Chapter%203%20Information%20Systems%20in%20Business

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Chapter 3Information Systems in Business
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Learning Objectives

• Identify various business functions and the role
  of ISs in these functions
• Explain how ISs in the basic business functions
  relate to each other
• Show how ISs of different business functions
  support each other

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Learning Objectives (Cont.)

• Explain how information technology is used in the
  most common business functions to make business
  processes more effective and more efficient
• Explain the notion of enterprise resource
  planning systems
• Identify 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 task is accomplished
• Efficiency
• Determined by the relationship between resources
  expended and benefits gained in achieving a goal

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Effectiveness and Efficiency (Cont.)
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Effectiveness and Efficiency (Cont.)
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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 (Cont.)

• Electronic Data Processing (EDP) Audits
• Ensure electronic systems comply with standard
  regulations and acceptable rules
• Ensure systems cannot be manipulated to
  circumvent acceptable principles

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Accounting (Cont.)
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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 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 (Cont.)
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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)
• Electronic transfer of cash from one bank account
  to another

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Investment Analysis and Service

• Analyze and project 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 (Cont.)
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Manufacturing 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 Inventory Control (Cont.)
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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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Materials Requirement Planning (MRP) (Cont.)
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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 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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Monitoring and Control

• Supply chain management (SCM)
• Managers know status of product during
  manufacturing
• Recent IS control as well as monitor
  manufacturing process
• System at Ford Motor Company designed to ensure
  no assemble steps are missed

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Marketing, Sales, 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, Customer Service (Cont.)
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Marketing, Sales, Customer Service (Cont.)

• 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

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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

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Customer Relationship Management

• Customer Relationship Management (CRM) software
  for companies to better serve and know customer
  needs
• Track past purchase and payments
• Update online answers to frequently asked
  questions
• Analyze customers contact with company
• Web-based Customer Service available 24/7

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Human Resources
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Human Resources (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

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Human Resources (Cont.)

• 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 (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

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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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Enterprise Resource Planning (ERP) (Cont.)
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Groupware andCollaborative 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
• Collaborative Projects
• Users can coordinate work on a single document
  from many different terminals

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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

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Summary

• There are various business functions and ISs have
  a role in these functions
• ISs relate to each other in basic business
  functions
• IT is used in business functions to make business
  more effective and more efficient
• Enterprise resource planning systems help run
  different functions