Chapter III

Information Systems in
Business Functions
Effectiveness and Efficiency
EFFECTIVENESS defines the degree to which a goal is
achieved. Thus, a system is more or less effective depending
upon:
(1) how much of its goal it achieves and;
(2) the degree to which it achieves better outcomes than
other systems do.

EFFICIENCY is determined by the relationship between

resources expended and the benefits gained in achieving a
goal.
In mathematics:
Efficiency = Benefits
Costs
Information Technology supports a variety of business functions

Human resource management

Marketing and Sales Accounting

Information
Technology

Manufacturing and Finance

Inventory Control

Engineering
Accounting

The purpose of accounting is to track every

financial transaction within a company.

Cost-accounting systems, used to

accumulate data about cost involved in
producing specific products, make
excellent use of IT to compile pricing data.
Finance
The goal of financial managers, including controllers
and treasurers, is to manage an organization’s
money as efficiently as possible.
Budgeting & Forecasting

Cash Management Investment & Analysis

Financial
Information
System

Financial information systems help

manage cash and investment portfolios.
Finance – Cash Management

One common use of a CMs is to execute cash

transaction in which financial institutions
transfer huge amounts of money using
electronic funds transfer (EFT).

EFT refers to the electronic transfer of cash

from an account in one bank to an account
of another bank.
Finance – Investment Analysis and
Service

Every investors goal is to buy an asset and

later sell it for more than it cost. When
investing in securities, such as stocks and
bonds, it is important to know the prices of
securities in real time, that is, “right now”.
Engineering
IT’s greatest contribution to engineering is in the
area of computer aided design (CAD) and rapid
prototyping (creating one of a kind products to
test design in three dimensions).
Manufacturing and Inventory Control
Manufacturing is the process of raw materials into
physical products.
Manufacturing Resources
Materials Requirement
Planning (MRP II)
Planning (MRP)

Manufacturing MRP II systems can

Economic Order Quantity And
(EOQ) of a specific raw quickly modify schedules
Inventory Control to accommodate orders.
materials is the optimal ISs
quantity that allows The most important input
business to minimize of MRP II systems is the
overstocking and save master production
cost. schedule (MPS), which
specifies how production
Manufacturing Execution
capacity will be used to
Systems
meet customer demands
& maintain inventories.
Marketing, Sales, and Customer Service

Market Research system help to find the

population and regions that are most likely to
purchase a new product or service. They also help
analyze how a new product fares in its first several
months on the market.
Marketing, Sales, and Customer Service

Targeted Marketing
The principle of targeted marketing is to define
the prospective customer as accurately as
possible.
Some marketing experts like to call this 1:1 (one-
to-one) marketing.
Marketing, Sales, and Customer Service

Customer Relationship Management

To better serve customer and learn of their
changing needs, companies use customer
relationship management (CRM).
Human Resources
HR Management has become more complex
due to the fast growth in specialized
occupations, the need to train and promote
highly skilled employees, and the growing
variety of benefits programs.
Human Resources
HR Management can be classified into five
main activities:

1. Employee record management

2. Promotion and recruitment
3. Training
4. Evaluation
5. Compensation and benefits management
Human Resources
Employee Record Management
Human resource departments must keep
personnel records to satisfy both external and
internal regulations.
Human Resources
Promotion and Recruitment
To select the best qualified person for a position,
a HR managers can search a database of
applicants and existing employees records for
set criteria.

The Web has prompted many companies to e-

recruit, making much of recruiting process
electronic.
Human Resources
Training

One important function of HR

departments is improving employee skills.
Training software emulates situations in
which employee must act and includes
tests and modules to evaluate a trainee’s
performance.
Human Resources
Evaluation
One of the difficult and often unpleasant, tasks of
supervisors is the periodic evaluation of technical
ability, communicating skills, professional conduct,
and general behavior of employees on the job.
Human Resources
Compensation and Benefits Management
ISs help HR officers manage compensation
efficiently and effectively.
Enterprise Resource Planning (ERP)
All business functions are served by one system
that supports different activities for different
departments. The system main focus is to help
run the different functions.
Groupware and Collaborative Work

When people work together, either to provide

a service or create a product, they often do
so in sequence: one person provides his or
her input to the project, then passes it along
to other person, who does the same, and so
on along the chain. A series of such
repeated activities is called work cycle , or
simply cycle.
Work cycles may take a long time to
complete.
Groupware and Collaborative Work
Document Control
Quality Manager document control module allows
companies to automate and manage internal and
external document.
Groupware and Collaborative Work
Collaborative Projects
Managing a project– especially a large one involving many
organizational units– and keeping on track requires enormous effort.
A growing number of collaborative tools utilize Web Technology.

Example of Programs use in Collaborative Projects

MarkUp from Mainstay lets people in Microsoft Netmeeting – free of

different locations work together on the charge.
same document
Groupware and Collaborative Work
Brainstorming
In business, brainstorming refers to the process
of a group of colleagues meeting and working
collaboratively to generate creative solution and
new ideas.
END ☺