This action might not be possible to undo. Are you sure you want to continue?
By: M Rafeeq
APPLICATION OF INFORMATION SYSTEMS Role of Accounting Transaction Processing System: Banks & Creditors
Departments & Employees
Cash Mgt. Investments foreign exchange
Strategic & Tactical planning
Produce shareholders reports
Payroll & employee benefits Produce Mgt. accounting reports
Tax filings & Planning
Order & account payable
Inventory & Assets Inventory Mgt. And fixed asset and cost accounting
Sales & account receivable
Supply and in-process inventory
Transaction processing is a major function of the accounting system. The accounting system collects data throughout the company and produces consolidated reports that are used for planning and Mgt. TPS is important, because they focus on money. Provide controls over the data to ensure accuracy and to prevent fraud, and create standard reports. 1). INPUT AND OUTPUT: - Financial data and reports.
AZAD College -Accounting department collects raw financial data and is stored in accounting journal. -Double-entry system is used to ensure accurate data. Double-entry system means, at least two entries must occur for every transaction. -Each entry includes the data, amount of money, account number, person’s name. -The journal purpose is to record all the transactions. -A general ledger is a collection of accounts include categories like accounts receivable, accounts payable, inventory and cash. -Produce balance sheets; cash statements and income statements every quarterly. -Reports are produced to compare the financial positions of various companies over time. -Accounting systems produce standardized reports. 2). PURCHASES, SALES, LOANS AND INVESTMENTS: -Purpose of accounting is to record the financial transactions with external organizations. Creates summary and detail reports to monitor key information. -If sales in a region drops, then there will be a major increase in the cash balance, then a message will be send to the appropriate manager by building exception reports. 3). INVENTORY: -Inventory control consists of knowing exactly what items are available and where they are located. -Determine when to place new orders. For E.g. With EDI, inventory control system can monitor current sales and automatically place orders with the supplier. -The computer system monitors production requirements, keeps track of delivers and electronically sends order to the suppliers. The suppliers then deliver the parts, as they are needed on the production line. 4). THE ACCOUNTING CYCLE: -Produce information in reports that are required to reflect the financial condition of the firm at the end of every quarter. -Managers operate for quarterly reports, with intermediate monthly reports for some items. The volume of data is kept on file by making summary reports. 5). PROCESS: - Checks and Balances. a) Double-Entry System: - Objective of accounting system is to maintain the integrity of the financial data. The goal is to prevent mistakes and discourage fraud, i.e., if an amount entered is incorrect, the account totals will not balance. Generally transactions involve outside organizations, mistakes can be caught by sharing data. For E.g.: - Companies typically send receipts, when they receive payments from each other. Auditors periodically send verification requests to suppliers and customers to make sure that data was recorded correctly.
AZAD College b) Separation of duties: This control is to minimize fraud to deal with multiple employees. c) Audit trails: This is important because it enables investigators to track backward through the data to the source. By audit trails entries can identify the person who is responsible for the entry. This identified data, is possible to list every article that affects an item on a report. I. Nature of Operational Information Systems: The information systems that perform or support the completion of tasks are often referred to as operational information system or transaction processing systems. Operational information describes past activities. They produce routine, repetitive, descriptive, expected and object data. [Structured format]. Information produced is in detail, highly structured, accurate because this information is obtained from internal sources. 1. 2. 3. 4. 5. Advantages: Reduced cost Increase speed. Increased accuracy. Increased custom service Increased data for decision-making. Application of Information Technology to some of the Operational Information Systems that common to four organizational functions: Accounting/Finance. Marketing Production. Human Resource management. OPERATIONAL FINANCE ACCOUNTING SYSTEMS: They focus on processing financial transactions to produce the routine, repetitive information outputs i.e., pay-slips, checks to vendor, customer invoices, purchase order, stock reports.
1. 2. 3. 4.
Verified sales order Accounts receivable Purchase & cash payments totals
Inventory totals Inventory
Orders to restock inventory
Purchase & cash payments totals
Verified purchase orders Purchasing Accounts payable
Checks to creditors Creditors
1. 2. 3. 4. 5. 6. 7. 8. 1. 2.
