Instructor's Manual, Chapter 2 Management Information Systems, Second Canadian Edition 2-1

Chapter 2
Information Systems in the Organization
Teaching Objectives
Students should be able to answer the following questions:
1. What are the maor types of information systems in a !usiness" What roles do they play"
2. Why should managers pay attention to !usiness processes" Why do firms need to integrate
their !usiness processes"
#. What are the !enefits and challenges of using enterprise systems"
$. What are the !enefits of using information systems to support supply chain management
and colla!orati%e commerce"
&. What are the !enefits of using information systems for customer relationship management
and 'no(ledge management"
Key Terms
The following alphabetical list identifies the key terms discussed in this chapter. The page
number for each key term is provided.
Bullwhip effect, 5 !anagement"level systems, #
$ollaborative commerce, 5% !anufacturing and production information systems, %&
$ollaborative planning, forecasting, and
replenishment '$()*+, 55
,ffice systems, %-
.ecision"support systems '.SS+, %% ,perational"level systems, &
.esktop publishing, % (rivate industrial networks, 55
.ocument imaging systems, % *everse logistics, 5-
/nterprise applications, %0 Strategic"level systems, #
/1ecutive support systems '/SS+, %5 Supply chain, 5-
2nowledge"level systems, # Supply chain management, 5-
2nowledge work systems '23S+, %- Transaction processing systems 'T(S+, %4
!anagement information systems '!5S+, % 3ord processing, %
Teaching Suggestions
The opening vignette, 6)ast"Track )ashions at 7ara,8 is a good way to introduce the importance
of $hapter - to students. The vignette demonstrates how 7ara9s supply chain management
system enabled the company to quickly respond to changing customer tastes. This vignette
illustrates the many benefits associated with integrating systems and business processes for
design, production, and logistics. To facilitate class discussion, ask your students the following
questions about 7ara9s supply chain management system:
Copyright 2005 Pearson Education Canada Inc.
Instructor's Manual, Chapter 2 Management Information Systems, Second Canadian Edition 2-2
4. 3hy does 7ara not use low"wage countries for its production process:
-. ;ow often does 7ara restock its stores: ;ow many new designs does 7ara produce each
year: <ow, compare these results to the competition.
. /1plain 7ara9s supply chain management process.
%. =re 7ara9s manufacturing costs higher or lower than the competition: .iscuss your
answer.
5. 3hat advantages have 7ara9s supply chain management system provided the company:
>. 3hat business processes are integrated:
This is a good time to remind students that moving beyond the old transaction processing
systems and low"level management information systems has created the possibility of strategic
information systems and competitive advantage from information systems. =lso, remind
students that 5T ? hardware @ software and 5S ? 5T @ people @ procedures.
$hapter - e1amines the people and procedures components. The technically oriented student
may resist understanding the substance of this chapter because 5T focuses on the difference
between the technical and sociotechnical view of information systems. ;owever, the technically
oriented student should be encouraged to understand how technology supports the business.
!any of the students who are less technically adept will find this chapter a surprise. They think
that we only study the technical material and are pleased to see the 6people8 side of !5S come
through.
