4. information systems in functional areas

Information Systems in Functional Areas

1Prof. Nivedita Roy, IBS-Gurgaon

Marketing Information Systems• The marketing oriented firm needs some form of

process and a system to carry out the activities of collection, storage, processing, retrieval and use of information

• Such a system is called a marketing information system (MKIS).

• Kotler defines an MKIS as:

‘…. Consisting of people, equipment and procedures to gather, sort, analyse, evaluate and distribute needed, timely and accurate information to marketing decision makers.’


Contd.

• To manage a business well is to manage its future and this means the management of information (MIS) of which the MKIS is an integral part, which is a valuable resource to be carefully managed as any other resource e.g. Human resources and financial resources.

• It is a framework to day-to-day managing and structuring of information gathered regularly from sources inside and outside the organization


Contd.

• Provides a continuous flow of information about such factors as prices, advertising expenditure, sales, competition and distribution expenses

• The marketing databank is a file that contains data collected from the MIS and market research projects

• Marketing intelligence is a collection of data and ideas available in an organization


Contd.

‘MKIS (MIS) is a set of procedures and methods for the regular, planned

collection, analysis and presentation of information for use in marketing

decisions’

American Marketing Association


Role of IT in Marketing

• Operational need – Mainly supports accounting and operational functions

(e.g. Stock control, staffing decisions). – Besides periodic reports are also used

• Decision support databases – Supports traditional marketing functions like: target

marketing, cross-selling, sales analysis/ forecasting, market basket analysis, promotional analysis, churn analysis, profitability analysis, customer life time value measurement, product packaging etc


Contd.

• Customer relationship management. • The major marketing functions are:

• Campaign management • E-marketing management,• Call centre management, • Profitability analysis, • Customer retention / loyalty, • Integration of customer touch points


Hierarchical view of MKIS

Strategic

Tactical

Operational

• External environment monitoring• Market scanning• Analytical tools

Functional information:• Price• Product• Promotion• Distribution• Finance• HR

Customer handling :• Product availability• Order processing • Salesperson

Productivity• Telemarketing


The components of a computerised MKIS

Model Bank

Data Bank

StatisticalBank

MKISDisplay

unitMarketingManager


Components of MKIS

• Data bank– Raw data e.g. Historical sales data, secondary data

• Statistical bank – Programmes to carry-out sales forecasts, spending

projections• A model bank

– Stores marketing models e.g. Ansoff’s matrix, Boston matrix

• Display unit – VDU and keyboard


Alternative representation of MKIS

DECISION SUPPORT SYSTEM (MKIS)

Marketing intelligence system

Marketing research system

Internal accounting

system Analytical marketing system


Internal Accounting System

• All firms generate data as part of the general process of carrying out their business.

• The generation, recording, storage and retrieval of such data is referred as the ‘internal accounting system of the firm’.

• It refers to all information received and generated by the firm.

• Perhaps a better name for this system would be the ‘internal documentary system’.

• The important thing for the management of marketing firms to realise is that such information is available and can be retrieved from within the internal documentary system or ‘internal accounting’ system of the firm with little effort and at small cost.


The Marketing Intelligence System

• Kotler defines the marketing intelligence system in the following manner:

‘A marketing intelligence system is a set of procedures and sources used by managers to obtain their everyday information about pertinent developments in the marketing environment’.

• In the course of carrying out their business for the firm, members of staff may come across potentially valuable and interesting information

• So a systems is required to collect, collate and manage this source of collected information that is referred to as the ‘marketing intelligence system’


The Marketing Research System

• This is the final input to the marketing information system.

• The marketing research system makes use of– Secondary data (data that are already in existence)– And primary data (data collected for a specific piece of

research for the first time).


The Analytical Marketing System

• This sub system of the overall MKIS does not produce any new data.

• Rather, it takes the data from the other three component parts of the system in the form of input data and enhances its value.

• Users of the system are able to do this by applying ‘management science’ techniques to the data thereby transforming it in to a form that makes it more easily understood and more valuable to the marketing decision maker.

• Information collected from formal marketing research, marketing intelligence gathering of internally generated information can be used as input data in a wide variety of forecasting models.


Contd.

• Data collected over a period of time can be extrapolated in to the future by the use of time series techniques that allows the manager to model seasonality and cyclicality effects.

• Trend fitting, using the mathematical functions of known ‘curves’ can also be used to forecast sales and model likely future product life cycles.

