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Information Systems in Functional Areas

Prof. 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.
Prof. Nivedita Roy, IBS-Gurgaon 2

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

Prof. Nivedita Roy, IBS-Gurgaon


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

Prof. Nivedita Roy, IBS-Gurgaon

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
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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

Prof. Nivedita Roy, IBS-Gurgaon

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

Prof. Nivedita Roy, IBS-Gurgaon

Hierarchical view of MKIS

External environment monitoring Market scanning Analytical tools Functional information: Price Product Promotion Distribution Finance HR


Customer handling : Product availability Order processing Salesperson Productivity Telemarketing

Prof. Nivedita Roy, IBS-Gurgaon

The components of a computerised MKIS

Data Bank

Statistical Bank


Display unit

Marketing Manager

Model Bank
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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. Ansoffs matrix, Boston matrix Display unit VDU and keyboard
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Alternative representation of MKIS

Marketing intelligence system

Marketing research system


Internal accounting system

Analytical marketing system

Prof. Nivedita Roy, IBS-Gurgaon


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.
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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
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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).

Prof. Nivedita Roy, IBS-Gurgaon


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.
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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

Prof. Nivedita Roy, IBS-Gurgaon


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

Prof. Nivedita Roy, IBS-Gurgaon

External Sources of Information

Marketing Information System (tactical)

Marketing-Mix Subsystems Product Subsystem Place Subsystem Sales Forecasting Promotion Subsystem Price Subsystem

Boundary-Spanning Subsystems

Marketing Research Marketing Intelligence

Customer and Prospect Data

Competitor Data

Transaction Processing Subsystems Order Entry Invoicing Call Reporting Transaction Data Internal Databases

Prof. Nivedita Roy, IBS-Gurgaon


Marketing Information System

Prof. Nivedita Roy, IBS-Gurgaon


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.

Prof. Nivedita Roy, IBS-Gurgaon


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

Prof. Nivedita Roy, IBS-Gurgaon


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

Prof. Nivedita Roy, IBS-Gurgaon


Manufacturing Planning System

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

Prof. Nivedita Roy, IBS-Gurgaon


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.
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Transaction Processing Systems

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

Prof. Nivedita Roy, IBS-Gurgaon


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
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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

Prof. Nivedita Roy, IBS-Gurgaon


Prof. Nivedita Roy, IBS-Gurgaon


Manufacturing integration

Prof. Nivedita Roy, IBS-Gurgaon


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

Prof. Nivedita Roy, IBS-Gurgaon


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

Prof. Nivedita Roy, IBS-Gurgaon


Computer Aided Design Process






Prof. Nivedita Roy, IBS-Gurgaon



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 interface 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.

Prof. Nivedita Roy, IBS-Gurgaon


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

Prof. Nivedita Roy, IBS-Gurgaon


Human Resource Management Process

Organizational Strategic Plan

Human Resource Planning Job Appraisal & Design

Evaluation Compensation
Prof. Nivedita Roy, IBS-Gurgaon



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.
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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.

Prof. Nivedita Roy, IBS-Gurgaon


Human Resource Information Systems support human resource management in organizations. They include:
Information systems for staffing the organization Training and development Compensation administration

Prof. Nivedita Roy, IBS-Gurgaon


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
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HRIS In Practice
Strategic Systems

Manpower Planning Labor Force Tracking

Labor Cost Analysis Turnover Analysis

Training & Development Succession planning Performance appraisal plans Training effectiveness Career matching

Compensation Administration

Contract costing Salary forecast

Compensation effectiveness Benefits Analysis Payroll control Benefits Administration

Tactical Systems

Recruitment Operational Workforce Systems Planning

Skill assessment Performance evaluation

Prof. Nivedita Roy, IBS-Gurgaon

HRIS: Description








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Primary HR Activities

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

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Channels of Recruiting

Write-in Employee referrals Advertising Department of labor

Private placement agencies

Educational institutions

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Selection Process

Preliminary reception of application Employment tests Selection interview

References and background check

Medical evaluation Conference Realistic job previews Hiring decision
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Human Resource Development

Orientation Training Education

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Payroll Executive compensation Bonus incentives, etc.