Sometimes you may have to do a bit of selling to get students to accept that the model of levels
of management and levels of information systems is an important concept. Some 6war stories8
may help students see your points, and they may be a good way to begin the class. =sk
students what kinds of systems they and their managers use at work: 3hat decisions and
business functions do these systems support:
$hapter -9s first section, 6!aAor Types of Systems in ,rganiBations,8 focuses on defining terms
and guides the students through the types of information systems. )igure -"4 is a good tool for
facilitating this discussion. To help students visualiBe and understand the importance of the
different types of information systems, you can provide specific e1amples. )igure -"- provides
e1amples of the different types of information systems and the levels supported by these
systems. =lso, ask students to present e1amples from their own e1perience. )or instance,
where does a registration system fit in the hierarchy: 3here do the universityCs financial
systems fit in the hierarchy:
Students may not be aware of the broad need for the data from T(S that underlies so many
other systems, and they may not even be aware of the si1 maAor types of systems. 5t might help
to have your students provide e1amples for each of the si1 types of systems that have not been
mentioned in the te1t. 3hat types of systems do your students encounter when they work, go to
school, or shop for food, automobiles, housing, and the products they need:
Students may better understand decision"support systems if they think about them in ways that
are familiar to them. )or e1ample, political parties and campaigns use decision"support systems
to target their advertising campaigns and candidate visits. The sophisticated demographic
software tied to maps at the census district level is a marvel. This may be a good place to help
students ponder whether all of this information or the building of such systems is socially a
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Instructor's Manual, Chapter 2 Management Information Systems, Second Canadian Edition 2-#
6good thing:8 3hat are the effects on campaigns or policy: 3hat happens to politics when
policies and campaigns are so narrowly targeted:
Windo On! "o#es
Window on Management: The Need for Collaboration
Why does the retai$ grocery industry need to imp$ement C%&'(
The worldwide grocery industry is fighting for its very e1istence. Several competitors are losing
market share to customer"focused supercentres, wholesale clubs, mass merchandisers, and
restaurants. The heightened state of competitiveness is forcing change on the slow"to"change,
traditional grocery industry. The D!= has publicly encouraged grocery stores to accelerate their
adoption of standards and technologies for collaboration. 5n -EE-, the D!= warned that over F#
billion dollars would be lost due to out"of"stock inventory.
What are the benefits they hope to achieve in terms of customer satisfaction and
efficiencies(
The use of $()* helps to ensure better accuracy in product forecasting and ordering for the
appro1imate - EEE stock keeping units that an average supermarket carries. These systems
provide real"time open access to a single demand forecast via a common information system,
improve service levels, and help to reduce inventory.
Why are grocery stores s$oer than other types of retai$ out$ets to imp$ement C%&'
systems(
The slow rate of $()* implementations in the grocery industry can be contributed to the
comple1ity of various $()* models published by various industry committees. 5n addition,
many $()* initiatives have not progressed past small tests involving only a few items traded
through a few distribution points.
What are some of the cha$$enges of imp$ementing C%&' systems(
Since $()* systems are difficult and comple1 to design, implement, and maintain, grocers
require a step"by"step process using industry"accepted standards and a successful
implementation tool. Based on the benefits these $()* systems provide, sophisticated
information technology is required to operate and support these comple1 systems.
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Instructor's Manual, Chapter 2 Management Information Systems, Second Canadian Edition 2-$
Window on Organizations: Customer Relationship Management: A Boon for Finanial
!er"ies
)o have customer re$ationship management systems changed ho organizations can
service their customers(
= customer relationship management system allows a company to have a consolidated,
sharper, and more consistent, unified view of its customers. = customer relationship
management system enables a company to use the sharper customer profiles to cross market
its products and offer new and e1isting products to those customers most likely to purchase its
products. = customer relationship management system enables a company to provide end"to"
end customer care. =dditionally, by using a central data repository, the company reduces data
redundancy, increases fle1ibility, and improves data accuracy.
,ne aspect of $*! use is that the marketing and sales staffs have more data about each
customer because of the automation of sales and the ability of the company to analyBe that
data. $ompanies using customer relationship management systems have more fle1ibility
because knowledge about each customer is available when needed.
)o have the organizations described here obtained va$ue from C'* systems(
!eriwest consolidated its customer account information into a more meaningful, consistent view
of the customer. !eriwest used its $*! system to target customers who were more prone to
purchase a specific service, such as a certificate of deposit. =s a result of its $*!, at the end of
-EE4, deposits were up by -0 percent, and customer loans were up %> percent.
!etlife used its $*! system to consolidate customer data from its %E lines of business. =s a
result, company employees can update and view a customer9s file and target products to
specific customers.
(G$ .irect uses its data repository to cross"sell to its customers. /ach customer record
contains census data and lifestyle codes that enable (G$ .irect to better target market its
products and services.
&or +iscussion ,uestions
-. Supp$y chain management is $ess about managing the physica$ movement of goods
and more about managing information. +iscuss the imp$ications of this statement.
5nformation is at the heart of what every company does. This is especially true when
several companies are coordinating logistics processes. These companies must share and
coordinate their information, in order to turn raw materials into final products that are
delivered to customers.
Before a company can physically move its goods, it must have accurate information.
