Information Systems for Functional Areas

Chapter 5 Financial Information system Objective: 1. Meeting the financial needs of the business, by way of providing working capital and long term loans to run the business with the goal of containing the cost capital at the minimum. 2. Meet the statutory compliances by way of declaring the audited financial results, submit all reports & return to the Govt. & Tax Authorities and fulfill the obligations to the shareholders. The Financial Information System involve large amounts of data concerned primarily with historical and internal information, although in some areas of financial planning the system provides futuristic look associated with planning. Finance is usually one of the first functions to get a computerized information system because of data handling ability and cost point of view. It lends easily to computerization as it deals with finite numbers and set procedures. They offer very little in terms of the quality of managerial decision making Advantage: Quick and accurate handling of financial data. Need: Management needs a Financial Information System to maintain control over budgets, expenditure and follow up on cash flow. Major problem in such a system involve Determination of appropriate standards of control Determining when action is required Obtaining up- to-date information of variance from the norms A computerized financial system will not addresses all these problems. Since many input documents already exist in the financial system, such as vouchers, invoices, receipts etc designing data capture methods is easy (materially assist in speeding up reporting) Modules in a Financial Information system Financial planning Cost accounting General ledger Asset management Budgeting Accounts receivable Payroll Example Billing Even though the preparation of invoice is viewed somewhat as a casual clerical function, the speed and accuracy can have a significant impact upon cash flow as well as customer goodwill. Additional advantages:

Clerical savings, more timely processing, the release of high salaried employees for other functions, flexibility to absorb additional work load during times of increased growth. The output from the billing system (invoice)can provide the input for additional vital subsystems. For eg., it can be upgraded for managerial decision making. Production / Operation System Is concerned with information about the physical flow of goods or the production of goods & services. It covers activities such as Production planning and Control, Inventory control and management, Purchasing, Distribution & Transportation. Because the quantities of data are so large and the timing of information so essential, production system is the most adaptable to automation and yields the largest benefits in terms of immediate solution of critical and costly problems. The six characteristics of the type of information that lends itself best to computer use: Speed Quantity Repetitiveness Complexity Exact input Accurate output These characteristics are clearly present in production system . Examples Purchasing, Materials Planning, Operations scheduling Purchasing Objectives Determining EOQ (Economic order quantity- defines the optimal quantity to order that minimizes total variable cost required to order & hold the inventory) Reduce clerical costs Monitor buyer performance Identify high volume vendors to negotiate higher discounts Determine supplier performance by identifying late deliveries and poor quality. Materials Planning Objectives Control of parts as per a predetermined production schedule Reduce the time and costs of determining and ordering material requirements. Allow non disruptive changes to production schedule. Forecast future needs for ordering material. Forecast changes in material requirements resulting from production schedule change. Operations Scheduling Identify work center loads for future periods and those that are over loaded or under loaded. What if analysis of overtime & outsourcing Skill forecasting Order release date forecasting

Marketing Information System Marketing has four crucial areas that benefit from computerized systems Forecasting/Sales planning Market Research Advertising Control information required to manage the marketing function. Marketing is one area where executives do not use available information. Decisions are often made on the basis of intuition and very little data is maintained on customers and demand chain. But IS gives marketing managers information on the following Pricing Advertising Product Promotion Sales Force Effectiveness Competitor activity etc. The following applications may be designed for use in the marketing function Marketing basically needs three types of IS Control systems Provide monitoring & review of performance against plan. Also provide information concerning trends, problems, and possible marketing opportunities Planning systems Provide information needed for planning the marketing & sales program. Market Research systems Used to develop, test, and predict the effects of actions taken or planned in the basic subsystems of marketing (pricing, advertising, design etc) The modules usually contained in Marketing IS Order entry Billing Sales analysis Forecasting Distribution statistics Demand History Stock availability Inputs Customer Invoices Marketing Budgets Cost Reports Inventory Reports Accounts Receivable Accounts Payable

Payroll (Marketing) Manufacturing Cost Annual Reports (customer, supplier etc) Market Research etc Outputs Sales By product, product line, customer class, region, salesman Profitability By product, product line, customer, salesman Periodic automated reports Life cycle analysis Marketing personnel analysis Financial analysis Credit Discount Distribution expense Promotion allowances Market share Inventory Forecast Service Customer lists General Marketing Information system New accounts
INPUTS
Periodic Automated Reports

Company database

Computer
Marketing Information System Programs

OUTPUTS

Marketing Subsystem files

Inquiry

Personnel Information System Deals with the flow of information about people working in the organization as well as future personnel needs. Subsystems Recruiting, Placement, Training, Compensation, Maintenance Recruitment Forecasts personnel needs and skills and recruits the personnel at the proper time to meet organizational needs. It will furnish information concerning Skills required for company programs and processes Inventory of skills available in the organization Placement It matches the available personnel functions with requirements, and hence the effective use of labour as a resource takes place within this system. A properly designed Placement Information System takes account of the latest behavioural tools and techniques to ensure that the capabilities of people are identified and placed with properly organized work requirements Training & Development As technology changes and demands for new skills accelerate, many companies find they must necessarily develop much of their talent requirements from internal sources. Compensation Basic function: The pay & other values for the satisfaction of individual wants and needs and for compliance with government, union, and other requirements. Maintenance This system, mainly for the benefit of operating managers, should be designed to ensure that personnel policies and procedures are achieved. To control wok standards, to measure performance against financial plans, maintenance
CLASSICAL PERSONNEL FUNCTIONS PERSONNEL RECORDS Employee profiles Employment histories Career profiles Education records Payroll data ENVIRONMENTALLY REQUIRED FUNCTIONS

Recruiting Placement Training Compensation Maintenance

EEO compliances

General Retrieval And processing for Operating mgmt Personnel specialist

Affirmative Action

OSHA-Health/ Safety

ERISA Pension

Marketing
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