FUNCTIONAL BUSINESS SYSTEMS Chapter 6 BIS 1202 FOUNDATIONS OF INFORMATION SYSTEMS

Overview  Marketing Systems  Manufacturing Systems  Human Resource Systems  Accounting Systems  Financial Management Systems

Functional Areas in an Organisation A Vertical View (Laudon & Laudon, 2006) MarketingFinanceManufacturingHuman resources

From the pyramid, Each vertical section represents a functional area of the organization, and thus a vertical view can be compared to a functional view of the organization Information systems can be designed to support the functional areas or traditional departments such as, accounting, finance, marketing, human resources, and manufacturing, of an organization Such systems are classified as ‘functional information systems’. Functional information systems typically follow the organizational structure Functional Areas in an Organisation. A Vertical View

Functional information systems are typically focused on increasing the efficiency of a particular department or a functional area. One disadvantage of functional systems is that although they may support a particular functional area effectively, they may be incompatible to each other(NO interaction between internal systems ). Such systems, rather than aiding organizational performance will act as inhibitors to an organization's development and change. Functional Areas in an Organisation A Vertical View

 Organizations have realized that in order to be agile and efficient they need to focus on organizational processes  A process may involve more than one functional area.  Some Information Systems are cross-functional  Example: A TPS can affect several different business areas: Accounting, Human Resources, Production, etc.  Some Information Systems concentrate on one particular business area (Accounting for example)

FUNCTIONAL INFORMATION SYSTEMS  These systems are:  Marketing Systems  Manufacturing Systems  Human Resource Systems  Accounting Systems  Financial Management Systems

Functional Business Areas

Marketing Systems  Marketing Information Systems provide information technologies that support major components of the marketing function.  Interactive Marketing Customer focused marketing process Based on using Internet, intranets, & extranets to establish two-way communications between customers or potential customers and the business Customers become involved in product development, delivery, & service issues

Marketing systems  Market Research  Statistical models help market researchers find the best populations for new and existing products  Targeted Marketing  Database management systems (DBMS) help define potential customers as narrowly as possible

Marketing systems Five targeting components Community: Customize their Web advertising messages and promotion methods to appeal to people in specific communities. Virtual communities. Content: Advertising such as electronic billboards or banners can be placed on various Web site pages, in addition to a company ‘s home page. These message reach the targeted audience. Context: Advertising appears only in Web pages that are relevant to the content of a product or services. So advertising is targeted only at people who are already looking for information about a subject matter.

Marketing systems Five targeting components. Demographic/psychographic: Marketing efforts can be aimed only at specific type of class of people: unmarried, twenty-something, middle income, male collage graduates Online behavior: Advertising and promotion efforts can be tailored to each visit to a site by individual. This strategy is based on “ Web cookie” files recorded on the visitor’s disk drive from previous visits.

Marketing systems Sales Force Automation The sales force is connected to marketing websites on the Internet, extranets, & the company intranet Equipping salespeople with information technology to facilitate productivity IT allows salespeople to present different options for products and services on the spot. Increases productivity of sales force Speeds up the capture & analysis of sales data. Allows management to provide improved delivery information & better support of the sales force.

The Internet as a Marketing and Selling Medium  Web lets companies reach more shoppers and serve them better  Mobile Commerce (M-Commerce) is the newest form of marketing  Commercial announcements pervade the Web

Marketing Systems

Manufacturing systems. Support the production/operations function Assists firms in, Planning, monitoring, & controlling inventories, purchases, & the flow of goods and services Plant activity scheduling Material requirement assessment Material reallocation between orders Resource qualification for task completion

Manufacturing Systems (continued) Computer-Integrated Manufacturing (CIM) the manufacturing approach of using computers to control the entire production process Objectives of CIM Simplify production processes, product designs and factory organization as a vital foundation to automation and integration. Automate production processes and the business functions that support them with computers machines and robots. Integrate all production and support processes using computers telecommunications networks and other information technologies.

Manufacturing Systems (continued) Supports the concepts of flexible manufacturing systems, agile manufacturing, & total quality management Computer-Aided Engineering (CAE) Computer-Aided Design (CAD) Material Requirements Planning (MRP)

Manufacturing Systems (continued)  Computer-Aided Manufacturing (CAM)  Systems that Automate the production process  Manufacturing Execution Systems (MES)  Performance monitoring systems for factory floor operations  Track, schedule, and control manufacturing processes Collect data such as: Hours machine operates every day of the month Hours the machine is idle and why  MES includes shop floor scheduling and control, machine control, robots control, and process control systems.