• Linear and multiple regression are more sophisticated forecasting techniques that make use of ‘econometric’ procedures


Sources of data for MKIS

External• On-line databases or• CD-ROM

– Census data– Market researchers– POS data

• Annual reports• Trade press

Internal• Transaction data

– Order entry– Invoicing– Billing– Service calls

• Market research• Sales call reports


Marketing Information System (tactical)

Marketing Research

Marketing Intelligence

Order Entry

Invoicing

Call Reporting

Transaction Processing Subsystems

Boundary-Spanning Subsystems

Product Subsystem

Place Subsystem

Promotion Subsystem

Price Subsystem

Sales Forecasting

Marketing-Mix Subsystems

Internal Databases

External Sources of Information

Customer and Prospect

Data

Competitor Data

Transaction Data


Marketing Information System


Manufacturing Information Systems: An Overview

• Most of the manufacturing centric organizations prefer an integrated manufacturing information system (MIS) that supports all the activities pertaining to production/operation

• Manufacturing information system based on computers use a variety of techniques to support computer integrated manufacturing (CIM) that simplifies, automates and integrates all the production processes.


Contd.

• Most of the manufacturing set-ups use computer aided design (CAD) and computer aided manufacturing (CAM) for assisting the engineers in product design and manufacturing activities.

• Computer aided process planning (CAPP) is also used for improvised production processes


Categories of Manufacturing Information Systems (MIS)

Broadly speaking any type of MIS fall into the following three categories:

• Manufacturing planning system• Manufacturing control system• Transaction processing system


Manufacturing Planning System

• This captures the details related to the following production activities:– Production planning– Manpower planning– Material requirement planning


Manufacturing Control Systems

This relates to the activities like:• Production scheduling • Material requirement planning • Capacity requirement planning • Engineering• Maintenance • Shop floor control • Quality control • Process control • Machine control• Robotics etc.


Transaction Processing Systems

• Here the following activities are carried out:– Shop floor reporting– Inspection– Work order processing


Benefits from Manufacturing Information System

Direct benefits of MIS are as under:• Improved efficiency in the manufacturing processes• Better production schedule planning • Higher productivity• Better quality control• Regular feedback monitoring and control of all the

production functions and operations• Reduced inventories• Improved customer service


Computer Integrated Manufacturing

• CIM involves the use of computers to automate, control and

document manufacturing activity through the entire

manufacturing process

• Applications for quality control, scheduling and yield

analysis are included in CIM systems

• Integration is the key word


Manufacturing integration


Computer Aided Design

• CAD is the use of computers for the synthesis, analysis, and optimization of a design.

• This is an iterative process that constitutes of certain steps


Use of Computer Aided Design

• CAD programs are good for– 2d sketches– 3d modeling– Animation in 3d space (rotation/translation/scaling)– Geometric and physical simulations/analysis– Virtual reality

• Be present in 3d world with 3d objects• Touch/feel the objects• Interact with the environments


CUSTOMER REQUIREMENTS,CUSTOMER NEEDS

FUTURE

DIRECTIONS

PROBLEM IDENTIFICATION

PRELIMINARY IDEAS

REFINEMENT PROCESS

ANALYSIS AND DECISION PROCESS

IMPLEMENTATION

CRITERIA SATISFIED

REFINEMENT PROCESS

YES

NO

Computer Aided Design Process


Computer Aided Manufacturing

• CAM is the use of computer systems to plan, manage, and control the operations of a manufacturing plant through either direct or indirect computer inter face with the plant's production resources.

• CAD/CAM covers a wide spectrum of activities that include production specification, conceptual design, final design, drafting, process planning, manufacturing, assembly, and inspection.


Role of Human Resource Department

• Is responsible for attracting and maintaining an appropriate work force for the firm.

• The human resources process entails:– Attracting the work force – Developing the firm's work force to meet the firm's

personnel needs– Maintaining the work force


Human Resource Management Process

Organizational

Strategic Plan

Human Resource Planning Job Appraisal & Design

Compensation

Staffing

Training

Replacement

Evaluation


Use Of IT In HR Activities • 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

• Training– Multimedia software training is replacing classrooms and

teachers.– Training software simulates an actual task or situation and

includes evaluation tools.


Contd.

• Evaluation– Evaluation software helps standardize the evaluation process

and adds a certain measure of objectivity and consistency.– Compensation and benefits management– IS 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.


Contd.

• Human Resource Information Systems support human resource management in organizations.

