Business Information Systems: Types, Functions, and Challenges
INTEGRATION
Design of various systems that give service to different levels and functions within the company. This integration is difficult and expensive, so managers need to determine the required levels of integration and associated costs.
Amplification: The Business of Management Thinking
Business systems investments are huge and should be developed for long periods. They should be guided by a shared vision of the objectives.
Main Types of Systems in the Organization
- Executive Support Systems (ESS)
- Decision Support Systems (DSS)
- Management Information Systems (MIS)
- Knowledge Work Systems (KWS)
- Office Systems
- Transaction Processing Systems (TPS)
Transaction Processing System (TPS)
These are basic business systems that serve the organization’s operational level. They are computerized systems that perform and record daily transactions required to run the business.
Knowledge Work Systems (KWS)
Information systems that assist knowledge workers in creating new knowledge in the organization.
Users: Staff of professionals
Office Systems
Computer systems, such as word processors, email systems, and programming systems, designed to increase worker productivity in the office.
Management Information System (MIS)
- Management Level Inputs: High volume of data
- Process: Simple models
- Output: Summary reports of routine and exceptional data
- Users: Administrative level. Support the functions of planning, control, and decision-making
- Example: Annual sales
Executive Support Systems (ESS)
- Strategic Level Inputs: Incorporate external and internal compressed data
- Processes: Designed to address unstructured decision-making through advanced graphics and communication
- Output: Projections
- Users: Executives, senior managers
- Example: 5-year planning
Sales and Marketing Systems
Types of System Functions
- Sales: Contact customers, sell products and services, take orders, and bring in sales revenue.
- Marketing: Identify customers for products and services, determine customer needs, plan and develop products and services to meet those needs, and manage advertising and promotion.
Types of Systems
- Order processing
- Market analysis and pricing analysis
- Sales trend forecasting
Production and Operations Systems
Types of System Functions
Systems that address the planning, development and product development services, and control and production flow.
Types of Systems
- Machine control
- Production planning
- Computer-aided design (CAD)
- Facility location
Financial and Accounting Systems
Type of System Functions
- Finance: Manage financial assets such as cash, stocks, bonds, and others. Determine the capitalization of the company.
- Accounting: Take and manage financial records (expenditures, income, payroll, depreciation) of the business.
Types of Systems
- Accounts Receivable
- Portfolio Analysis
- Budgeting
- Profit planning
Human Resource Systems
Type of System Functions
- Maintain records of employees, skills, work performance, and employee training.
- Support compensation planning and professional development of employees.
System Type
- Training and development
- Career planning
- Compensation analysis
- Human resource planning
Business Processes
Business Process: Refers to how to organize, coordinate, and focus the work to develop a valuable product or service. Business processes are specific workflows of materials, information, and knowledge: a set of activities.
Business Support Systems in Organizations
- Provide a technology platform in which organizations can integrate and coordinate their main internal business processes.
- They address the problem of organizational inefficiencies created by isolated islands of information, business processes, and technologies.
Examples of Business Processes
- Manufacturing & Production: Assembly of products, quality verification, producing a bill of materials.
- Sales and Marketing: Identifying customers, creating awareness of the products to customers, selling the product.
- Finance and Accounting: Paying creditors, creating financial statements, managing cash accounts.
- Human Resources: Hiring employees, evaluating employee work performance, enrolling employees in benefit plans.
Benefits of Enterprise Systems
- Firm Structure and Organization: Supports a more centralized organization and management structure.
- Administration: Enables firm-wide, broad-based knowledge sharing.
- Management Processes: Facilitates the implementation of standardized business processes.
- Technology: Provides a unified technology platform for the entire enterprise.
- Business: Enables more efficient operations and business processes for supplier management.
Computational System Challenges
- Difficult to build: They require fundamental changes in the mode of operation of the enterprise.
- Technology: Requires complete pieces of software and large investments of time, money, and expertise.
- They encourage coordinated and centralized decision-making, which might not be the best way to operate for some companies.
Customer Relationship Management (CRM)
- Focuses on the management of all the ways the company interacts with its customers and potential customers.
- Is a discipline of both business and technology.
- Uses information systems to integrate all business processes relating to the interaction of the company’s sales, marketing, and service departments.
Knowledge Management Systems
- Knowledge Creation: Discovery and codification of knowledge.
- Knowledge Sharing: Knowledge distribution and access.