanisms actually being used by Nationwide employees, and it all was working. “They saw the value they were creating,” recalls Butler. “The ‘aha’ Jmoment came when we finally got a chance to look in the rear-view mirror.” A The first benefit of the transformation that Rosholt Mmentions is something that didn’t happen. “You go through a project such as this, in a period of extreme regulatory and I accounting oversight, and these things can cough up more such as earnings restatements. We’ve avoided that,” Eissues, he says. “That doesn’t mean we’re perfect, but that’s one thing everyone’s amazed at. We went through all this change and nothing coughed up. Our balance sheet was right.” 5 Source: Adapted from Thomas Wailgum, “How Master Data Management 0Unified Financial Reporting at Nationwide Insurance,” CIO.com, December 21, 2007. 5 1 REAL WORLD ACTIVITIES B U1. Technologies and systems involved in financial reporting have received a great deal of attention in the last few years due to renewed regulatory focus on the integrity and reliability of financial information. Go online and research how companies are deploying technology to deal with these issues. Prepare a report to summarize your findings. 2. A number of political and cultural issues were involved in the implementation of the “one source of the truth” approach at Nationwide. Can these obstacles be overcome simply by mandating compliance from top management? What else should companies do to help ease these transitions? Break into small groups with your classmates and brainstorm some possible actions. obr76817_ch07_270-306.indd Page 287 8/13/10 2:58 PM user-f494 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Chapter 7 / e-Business Systems ● 287 FIGURE 7.11 Examples of functional business information systems. Note how they support the major functional areas of business. Marketing Customer relationship management Interactive marketing Sales force automation Production/ Operations Human Resource Management Manufacturing resource planning Manufacturing execution systems Process control Functional Business Systems Order processing Inventory control Accounts receivable Accounts payable Payroll General ledger Accounting W I L S O N , Compensation analysis Employee skills inventory Personnel requirements forecasting Cash management Credit management Investment management Capital budgeting Financial forecasting J A Finance M The goal of interactive marketing is to enable a company to use those networks profitI ably to attract and keep customers who will become partners with the business in E creating, purchasing, and improving products and services. In interactive marketing, customers are not just passive participants who receive media advertising prior to purchase; they are actively engaged in network-enabled 5 proactive and interactive processes. Interactive marketing encourages customers to become involved in product0development, delivery, and service issues. This is enabled by various Internet technologies, including chat and discussion groups, Web forms 5 and questionnaires, instant messaging, and e-mail correspondence. Finally, the expected 1 B U F IGUR E 7.12 Marketing information systems provide information technologies to support major components of the marketing function. Interactive Marketing Marketing Information Systems Sales Force Automation Market Research and Forecasting Customer Relationship Management Advertising and Promotion Sales Management Product Management obr76817_ch07_270-306.indd Page 288 8/13/10 2:58 PM user-f494 288 ● /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Module III / Business Applications F IGU RE 7.13 The five major components of targeted marketing for electronic commerce. Online Behavior Demographic / Psychographic Context Community Content outcomes of interactive marketing are a rich mixture of vital marketing data, new product ideas, volume sales, and strong customer relationships. Targeted Marketing Targeted marketing has become an important tool in developing advertising and promotion strategies to strengthenW a company’s e-commerce initiatives, as well as its traditional business venues. As illustrated I in Figure 7.13, targeted marketing is an advertising and promotion management concept that includes five targeting components: L motion methods to appeal S to people in specific communities. They can be communities of interest, such as O virtual communities of online sporting enthusiasts, or arts and crafts hobbyists, or geographic communities formed by the Web sites of N a city or other local organization. • Content. Advertising, such, as electronic billboards or banners, can be placed on a • Community. Companies can customize their Web advertising messages and pro- • • • variety of selected Web sites, in addition to a company’s Web site. The content of these messages is aimed at the targeted audience. An ad for a product campaign on the opening page of an J Internet search engine is a typical example. Context. Advertising appears A only in Web pages that are relevant to the content of a product or service. So, advertising is targeted only at people who are already M looking for information about a subject matter (e.g., vacation travel) that is related I car rental services). to a company’s products (e.g., Demographic/Psychographic E . Web marketing efforts can be aimed only at specific types or classes of people: for example, unmarried, twenty-something, middle income, male college graduates. 