Manufacturing Systems (continued)  Process Control  The use of computers to control an ongoing physical process  Machine Control  The use of a computer to control the actions of a machine.  Also called numerical control

Manufacturing Systems (continued)

HUMAN RESOURCE SYSTEMS. Human Resource Information Systems Support Planning to meet the personnel needs of the business Development of employees to their full potential Recruitment, selection, & hiring Job placement Performance appraisals Employee benefits analysis Training and development Health, safety, & security

Human Resource systems (Cont.)  Employee Record Management  Reduce space needed to store records, time to retrieve them, and costs of both  Promotion and Recruitment  Search databases for qualified personnel  Use intranet to post job vacancies  Use the Web to recruit

Human Resource systems (Cont.)  Training  Multimedia software training is replacing classrooms and teachers (CBT)  Training software simulates an actual task or situation and includes evaluation tools  Evaluation  Evaluation software helps standardize the evaluation process and adds a certain measure of objectivity and consistency

Human Resource systems (Cont.)  Compensation and Benefits Management  ISs can help manage compensation efficiently and effectively Calculate salaries, hourly pay, commissions, and taxes Automatically generate paychecks or direct deposits  Special software helps manage benefits, such as health insurance, life insurance, retirement plans, and sick and leave days

Human Resource Systems (continued)  HRM and the Internet  Allows companies to process most common HRM applications over their intranets.  Allows companies to provide around-the- clock services to their employees.  Allows companies to disseminate valuable information faster.  Allows employees to perform HRM tasks online.

Human Resource Systems (continued)

Accounting system.  AISs automatically post transactions in the books and automate generation of reports for management and legal requirements  Record and report business transactions and other economic events  Online Accounting Systems Accounting Information Systems are being affected by Internet and client/Server technologies.  Using the internet,intranets, extranets and other networks changes how accounting information systems monitor and track business activity.

Accounting Systems (continued)  Six widely used accounting systems  Order processing Captures & processes customer orders and produces data needed for sales analysis and inventory control  Inventory Control Processes data reflecting changes in items in inventory. Helps provide high-quality service while minimizing investment in inventory & inventory carrying costs

Accounting Systems (continued)  Accounts Receivable Keeps records of amounts owed by customers from data generated by customer purchases and payments  Accounts Payable Keeps track of data concerning purchases from, and payments to, suppliers

Accounting Systems (continued)  Payroll Receives and maintains data from employee time cards and other work records  General Ledger Consolidates data received from accounts receivable, accounts payable, payroll, & other accounting information systems

Accounting systems (Cont.)  Electronic Data Processing (EDP) Audits  Ensure electronic systems comply with standard regulations and acceptable rules  Ensure systems cannot be manipulated to avoid acceptable principles

Accounting systems(Cont.)

Financial information system.  The job of financial managers is to manage money as efficiently as possible by:  Collecting payables as soon as possible  Making payments by the latest time allowed by contract or law  Ensuring sufficient funds are available for day- to-day operations  Taking advantage of opportunities to accrue the highest yield on funds not used for current activities

Financial Management Systems  Supports financial managers in decisions concerning  The financing of the business  The allocation & control of financial resources within the business.

Financial Management Systems (continued)  Major financial management system categories  Cash Management Collects information on all cash receipts and disbursements on a real-time or periodic basis  Investment Management Helps the financial manager make buy, sell, or hold decisions for each type of security Helps the financial manager develop the optimum mix of securities in order to minimize risk and maximize return

Financial Management Systems (continued)  Capital Budgeting Involves evaluating the profitability and financial impact of proposed capital expenditures Allows financial managers to analyze long-term expenditure proposals for plant and equipment  Financial Forecasting & Planning Evaluate the present and projected financial performance of the company Help determine financing needs and analyze alternative methods of financing Explore what-if and goal-seeking questions

Finance (Cont.)

Financial management system

Students research….  Cross functional systems  Enterprise resource planning(ERP)  Examples  Advantages and disadvantages.