CHAPTER FOUR
COMMON BUSINESS APPLICATIONS OF
INFORMATION SYSTEMS
4. Introduction
Information Systems (IS) play a vital role in supporting modern organizations. They help collect,
process, store, and distribute information to assist decision-making, coordination, and control.
Information systems may be designed to support:
Functional departments (Accounting, Finance, Marketing, HR, Manufacturing)
Cross-functional business processes
Functional Information Systems
These systems support specific departments and improve operational efficiency within each unit.
Examples:
Accounting Information System (AIS)
Marketing Information System (MkIS)
Human Resource Information System (HRIS)
Manufacturing Information System (MIS)
Limitations of Functional Systems
Although effective within departments, they may:
Work independently (no integration)
Cause poor communication between departments
Reduce overall organizational performance
Cross-Functional Systems
These integrate multiple departments.
Example:
Transaction Processing System (TPS) supports Accounting, HR, Production, Sales, etc.
4.1 Marketing Information System (MkIS)
Definition
A Marketing Information System (MkIS) is a management information system that collects,
analyzes, stores, and distributes marketing data to support marketing decision-making.
It helps managers make decisions about:
Pricing
Promotion
Product development
Distribution
Customer service
Components of MkIS
1. Internal Records
Information from inside the company:
Sales reports
Cost data
Inventory levels
Cash flow
Accounts receivable/payable
2. Marketing Intelligence
Daily external information about:
Competitors
Market trends
Industry news
Customer behavior
Sources:
Magazines
Trade journals
Reports
Sales staff
3. Marketing Research (MR)
Systematic process of collecting data to solve specific marketing problems.
Marketing Research Process
1. Define the problem
2. Develop research plan
3. Collect information
4. Analyze data
5. Present findings
4. Marketing Decision Support System (MDSS)
Computer-based tools that:
Analyze data
Support forecasting
Help segmentation
Assist pricing decisions
Benefits of MkIS
Better marketing planning
Improved decisions
Reduced risks
Faster response to market changes
Discussion Questions
1. How can information systems improve marketing performance?
2. What are the benefits of marketing research?
3. Why is timely marketing information important?
4.2 Human Resource Information System
(HRIS)
Definition
HRIS is an integrated system combining Human Resource Management and Information
Technology to manage employee data efficiently.
It helps in:
Storing
Processing
Retrieving
Analyzing HR information
Applications of HRIS
HR planning
Recruitment and applicant tracking
Workforce planning
Employee database management
Performance appraisal
Payroll management
Compensation and benefits
Training and development
Job evaluation
Salary surveys
Organizational structure development
Benefits of HRIS
Faster information processing
Improved accuracy
Better planning
Reduced paperwork
Enhanced communication
Cost savings
Discussion Questions
1. How does HRIS improve recruitment?
2. Explain the benefits of payroll automation.
3. What challenges may arise in implementing HRIS?
4.3 Financial Management Information
Systems (FMIS)
Definition
FMIS is a computer-based system used to collect, process, and analyze financial information to
support financial planning and control.
Objectives
Meet financial obligations
Manage cash efficiently
Support financial decision-making
Provide accurate reports
Features of FMIS
Integrated financial information
Real-time updates
Reporting flexibility
Strong internal controls
Audit trails
Functions of FMIS
1. Cash Management
Monitor receipts/disbursements
Forecast cash flow
2. Investment Management
Manage securities
Optimize returns
3. Capital Budgeting
Evaluate investment projects
Analyze profitability
4. Financial Forecasting & Planning
Predict revenues/expenses
Develop financial plans
Advantages
Better financial control
Reduced costs
Improved reporting
Increased accountability
Discussion Questions
1. What is FMIS?
2. How does FMIS support financial planning?
3. Why is cash forecasting important?
4.4 Accounting Information Systems (AIS)
Definition
AIS records, processes, and reports financial transactions of an organization.
It produces:
Balance sheets
Income statements
Budgets
Financial forecasts
Types of AIS
1. Operational Accounting Systems
Focus on transaction processing:
Order processing
Inventory control
Payroll
Accounts receivable
Accounts payable
General ledger
2. Management Accounting Systems
Focus on planning and control:
Cost reports
Budget preparation
Performance analysis
Online Accounting Systems
Use:
Internet
Intranet
Networks
For real-time processing.
Benefits
Faster processing
Accuracy
Reduced errors
Better financial control
Discussion Questions
1. What is the difference between operational and management accounting systems?
2. How does AIS improve financial reporting?
4.5 Manufacturing Information System
Definition
Supports production and operations activities by planning, monitoring, and controlling
manufacturing processes.
Computer Integrated Manufacturing (CIM)
Goals:
Simplify processes
Automate operations
Integrate all functions
Technologies Used
CAD (Design)
CAM (Manufacturing)
CAE (Engineering)
MRP (Material planning)
MES (Execution systems)
Robotics
Process control
Machine control
Benefits
Higher productivity
Reduced costs
Better quality
Improved scheduling
Faster customer response
Discussion Questions
1. What is CIM?
2. Explain the role of robots in manufacturing.
3. How does MES improve production efficiency?
4.6 Transaction Processing System (TPS)
Definition
TPS processes daily business transactions and supports operational activities.
Examples:
Sales
Purchases
Payments
Deposits
Refunds
TPS Processing Cycle
1. Data Entry
Capture transaction data
2. Processing
Batch processing
Real-time processing
3. Database Maintenance
Update records
4. Document/Report Generation
Produce invoices, receipts, statements
5. Inquiry Processing
Allow users to query data
Benefits
Fast transaction handling
Accurate records
Real-time updates
Supports e-commerce