The financial accounting system is composed of following modules: General ledger Fixed assets Sales order processing Accounts receivable Accounts payable Inventory control Purchase order processing Payroll General Ledger system: Produce income statements and balance sheet periodically. Updates data of pay roll accounts. Fixed assets system: Maintains records of long term & short term assets owned by an organization. E.g.: - property, machinery General ledger system uses this information to maintain current balances in long-term asset accounts of the organization. Sales order processing system: -
AZAD College It is also called order-entry system, which records sales order and provide data to other systems like inventory and bill the customers. The sale can be closed while picking and packing slips. 4. Accounts receivable system: It allows entering, updating and deleting customer information, such as sales made on account, credit terms, cash payments received and accounting balances. INPUTS OUT PUTS
Payments Sales orders Adjustments (Returns, credit terms) ACCOUNTS RECEIVABLE Customer statements Schedule of accounts receivable
5. Accounts payable system: Provides information directly to the general ledger system and receives data from the purchase order system. INPUTS
Purchase orders Sales orders Adjustments (Returns, credit terms) ACCOUNTS PAYABLE
Checks to creditors Schedule of accounts payable
List of bills due
6. Inventory control system: Provides input to the ledger, where it receives input from order processing. Purpose is to keep track of inventory levels and costs. Inventory control updates stock changes, such as damaged goods, spoilage. 7. Purchase order processing system: Purchase order system take orders from inventory and provides information to the accounts payable and inventory steps. Produces stock reports and order reports. 8. Payroll system: Process wage and information such as payments to employees Produces weekly payroll summary report, overtime reports, wage and tax statements, and payroll checks. OPERATIONAL MARKETING INFORMATION SYSTEMS: INPUTS 5
Periodic automated reports
Company database Computer Marketing information system programs
Marketing subsystem files
Customer invoices Marketing budgets Sales call reports Cost reports Inventory reports Accounts payable Accounts receivable Payroll Manufacturing costs Annual reports Market research
OUTPUTS Sales recap
Record summaries Transaction analysis Exception inquires
Operational Marketing Information system: The business function of marketing is concerned with the planning promoters, sales of existing product, the development of new product and new market to better serve the potential customer. Thus marketing performs a vital function in the operation of a business enterprise. To be effective, marketing information system must be coordinate with other organizational information system such as purchasing system, production system, inventory system, accounts receivable system, credit system and orderentry system. Operational marketing information system include system such as: 1. 2. 3. 4. 5. 6. 7. 1. Sales force automation systems Micro marketing and data ware house systems Telemarketing systems Direct mail advertising system. Point-of-sale systems. Delivering tracking and routing systems. Electronic shopping and advertising.
Sales force automation system: -
AZAD College These are designed to increase the production of sales people which includes identifying potential customers, contacting customers, calling on customers, closing the sale and follow up the sales. There most support managing sales cycle, provide electronic catalogs or sales presentation. Prospect Information systems include lists of prospects by location by product category by income etc. Customer contact management systems provide information related to sales force pertaining to customers, their product or service & sales history data. Micro marketing and data were house system: Pitching sales or advertising campaigns to a very narrowly defined target customer is called micro marketing. They are used to identify and target specific customer or prospect from large database. A data warehouse system, which stores, retrieves manager or otherwise manipulates massive amounts of data that may be from the organization database and external sources. The warehouse of data is often separated from the organizational production database so that users can use these resources without reducing the response time of an organizational routine data processing operation. Telemarketing systems: A marketing system that uses the telephone, often coupled with computer support, to sell products or services. Telemarketing uses electronic directories and on-line database together for names, address, telephone numbers & alter data of the potential customers. Direct Mail Advertising System: A marketing system that utilities marketing list to distribute sales broachers and catalogs to a large number of potential customers. Point of sale (POS) systems: Computer system used by sales clerks to record a sale at the customer i.e., Environmentally capture date about orders found in food chain stores, departmental stores and Classical personnel required functions functionsstores. other chain The information obtained from point of sale systems becomes input to the EEO compliance Recruiting accounting system, which then supplies data to marketing information financial (Equal Employment Hiring systems. Opportunity) Job evaluation Delivery tracking and routing systems: Personal Today delivery systems place small satellite dishes on their delivery Requirements Affirmative monitor vehicles and these are the satellite bases global position system (GPS) toaction Placements the plans Careermovement and location of every vehicle. Electronic shopping and advertising: Specific job OSHA-Health/safety The Requirements computer age avenues for shopping and advertising in Internet, rather (Occupational Safety than TV Training radio and magazines. and Health Act) Skills inventory Virtually shopping or electronic shopping allows organizations to Skills requirements present information about goods and services to potential customers who are Compensation their electronic store. ERISA pension connected to