5 and promotion efforts can be tailored to each visit Online Behavior. Advertising to a site by an individual. This 0 strategy is based on a variety of tracking techniques, such as Web “cookie” files recorded on the visitor’s disk drive from previous visits. This enables a company to5track a person’s online behavior at its Web site so marketing efforts (such as1coupons redeemable at retail stores or e-commerce Web sites) can be targeted to that individual at each visit to its Web site. B An interesting and effective marriage between e-business and target marketing is the emergence of the digital U billboard. It is estimated that about 450,000 billboard faces exist in the United States. While only a tiny fraction of them are digital, the new billboards are making a huge impact on markets all over the country. The concept behind the digital billboard is elegantly simple. A billboard is constructed using hundreds of thousands of small LEDs, which are controlled via a computer interface that can be accessed via the Web. Advertisers can change their messages quickly, including multiple times in one day. For example, a restaurant can feature breakfast specials in the morning and dinner specials in the evening. A realtor can feature individual houses for sale and change the creative content when the house sells. Print and broadcast news media alike use digital billboards to deliver headlines, weather updates, and programming information. WCPO-TV credits its meteoric rise in the ratings to the use of digital billboards to deliver breaking news and updates to the nightly newscast. obr76817_ch07_270-306.indd Page 289 8/13/10 2:58 PM user-f494 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Chapter 7 / e-Business Systems ● 289 The television station went from the bottom of the ratings in 2002 to the third largest ABC affiliate in the nation. When the I-35 bridge collapsed in Minneapolis in 2007, a dangerous situation for unsuspecting drivers existed. Within minutes, a digital billboard network in the area switched from showing advertising copy to informing drivers about the collapse. Later that evening, the digital billboards advised motorists to take alternate routes. Target marketing is in the digital arena, with a new way of doing something old. Sales Force Automation F IGUR E 7.14 This Web-based sales force automation package supports sales lead management of qualified prospects, and management of current customer accounts. Increasingly, computers and the Internet are providing the basis for sales force automation. In many companies, the sales force is being outfitted with notebook computers, Web browsers, and sales contact management software that connect them to marketing Web sites on the Internet, extranets, and their company intranets. This not only increases the personal productivity of salespeople, but it dramatically speeds up the capture and analysis of sales data from the field to marketing managers at company headquarters. In return, it allows marketing and sales management to improve the delivery of information and the support they provide to their salespeople. Therefore, Wsales force automation as a way to gain a strategic advanmany companies are viewing tage in sales productivity and I marketing responsiveness. See Figure 7.14. For example, salespeople use their PCs to record sales data as they make their calls on customers and prospectsLduring the day. Then each night, sales reps in the field can connect their computers byS modem and telephone links to the Internet and extranets, which can access intranet or other network servers at their company. Then, they can upload information on salesO orders, sales calls, and other sales statistics, as well as send e-mail messages and access N Web site sales support information. In return, the network servers may download product availability data, prospect lists of information on good sales prospects, and e-mail ,messages. J A M I E 5 0 5 1 B U Source: Courtesy of Salesforce.com. obr76817_ch07_270-306.indd Page 290 8/13/10 2:58 PM user-f494 290 ● /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Module III / Business Applications Wireless Sales Force Automation Drives Sales for adidas America Located in Portland, Oregon, with more than 1,000 employees, adidas America produces athletic footwear, apparel, accessories and equipment products. With roots reaching back to 1949, adidas America is part of a larger organization that strives to be the global leader in the sporting goods industry. Adidas products are available in virtually every country. A leader in its industry, adidas America recognized that it could increase its sales potential by automating many components of the sales process. Its team of 200 sales representatives had been using BlackBerry handheld devices for email. Before implementing its wireless sales force automation solution, the company’s sales representatives were required to borrow a customer’s phone or use their personal mobile phones to check warehouse inventory. The company realized that this slowed sales momentum. “We wanted to strike while the iron is hot, while the enthusiasm is there for the product,” says Tim Oligmueller, sales force automation manager for adidas America. “Real-time wireless access is important because we want the customer to see that we W have immediate access to data to meet their needs.” Lacking wireless capability, some I sales representatives would prepare for a meeting with a customer by checking inventory before they left the office. L