5naccurate information causes part shortages, underutiliBed plant capacity, e1cessive
finished goods inventory, and e1cessive transportation costs. = supply chain management
system enables its members to adAust sourcing, manufacturing, and distribution plans
based on changing inventory levels, schedules, forecasts, and shipments.
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Instructor's Manual, Chapter 2 Management Information Systems, Second Canadian Edition 2-&
2. /dopting an enterprise system is a 0ey business decision as e$$ as a techno$ogy
decision. +o you agree( Why or hy not( Who shou$d ma0e this decision(
/nterprise systems feature a single information technology platform where data definitions
are standardiBed across the organiBation. 5f developed, installed, and used properly, it
unifies the technology of the company and therefore the company itself. =n enterprisewide
system can help create a more uniform organiBation in which everyone uses similar
processes and information. 5t can aid in measuring employee productivity in terms of
organiBation"wide standards. 5t can supply management with better data about business
processes and overall organiBational performance. ;owever, although the decision is
partly a technology decision in that those on the business side need to know what the
technology can and cannot do, ultimately, it is a business decision. ;ow well does it
support the business strategy: 3hat is the cost, and how will that affect the corporation:
The goal of any system is to support the business. !oreover, the business must decide
whether or not to spend the money to develop and install the system.
'evie ,uestions
-. Identify and describe the four $eve$s of the organizationa$ hierarchy. What types of
information systems serve each $eve$(
)rom lowest to highest, the four levels of the organiBational hierarchy are operational,
knowledge, management, and strategic. Types of information systems include transaction
processing systems, office systems, knowledge work systems, decision"support systems,
management information systems, and e1ecutive support systems.
Transaction processing systems, such as order tracking, payroll, machine control, and
compensation, serve the operational level. /ngineering workstations, word processing,
graphics workstations, managerial workstations, document imaging, and electronic
calendars are e1amples of knowledge work systems and office systems that serve the
knowledge level. Sales region analysis, cost analysis, annual budgeting, and relocation
analysis are e1amples of decision"support systems and management information systems.
!any of these systems are programs that students learn in their management science or
quantitative methods courses. Some are based on database management systems.
/1amples of e1ecutive support systems that serve the strategic level are sales trend
forecasting, operating plan development, budget forecasting, profit planning, and
manpower planning.
2. 1ist and brief$y describe the major types of systems in organizations.
Transaction processing systems, office systems, knowledge work systems, decision"
support systems, management information systems, and e1ecutive support systems are
the maAor types of systems in organiBations. Transaction processing systems function at
the operational level of the organiBation. /1amples of transaction processing systems
include order tracking, order processing, machine control, plant scheduling, compensation,
and securities trading.
2nowledge work systems help create and integrate new knowledge within the
organiBation. /1amples of knowledge work systems include engineering workstations,
managerial workstations, and graphics workstations. ,ffice systems help increase data
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Instructor's Manual, Chapter 2 Management Information Systems, Second Canadian Edition 2-)
worker productivity and include word processing, document imaging, and electronic
calendars.
!anagement information systems provide managers with reports based primarily on data
pulled from transaction processing systems, have an internal orientation, and have limited
fle1ibility. /1amples of management information systems include sales management,
inventory control, and capital investment analysis. .ecision"support systems function at
the management level and provide analytical models and data analysis tools to provide
support for semistructured and unstructured decision"making activities. /1amples of
decision"support systems include sales region analysis, cost analysis, and contract cost
analysis.
/1ecutive support systems function at the strategic level, support unstructured decision
making, and use advanced graphics and communications. /1amples of e1ecutive support
systems include sales trend forecasting, budget forecasting, and personnel planning.
The systems form a hierarchy of systems, with all types either formatting, filtering, or
processing the information from a lower level. )or instance, the office systems provide
reports or presentations based on the information or data in transaction processing
systems. .ecision"support and e1ecutive support systems often use office systems in
presenting information e1tracted from transaction processing systems and management
information system. !anagement information systems depend on data from transaction
processing systems. Some systems, including knowledge work systems, decision"support
systems, and e1ecutive support systems may use e1ternal information, such as stock
market information and design information from suppliers.
2. What are the five types of T%S in business organizations( What functions do they
perform( 3ive e#amp$es of each.