Payroll (Employee Personnel records Benefits Retirement OPERATIONAL HUMAN RESOURCE INFORMATION SYSTEMS: - Income Maintenance Security Act) Employee profiles Absenteeism Employment histories Tracking Carrier profiles 7 Organization Education records Charts Payroll data
General retrieval and processing for operating management personnel specialists
Marketing, production, finance & other major systems
The five classical subsystems of the personal information system: 1. Recruitment – forecasts personal needs and skills and recruits the personnel at proper time to meet organizational needs. 2. Placements – effective use of labor takes place in this system. 3. Training & Development - work force be constantly update in new techniques and developments. 4. Compensation – giving benefits to the employee. 5. Maintenance –personal policies and procedures are achieved.
Nature of Tactical Information Systems: 8
AZAD College Tactical IS support management decision making by providing managers with regular summary reports, exception reports, adhoc reports and other information that help to: 1) Control their areas of responsibility 2) Allocate their resources to obtain organization goals. The focus of tactical IS is on resource allocation i.e., how do you allocate the available resources to reach organizational goals. Information Systems to functional areas: 1) Tactical Accounting & Financial IS’s. 2) Tactical marketing IS’s. 3) Tactical Human Resource IS’s. 1. Tactical Accounting & Financial Information Systems: Many Information systems can be designed for financial mangers to make decisions. Budgeting systems Cash management. Capital budgeting systems. Investment management systems.
a) b) c) d)
Systems: It permits managers to track actual revenue and expenses and compare these amounts to expected revenues and expenses. In a computerized general ledger system, financial accounting system often permits budget amounts to be entered by account number. Periodically (weekly, monthly, quarterly or monthly) these budgeted amounts (allocations) and the actual amounts spent or received (actual) for each account are compared and reports are prepared. The difference between the allocation for an account and the actual amount spent is called variance, is also identified and reported. The reports prepared by general ledger system of financial accounting system are:1) Current budget allocations, expenditures and variances by budget line item 2) Current budget allocations compared to the previous years allocations. 3) Current revenues and expenditures compared to the previous year’s revenues and expenditures. 4) Current revenues and expenditures compared to average of the other units or divisions of the organization. 5) Projected expenditures and variances for each budget line item for the entire year based on the expenditures incurred to date.
AZAD College This system provides information to identify and solve problems, i.e., the systems do not make any decisions. It is a decision-support system, not a decision system. Generally mangers use spreadsheet software to analyze their departments budgetary data. b) Cash Management systems: The important function of financial management is to ensure that whether the organization: 1) Has sufficient cash to meet it needs. 2) Putting excess funds from any period to use through investments. 3) Providing borrowing power to meet the organization’s cash needs in periods of insufficient cash flow. Organizations needs cash for two major reasons: For working capital (cash needed for day-to-day operations) For acquisition of long-term assets. If adequate cash is available for its working capital needs and long-term asset acquisition plan, the organization must prepare a report of its expected cash flow for the time periods. The report shows the cash flow for each month of the coming year. A cash flow report shows the estimated amount of cash that will be received and spent each month. The report shows which months will have excess funds that might be put to use and which months will have insufficient funds, which may require the organization to borrow cash to meet its working capital or fixed asset acquisition needs. A cash flow report, supplies information that helps the manager to make decisions about investing, purchasing and borrowing money. Cash Management systems are generally used for larger organizations. Cash management Accountant (CMA) provides automatic deposits of cash and dividends from other accounts in to a money market account. c) Capital budgeting systems: It contains information about planned acquisition or disposal of major plant assets during the current year. The manager compares the various capital spending plans using 3 commonly used evaluation tools. 1) NPV Net Present Value. 2) IRR Internal Rate of Return. 3) PBP Pay Back Period. 1) Net present Value: - It is the current value of cash that will be received at same future time. 2) Internal Rate of Return: - It is to find the discount rate that generates a present value of the earnings or savings equal to the present values of initial investment.
