Living in the IT ERA

Content
Information Systems for Business Operations 9.hours
Marketing Information Systems
Human Resource Information Systems
Accounting Information Systems
Financial Management   Systems
Online Transaction Processing
E-Commerce and the RA 8792
Electronic Payments and Security
IOT

Marketing Information Systems

Components of a marketing information system

A marketing information system (MIS) is intended to bring together disparate items of data into
a coherent body of information. An MIS is, as will shortly be seen, more than raw data or
information suitable for the purposes of decision making. An MIS also provides methods for
interpreting the information the MIS provides. Moreover, as Kotler's1 definition says, an MIS is
more than a system of data collection or a set of information technologies:

"A marketing information system is a continuing and interacting structure of people, equipment
and procedures to gather, sort, analyse, evaluate, and distribute pertinent, timely and accurate

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information for use by marketing decision makers to improve their marketing planning,
implementation, and control".
Figure 9.1 illustrates the major components of an MIS, the environmental factors monitored by
the system and the types of marketing decision which the MIS seeks to underpin.

Figure 9.1 The marketing information systems and its subsystems

The explanation of this model of an MIS begins with a description of each of its four main
constituent parts: the internal reporting systems, marketing research system, marketing
intelligence system and marketing models. It is suggested that whilst the MIS varies in its degree
of sophistication - with many in the industrialised countries being computerised and few in the
developing countries being so - a fully fledged MIS should have these components, the methods
(and technologies) of collection, storing, retrieving and processing data notwithstanding.

Internal reporting systems: All enterprises which have been in operation for any period of time
nave a wealth of information. However, this information often remains under-utilised because it
is compartmentalised, either in the form of an individual entrepreneur or in the functional
departments of larger businesses. That is, information is usually categorised according to its
nature so that there are, for example, financial, production, manpower, marketing, stockholding
and logistical data. Often the entrepreneur, or various personnel working in the functional
departments holding these pieces of data, do not see how it could help decision makers in other
functional areas. Similarly, decision makers can fail to appreciate how information from other
functional areas might help them and therefore do not request it.

The internal records that are of immediate value to marketing decisions are: orders received,
stockholdings and sales invoices. These are but a few of the internal records that can be used by
marketing managers, but even this small set of records is capable of generating a great deal of
information. Below, is a list of some of the information that can be derived from sales invoices.

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· Product type, size and pack type by territory

· Product type, size and pack type by type of account
· Product type, size and pack type by industry
· Product type, size and pack type by customer
· Average value and/or volume of sale by territory
· Average value and/or volume of sale by type of account
· Average value and/or volume of sale by industry
· Average value and/or volume of sale by sales person

By comparing orders received with invoices an enterprise can establish the extent to which it is
providing an acceptable level of customer service. In the same way, comparing stockholding
records with orders received helps an enterprise ascertain whether its stocks are in line with
current demand patterns.

Marketing research systems: Marketing research is a proactive search for information. That
is, the enterprise which commissions these studies does so to solve a perceived marketing
problem. In many cases, data is collected in a purposeful way to address a well-defined problem
(or a problem which can be defined and solved within the course of the study). The other form of
marketing research centres not around a specific marketing problem but is an attempt to
continuously monitor the marketing environment. These monitoring or tracking exercises are
continuous marketing research studies, often involving panels of farmers, consumers or
distributors from which the same data is collected at regular intervals. Whilst the ad hoc study
and continuous marketing research differs in the orientation, yet they are both proactive.

Marketing intelligence systems: Whereas marketing research is focused, market intelligence is not. A
marketing intelligence system is a set of procedures and data sources used by marketing managers to sift
information from the environment that they can use in their decision making. This scanning of the
economic and business environment can be undertaken in a variety of ways, including2

Unfocused The manager, by virtue of what he/she reads, hears and watches exposes
scanning him/herself to information that may prove useful. Whilst the behaviour is
unfocused and the manager has no specific purpose in mind, it is not unintentional

Semi- Again, the manager is not in search of particular pieces of information that he/she
focused is actively searching but does narrow the range of media that is scanned. For
scanning instance, the manager may focus more on economic and business publications,
broadcasts etc. and pay less attention to political, scientific or technological media.