However, if an item wasn’t available when the sales representative returned to the office, the rep would have to contact the customer to S change the order. At the foundation of adidas O America’s wireless solution is Atlas2Go, an internally developed sales force automation application. The custom wireless applicaN tion runs on the sales representatives’ BlackBerry devices and performs real-time inventory queries into the company’s SAP application data over AT&T’s wireless , network. Sales reps can view up-to-date inventory information, and can choose to receive an email with inventory status, which they can then forward to their J customer. The wireless sales force automation solution has provided adidas America with A valuable benefits. Sales representatives can more quickly and easily check inventory from the field while providingM improved customer service. Back-office staff work more I efficiently with fewer interruptions from sales representatives. Oligmueller notes that the adidas inventory system receives nearly 120 E time otherwise spent by phone calls between sales wireless queries each day, saving and back-office staff. The application was pushed out over the air to the sales representatives’ BlackBerry 5 sales meeting. Training was done on the spot at devices during a regularly scheduled the same meeting. Oligmueller0estimates that the company spent less than $10,000 to develop the software application. “It was so inexpensive to do that just one order paid for it,” said Oligmueller. “Our 5 return on investment is going to grow and grow.” 1 B U Source: Adapted from “Sales Force Automation Case Study—Wireless Sales Force Automation Drives Sales for adidas America,” AT&T Wireless Case Study, June 30, 2008. Manufacturing Systems Manufacturing information systems support the production/operations function that in- cludes all activities concerned with the planning and control of the processes producing goods or services. Thus, the production/operations function is concerned with the management of the operational processes and systems of all business firms. Information systems used for operations management and transaction processing support all firms that must plan, monitor, and control inventories, purchases, and the flow of goods and services. Therefore, firms such as transportation companies, wholesalers, retailers, financial institutions, and service companies must use production/operations information systems to plan and control their operations. In this section, we will concentrate on computer-based manufacturing applications to illustrate information systems that support the production/operations function. obr76817_ch07_270-306.indd Page 291 8/13/10 2:58 PM user-f494 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Chapter 7 / e-Business Systems ● ComputerIntegrated Manufacturing 291 Once upon a time, manufacturers operated on a simple build-to-stock model. They built 100 or 100,000 of an item and sold them via distribution networks. They kept track of the stock of inventory and made more of the item once inventory levels dipped below a threshold. Rush jobs were both rare and expensive, and configuration options limited. Things have changed. Concepts like just-in-time inventory, build-to-order (BTO) manufacturing, end-to-end supply chain visibility, the explosion in contract manufacturing, and the development of Web-based e-business tools for collaborative manufacturing have revolutionized plant management. A variety of manufacturing information systems, many of them Web-enabled, are used to support computer-integrated manufacturing (CIM). See Figure 7.15. CIM is an overall concept that emphasizes that the objectives of computer-based systems in manufacturing must be to: • Simplify (reengineer) production processes, product designs, and factory organi• • zation as a vital foundation to automation and integration. Automate production processes and the business functions that support them W and robots. with computers, machines, I and support processes using computer networks, crossIntegrate all production functional business software, L and other information technologies. The overall goal of CIM Sand such manufacturing information systems is to create flexible, agile, manufacturing processes that efficiently produce products of the highO the concepts of flexible manufacturing systems, agile est quality. Thus, CIM supports manufacturing, and total quality N management. Implementing such manufacturing concepts enables a company to respond to and fulfill customer requirements quickly with , high-quality products and services. Manufacturing information systems help companies simplify, automate, and integrate many of the activities needed to produce products of all kinds. For example, computers J better products using both computer-aided engineering are used to help engineers design (CAE) and computer-aided design A (CAD) systems, and better production processes with computer-aided process planning. They are also used to help plan the types of material M needed in the production process, which is called material requirements planning (MRP), and to integrate MRP with Iproduction scheduling and shop floor operations, which is known as manufacturing resource planning. Many of the processes within manufacturing E F IG UR E 7.15 Enterprise Resource Planning Manufacturing information systems support computerintegrated manufacturing. Note that manufacturing resource planning systems are one of the application clusters in an ERP system. 