The five types of transaction processing systems include salesHmarketing systems,
manufacturingHproduction systems, financeHaccounting systems, human resources
systems, and other types. )igure -"% identifies and provides e1amples for each type of
transaction processing system. SalesHmarketing systems provide sales management,
market research, promotion, pricing, and new product functions. /1amples include sales
order information systems, market research systems, and sales commission systems.
!anufacturingHproduction systems provide scheduling, purchasing, shippingHreceiving,
engineering, and operations functions. /1amples of manufacturing systems include
machine control systems, purchase order systems, and quality control systems.
)inanceHaccounting systems provide budgeting, general ledger, billing, and cost
accounting functions. /1amples of financeHaccounting systems include general ledger,
accounts receivableHpayable, and funds management systems. ;uman resource systems
provide personnel records, benefits, compensation, labor relations, training, and payroll
functions. /1amples include employee records, benefit systems, and career path systems.
,ther types include admissions, grade records, course records, and alumni for a
university. /1amples of transaction processing systems for a university include a
registration system, student transcript system, and an alumni benefactor system.
4. +escribe the functions performed by 0no$edge or0 systems and office systems
and some typica$ app$ications of each.

2nowledge work systems '23S+ aid knowledge work professionals to create new
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Instructor's Manual, Chapter 2 Management Information Systems, Second Canadian Edition 2-*
information and knowledge, and ensure that new knowledge and technical e1pertise are
properly used in their corporations. /1amples of knowledge workers 'and some of their
software+ include engineers 'graphics workstations+, stock traders, analysts and
arbitrageurs 'financial and stock market workstations+, research scientists, doctors, and
designers '$=. systems+.
,ffice systems provide support for data workers, including secretaries, accountants, filing
clerks, and some managers. Software e1amples include word processing, desktop
publishing, presentation programs, electronic calendars, and document imaging.
5. What are the characteristics of *IS( )o do *IS differ from T%S( &rom +SS(
!5S support the management level by providing routine summary reports and e1ception
reports for various purposes, including planning, controlling, and decision making.
/1amples include sales and profit per customer and per region, relocation summary and
analysis, inventory control, capital investment analysis, and even a report on students who
were enrolled in the autumn but did not return in the spring. !5S differs from T(S in that
!5S deals with summariBed and compressed data from the T(S and usually routine
analysis of that summariBed data.
.ecision"support systems provide material for analysis for the solution of semi"structured
problems, which often are unique or rapidly changing. Typically, they provide the ability to
do 6what if8 analysis. 3hile !5S have an internal orientation, .SS will often use data from
e1ternal sources, as well as data from T(S and !5S. .SS support 6right now8 analysis
rather than the long"term structured analysis of !5S. !5S are generally not fle1ible and
provide little analytical capabilities. 5n contrast, .SS are designed for analytical purposes
and are fle1ible.
6. What are the characteristics of +SS( )o do they differ from those of 7SS(

.SS provide sophisticated analytical models and data analysis tools to support
semistructured and unstructured decision"making activities. .SS use data from T(S, !5S,
and e1ternal sources, provide more analytical power than other systems, combine data,
and are interactive. /SS support senior managers with unstructured strategic"level
decision making. They may be less analytical than .SS with less use of models such as
linear programming or forecasting. ;owever, they often rely on e1ternal data and rely
heavily on graphics.
8. +escribe the re$ationship beteen T%S9 office systems9 KWS9 *IS9 +SS9 and 7SS.
The various types of systems in the organiBation e1change data with one another. T(S are
a maAor source of data for other systems, especially !5S and .SS. T(S are operational"
level systems that collect transaction data. /1amples of these are payroll or order
processing that track the flow of the daily routine transactions that are necessary to
conduct business. T(S provide data that are required by office systems, 23S, !5S and
.SS, although these systems may also use other data. 23S and office systems not only
use data from T(S but also from !5S. .SS not only use data from T(S but also from
23S, office systems, and !5S. !5S rely heavily on data from T(S but also use data from
23S and office systems. /SS obtain most of their internal data from !5S and .SS.
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Instructor's Manual, Chapter 2 Management Information Systems, Second Canadian Edition 2-+
:. What is a business process( 3ive to e#amp$es of processes for functiona$ areas
of the business and one e#amp$e of a cross;functiona$ process.