Prof. Nivedita Roy, IBS-Gurgaon


Flow of Information in HR



Education and Training

Benefit Termination Administration

Potential employees


Retired employees

The Firm

Data Management
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Concept of HRIS( 5 C )
Capability Top management HR department IS department Control Cost Communication Information flow Competitive advantage

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A model of a Human Resource Information System

Input subsystems

Work force planning subsystem Recruiting subsystem Work force management subsystem
HRIS Database

Output subsystems

Accounting information system

Internal sources

HRs research subsystem

Environmental sources

Compensation subsystem

Benefits subsystem
Environmental reporting subsystem


HRs intelligence subsystem

Prof. Nivedita Roy, IBS-Gurgaon



HRIS Subsystems Accounting Information System

Personnel data elements Accounting data elements Human resources research subsystem Succession studies Job analyses and evaluations Grievance studies

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Contd. Human Resources Intelligence Subsystem

Government intelligence Supplier intelligence Labor union intelligence Global community intelligence Financial community intelligence Competitor intelligence

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Work force planning subsystem Organization charting Salary forecasting Job analysis / evaluation Planning Work force modeling Recruiting subsystem Applicant tracking Internal search
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Work force management subsystem Performance appraisal Training Position control Relocation Skill / competency Succession Disciplinary Compensation subsystem Merit increases Payroll Executive compensation Bonus incentives Attendance
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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

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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.

Prof. Nivedita Roy, IBS-Gurgaon


The first function of the AIS is to support the performance of the organizations 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.

Prof. Nivedita Roy, IBS-Gurgaon


Accounting Information Systems

Prof. Nivedita Roy, IBS-Gurgaon


Basic subsystems in the AIS

Financing Cycle Expenditure Cycle Human Resources

General Ledger & Reporting System Production Cycle Revenue Cycle


Prof. Nivedita Roy, IBS-Gurgaon

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.

Prof. Nivedita Roy, IBS-Gurgaon


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.

Prof. Nivedita Roy, IBS-Gurgaon


The Accounting Information System Model

Source Documents General Journal General Ledger Trial Balance Adjusting Entries Closing Entries



Financial Statements

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Basic activities of revenue cycle

Sales order entry Shipping Billing and accounts receivable Cash collections

Prof. Nivedita Roy, IBS-Gurgaon


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

Prof. Nivedita Roy, IBS-Gurgaon


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.

Prof. Nivedita Roy, IBS-Gurgaon


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
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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 customers account.

Prof. Nivedita Roy, IBS-Gurgaon


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
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Use of IT in cash collection

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

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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
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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
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A model of a Financial Information System

Input subsystems Output subsystems Forecasting subsystem
Data Information

Accounting information system

Internal sources Internal audit subsystem Environmental sources Financial intelligence subsystem

Funds management subsystem


Control subsystem

Prof. Nivedita Roy, IBS-Gurgaon


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 communityIndirect influence from the government sources of financial intelligence: Word of mouth Periodicals Computer databases Environmental influence on the money flow
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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

Prof. Nivedita Roy, IBS-Gurgaon


Non-quantitative (qualitative) Panel consensus Delphi method Electronic meeting system (EMS) help combine nonquantitative and quantitative methods Quantitative forecasting methods Regression analysis is dominant Related methods are available Many software packages used Minitab SAS SPSS
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Funds Management Subsystem

Manage to achieve
Revenue flow inflow exceeds expense outflow Maintain stability

Cash flow models

Performs cash flow analysis

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Control Subsystem
Operating budget for the fiscal year Three approaches Top-down Bottom-up Participative

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Forecasting model Sales forecast


Top management Approved sales forecast Resource planning model

The Budgeting Process

Finance requirements

Human resource Information services requirements requirements

Manufacturing requirements

Marketing requirements


Finance manager

Human resource manager

Information services manager

Manufacturing manager Requested manufacturing budget

Marketing manager

Requested finance budget

Requested human resources budget

Requested information services budget

Requested marketing budget


Top management

Final organizational budget

Prof. Nivedita Roy, IBS-Gurgaon