5 0 Production 5 Forecasting 1 Production B Scheduling Material U Manufacturing Resource Planning Systems Requirements Planning Manufacturing Execution Systems Shop Floor Scheduling Shop Floor Control Quality Control Computer-Aided Design Computer-Aided Engineering Machine Control Capacity Planning Production Cost Control Engineering Systems Computer-Aided Process Planning Robotics Control Process Control Product Simulation and Prototyping Computer-Integrated Manufacturing obr76817_ch07_270-306.indd Page 292 8/13/10 2:58 PM user-f494 292 ● /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Module III / Business Applications resource planning systems are included in the manufacturing module of enterprise resource planning (ERP) software, which will be discussed in Chapter 8. Computer-aided manufacturing (CAM) systems are those that automate the production process. For example, this could be accomplished by monitoring and controlling the production process in a factory (manufacturing execution systems) or by directly controlling a physical process (process control), a machine tool (machine control), or machines with some humanlike work capabilities (robots). Manufacturing execution systems (MES) are performance-monitoring information systems for factory floor operations. They monitor, track, and control the five essential components involved in a production process: materials, equipment, personnel, instructions and specifications, and production facilities. MES includes shop floor scheduling and control, machine control, robotics control, and process control systems. These manufacturing systems monitor, report, and adjust the status and performance of production components to help a company achieve a flexible, high-quality manufacturing process. Process control is the use of computers to control an ongoing physical process. W physical processes in petroleum refineries, cement Process control computers control plants, steel mills, chemical plants, I food product manufacturing plants, pulp and paper mills, electric power plants, and so on. A process control computer system requires the use of special sensing devices L that measure physical phenomena such as temperature or pressure changes. These continuous physical measurements are converted to digital S form by analog-to-digital converters and relayed to computers for processing. Machine control is the use O of computers to control the actions of machines. This is also popularly called numericalNcontrol. The computer-based control of machine tools to manufacture products of all kinds is a typical numerical control application used by many factories throughout the, world. Human Resource Systems HRM and the Internet HRM and Corporate Intranets The human resource management J (HRM) function involves the recruitment, placement, evaluation, compensation, and development of the employees of an organizaA management is the effective and efficient use of the tion. The goal of human resource human resources of a company. M Thus, human resource information systems (HRIS) are designed to support (1) planning to meet the personnel needs of the business, (2) development of employeesI to their full potential, and (3) control of all personnel policies and programs. Originally, E businesses used computer-based information systems to (1) produce paychecks and payroll reports, (2) maintain personnel records, and (3) analyze the use of personnel in business operations. Many firms have gone beyond these traditional personnel management functions and have developed human resource 5 information systems that also support (1) recruitment, selection, and hiring; (2) job 0 placement; (3) performance appraisals; (4) employee benefits analysis; (5) training and development; and (6) health, safety, 5 and security. See Figure 7.16. 1 force for change in human resource management. The Internet has become a major For example, online HRM systems B may involve recruiting for employees through recruitment sections of corporate Web sites. Companies are also using commercial recruiting U services and databases on the World Wide Web, posting messages in selected Internet newsgroups, and communicating with job applicants via e-mail. The Internet has a wealth of information and contacts for both employers and job hunters. Top Web sites for job hunters and employers on the World Wide Web include Monster.com, HotJobs.com, and CareerBuilder.com. These Web sites are full of reports, statistics, and other useful HRM information, such as job reports by industry, or listings of the top recruiting markets by industry and profession. Intranet technologies allow companies to process most common HRM applications over their corporate intranets. Intranets allow the HRM department to provide around-the-clock services to their customers: the employees. They can also disseminate valuable information faster than through previous company channels. Intranets can obr76817_ch07_270-306.indd Page 293 9/29/10 7:31 PM user-f494 /208/MHBR180/obr76817_disk1of1/0073376817/obr76817_pagefiles Chapter 7 / e-Business Systems ● 293 F IGUR E 7.16 Human resource information systems support the strategic, tactical, and operational use of the human resources of an organization. Staffing Training and Development Compensation Administration Strategic Systems Human resource planning Labor force tracking Succession planning Performance appraisal planning Contract costing Salary forecasting Tactical Systems Labor cost analysis and budgeting Turnover analysis Training effectiveness Career matching Compensation effectiveness and equity analysis Benefit preference analysis Operational Systems Recruiting Workforce planning/ scheduling W I L Skill assessment S Performance evaluations O N , Payroll control Benefits administration collect information online from employees for input to their HRM files, and they can enable managers and other employees to perform HRM tasks with little intervention J Figure 7.17. by the HRM department. See For example, employee self-service (ESS) intranet applications allow employees to view A benefits, enter travel and expense reports, verify employment and salary information, M I E F IGUR E 7.17 An example of an employee hiring review system. 