Chapter 3 Information Systems in Business Functions

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Chapter 3Information Systemsin Business
Functions
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Learning Objectives

• When you finish this chapter, you will
• Recognize different business functions and the
  role of ISs in these functions.
• Understand how ISs in the basic business
  functions relate to each other.
• Be able to show how ISs of different business
  functions support each other.

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Learning Objectives

• Understand how IT is used in the most common
  business functions to make business processes
  more effective and more efficient.
• Understand the notion of Enterprise Resource
  Planning systems.
• Recognize business areas where information
  technology facilitates the work of managers and
  knowledge workers.

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Effectiveness and Efficiency

• ISs can help companies attain more effective and
  efficient business processes.
• Effectiveness
• The degree to which a goal is accomplished
• Efficiency
• Determined by the relationship between resources
  expended and benefits gained in achieving a goal

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Effectiveness and Efficiency
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Accounting

• AISs automatically post transactions in the books
  and automate generation of reports for management
  and legal requirements.
• Three types of AISs
• Transaction processing systems (TPS)
• Cost accounting systems
• Managerial accounting systems

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Accounting

• Electronic Data Processing (EDP) Audits
• Ensure electronic systems comply with standard
  regulations and acceptable rules
• Ensure systems cannot be manipulated to
  circumvent acceptable principles
• In recent years EDP auditors job title has
  changed to information systems auditors.

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Accounting
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Finance

• 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 that 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

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Finance
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Finance

• Cash Management
• Financial ISs help balance the need to accrue
  interest against the need to have cash available.
• Cash management systems (CMS) Handle cash
  transactions specifically.
• Electronic fund transfer (EFT) The electronic
  transfer of cash from one bank account to another.

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Finance

• Investment Analysis and Service
• Analyze and project the prices of a specific
  stock or bond.
• Transmit buy and sell orders electronically.
• Provide clients with a detailed statement.
• Monitor account information and news online.

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Engineering

• ISs reduce engineering lead time or
  time-to-market.
• Key to maintaining a competitive edge
• Computer-Aided Design (CAD) Systems
• Help engineers and technicians design new
  products and quickly modify and store drawings
  electronically.
• Rapid Prototyping Creating one-of-a-kind
  products to test design in three dimensions.

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Engineering
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Manufacturing and Inventory Control

• IT helps in these manufacturing activities
• Plant activity scheduling
• Material requirement assessment
• Material reallocation between orders
• Dynamic inventory management
• Grouping work orders by characteristics
• Resource qualification for task completion

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Manufacturing and Inventory Control
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Manufacturing and Inventory Control

• Materials Requirement Planning (MRP)
• Take customer demand as initial input
• Number of product units needed and when they are
  needed
• Use long-range forecasts to put long-lead
  material on order
• Help reduce inventory cost while ensuring
  availability

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Manufacturing and Inventory Control
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Manufacturing and Inventory Control

• Manufacturing Resource Planning (MRP II)
• Combines MRP with other manufacturing-related
  activities to plan the manufacturing process such
  as
• Shop activity control and purchasing
• Source of demand
• Customer order entry and forecasting
• Support functions such as financial management,
  sales analysis, and data collection

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Manufacturing and Inventory Control

• Manufacturing Execution Systems (MES)
• 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

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Marketing, Sales, and Customer Service

• 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.

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Marketing, Sales, and Customer Service
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Marketing, Sales, and Customer Service

• The Computer as a Marketing and Selling Medium
• Companies send customers promotional disks with
  information on their products and services.
• Commercial announcements are posted on public
  bulletin board systems.
• The Web lets companies reach more shoppers and
  serve them better.

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Marketing, Sales, and Customer Service

• Sales Force Automation
• Equipping salespeople with information technology
  to facilitate productivity.
• IT allows salespeople to present different
  options for products and services on the spot.
• Customer Relationship Management (CRM)
• Customer service via the Web is available 24
  hours/day, 7 days/week.
• Saves companies labor hours and telephone expenses

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Human Resources
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Human Resources

• 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

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Human Resources

• Training
• Multimedia software training is replacing
  classrooms and teachers.
• 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.

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Human Resources

• 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.

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Enterprise Resource Planning

• Enterprise Resource Planning (ERP)
• All business functions served by one system that
  supports different activities for different
  departments
• Support supply chain management, the series of
  main and supporting activities from order to
  delivery.

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Groupware and Collaborative Work

• GroupWare lets workers in different locations
  communicate ideas, brainstorm, and work together
  as if they were in the same place.
• Document Control
• Users can distribute and track electronic
  documents without working with outdated
  information.
• Especially useful for legal revisions.
• Collaborative Projects
• Users can coordinate work on a single document
  from many different terminals.

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Groupware and Collaborative Work

• Brainstorming
• A group meeting and working collaboratively to
  generate creative solutions and new ideas.
• Groupware software can facilitate this process
• Eliminates the expense of bringing everyone to
  the same physical location.

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Debate

• Time permitting Refer to pgs 90-91 in your text
• Class divided in two groups
• Business
• Civil Rights advocates
• Refer to rules on pg. 91
• Business Do these rules impede the free flow of
  information? What are the impacts?
• Civil Rights Are these rules critical for
  privacy? Are the technical and financial
  arguments strong enough to set aside privacy
  issues?

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Ethical and Societal IssuesPrivacy? What Privacy?

• What is Privacy?
• Ones right to control information about oneself.
• Not a constitutional right per se secured by
  laws or convention.
• Increasing number of organizations may access
  information via better IT hardware and software.
• Business and civil rights advocates dispute
  degree of privacy vs. utility of information
  access.

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Ethical and Societal IssuesPrivacy? What Privacy?

• Business Arguments
• Necessary to collect basic financial and personal
  information as cheaply as possible
• Consumers benefit eventually from competitive
  environment augmented by readily available
  information

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Ethical and Societal IssuesPrivacy? What Privacy?

• Consumer Arguments
• Resent unsolicited mail and telephone calls
• Resent being refused credit because of credit
  bureau mistakes
• Frightened by dossier phenomenon
• Loss of control over information
  unfairinformation gathered for a particular
  purpose with permission should remain restricted

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Ethical and Societal IssuesPrivacy? What Privacy?

• Seven Commandments of Personal Data Collection
  and Maintenance
• Purpose. Companies should inform people who
  provide information of specific, exclusive
  purpose.
• Relevance. Companies should record and use only
  data necessary to fulfill their own purposes.
• Accuracy. Companies should ensure that their data
  are accurate.

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Ethical and Societal IssuesPrivacy? What Privacy?

• Currency. Companies should make sure that all
  data about an individual are current.
• Security. Companies should limit data access to
  only those who need to know.
• Time Limitation. Companies should retain data
  only for the time period necessary.
• Scrutiny. Companies should establish procedures
  to let individuals review their records and
  correct inaccuracies.