Business processes are the ways in which organiBations coordinate and organiBe work
activities, information, and knowledge to produce their valuable products or services.
Business processes for the manufacturing and production area include product assembly,
quality checking, and producing bills of materials. )or the sales and marketing area,
business processes include identifying customers, making customers aware of the
product, and selling the product. )or finance and accounting, business processes includes
paying creditors, creating financial statements, and managing cash accounts. )or human
resources, business processes include hiring employees, evaluating Aob performance of
employees, and enrolling employees in benefits plans.
The order fulfillment process is an e1ample of a cross"functional process. =s )igure -"4E
illustrates, the order fulfillment process involves activities performed by sales, accounting,
and manufacturing functions.
<. Why are organizations trying to integrate their business processes( What are the
four 0ey enterprise app$ications for organization;ide process integration(
=n organiBation operates in an ever"increasingly competitive global environment.
,perating in a global environment requires an organiBation to focus on the efficient
e1ecution of its processes, customer service, and speed to market. To accomplish these
goals, the organiBation must e1change valuable information across different functions,
levels, and business units. By integrating its processes, the organiBation can more
efficiently e1change information among its functional areas, business units, suppliers, and
customers. The four key enterprise applications are enterprise systems, supply chain
management systems, customer relationship management systems, and knowledge
management systems.
-=. What are enterprise systems( )o do they change the ay an organization or0s(
/nterprise systems integrate the key business processes of an organiBation into a single
software system. .ata from various functional areas are maintained centrally where they
can be accessed and used by other functions and cross"functional processes. This
changes the work flow of an organiBation. <ow information can seamlessly flow
throughout the organiBation, improving coordination, efficiency, and decision making.
--. What are the benefits and cha$$enges of imp$ementing enterprise systems(
/nterprise systems are firm"wide information systems that integrate key business
processes so that information can flow freely between different parts of the firm. /nterprise
systems help create a more uniform organiBation in which everyone uses similar
processes and innovation and measures their work in terms of organiBation"wide
performance standards. /nterprise systems are very difficult to successfully implement
and once implemented, are very difficult to change. /nterprise systems require e1tensive
organiBational change, use complicated technologies, and require large up"front costs for
long"term benefits that are difficult to quantify.
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Instructor's Manual, Chapter 2 Management Information Systems, Second Canadian Edition 2-,
-2. What is supp$y chain management( What activities does it comprise( Why is it so
important to businesses( )o do information systems faci$itate supp$y chain
management(
Supply chain management is the close linkage of activities involved in the processes of
buying, making, and moving a product. Supply chain management is important to a
business because through its efficiency it can coordinate, schedule, and control the
delivery of products and services to customers.
Supply chain management closely links and coordinates activities in buying, making, and
moving a product. The system should lower costs and streamline the userCs business.
5nformation systems make supply chain management more efficient by helping companies
coordinate, schedule, and control procurement, production, inventory management, and
delivery of products and services to customers. 5nformation systems help organiBations
achieve great efficiencies by automating parts of these processes or by helping
organiBations rethink and streamline these processes.
-2. What is co$$aborative commerce( )o can organizations benefit from it(
)or supply chain management to work, an atmosphere of trust must e1ist among supply
chain members. !embers need to work together on a common goal, and they must
redesign appropriate business processes so they can more easily coordinate their
activities. $ollaborative commerce uses digital technologies to enable the members of the
supply chain to collaboratively design, develop, build, and manage products through their
lifecycles. 5t helps the various partners to integrate their systems with each other. =side
from gaining benefits from having a successful supply chain, they also benefit by achieving
new levels of efficiency in reducing product design cycles, minimiBing e1cess inventory,
forecasting demand, and keeping all partners informed.
-4. )o can organizations benefit from participating in private industria$ netor0s(
(rivate industrial networks are 3eb"enabled networks that permit firms and their business
partners to share such activities as product design and development, marketing, inventory,
production scheduling, and communications, including graphics, $=. drawings, and e"
mail. Benefits include the ability to reduce inventory, product cycle time, inventory costs,
and system costs. (rivate industrial networks also improve the coordination and sharing of
information and provide the ability to track a product from raw materials to the customer,
track demand, adAust production, and adAust the timing and siBe of deliveries, as well as
monitor product availability, production capacity, and inventory levels.