5 0 5 1 B U Source: Courtesy of IBM. obr76817_ch07_270-306.indd Page 294 8/13/10 2:58 PM user-f494 294 ● /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Module III / Business Applications access and update their personal information, and enter time-sensitive data. Through this completely electronic process, employees can use their Web browsers to look up individual payroll and benefits information online, right from their desktop PCs, mobile computers, or intranet kiosks located around a work site. Another benefit of the intranet is that it can serve as a superior training tool. Employees can easily download instructions and processes to get the information or education they need. In addition, employees using new technology can view training videos over the intranet on demand. Thus, the intranet eliminates the need to loan out and track training videos. Employees can also use their corporate intranets to produce automated paysheets, the online alternative to time cards. These electronic forms have made viewing, entering, and adjusting payroll information easy for both employees and HRM professionals. Chiquita Brands: Finding Out How Many Employees They Have It seems like a straightforward and simple question that your typical HR application and corporate ERP system should be able to answer: How many employees are W working for our company today? At Chiquita Brands, the Fortune 500 company best known for its blue-stickered I bananas, “We couldn’t answer that question,” recalls Manjit Singh, Chiquita’s CIO L since September 2006. “It would take us a couple S of weeks to get the answer pulled together and by that time, of course, it was all incorrect.” O Chiquita boasts a global workforce of 23,000 employees in 70 countries on six continents, although most ofN the workers are predominantly in Central America. Until 2008, the Cincinnati-based food manufacturer had employed a hodgepodge of legacy HR systems that were ,inadequate at managing the complex demands of its decentralized workforce. Manual, inefficient workarounds (Excel spreadsheets and paper-based processes) were frequently used. J When Chiquita hired a new employee, for instance, the HR paper-trail process A notes. could contain 20 to 30 steps, Singh “At any point, if that paper gets lost, things are going to fall through the cracks,” M he says. “Many times new employees have shown up and haven’t had an office, a PC I or a phone. Obviously that causes pain to the employee, it doesn’t make the employer look good and you’ve lost productivity from the moment the employee walks E through the door.” In October 2008, Chiquita went live on Workday HCM with 5,000 U.S.-based employees and 500 managers 5 across 42 countries. Singh took advantage of customization options Workday offered when necessary. But he and his team tried to minimize customization as much as0possible, so that they could shorten implementation time lines as they continue phased 5 rollouts to 18,000 Latin America–based employees and nearly 3,000 employees throughout Europe. 1 Today, Chiquita’s North American operations enjoy the fruits of the new system, including core HR functions such B as employee hiring, job changes, compensation tracking and more. “We can see exactly where in the process the employee is, or how the U hiring is going, who is holding it up and why it’s being held up, so that we can guarantee when an employee walks through the door, they have an office, a phone, a PC, and they’ve been given access to all of the systems they need to have access to,” says Singh. “That’s big, when you talk about the number of employees we hire in a given month,” Singh continues. “That drops dollars back down to the bottom line.” Lastly, the new HR system has freed up many of Chiquita’s 200 IT staffers to focus on higher-value projects. “I want my folks sitting arm and arm with business folks, talking about process transformation and trying to figure out how to bring products to market even quicker,” Singh says, “not keeping the lights on running a system.” Source: Adapted from Thomas Wailgum, “Why Chiquita Said ‘No’ to Tier 1 ERP Providers and ‘Yes’ to SaaS Apps from Upstart Workday,” CIO Magazine, April 7, 2009. obr76817_ch07_270-306.indd Page 295 8/13/10 2:58 PM user-f494 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Chapter 7 / e-Business Systems ● Accounting Systems Accounting information systems are the oldest and most widely used information systems in business. They record and report business transactions and other economic events. Computer-based accounting systems record and report the flow of funds through an organization on a historical basis and produce important financial statements such as balance sheets and income statements. Such