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1

 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.
2
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.
3
Learning Objectives

 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
4
Effectiveness and
Efficiency

Yasir ALi #03023424143 (GCUF) 5
Effectiveness and
Efficiency
Figure 3.1 Information technology supports a variety of business functions

 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
6
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.
7
Accounting

8
Accounting
Figure 3.3 Accounting information systems include features that reflect up-to-date performance
of the organization in financial terms.

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
9
Finance

10
Finance
Figure 3.4 Financial information systems help manage cash and investment portfolios.

 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.
11
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.
12
Finance

 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.
13
Engineering

14
Engineering
Figure 3.5 Engineering information systems aid engineers in designing new products and simulating
operations.

 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
15
Manufacturing and
Inventory Control

16
Manufacturing and
Inventory Control
Figure 3.6 Manufacturing and inventory control information systems help reduce cycle times and the
cost of maintaining inventory.

 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
17
Manufacturing and
Inventory Control

18
Manufacturing and
Inventory Control
Figure 3.7 Materials requirement planning and manufacturing resource planning

 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
19
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
20
Manufacturing and
Inventory Control

 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.
21
Marketing, Sales, and
Customer Service

22
Marketing, Sales, and
Customer Service
Figure 3.8 Marketing and sales information systems help target potential buyers and serve clients.
 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.
23
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
24
Marketing, Sales, and
Customer Service

Yasir ALi #03023424143 (GCUF) 25
Human Resources
Figure 3.9 Human resource management information systems help managers optimize the
assignment of employees and provide payroll, benefits, and other employee-related services.

 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
26
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.
27
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.
28
Human Resources

 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.
29
Enterprise Resource
Planning

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.
30
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.
31
Groupware and
Collaborative Work

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?
32
Debate

What is Privacy?
 One’s 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.
33
Ethical and Societal Issues
Privacy? 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
34
Ethical and Societal Issues
Privacy? 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 unfair—information
gathered for a particular purpose with permission
should remain restricted
35
Ethical and Societal Issues
Privacy? 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.
36
Ethical and Societal Issues
Privacy? 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.
37
Ethical and Societal Issues
Privacy? What Privacy?

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Information System in Business Enterprises

  • 1. 1
  • 2.   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. 2 Learning Objectives
  • 3.   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. 3 Learning Objectives
  • 4.   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 4 Effectiveness and Efficiency
  • 5.  Yasir ALi #03023424143 (GCUF) 5 Effectiveness and Efficiency Figure 3.1 Information technology supports a variety of business functions
  • 6.   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 6 Accounting
  • 7.   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. 7 Accounting
  • 8.  8 Accounting Figure 3.3 Accounting information systems include features that reflect up-to-date performance of the organization in financial terms.
  • 9.  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 9 Finance
  • 10.  10 Finance Figure 3.4 Financial information systems help manage cash and investment portfolios.
  • 11.   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. 11 Finance
  • 12.   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. 12 Finance
  • 13.   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. 13 Engineering
  • 14.  14 Engineering Figure 3.5 Engineering information systems aid engineers in designing new products and simulating operations.
  • 15.   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 15 Manufacturing and Inventory Control
  • 16.  16 Manufacturing and Inventory Control Figure 3.6 Manufacturing and inventory control information systems help reduce cycle times and the cost of maintaining inventory.
  • 17.   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 17 Manufacturing and Inventory Control
  • 18.  18 Manufacturing and Inventory Control Figure 3.7 Materials requirement planning and manufacturing resource planning
  • 19.   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 19 Manufacturing and Inventory Control
  • 20.   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 20 Manufacturing and Inventory Control
  • 21.   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. 21 Marketing, Sales, and Customer Service
  • 22.  22 Marketing, Sales, and Customer Service Figure 3.8 Marketing and sales information systems help target potential buyers and serve clients.
  • 23.  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. 23 Marketing, Sales, and Customer Service
  • 24.   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 24 Marketing, Sales, and Customer Service
  • 25.  Yasir ALi #03023424143 (GCUF) 25 Human Resources Figure 3.9 Human resource management information systems help managers optimize the assignment of employees and provide payroll, benefits, and other employee-related services.
  • 26.   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 26 Human Resources
  • 27.   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. 27 Human Resources
  • 28.   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. 28 Human Resources
  • 29.   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. 29 Enterprise Resource Planning
  • 30.  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. 30 Groupware and Collaborative Work
  • 31.   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. 31 Groupware and Collaborative Work
  • 32.  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? 32 Debate
  • 33.  What is Privacy?  One’s 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. 33 Ethical and Societal Issues Privacy? What Privacy?
  • 34.   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 34 Ethical and Societal Issues Privacy? What Privacy?
  • 35.   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 unfair—information gathered for a particular purpose with permission should remain restricted 35 Ethical and Societal Issues Privacy? What Privacy?
  • 36.   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. 36 Ethical and Societal Issues Privacy? What Privacy?
  • 37.   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. 37 Ethical and Societal Issues Privacy? What Privacy?

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