Informal This describes the situation where a fairly limited and unstructured attempt is
search made to obtain information for a specific purpose. For example, the marketing
manager of a firm considering entering the business of importing frozen fish from

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a neighbouring country may make informal inquiries as to prices and demand

levels of frozen and fresh fish. There would be little structure to this search with
the manager making inquiries with traders he/she happens to encounter as well as
with other ad hoc contacts in ministries, international aid agencies, with trade
associations, importers/exporters etc.

Formal This is a purposeful search after information in some systematic way. The
search information will be required to address a specific issue. Whilst this sort of activity
may seem to share the characteristics of marketing research it is carried out by the
manager him/herself rather than a professional researcher. Moreover, the scope of
the search is likely to be narrow in scope and far less intensive than marketing
research

Marketing intelligence is the province of entrepreneurs and senior managers within an

agribusiness. It involves them in scanning newspaper trade magazines, business journals and
reports, economic forecasts and other media. In addition it involves management in talking to
producers, suppliers and customers, as well as to competitors. Nonetheless, it is a largely
informal process of observing and conversing.

Some enterprises will approach marketing intelligence gathering in a more deliberate fashion
and will train its sales force, after-sales personnel and district/area managers to take
cognisance of competitors' actions, customer complaints and requests and distributor problems.
Enterprises with vision will also encourage intermediaries, such as collectors, retailers, traders
and other middlemen to be proactive in conveying market intelligence back to them.

Marketing models: Within the MIS there has to be the means of interpreting information in
order to give direction to decision. These models may be computerised or may not. Typical tools
are:
· Time series sales modes
· Brand switching models
· Linear programming
· Elasticity models (price, incomes, demand, supply, etc.)
· Regression and correlation models
· Analysis of Variance (ANOVA) models
· Sensitivity analysis
· Discounted cash flow
· Spreadsheet 'what if models

These and similar mathematical, statistical, econometric and financial models are the analytical
subsystem of the MIS. A relatively modest investment in a desktop computer is enough to allow
an enterprise to automate the analysis of its data. Some of the models used are stochastic, i.e.
those containing a probabilistic element whereas others are deterministic models where chance
plays no part. Brand switching models are stochastic since these express brand choices in
probabilities whereas linear programming is deterministic in that the relationships between
variables are expressed in exact mathematical terms.

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Chapter Summary

Marketing information systems are intended to support management decision making.

Management has five distinct functions and each requires support from an MIS. These are:
planning, organising, coordinating, decisions and controlling.

Information systems have to be designed to meet the way in which managers tend to work.
Research suggests that a manager continually addresses a large variety of tasks and is able to
spend relatively brief periods on each of these. Given the nature of the work, managers tend to
rely upon information that is timely and verbal (because this can be assimilated quickly), even if
this is likely to be less accurate then more formal and complex information systems.

Managers play at least three separate roles: interpersonal, informational and decisional. MIS, in
electronic form or otherwise, can support these roles in varying degrees. MIS has less to
contribute in the case of a manager's informational role than for the other two.

Three levels of decision making can be distinguished from one another: strategic, control (or
tactical) and operational. Again, MIS has to support each level. Strategic decisions are
characteristically one-off situations. Strategic decisions have implications for changing the
structure of an organisation and therefore the MIS must provide information which is precise
and accurate. Control decisions deal with broad policy issues and operational decisions concern
the management of the organisation's marketing mix.

A marketing information system has four components: the internal reporting system, the
marketing research systems, the marketing intelligence system and marketing models. Internal
reports include orders received, inventory records and sales invoices. Marketing research takes
the form of purposeful studies either ad hoc or continuous. By contrast, marketing intelligence is
less specific in its purposes, is chiefly carried out in an informal manner and by managers
themselves rather than by professional marketing researchers.

Key Terms
Deterministic models
Internal reports
Marketing intelligence
Model banks
Operational decisions
Stochastic models
Strategic decisions
Tactical plans

Review Questions
1. Name the four components of an MIS.
2. What were the functions of management that Henry Fayol identified?
3. What is stochastic model?
4. What are the 3 levels of decision making outlined in this chapter?
6. According to Kotler, what are the contributing elements to an MIS?
7. Which elements of the marketing environment are mentioned in the chapter?
8. What differences are there between marketing research and marketing intelligence?