-5. What is customer re$ationship management( Why is it so important to businesses(
)o do information systems faci$itate customer re$ationship management(
$ustomer relationship management is a business and technology discipline to coordinate
all of the business processes for dealing with e1isting and potential customers. 3ith the
growth of the 3eb, potential customers can easily comparison shop for retail and
wholesale goods and even raw materials, so better treatment of customers has become
very important. Dood $*! systems consolidate customer data from multiple sources and
provide analytical tools for answering questions such as: 3hat is the value of a particular
customer to the firm over his or her lifetime: $*! tools integrate the firmCs customer"
related processes and consolidate customer information from multiple communication
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Instructor's Manual, Chapter 2 Management Information Systems, Second Canadian Edition 2-1-
channels, so that the firm can put one coherent face to the customer.
-6. What is the ro$e of 0no$edge management systems in the enterprise( What
organizationa$ processes are supported by 0no$edge management app$ications(
2nowledge management systems codify knowledge and e1perience, make the collected
knowledge and e1perience available when and where it is needed, and provide links to
e1ternal sources of knowledge. ,rganiBational processes include creating knowledge,
discovering and codifying knowledge, sharing knowledge, and distributing knowledge.
2nowledge work systems support knowledge creationI artificial intelligence systems
support knowledge discovery and codificationI group collaboration systems support
knowledge sharing, and office and communication tools support knowledge distribution.
/pp$ication Softare 7#ercise
This e1ercise requires some student knowledge of spreadsheet database functions. =t a
minimum, students should know how to sort the database by various criteria such as item
description, item cost, vendor number, vendor, name, or =H( terms. Students may need to be
told that =H( Terms is e1pressed as the number of days that the customer has to pay the vendor
for a purchase. 5n other words, E designates net E days. The vendor that allows customers
the longest amount of time to pay for an order would, of course, offer the most favorable
payment terms.
Students will need to add additional columns for calculating the actual delivery time for each
order and the number of days the delivery is late. The =ctual .elivery Time can be calculated by
subtracting the (romised Ship .ate from the =rrival .ate. The number of days late can be
calculated by subtracting the (romised Transit Time from the =ctual .elivery Time. 5f the
number of days late is negative, it indicates that the order arrived early.
These numbers are useful when trying to determine who is the vendor with the best on"time
delivery track record. Students can use the .=J/*=D/ function to determine the average
delivery time for each vendor. Students can also use one of the database functions to determine
the vendor with the best accounts payable terms. To determine the vendor with the lowest
prices for the same item when it is supplied by multiple vendors, students can filter the database
using the item description. This filtered list can then be sorted by item cost and vendor number.

3roup %roject
With a group of three or four other students9 se$ect a business using an industria$
netor0 for supp$y chain management. >se the Web9 nespapers9 journa$s9 and
computer or business magazines to find out more about that organization and its use of
information techno$ogy and $in0s to other organizations. If possib$e9 use presentation
softare to present your findings to the c$ass.
Student answers will vary depending on the companies they choose. The following e1amples
can be used to facilitate class discussion.
*eAecting the traditional view of a company and its component parts as distinct functional
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Instructor's Manual, Chapter 2 Management Information Systems, Second Canadian Edition 2-11
entities, (rocter G Damble managers realiBe that the real measure of success is how well
activities coordinate across the supply chain to create value for customers, while increasing the
profitability of every link in the chain. 5n the process, some redefine the competitive game,
considering the success of (rocter G Damble.
(roctor G Damble recently introduced the Streamlined Kogistics program to improve customer
service and supply chain efficiency. The first phase consolidated ordering, receipt, and invoicing
of multiple brands, harmoniBed payment terms, and reduced bracket pricing categories. 3hat
are the implications for customers: =s Steven .avid, vice president of sales, e1plained: L<ow
they9ll be able to mi1 a load of soap or paper or food products on a full truck to get the best
possible pricing. 3e9re going to make available common"quantity pricing brackets across all our
sectors. 3e9re going to have multisector ordering for the first time.L
=nother site to visit is M(S Kogistics Droup. M(S Kogistics Droup works with businesses to
evaluate and fully understand their supply chain requirements and business obAectives,
essentially helping the businesses form an industrial network for supply chain management. The
M(S Kogistics Droup has operations around the world that offer supply chain redesign and
reengineering, comprehensive customer care solutions, transportation and inventory
management, warehousing operations, systems integration, reverse logistics and more, all
custom"tailored to the individual needs of their customers. Their in"house consultants and
operations e1perts provide valuable e1perience and e1pertise in a wide variety of industries,
including computers, telecommunications, automotive, electronics, e"commerce, and
healthcare.
