The term, enterprise, commonly describes a
business or venture of any size. In this chapter,
the term enterprise refers to large multi national
corporations, universities, hospitals, research
laboratories, and government organizations.
Enterprise computing involves the use of
computers in networks, such as LANs and
WANs, or a series of interconnected networks
that encompass a variety of different operating
systems, protocols, and network architectures.
Enterprises produce and gather enormous
volumes of information about customer, supplier,
and employee activity. The information flows
among an assortment of entities both inside and
outside of the enterprise, and users consume the
information during a number of activities (Figure
14-1). Customers, suppliers, and employees interact
with the enterprise in a number of ways, and
computers track each interaction. Each sale of
a product, purchase of a piece of equipment, or
paycheck generates activity involving information
systems. A small- and medium-sized business (SMB)
is smaller in size than an enterprise and typically
does not have an international presence. Such
entities, however, use many of the same technologies
and procedures as enterprises, but on a
smaller scale.
A typical enterprise consists of corporate
headquarters, remote offices, international
offices, and hundreds of individual operating
entities, called functional units, including departments,
centers, and divisions. Often, organizations
within the enterprise may have similar
responsibilities within the divisions to which
they belong. For example, a large manufacturing
company may organize its divisions based on the
type of product that the business unit produces.
Each division includes a group of engineers that
designs the products. Each of the engineering
groups may use similar or different information
systems based on its needs or the culture of the
company. Some companies allow for independence
within their divisions, while others attempt
to standardize systems across the enterprise.
Each type of functional unit has specialized
requirements for its information systems. These
units can be grouped by the functions they
perform. The types of functional units within a
typical manufacturing enterprise are accounting
and finance, human resources, engineering,
manufacturing, marketing, sales, distribution,
customer service, and information technology.
These functional units are summarized later in
this chapter.
Large computers connected by vast networks
allow the enterprise to manage and distribute
information quickly and efficiently. Procedures
safeguard information when disaster strikes.
Security policies ensure that people, computers,
and networks access only the information they
require.
When a customer visits a Web site to make a
purchase, many activities occur behind the scenes
at a company. A customer views an advertisement
on a Web site that is created by the company’s
marketing department. Then the customer purchases
a product at a Web site. The customer
makes a credit card payment that is processed by
a financial system connected to the company’s
bank. The company’s accounting system records
the payment and transaction. Next, the distribution
center receives a message telling it to ship
the product. The marketing department notes the
advertising that was successful in generating the
sale to the customer and informs the sales department
that this customer may be interested in purchasing
complementary products.
When the customer calls to check the status
of an order, a computer routes the telephone call
to the proper customer service representative
who checks the status of the order in a database
shared with the distribution department.
Customers and employees use mobile devices to
perform many of the tasks accomplished via Web
sites or telephone calls. Finally, the activity generated
by the purchase is detailed on man agement
reports, and managers make decisions based on
the information collected in the purchase process.
For example, a manager may make a decision to
order more parts for inventory because a product
is selling particularly well. Companies often
track customer purchases over a long period of
time, whether the purchases are made over the
telephone or on a Web site. Managers at the company
then use this information to make a variety
of decisions, such as which goods to offer in certain
locations, how to best advertise goods, and
which combinations of goods consumers are likely
to purchase.
As just described, information is combined and
analyzed by the management, and decisions are
made based on the information. The divisions and
departments within the enterprise use specialized
hardware and software to perform their tasks.
These same units may share hardware and software
with each other to become more effective.
Some large organizations employ enterprise-wide
networks that help manage all aspects of a company
and are used by many or all of the divisions
and departments.
Types of Enterprises
Figure 14-1 on pages 720 and 721 shows an
example of an enterprise whose main focus is in
the manufacturing sector. Following is a list of
examples of types of enterprises.
• Retail enterprises own a large number of
stores in a wide geographical area and use
their size to obtain discounts on the goods
they purchase; they then seek to sell the goods
at a lower price than smaller retailers.
• Manufacturing enterprises create goods on
a large scale and then distribute and sell the
goods to consumers or other organizations.
• Service enterprises typically do not create or
sell goods, but provide services for consumers
or other organizations. Examples include
companies in the insurance, restaurant, and
financial industries.
• Wholesale enterprises seek to purchase and
then sell large quantities of goods to other
organizations, usually at a lower cost than retail.
• Government enterprises include large city
governments, state governments, and the
departments and agencies of the federal
government.
• Educational enterprises include large
universities or schools that include executives,
instructors, and other service personnel and
whose reach extends throughout a county, a
state, or the entire country.
• Transportation enterprises include airlines,
regional transportation authorities, freight
and passenger railroads, and trucking firms.
These enterprises often include a mix of such
types of transportation and have a local or an
international reach.
Organizational Structure of an Enterprise
Most traditional enterprises are organized in a
hierarchical manner. Figure 14-2 shows an example
of an organization chart of a large manufacturing
company. Managers at the first two levels at
the top of the chart, including the chief executive
officer (CEO), mainly concern themselves with
strategic decisions and long-term planning.
The activities relating to running the business
are called supporting activities. Supporting activities
usually are separated from those activities
that relate to the main mission of the company
which are the core activities. Operations refer to
the core activities of a business, and involve
the creation, selling, and support of the products
and services that the company offers. For
example, in an airplane manufacturing company,
a core activity may be the production of
wings and cockpits, while a supporting activity
may be paying vendors for the parts needed to
manufacture those parts. In Figure 14-2, the
chief operating officer (COO) manages the
core activities. The supporting activities include
financial departments and information technology
(IT) departments. The chief financial
officer (CFO) and the chief information officer
(CIO) lead these supporting roles.