AZAD College 3) Pay Back Period: -It is to know how many years or months the increase in revenues or the savings from reduced operating expenses obtained from the asset, which will take to match the investment in the asset. d) Investment Management Systems: Management invests organizations money in securities. So, careful management of these investments is necessary to ensure the achievement of organizations goals. Computer Information Systems provide unique ways to mange stock and bond portfolios. Investment management systems uses on-line databases for immediate update for stock and bond prices, information about the history of each investment and various portfolio investments analysis tools to help manger to stay on top of the organization’s investment. 2. Tactical Marketing Information Systems: External Environment Internal Environment
Marketing Mix Decisions
Evaluation and Control
Marketing function is to identify customer needs and wants & to satisfy them. Marketing managers are engaged in planning activities, which result in a combination of product, price, place and promotion, which are referred to as the Marketing Mix (MM) Tactical Information systems has the following systems: a) Sales Management System. b) Advertising and promotion systems. c) Pricing systems. d) Distribution channel systems. e) Competitive tracking systems. a) Sales Management System: 11
AZAD College The objective of marketing mangers is to reach sales goals set by the top management. To attain this objective marketing managers must make many tactical decisions i.e., about sales terriorities structure, sales force in the territory, products offered and served to customers. For a better sale, sales managers should decide a good reward to sales people to increase their sales efforts. The various IS’s that supply these data to marketing managers are called Sales Management Systems. Marketing managers use statistical software and spreadsheet software as IS’s tool. Using these software & spreadsheet manager can monitor the sales progress of each sales persons by market segment, by product averages and effectiveness of sales person selling to each group i.e., customer type. b) Advertising and Promotion Systems: These systems are to implement strategic sales goals set by the top management. Decisions are made on media and promotion to select market segments in order to achieve sales goals. Following information is required by marketing managers to make decisions for advertising and promotions. 1) Projected sales goals. 2) Production and distribution of stock. 3) Information from marketing research firms. 4) Market segments. The tools used for support are data warehouses, query tools, spreadsheet software, statistical software, on-line database, Internet and custom written reports.
Pricing Systems: This system provides information to managers to help them to set prices for their products and services. This information is important, because the price of a product or service affects the volume of sales and profitability of the organization. Pricing decisions are made according to demand of the product or similarly of the product or service i.e., the prices of competing, as well as substitute products (products that are used instead of original products). Pricing of a product depends upon competitors, customer satisfaction and organization objectives. It also includes. What type of discounts to be given at various levels of channel of distribution and what promotional devices should be used i.e., financing, and rebates. Distribution Channel Systems:Organization should determine, whether the products and services should directly reach to a customer or to use a middlemen or do both. For direct sales, organization consider trade channels, i.e., sales force, direct mail, telemarketing, etc.,
AZAD College For middlemen, organization chooses channel to distribute the product or service to reach targeted market segments. Distribution channel decision- support systems are used to marketing manager with the relevant information.
Competitive tracking systems: This is to ensure organizations marketing mix, whether the customer is satisfying to our product when compared to competitors and their marketing activities. Competitive intelligence or knowledge of competitor prices, products. Sales advertising and promotions must be gathered regularly in order not to fall behind the competition. Gathering competitive intelligence is carried out through competitive tracking systems. Competitor information is readily available in Journals and Newspapers, where both strategic and tactical managers use this information to make decisions. Sales people collect more information about competitor activities from field reports. So, sales people should be encouraged more.