• They include:

– Information systems for staffing the organization– Training and development– Compensation administration


Common Use of Computers in HRM

• Job analysis• Equal employment opportunity and affirmative action

reporting• Recruitment• Selection• Human resource development and career planning• Performance appraisal• Compensation and benefits• Health and safety• Labor relations• Selection out• New and future applications


HRIS In Practice

• Manpower Planning• Labor Force Tracking

• Labor Cost Analysis• Turnover Analysis

• Recruitment• Workforce Planning

• Skill assessment• Performanceevaluation

• Payroll control• Benefits Administration

• Compensation effectiveness• Benefits Analysis

• Contract costing• Salary forecast

• Succession planning• Performance appraisal plans

• Training effectiveness• Career matching

Staffing Training &

Development CompensationAdministration

StrategicSystems

TacticalSystems

OperationalSystems


SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

TRAINING & DEVELOPMENT TRACK TRAINING, SKILLS, APPRAISALS OPERATIONAL

CAREER PATHING DESIGN EMPLOYEE CAREER PATHS KNOWLEDGE

COMPENSATION ANALYSIS MONITOR WAGES, SALARIES, BENEFITS MANAGEMENT

HUMAN RESOURCES PLANNING PLAN LONG-TERM LABOR FORCE NEEDS STRATEGIC

HRIS: Description


Recruiting & hiring Education & training Data management Termination & benefit administration

Primary HR Activities


Channels of Recruiting

Walk-in

Write-in

Employee referrals

Advertising

Department of labor

Private placement agencies

Educational institutions


Preliminary reception of application

Employment tests

Selection interview

References and background check

Medical evaluation

Conference

Realistic job previews

Hiring decision

Selection Process


Human Resource Development

Orientation

Training

Education


Compensation

Payroll

Executive compensation

Bonus incentives, etc.


Flow of Information in HR

Recruiting

Potentialemployees

Hiring

Employees

Educationand

Training

BenefitAdministrationTermination

Retiredemployees

Data Management

The Firm


Concept of HRIS( 5 C )

Capability• Top management• HR department• IS department

Control Cost Communication

• Information flow Competitive advantage


A model of a Human Resource Information System

Accountinginformation

system

HRsresearch

subsystem

HRsintelligencesubsystem

Inputsubsystems

Data Information

HRISDatabase

Internal sources

Environmental sources

Work forceplanning

subsystem

Work forcemanagement

subsystem

Benefitssubsystem

Environmentalreportingsubsystem

Compensationsubsystem

Recruitingsubsystem

Outputsubsystems

Users


HRIS Subsystems

• Accounting Information System• Personnel data elements• Accounting data elements

• Human resources research subsystem• Succession studies• Job analyses and evaluations• Grievance studies


Contd.

Human Resources Intelligence Subsystem Government intelligence Supplier intelligence Labor union intelligence Global community intelligence Financial community intelligence Competitor intelligence


Contd.

Work force planning subsystem Organization charting Salary forecasting Job analysis / evaluation Planning Work force modeling

Recruiting subsystem Applicant tracking Internal search


Contd.

Work force management subsystem Performance appraisal Training Position control Relocation Skill / competency Succession Disciplinary

Compensation subsystem Merit increases Payroll Executive compensation Bonus incentives Attendance


Contd.

Benefits subsystem Defined contribution Defined benefits Benefit statements Flexible benefits Stock purchase Claims processing

Environmental reporting subsystem EEO records ( equal employment opportunity ) EEO analysis Union increases Health records Toxic substance Grievances


Accounting Information Systems (AIS)

• Comprise the functional area of business responsible for providing information to the other areas to enable them to do their jobs and for reporting the results to interested parties.

• Used to identify, analyze, measure, record, summarize, and communicate relevant economic information to interested parties.

• Is a unified structure that employs physical resources and components to transform economic data into accounting information for external and internal users.


Contd.

• The first function of the AIS is to support the performance of the organization’s business activities.

• For this the revenue cycle is used that includes a recurring set of business and related information processing operations associated with providing goods and services to customers and collecting cash payment for those sales.


Accounting Information Systems


Basic subsystems in the AIS

ExpenditureCycle

HumanResources

ProductionCycle

RevenueCycle

FinancingCycle

General Ledger & Reporting System


Contd.

• The expenditure cycle• Involves activities of buying and paying for goods or

services used by the organization.• The production cycle

• Involves activities converting raw materials and labor into finished goods.

• The human resources/payroll cycle• Involves activities of hiring and paying employees.


Contd.

• The revenue cycle• Involves activities of selling goods or services and

collecting payment for those sales.• The financing cycle

• Involves activities of obtaining necessary funds to run the organization, repay creditors, and distribute profits to investors.


