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6 STRATEGIC BUSINESS OBJETIVES for implementation are:
1. Operational excellence: improve efficiency, productivity and performance through automation and streamlined process. Walmart uses real-time inventory systems to reduce costs.
2. New products, services and business models: enable innovation and create new ways of delivering value. Apple → iTunes / Appstore innovation.
3. Customer and supplier intimacy: use systems to build stronger relationships, improve service and increase loyalty. Amazon shopping experience.
4. Competitive advantage: achieve superior performance differentiation or lower costs through better use of information.
5. Improved decision-making: real-time data for faster and better decisions.
6. Survival: essential for staying in business in a digital world — meeting customer, legal, and competitive requirements. Banks need online and mobile services to remain viable.
The Major Components and Dimensions of an Information System
Definition of an Information System
Is a set of interrelated components that collect, process, store, and distribute information to
support decision-making, coordination, control, analysis and visualization in an organization.
It helps managers and employees work efficiently and supports the firm's business operations and
strategies.
MAJOR COMPONENTS of an IS
1.
Hardware
Computers, servers, mobile devices
o The physical devices and equipment used to process and store data.
2.
Software
SAP, Microsoft Windows, Excel
o The programs and operating systems that control the hardware and process the data.
3.
Data
Customer names, transactions, sales figures
o The raw facts that are transformed into meaningful info.
4.
Procedures
How data is entered, validated and updated
o The policies and methods for operating and using the system.
5.
People
Employees, managers
o The users who interact with the system – IT specialists, managers, employees and even customers.
DiMENSIONS of an IS
Organizations
Workflows, reporting systems, hierarchy
The system reflects the company’s structure, culture, business processes, and
management levels.
Management:
Managers use IS for decision-making, problem solving and strategic planning.
They set objectives, allocate resources, and design systems that support the firm’s goals.
Technology:
The foundation of IS: hardware, software, data management and networking.
It provides the tools and platforms that store, process, and transmit info.
CRM: Manage customers and relationships
Manage all interactions with current and potential customers to increase satisfaction, loyalty and profitability.
Support functions such as sales force automation, email and social media marketing and customer service management.
Collect data from multiple channels to build a “360°” view of each customer.
Help companies segment their audience, personalize communication and identify opportunities for cross-selling and upselling.
CRM systems strengthen relationships, reduce service costs through self-service tools, and improve retention rates.
ERP Integration:
provides an integrated back-end that supports a company’s core functional requirements and c
onnects them into a cohesive whole.
Role in Unification
1. Centralizing info: all departments access the same real-time data, improving accuracy and transparency.
2. Standardizing processes: business operations follow consistent procedures company-wide,reducing errors and delays.
3. Facilitating communication: sales, production, finance and HR share updates instantly, avoiding duplication and miscommunication.
4. Linking transactions: a sale recorded in CRM automatically updates inventory, finance, and logistic modules.
Benefits of ERP Integration
1. Operational efficiency: streamlines cross-departmental processes and reduces manual work.
2. Data accuracy: ensures consistent, real-time info across the organization.
3. Better decision making: provides integrated analytics and performance reports for
management.
4. Cost reduction: minimizes redundancies, duplicate systems and data reconciliation efforts.
5. Scalability: supports company growth and expansion with flexible modules that can adapt to
new business models.
CORE SYSTEMS
– FMS:
Manage money and ensure accountability
Manage all financial activities to ensure accuracy, transparency and control of resources.
Include modules such as accounts payable and receivable, cash management, budgeting, asset tracking, and general ledger.
Provide real-time financial data for managers, ensuring paperless workflows, faster reconciliations and compliance with accounting regulations.
Use tools like XBRL to standardize reporting and improve communication with investors and regulators.
HCM: Manage people and their performance
Focus on the management and development of a company’s workforce. Human Capital.
The core HCM module stores employee data: demographics, salary, benefits, tax details and work history.
Workforce management tools monitor attendance, schedules and project assignments.
Talent management handles recruitment, performance evaluation, learning, compensation and career growth.
These systems give HR managers valuable analytics on productivity, engagement and turnover, supporting data-driven decision making and better alignment between employees and company goals.
SCM: Manage materials, logistics and suppliers
Coordinate and optimize the flow of materials, goods and information from suppliers to
customers.
Cover key processes known as the SCOR model: Plan, Source, Make, Deliver and Return.
Use advanced software such as SCP, WMS and TMS to improve logistics and efficiency.
Technologies like IoT sensors, RFID tags, GPS and blockchain provide real-time tracking and
visibility, reducing delays and errors.
Help businesses reduce costs, increase speed and respond quickly to market changes.
Types of IS in Organizations
Operational systems (TPS):
handle routine, day-to-day transactions — payroll, orders, billing.
Managerial systems (MIS):
summarize data and support middle management in planning and control activities.
Strategic systems (DSS / ESS):
help management with forecasting, performance monitoring, and long-term strategies.
Functional systems:
o Financial Management (FMS): accounting, budgets
o Human Capital M. (HCM): employee data + talent development
o Supply Chain M. (SCM): production, logistics, suppliers
o Customer Relationship M. (CRM): customer loyalty and service
o Enterprise Resource Planning (ERP): integrates all functional systems
Strategic Impact
Organizational Efficiency
1. Reducing duplication of data and errors: information entered once updates all modules automatically.
2. Streamlining workflows: departments work with shared, real-time data instead of disconnected spreadsheets or manual reports.
3. Automating routine tasks: order processing, payroll or inventory updates, saving time and labor costs.
4. Enhancing coordination: finance, logistic, and sales operate in sync, shortening production and delivery cycles.
5. Improving decision making: managers access consistent up-to-date dashboards for faster, evidence-based actions.
6 Core Activities in System Development:
The first stage, Analysis, focuses on identifying the real problem and defining what the system must achieve. It involves studying the current situation to detect problems or opportunities, finding the true causes rather than just the symptoms, and conducting a feasibility study to evaluate whether the project is technically, financially, and organizationally possible. During this stage, the information requirements—such as what data is needed, when, how, and why—are also determined.
The second stage, System Design, is about creating a solution to meet the identified needs. It includes the logical design, which defines how data and processes will appear to users, and the physical design, which determines how data will be stored and processed internally. The result is a detailed system blueprint that serves as a guide for the next steps.
The third stage, Programming, converts the design into actual code. This is where the software is developed and built according to the design specifications.
The fourth stage, Testing, ensures that the system works properly and meets all requirements before it is launched. It includes unit testing, where individual components are tested separately; system testing, which checks all parts together as a whole; and acceptance testing, where end users evaluate the system before final approval.
The fifth stage, Conversion, focuses on implementing the new system and replacing the old one. There are several strategies: running both systems in parallel for safety, a direct cutover for a fast transition, a pilot study to test the system in a limited area first, or a phased approach where the system is introduced gradually. The goal is to move to the new system efficiently while minimizing risks and business disruptions.
Finally, the sixth stage, Production and Maintenance, begins once the system is fully implemented and in regular use. Maintenance involves fixing errors, updating features, and adapting the system to new conditions. A post-implementation review ensures that the system continues to meet business objectives and performance standards.