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Human Resource Information Systems

HRIS stands for Human Resources Information System. The HRIS is a system that is used to
collect and store data on an organization’s employees.

In most cases, an HRIS encompasses the basic functionalities needed for end-to-end Human
Resources Management (HRM). It has a system for recruitment, performance management,
learning & development, and more.

An HRIS is also known as HRIS software. This is a bit confusing as it implies that different
systems can have different software running on them. However, this is not the case. The HRIS
is, in essence, a software package.

The HRIS can either run on the company’s own technical infrastructure, or, what’s more
common nowadays, be cloud-based. This means that the software is running outside of the
company’s premises, making it much easier to update.

Benefits of an HRIS
Using an HRIS has a number of clear benefits.
• Record-keeping. An HRIS is a record-keeping system that keeps track of changes to
anything related to employees. The HRIS can be seen as the one source of truth when it
comes to personnel data.
• Compliance. Some data is collected and stored for compliance reasons. This includes
material for the identification for employees in case of theft, fraud, or other misbehaviors,
first contact information in case of accidents, citizens identification information for the tax
office, and expiration dates for mandatory certification. All this information can be stored
in the HRIS.
• Efficiency. Having all this information in one place not only benefits accuracy but also
saves time.
• HR strategy. The HRIS enables the tracking of data required to advance the HR and
business strategy. Depending on the priorities of the organization, different data will be
essential to track. This is where the HRIS comes in.
• Self-Service HR. A final benefit is the ability to offer self-service HR to employees and
managers. This enables employees to manage their own affairs. When done right, the
HRIS can offer a good employee experience. Keep in mind that not all HRIS systems
offer this in a user-friendly manner!

Working with an HRIS has multiple benefits for the organization, HR, and the employee. Using
an HRIS becomes interesting when you have between 30 to 50 employees.

At this time, managing this basic information in Excel becomes cumbersome and simple
procedures like approving employee holidays need to be standardized. Most of our readers
work at large organizations. These organizations use advanced HRIS systems that we will
discuss later in this article.

Different kinds of HRIS systems & software

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There are different kinds of HRIS systems and software. Because an HRIS encompasses all the
functionalities for HR, all separate functionalities are part of the system. These functionalities
include:
• Applicant Tracking System (ATS). This software handles all the company’s recruiting
needs. It tracks candidate information and resumes, enables recruiters to match job
openings to suitable candidates from the company’s application pool, and helps in
guiding the hiring process.
• Payroll. Payroll automates the pay process of employees. Contractual data is often
entered into this system – sometimes combined with time & attendance data – and at the
end of the month, payments orders are created.
• Benefits. Another functionality of the HRIS is benefits management. Employee benefits
are an important aspect of compensation and are also managed in this system. More
advanced systems offer an employee self-service model for employee benefits. In this
case, employees can select the benefits they are looking for themselves. One may want
more paternity leave, the other one a more expensive company car. This self-service
approach to benefits is also called a cafeteria model.
• Time & Attendance. This module gathers time and attendance data from employees.
These are especially relevant for blue-collar work where employees clock in and out.
Back in the day when I worked in a supermarket, we wrote the time worked down on a
piece of paper, which was then manually entered into the time tracking system by the
manager. Based on this data, payment orders were generated and paid to all employees.
• Training. Learning and development is a key element when it comes to employee
management. This module allows HR to track qualification, certification, and skills of the
employees, as well as an outline of available courses for company employees. This
module is often referred to as an LMS, or Learning Management System, when it’s a
stand-alone. An LMS usually includes available e-learning and other courses to be
followed by employees.
• Performance management. Performance management is a key part of managing
people. Performance ratings are generated once or multiple times a year by the direct
manager or peers of the employee.
• Succession planning. Creating a talent pipeline and having replacements available for
key roles in the organization is another key component of an HRIS.
• Employee self-service. Employee self-service was already mentioned. Organizations
are focusing increasingly on having employees and their direct supervisors manage their
own data. Requests like holidays can be asked for by the employee him/herself. After
approval, these are then immediately saved into the system (and registered to track for
payroll and benefits purposes).
• Reporting & Analytics. A much rarer module in HRIS systems is reporting and
analytics. Modern systems enable the creation of automated HR reports on various
topics like employee turnover, absence, performance, and more. Analytics involves the
analysis of this data for better-informed decision making. We’ll explain more about this in
the section below.

