Functional Business Systems

Introduction

There are as many ways to use information technology in business as there are business activities to be performed, business problems to be solved, and business opportunities to be pursued. A business professional should have a basic understanding and appreciation of the major ways information systems are used to support each of the functions of business that must be accomplished in any company that wants to succeed. Thus, in this section, Functional business systems, that is, a variety of types of information systems (transaction processing, management information, decision support, etc) that support the business functions of accounting, finance, marketing, operations management, and human resource management are described.

IT in Business

A business professional should have a specific understanding of how information systems affect a particular business function – marketing, for example – or a particular industry (e.g. banking) that is directly related to his/her career objectives.

For example, someone whose career objective is a marketing position in banking should have a basic understanding of how information systems are used in banking and how they support the marketing activities of banks and other firms.

Figure illustrates how information systems can be grouped into business function categories. Thus, information systems in this section will be analyzed according to the business function they support by looking at a few key examples in each functional area. This should give you an appreciation of the variety of functional business systems that both small and large business firms may use.

Marketing Systems

The business function of marketing is concerned with the planning, promotion, and sale of existing products in existing markets, and the development of new products and new markets to better attract and serve present and potential customers. Thus, marketing performs a vital function in the operation of business enterprise. Business firms have increasingly turned to information technology to help them perform vital marketing functions in the face of the rapid changes of today’s environment.

Figure illustrates how marketing information systems provide information technologies that support major components of the marketing function. For example, Internet/intranet websites and service make an interactive marketing process possible where customers can become partners in creating, marketing, purchasing, and improving products and services.

Sales force automation systems use mobile computing and internet technologies to automate many information processing activities for sales support and management. Other marketing information systems assist marketing managers in customer relationship management, product planning, pricing, and other production management decisions, advertising, sales promotion, and targeted marketing strategies, and market research and forecasting.

Human Resource Systems

The human resource management (HRM) function involves the recruitment, placement, evaluation, compensation, and development of the employees of an organization. The goal of human resource management is the effective and efficient use of human resources of a company. Thus human resources information systems are designed to support

Planning to meet the personal needs of the business,

Development of employees to their full potential, and

Control of all personnel policies and programs.

Originally, businesses used computer based information systems to

Produce paychecks and payroll reports,

Maintain personnel records, and

Analyze the use of personnel in business operations.

Many firms have gone beyond these traditional personnel management functions and have developed human resource information systems (HRIS) that also support

Recruitment, selection, and hiring;

Job placement;

Performance appraisals;

Employee benefit analysis;

Training and development; and

Health, safety, and security. See Figure.

Financial Management Systems

Computer based Financial management systems support business managers and

professionals in decision concerning

The financing of a business and

The allocation and control of financial resources within a business.

Major financial management system categories include cash and investment management, capital budgeting, financial forecasting, and functional planning. See Figure

For example, the capital budgeting process involves evaluating the profitability and financial impact of proposed capital expenditures. Long-term expenditure proposals for facilities and equipment can be analyzed using a variety of return on investment (ROI) evaluation techniques. This application makes heavy use of spreadsheet models that incorporate present value analysis of expected cash flows and probability analysis of risk to determine the optimum mix of capital projects for a business.

Financial analysts also typically use electronic spreadsheets and other financial planning software to evaluate the present and projected financial performance of a business. They also help determine the financing needs of a business and analyze alternative methods of financing.

Financing analysts use financial forecasts concerning the economic situation, business operations, types of financing available, interest rates, and stock and bond prices to develop an optimal financing plan for the business. Electronic spreadsheet packages, DSS software, and Web-based groupware can be used to build and manipulate financial models.

Manufacturing Systems

Manufacturing information systems support the production/operations function that includes all activities concerned with the planning and control of the processes producing goods and services. Thus, the production/operations function is concerned with the management of the operational processes and systems of all business firms. Information systems used for operations management and transaction processing support all firms that must plan, monitor, and control inventories, purchases, and the flow of goods and services. Therefore, firms such as transportation companies, wholesalers, retailers, financial institutions, and service companies must use production/operations information systems to plan and control their operations.