TrialBalance

TrialBalance

GeneralJournal

GeneralJournal

GeneralLedger

GeneralLedger

SourceDocuments

SourceDocuments

AdjustingEntries

AdjustingEntries

FinancialStatements

FinancialStatements

ClosingEntries

ClosingEntries

The Accounting Information System Model

INPUTS

PROCESSING

OUTPUTS61Prof. Nivedita Roy, IBS-Gurgaon

Basic activities of revenue cycle

• Sales order entry • Shipping• Billing and accounts receivable• Cash collections


Use of IT in sales order entry

– On-line processing of sales orders with e-mail/web site– Optical character recognition (OCR)– Electronic data interchange (EDI)– Linking EDI with customers’ point-of-sale (POS)– Sales force automation


Billing and Accounts Receivables

• Following two activities are performed at this stage of the revenue cycle: Invoicing customers Maintaining customer accounts

• The decisions and information required here include:– Accurate billing and information identifying the items

and quantities shipped, prices, and special sales terms.– Decisions about policies regarding sales returns and

warranties.


Contd.

• Billing• The sales invoice notifies customers of the

amount to be paid and where to send payment.• Cycle billing.

• Maintain accounts receivable• Open invoice method• Balance-forward method

• A monthly statement summarizes transactions that occurred and informs customers of their current account balance.

• Account adjustments and write-offs• A credit memo


Use of IT in billing and A/c Receivables

– On-line processing of invoices– Electronic Data Interchange (EDI)– Imaging to create and store digital versions of all paper

relating to a customer’s account.


Cash Collections

– Reduction of cash theft is essential.– The billing/accounts receivable function should not

have physical access to cash or checks.– The accounts receivable function must be able to

identify the source of any remittances and the applicable invoices that should be credited.

– Checks are received and deposited.– Remittances

• Remittance list - shows the customer, invoice number, and the amount of each payment.

• Lockbox


Use of IT in cash collection

– Electronic lockbox– Electronic funds transfer (EFT)– Financial electronic data interchange (FEDI)


Users of Financial Information

• Internal users– Managers– Non managers

• Environmental users– Those with direct business relationships– Those with no direct relationships

• Information type– Periodic and special reports– Results of mathematical simulations– Electronic communications – Advice of expert systems


Financial Information Systems

• Financial information systems provide necessary support for the finance function.

• Financial information systems provide a wide range of information for both managers and interested external people

• Uses include:– Auditing– Financial intelligence– Forecasting– Funds management– Budgeting

• Financial modeling is one of the oldest uses of mathematical simulations in business


Database

Accountinginformation

system

Internal audit

subsystem

Financialintelligencesubsystem

Forecastingsubsystem

Fundsmanagementsubsystem

Controlsubsystem

Internal sources

Environmentalsources

Inputsubsystems

Outputsubsystems

Users

Data Information

A model of a Financial Information System


Financial Intelligence Subsystem

Represents the firm in establishing two-way links with:• Stockholders or owners• Stockholder relations department

– Annual meetings– Annual reports– Quarterly reports

• Financial community- Indirect influence from the government sources of

financial intelligence:– Word of mouth– Periodicals– Computer databases

• Environmental influence on the money flow


Forecasting Subsystem• One of the oldest mathematical activities in business

– Rely on past data– Make semi structured decisions– Cannot be perfect

• Short-term forecasts – One to three years– May be done by marketing

• Long-term forecasts – Usually done by finance, or special planning group


Contd.

• Non-quantitative (qualitative)– Panel consensus– Delphi method

• Electronic meeting system (EMS) help combine non-quantitative and quantitative methods

• Quantitative forecasting methods– Regression analysis is dominant– Related methods are available– Many software packages used

• Minitab• SAS• SPSS


Funds Management Subsystem

• Manage to achieve– Revenue flow inflow exceeds expense outflow– Maintain stability

• Cash flow models– Performs cash flow analysis


Control Subsystem

• Operating budget for the fiscal year• Three approaches

– Top-down– Bottom-up– Participative


1.

2.

3.

4.

Final organizationalbudget

5.

The Budgeting Process

Forecasting model

Sales forecast

Topmanagement

Resource planningmodel

Human resourcerequirements

Financerequirements

Manufacturingrequirements

Marketingrequirements

Financemanager

Human resourcemanager

Informationservicesmanager

Manufacturingmanager

Marketingmanager

Requestedfinancebudget

Requestedhumanresourcesbudget

Requested informationservices budget

Requestedmanufacturingbudget

Requestedmarketingbudget

Approved sales forecast

Topmanagement

Information servicesrequirements