Reporting and analytics in an HRIS

The common characteristic for all HRIS systems is that they have been designed as
transactional systems. They are databases that record a company’s transactions. An example
of a transaction is when an employee joins the company.

The employee record is entered, and the person is considered ‘active’. If a person leaves the
company three months later, a new transaction is recorded, setting the person’s status to
‘terminated’.

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The fact that these systems are designed as transactional systems, makes them bad at data
reporting and analytics. They simply haven’t been designed for this. In addition, not all HRIS
systems have all the above functionalities build-in.

Some functionalities, like payroll, LMS, or ATS could also be recorded in external systems. This
makes HR reporting even more challenging, as it means that data is dispersed into multiple
systems. In order to report data, a new layer needs to be added on top of all HR systems to
report and analyze the HR data.

This is the second reason why the practical use of reporting and analytics for these systems is
limited. Be aware of this when you are talking to HRIS providers, as they often tout their
systems to be excellent in data reporting and analytics.

2.4. Accounting Information Systems

An accounting information system (AIS) involves the collection, storage, and processing of
financial and accounting data used by internal users to report information to investors, creditors,
and tax authorities. It is generally a computer-based method for tracking accounting activity in
conjunction with information technology resources. An AIS combines traditional accounting
practices, such as the use of Generally Accepted Accounting Principles (GAAP), with modern
information technology resources.

What is an Accounting Information System (AIS)?

An accounting information system (AIS) involves the collection, storage, and processing of
financial and accounting data used by internal users to report information to investors, creditors,
and tax authorities. It is generally a computer-based method for tracking accounting activity in
conjunction with information technology resources. An AIS combines traditional accounting
practices, such as the use of Generally Accepted Accounting Principles (GAAP), with modern
information technology resources.

How an Accounting Information Systems (AIS) is Used

An accounting information system contains various elements important in the accounting cycle.
Although the information contained in a system varies among industries and business sizes, a
typical AIS includes data relating to revenue, expenses, customer information, employee
information, and tax information. Specific data includes sales orders and analysis reports,
purchase requisitions, invoices, check registers, inventory, payroll, ledger, trial balance, and
financial statement information.

An accounting information system must have a database structure to store information. This
database structure is typically programmed with query language that allows for table and data
manipulation. An AIS has numerous fields to input data as well as to edit previously stored data.
In addition, accounting information systems are often highly secured platforms with preventative
measures taken against viruses, hackers, and other external sources attempting to collect
information. Cybersecurity is increasingly important as more and more companies store their
data electronically.

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The various outputs of an accounting information system exemplify the versatility of its data
manipulation capabilities. An AIS produces reports including accounts receivable aging reports
based on customer information, depreciation schedules for fixed assets, and trial balances for
financial reporting. Customer lists, taxation calculations, and inventory levels may also be
reproduced. However, correspondences, memos, or presentations are not included in the AIS
because these items are not directly related to a company’s financial reporting or bookkeeping.

Benefits of Accounting Information Systems

Interdepartmental Interfacing
An accounting information system strives to interface across multiple departments. Within the
system, the sales department can upload the sales budget. This information is used by the
inventory management team to conduct inventory counts and purchase materials. Upon the
purchase of inventory, the system can notify the accounts payable department of the new
invoice. An AIS can also share information about a new order so that the manufacturing,
shipping, and customer service departments are aware of the sale.

Internal Controls
An integral part of accounting information systems relates to internal controls. Policies and
procedures can be placed within the system to ensure that sensitive customer, vendor, and
business information is maintained within a company. Through the use of physical access
approvals, login requirements, access logs, authorizations, and segregation of duties, users can
be limited to only the relevant information necessary to perform their business function.

2.5. Financial Management   System

2.6. Online Transaction Processing

2.7. E-Commerce and the RA 8792

2.8. Electronic Payments and Security

2.9. IOT

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