3) Tactical Human Resource Information systems: Human resources represent largest operating expenditure (between 40% to 60% of total operating expenses) In service organizing salaries and wages are 85% of total operating expenses. People are the most basic and the important component of any organization so; HRM is critical to the organizations success. To maintain proper human resources, mange’s require Human resource Information’s systems (HRIS). HRIS contain personal information about the employees of an organization. HRIS includes a number of tactical strategic decisions. ASK (Attitudes, Skills, Knowledge) – these shapes the organization. Tactical HRIS includes: a) Job analysis and design systems b) Recruiting systems c) Compensation and Benefit systems. d) Succession planning systems.
Job analysis and Design systems:Job analysis and design systems include describing the jobs needed in an organization and the qualities of the workers needed to fill those jobs. The tasks develop job descriptions, for every type of position in the organization, which specifies the purposes, tasks, duties and responsibilities of each job and the conditions and performance standards. Job analysis and design system also include Job specifications for each type of job, which describes the skills knowledge, experience in job descriptions. Input of data to job analysis and design is in from internal and external sources.
AZAD College 1) Internal - Includes data from interviewers, with supervisors and workers. 2) External - Labour Unions, competitors and government agencies. The output of job analysis information are job descriptions and job specifications, which helps mangers to make tactical decisions. This information’s allows to provide equal pay for equal work within an organization other wise due to low morale poor performance and productivity results. Job Description
Job title: Clerk Job No: 100 Pay grade: 6 Reports to: Supervises: Revision date:
Job title: Job No: Pay grade: Job Requirements: Education: Revision date:
General description: Duties & responsibilities:
Physical & Health: Appearance: Special skills
b) Recruiting systems:It provides qualified applicants to fill the vacant positions described by job analysis and design IS. The goal of recruiting is to improve the quality of the organizations human resources. Recruiting should be done based on affirmative action plan and equal employment opportunity (EEO). Information about applicants includes from the following sources: 1) Schools and colleges, including placement officers. 2) Federal, state & local employment officers. 3) Private placement services. 4) Journal, magazine and newspaper advertisements 5) Standard job advertisements and recruiting brochures. 6) Prospect files. c) Compensation and benefits systems: The wage and salary systems, or compensation plans, an organization offers widely hourly, wage plans, piece-rate plans, incentive pay plans, merit pay plans, monthly salary plans, commissions and profit sharing. Benefits like fringe benefits such as health insurance, life insurance, medical services, retirement plans, etc., Organizations have implemented computerized HRIS to better compensate and benefit plans, where information is collected from internal and external sources. 14
Better compensation and benefit plans improve organizations productivity. d) Succession planning systems: This is to replace key organizational personnel, where it is made certain, when the key positions persons become vacant, because of death, injury, retirement or other reasons. Planning for succession means identifying replacement employees and providing them with the appropriate training and experience to fill openings.
Nature of Strategic Information Systems: Strategic IS’s are goal oriented i.e., these systems are designed to support organizations goal and directing setting. Information Systems to functional areas: 1. Strategic Accounting & Financial IS’s 2. Strategic marketing IS’s 3. Strategic Human Resources IS’s.