systems also produce forecasts of future conditions such as projected financial statements and financial budgets. A firm’s financial performance is measured against such forecasts by other analytical accounting reports. Operational accounting systems emphasize legal and historical record-keeping and the production of accurate financial statements. Typically, these systems include transaction processing systems such as order processing, inventory control, accounts receivable, accounts payable, payroll, and general ledger systems. Management accounting systems focus on the planning and control of business operations. They emphasize cost accounting reports, the development of financial budgets and projected financial statements, and analytical reports comparing actual to forecasted performance. Winterrelationships of several important accounting inforFigure 7.18 illustrates the mation systems commonlyIcomputerized by both large and small businesses. Many accounting software packages are available for these applications. Figure 7.19 provides L purpose of six common, but important, accounting a good summary of the essential information systems used by Sboth large and small business firms. O that the accounting information systems illustrated in It should come as no surprise Figures 7.18 and 7.19 are being N transformed by Internet technologies. Using the Internet and other networks changes how accounting information systems monitor and track business activity. The, interactive nature of online accounting systems calls for new forms of transaction documents, procedures, and controls. This particularly applies to systems like order processing, inventory control, accounts receivable, and J in Figure 7.18, these systems are directly involved in accounts payable. As outlined the processing of transactions A between a business and its customers and suppliers. So Online Accounting Systems M F IGUR E 7.18 Important accounting information systems for transaction processing and financial reporting. I Note how they are related to each other in terms of input and output flows. E Sales Order Processing 295 Billing Sales Analysis 5 Cash 0 Receipts 5 Cash Receipts and Disbursements Transaction Processing Systems 1 B Cash Accounts Disbursements Payable U Accounts Receivable General Ledger Financial Reporting General Ledger Processing and Reporting System Sales Transaction Processing System Purchases Payroll Purchases Transaction Processing System Inventory Processing Payroll Transaction Processing System Timekeeping obr76817_ch07_270-306.indd Page 296 8/13/10 2:58 PM user-f494 296 ● /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Module III / Business Applications F IGU RE 7.19 A summary of six essential accounting information systems used in business. Common Business Accounting Systems • Order Processing Captures and processes customer orders and produces data for inventory control and accounts receivable. • Inventory Control Processes data reflecting changes in inventory and provides shipping and reorder information. • Accounts Receivable Records amounts owed by customers and produces customer invoices, monthly customer statements, and credit management reports. • Accounts Payable Records purchases from, amounts owed to, and payments to suppliers, and produces cash management reports. • Payroll Records employee work and compensation data and produces paychecks and other payroll documents and reports. • General Ledger I the periodic financial statements and reports of the Consolidates data from other accounting systems and produces business. L W S O N , F IGU RE 7.20 An example of an online accounting report. J A M I E Source: Courtesy of Hyperion. 5 0 5 1 B U naturally, many companies are using Internet and other network links to these trading partners for such online transaction processing systems, as discussed in Section I. Figure 7.20 is an example of an online accounting report. Financial Management Systems Computer-based financial management systems support business managers and professionals in decisions concerning (1) the financing of a business and (2) the allocation and control of financial resources within a business. Major financial management system categories include cash and investment management, capital budgeting, financial forecasting, and financial planning. See Figure 7.21. obr76817_ch07_270-306.indd Page 297 8/13/10 2:58 PM user-f494 /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Chapter 7 / e-Business Systems ● 297 F IGUR E 7.21 Information Systems in Finance Examples of important financial management systems. Cash Management Investment Management Forecast and manage cash position Manage short-term and other securities Capital Budgeting Evaluate risk /return of capital expenditures Financial Planning Forecast financial performance and financing needs W I budgeting process involves evaluating the profitability For example, the capital and financial impact of proposed capital expenditures. Long-term expenditure proL posals for facilities and equipment can be analyzed using a variety of return on investS ment (ROI) evaluation techniques. This application makes heavy use of spreadsheet models that incorporate present value analysis of expected cash flows and probability O analysis of risk to determine the optimum mix of capital projects for a business. Financial analysts also N typically use electronic spreadsheets and other financial planning software to evaluate , the present and projected financial