When you finish this chapter, you will:
* Recognize different business functions and the role of ISs in these functions.
* Understand how ISs in the basic business functions relate to each other.
* Be able to show how ISs of different business functions support each other.
* Understand how IT is used in the most common business functions to make business processes more effective and more efficient.
* Understand the notion of Enterprise Resource Planning systems.
* Recognize business areas where information technology facilitates the work of managers and knowledge workers.
Effectiveness and Efficiency
ISs can help companies attain more effective and efficient business processes.
The degree to which a goal is accomplished, or how much is the actual performance output (achievement)compared to the planned goal.
Sometimes effectiveness is viewed as better performance.
Determined by the relationship between resources expended and benefits gained (in terms of saving money and/or time) in achieving a goal
Effectiveness and Efficiency
Figure 3.1 Information technology supports a variety of business functions
Figure 3.2 Information systems in different business functions are interdependent.
AISs automatically post transactions in the books and automate generation of reportsfor management and legal requirements.
Three types of AISs
Transaction processing systems (TPS)
Cost accounting systems
Managerial accounting systems
Electronic Data Processing (EDP) Audits
* Ensure electronic systems comply with standard regulations and acceptable rules * Ensure systems cannot be manipulated to circumvent acceptable principles In recent years EDP auditor’s job title has changed to information systems auditors.
Figure 3.3 Accounting information systems include features that reflect up-to-date performance of the organization in financial terms.
The job of financial managers is to manage money as efficiently as possible by: * Collecting payables as soon as possible
* Making payments by the latest time allowed by contractor law * Ensuring that sufficient funds are available for day-to-day operations * Taking advantage of opportunities to accrue the highest yield on funds not used for current activities
Figure 3.4 Financial information systems help manage cash and investment portfolios.
* Financial ISs help balance the need to accrue interest against the need to have cash available. * Cash management systems (CMS): Handle cash transactions specifically. * Electronic fund transfer (EFT): The electronic transfer of cash from one bank account to another.
Investment Analysis and Service
* Analyze and project the prices of a specific stock or bond. * Transmit buy and sell orders electronically.
* Provide clients with a detailed statement.
* Monitor account information and news online.
ISs reduce engineering lead time or time-to-market.
The time between generating an idea for a product and completing a prototype that can be mass- manufactured.
* Key to maintaining a competitive edge (minimizing the time) it leaves competitors insufficient time to introduce their own products first. * Computer-Aided Design (CAD) Systems
Help engineers and technicians design new products and quickly modify and store drawings electronically. * Rapid Prototyping: Creating one-of-a-kind products to test design in three dimensions.
Computerized Numeric Control (CNC) – Machines that take the data and create instructions that tell robots how to manufacture and assemble prototypes.
Figure 3.5 Engineering information systems aid engineers in designing new products and simulating operations ....