1. Strategic Accounting and Financial Information Systems: It includes several types of information flows: a) Internally generated financial conditions analysis data, describing the status of the organization. b) Externally generated economic, demographic and social data describing the present and future environments for the organization. c) Forecasts of the future of that organization in those environments. The 2 outcomes of financial strategic planning are: 1) Financial goals – includes setting goals for investment and return on investments. 2) Financial direction – involves in deciding on new investment opportunities to fund the organization. The major purpose of strategic decision-making is to use longrange forecasts to reduce the risk involved in major organizational decisions. It has the following Information systems. Financial Conditional Analysis systems Long-range forecasting systems. Financial Conditional Analysis systems: It includes computerized accounting systems, which automatically calculate and presents the results in the form of reports using tools and ratios. Financial condition analysis system collects data on competitors, suppliers, buyers and other organizations like on-line financial databases. The manger uses a variety of analysis tools and produces reports on the income statement and balance sheet. 15
Long-range forecasting systems: Strategic forecasts will affect the performance of organization in the future. Information required for forecasting the future environment includes. 1) Past activities of the organization. 2) Data on the present economy & future economy. 3) Information on present demographic structure of the region. For forecasting future events, it requires use of statistical tools, generally used on spreadsheets. 2. Strategic Marketing Information systems: External Environment Internal Environment
New Product design and development
Old Product Management
To Tactical Planning
1) 2) 3) 4)
Strategic marketing plan develops an overall marketing plan, which includes: Segmenting the market into target groups of potential customers based on common characteristics, needs or wants. Selecting these market segments. Planning products and services to meet the customer needs. Forecasting sales for the market segments and products. The strategic activities revolves around: Sales forecasting systems Marketing Research Systems Product planning and development systems. 16
a) b) c)
Sales forecasting systems: It includes: i) Forecasts of sales for the industry as a whole ii) Forecasts of sales for the entire organization of sales for each product or service. iii) Forecasts of sales for a new product or service. iv) Forecasts for market segments. Predicting the future is very difficult and predicting sales of new products is most difficult of all sales-forecasting activities. As new products do not have any track record of sales, no date will be readily availably so estimation of sales must be made of similar products from customer surveys.
Marketing Research Systems: The results of MR provide important input for both strategic and tactical IS’s. Large organizations conduct their own researches in their departments. Small organizations conduct by outside consultants. Data collection is heavily derived from external sources i.e. customers, competitors, Trade, government, census, etc. Data can be obtained from direct surveys, mail survey, Internet surveys & telephone interview from consumers. Collected sales data is to determine the projected sales of a product and testing hypothesis about consumer responses. The activities of a typical marketing research department are: 1) Conducting trend analysis. 2) Analyze population and target group characteristics. 3) Analyzing & identifying consumer preferences, includes testing products and services. 4) Determining and analyzing customer satisfaction with the organizations existing products and services. 5) Estimating market share for all of each product and service offered. [CATI – Computer Aided Telephone Interview]. Product Planning and Development Systems: The objective of this is to make information’s about consumer preferences obtained from the MR system and from customer inquires available for the development of new products. The output of this system is a set of specifications like design of a product. This system most provides appropriate organizational personnel with sufficient information to ensure that they accurately & completely address patent & copyright concerns, consumer product safety concerns and alter legal issues pertaining to the product. 17
3) Strategic Human Resource Information Systems: It ensures that the organization has the right kinds and the right number of people at the right places at the right time to achieve its objectives. Strategic HRIS includes. a) Workforce planning systems. b) Information systems supporting labour negotiations. c) Other strategic uses of HRIS. a) Workforce planning systems: This involves identifying the human resources needed to meet the organizational objectives specified, which depends on forecasting supply and demand of the required workforce. Forecasting human resource needs the following required information, to the questions. 1) What labour force meets the strategic plan? What skills, experiences, knowledge and other qualities should the human resource possess, i.e., what job description & job specifications does the strategic plan require? 2) How many human resources, qualities and how many positions are required to meet the strategic plan? 3) What are the current human resources of the organization and how well they satisfy the organizations strategic needs for human resource? 4) What other human resources are available to achieve the strategic plan.
Work force Plan
Forecasted labor supply & demand
Externally labor supply
Job analysis & design
Compensation & benefits
Training & development
AZAD College Fig: - A model showing HRIS support for work force plan. Human resources are identified internally and externally. Forecasting demand and supply can be: 1) Macroeconomic level: - Forecasts in various job categories can be obtained for states and regions from a variety of national & state agencies. 2) Microeconomic Level: - Forecasts involve using data more specific to the organization. b) Information systems supporting labour negotiations: It includes negotiations with craft, maintenance, office and factory unions etc. HR to negotiate needs numerous adhoc reports to analyze the organizations and Unions positions in industry and the current economic situations. c) Other strategic uses of HRIS: Like organizations planning to restructure, downsize, sell off divisions or merge with other organizations need to know what impact these decisions will have on their workforce profiles, overall cost of personnel, benefit plans, retirement and health plans.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.