performance of a business. They also help determine the financing needs of a business and analyze alternative methods of financing. Financial analysts use financial forecasts concerning the economic situation,Jbusiness operations, types of financing available, interest rates, and stock and bond prices to develop an optimal financing plan for the busiA ness. Electronic spreadsheet packages, DSS software, and Web-based groupware M can be used to build and manipulate financial models. Answers to what-if and goalseeking questions can be explored as financial analysts and managers evaluate their I financing and investment alternatives. We will discuss such applications further in E. Chapter 10. See Figure 7.22 5 0 5 1 B U F IGUR E 7.22 An example of strategic financial planning using a multiple scenario approach. Note the effect on earnings per share. Source: Courtesy of Comshare. obr76817_ch07_270-306.indd Page 298 8/13/10 2:58 PM user-f494 298 ● /Volumes/203/MHBR178/sLa1719X_disk1of1/007731719X/sLa1719X_pagefiles Module III / Business Applications Summary • • • • Cross-Functional Enterprise Systems. Major e-business applications and their interrelationships are summarized in the enterprise application architecture of Figure 7.2. These applications are integrated cross-functional enterprise systems such as enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management (SCM). These applications may be interconnected by enterprise application integration (EAI) systems so that business professionals can more easily access the information resources they need to support the needs of customers, suppliers, and business partners. Enterprise collaboration systems (ECS) are cross-functional systems that support and enhance communication and collaboration among the teams and workgroups in an organization. Refer to Figures 7.4 and 7.8 for summary views of the e-business applications in EAI systems and enterprise collaboration systems. Transaction Processing Systems. Online transaction processing systems play a vital role in business. Transaction processing involves the basic activities of (1) data entry, (2) transaction processing, (3) database maintenance, (4) document and report generation, and (5) inquiry processing. Many firms are using the Internet, intranets, extranets, and other networks for online transaction processing to provide superior service to their customers and suppliers. Figure 7.6 illustrates the basic activities of transaction processing systems. Functional Business Systems. Functional business information systems support the business functions of marketing, production/operations, accounting, finance, and human resource management through a variety of e-business operational and management information systems summarized in Figure 7.11. Marketing. Marketing information systems support traditional and e-commerce processes and management of the marketing function. Major types of marketing information systems include interactive marketing at e-commerce Web sites, sales force automation, customer relationship management, sales management, product management, targeted marketing, advertising and promotion, and market research. Thus, marketing information K e y Te r m s a n d C o n c e p t s systems assist marketing managers in e-commerce product development and customer relationship decisions, as well as in planning advertising and sales promotion strategies and developing the e-commerce potential of new and present products and new channels of distribution. • W I L S O N• , J A M I• E 5 0 5 1 B U Manufacturing. Computer-based manufacturing information systems help a company achieve computer-integrated manufacturing (CIM), and thus simplify, automate, and integrate many of the activities needed to quickly produce high-quality products to meet changing customer demands. For example, computer-aided design using collaborative manufacturing networks helps engineers collaborate on the design of new products and processes. Then manufacturing resource planning systems help plan the types of resources needed in the production process. Finally, manufacturing execution systems monitor and control the manufacture of products on the factory floor through shop floor scheduling and control systems, controlling a physical process (process control), a machine tool (numerical control), or machines with some humanlike work capabilities (robotics). Human Resource Management. Human resource information systems support human resource management in organizations. They include information systems for staffing the organization, training and development, and compensation administration. HRM Web sites on the Internet or corporate intranets have become important tools for providing HR services to present and prospective employees. Accounting and Finance. Accounting information systems record, report, and analyze business transactions and events for the management of the business enterprise. Figure 7.19 summarizes six essential accounting systems including order processing, inventory control, accounts receivable, accounts payable, payroll, and general ledger. Information systems in finance support managers in decisions regarding the financing of a business and the allocation of financial resources within a business. Financial information systems include cash management, online investment management, capital budgeting, and financial forecasting and planning. These are the key terms and concepts of...
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