Each enterprise includes its own special needs
and the organizational structure of every enterprise
varies. Organizations may include all or
some of the managers and departments shown
in Figure 14-2. Organizations also may include
additional departments or combine some of
those shownA decentralized approach to information
technology exists when departments and divisions
maintain their own information systems.
Sometimes, enterprises use outsourcing in
a decentralized approach so that the company
better can focus on its core skills. Some
organizations maintain central computers,
supported by a central information technology
department, which is referred to as a
centralized approach to information technology.
Organizations decide whether to support a
centralized or decentralized approach based on
a number of factors, including cost, efficiency,
and the interdependence of departments. A centralized
approach to information systems usually
reduces costs of maintenance and increases
manageability.
A decentralized approach allows
for greater flexibility, allowing each functional
unit or department to customize information
systems to their particular needs. Both centralized
and decentralized approaches focus on the
sharing of information with other departments
and divisions. Some enterprises use a combination
of the approaches. For example, each of
the enterprise’s locations may be allowed to use
their own information systems, but all locations’
information systems communicate using a
common data format.Levels of Users in the Enterprise
In an enterprise, users typically fall into one of
four categories: executive management, middle
management, operational management, and nonmanagement
employees (Figure 14-3). The types
of information that users require often depend on
their employee level in the company. Read Ethics
& Issues 14-1 for a related discussion. The following
paragraphs discuss the four categories of
users and their information requirements.
• Executive management, which includes the
highest management positions in a company,
focuses on the long-range direction of the company.
These managers primarily are responsible
for strategic decisions that center on the company’s
overall goals and objectives. Executive management
oversees middle management. For
example, in an airplane manufacturing company,
executive management may decide when to
design and build a new type of airplane.
• Middle management is responsible for
implementing the strategic decisions of executive
management. Middle managers make tactical
decisions, which are short-range decisions that
apply specific programs and plans necessary to
meet the stated objectives. Middle management
oversees operational management. For example,
in an airplane manufacturing company, middle
management may decide from which vendor to
purchase parts and whether to outsource some
operations.
• Operational management supervises the
production, clerical, and other nonmanagement
employees of a company. In performing their
duties, operational managers make numerous
operational decisions. An operational decision
involves day-to-day activities within the
company. These decisions should be consistent
with and support the tactical decisions made
by middle management. For example, in an
airplane manufacturing company, operational
management may decide the scheduling and
process for building a new airplane.
• Nonmanagement employees include
production, clerical, and other personnel.
Nonmanagement employees frequently need
information to perform their jobs. Today, these
employees have more information available
to them than in the past. For example, in an
airplane manufacturing company, a production
employee may gather information regarding
how to assemble a complex piece of equipment.
They have access to the information necessary
to make decisions that previously were made by
managers — a trend called empowering users.
How Managers Use Information
Enterprise information is the information
gathered in the ongoing operations of an
enterprise-sized organization. Enterprise information
begins with the day-to-day transactions
that occur within a company, such as sales
receipts or time cards. The company gathers
and stores the information. Over time, employees
collect, combine, and analyze the information.
Ultimately, the role of information
gathered in this way is to allow managers to
make better decisions.
All employees, including managers, in a company
need accurate information to perform their
jobs effectively. Managers are responsible for
coordinating and controlling an organization’s
resources. Resources include people, money, materials,
and information. Managers coordinate these
resources by performing four activities: planning,
organizing, leading, and controlling.
• Planning involves establishing goals and
objectives. It also includes deciding on the
strategies and tactics needed to meet these
goals and objectives.
• Organizing includes identifying and combining
resources, such as money and people, so that
the company can reach its goals and objectives.
Organizing also involves determining the
management structure of a company, such as
the departments and reporting relationships.
• Leading, sometimes referred to as directing,
involves communicating instructions and
authorizing others to perform the necessary
work.
• Controlling involves measuring performance
and, if necessary, taking corrective action.
Figure 14-4 shows how these four management
activities usually occur in an order that forms
an endless cycle. During the controlling activity,
managers measure actual performance against
a previously established plan. Following this
measurement, they may revise the plan. Revised
plans may result in additional organizational and
leadership activities. Managers then measure
performance against the revised plan, and the
cycle repeats itself. The four tasks are linked. A
change in one task usually affects one or more of
the other tasks.
Managers use a variety of tools and techniques
to focus on information that is important
to the decision-making process. These tools
and techniques, including business intelligence,
business process management, and business process
automation, are described in the following
sections.
Business Intelligence Business intelligence (BI )
includes several types of applications and technologies
for acquiring, storing, analyzing, and
providing access to information to help users
make more sound business decisions. BI applications
include decision support systems, query and
reporting, online analytical processing (OLAP),
statistical analysis, and data mining. These
activities are described later in this chapter.
Business Process Management Business process
management (BPM) includes a set of activities
that enterprises perform to optimize their business
processes, such as accounting and finance,
hiring employees, and purchasing goods and services.
BPM almost always is aided by specialized
software designed to assist in these activities.
Business Process Automation Business
process automation (BPA) provides easy exchange
of information among business applications,
reduces the need for human intervention in processes,
and uses software to automate processes
wherever possible. BPA offers greater efficiency
and reduces risks by making processes more
predictable.
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