Case Study ? Ceridian >ses C'* to Target Customers
-. Why do you thin0 payro$$ services have become a commodity or uti$ity service(
)o does this affect the ay Ceridian approaches its business(
,ver the years of market evolution, payroll services have become more of commodity or
utility due to the decrease of importance of product line as a competitive differentiator.
(ayroll services are viewed by businesses as more of a generic service and less as a
specialiBed product.
2. Why did Ceridian as0 I"* to he$p eva$uate C'* system vendors( What do you thin0
the benefits ere of as0ing an outsider to he$p(
.ue to the level of importance placed on this implementation, which would provide the
main point of entry for account teams servicing customers, $eridian requested the
assistance of 5B! Dlobal Services to assess the various vendor alternatives. Since
$eridian had never implemented a $*! solution, this decision process was an area
where outside e1pertise could be used. By choosing 5B! Dlobal Services to help decide
on a suitable $*! vendor, $eridian benefited from an obAective third"party opinion and a
higher level of selection and implementation e1perience.
2. )o did the use of the ST/' system integrate Ceridian@s databases( What are the
benefits of this integration(
The core of the ST=* system is a centraliBed database that stores payroll account
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Instructor's Manual, Chapter 2 Management Information Systems, Second Canadian Edition 2-12
information, as well as a complete record of interaction between $eridian $anada and the
customer 'telephone calls, fa1es, and email+. The ST=* database is integrated with
$eridian $anadaCs various legacy systems N principally client"server systems N throughout
the companyCs branches. The ST=* systemCs core $*! functionality will substantially
improve the effectiveness of $eridian $anadaCs account teams. The company also stands
to garner maAor operational benefits from the implementation of ST=*, the most important
of which is an increase in the efficiency its customer service operations.
4. What do you thin0 are the benefits that Ceridian@s c$ients perceive in the ne
systems(
Since the system is able to create and track service requests when a $eridian
representative cannot immediately address a customerCs problem, clients should perceive
a higher level of customer care regarding problems and issues. (roviding employees with
information regarding a customerCs account history, completed customer survey
questionnaires, and payment information allows customer service representatives to
interact more personally and better understand their clientsC needs, which, in turn, should
be perceived by $eridianCs customers.
5. +id Ceridian need to imp$ement the Web;based se$f;service initiative( What are the
benefits of that initiative for Ceridian@s customers( &or Ceridian(
$eridian made a good business decision by introducing a 3eb"based self"service
application into their service offering. This self"service application supports their customer"
focused strategy and differentiates $eridian from other payroll companies in the market.
$eridianCs customers will be able to access their payroll information in a timely manner,
using a medium that is available to them anytime. They will also be able to track the status
of their service requests online and make online changes. $eridian will benefit from this
implementation by reducing current customer service costs and allowing their client base
to grow while keeping the cost of supporting that base stable.
6. 'evie the si# types of information systems categorized in this chapter. Categorize
each type of the systems mentioned in the case as one of those types of systems.
7#p$ain your anser.
$eridianCs Siebel $*! system 'ST=*+: This system helps account teams and managers
interact with customers and also provides the main point of entry for servicing customers.
This system should be categoriBed as a transaction processing system, due to its
operational ability to provide representatives with information about clients while they are
dealing with new contracts, problems, or questionnaires. '<ote: it could also be argued
that this system is a management information system, due to its ability to provide summary
reports about customers to management.+
$eridianCs 3eb"based self service application: This system allows customers to access
their payroll information in a timely manner, using a medium that is available to them
anytime. They will also be able to track the status of their service requests online and
make online changes. This system should be categoriBed as a transaction processing
system, due to its ability to act as an interface between the client and the payroll system,
essentially eliminating the need for a customer service representative in certain situations.
Copyright 2005 Pearson Education Canada Inc.