MIS Unit-4 NOTES

Functional Information Systems: Marketing, Manufacturing, Financial and Human

resource Information Systems.

Functional information system is based on various business functions such as Production,

Marketing, Finance and Human Resource Management etc. This departments or functions
are known as Functional areas of business. Each Functional area requires Applications to
perform all information Processing related to function .the popular Functional areas of the
business organizations are:

 Financial Information System

 Marketing Information System
 Production Information System
 Human Resource Information System

Financial Information System:

Financial data analysis may be conducted through trend evaluations, ratio analyses and
financial planning modeling. Data outputs that are produced by FIS can include

 Operating and capital budgets

 Working capital reports
 Accounting reports
 Cash flow forecasts

The predictive analytics included in these applications may also narrow down exactly what
could be expected from a business interaction or transaction that has yet to take place.

The management of financial information in an e-commerce business is paramount in

order to gain maximum operating results in the shortest amount of time. An FIS can also
yield huge amounts of data for daily business operations. Financial markets traders and
salespeople have the greatest demand for FIS because they work in very fast environments
and their on-demand computing systems must keep up with real-time activities in order to
allow these professionals to operate in real time.

FIS must have the following capabilities

• Collect accurate, timely, complete, reliable information.
• Provide adequate management reporting.
• Support budget preparation and execution.
• Facilitate financial statement preparation.
• Support government-wide and agency policy decision.
• Provide complete audit trail to facilitate audits

Features of FIS:
 Clarity/Understandability
 Reliability
 Relevance
 Presentation
 Security
 Cost Effective
 Comparability
 Availability
 Verifiability
Components of Financial Information System Financial Information System generally
consists of six main components: people, procedures, data, software, information
technology infrastructure and internal control.
People: These are the users of the FIS. Internal users include accountants and other
financial officers of the company. Then there are also users outside the organization that
can be given access to the AIS. Some such external users are auditors, consultants, tax
authorities etc.
Procedures: These are the procedures the system follows to collect and process data. The
database for such a process can be internal (like employee names, sales figures) or external
databases (like customer orders, tax slabs etc). The feeding of the data can be both manual
as well as automated.
Data: FIS mainly deals with all kinds of financial and commercial data. Any data that is
pertinent to the financial of the firm will be input data for an FIS. Care must be taken that
the data entered is accurate and complete. Examples of such data include general ledger,
invoices, orders, payroll, bills etc.
Software: FIS software performs all the functions of storing, processing, analyzing,
retrieving financial data of a company. The software can be generalized software that is
available in the market or can be specialized software created specifically for a particular
company and its accounting needs. Some of this software has an inbuilt internal control
and audit options. They even help in tax management.
Information Technology Infrastructure: Information technology infrastructure is just a
fancy name for the hardware used to operate the financial information system. These can
include computers, laptops, servers, printers, scanners, secondary storage hardware etc.
Perhaps most importantly, the hardware selected for an FIS must be compatible with the
intended software.
Internal Controls: Internal controls of a FIS are the security measures it contains to
protect sensitive data. These can be as simple as passwords or as complex as biometric
identification. FIS must have internal controls to protect against unauthorized computer
access and to limit access to authorized users which includes some users inside the
company he financial function of the enterprise consists in taking stock of the flows of
money and other assets into and out of an organization, ensuring that its available
resources are properly used and that the organization is financially fit. The components of
the accounting system include:
1. Accounts receivable records
2. Accounts payable records
3. Payroll records
4. Inventory control records
5. General ledgers

Financial information systems rely on external sources, such as on-line databases and
custom produced reports, particularly in the areas of financial forecasting and funds
management. The essential functions that financial information systems perform include:

1. Financial forecasting and planning

2. Financial control
3. Funds management
4. Internal auditing

Financial Forecasting

Financial forecasts are based on computerized models known as cash-flow models. They
range from rather simple spreadsheet templates to sophisticated models developed for the
given industry and customized for the firm or, in the case of large corporations to specify
modeling of their financial operations. Financial forecasting serves to identify the need for
funds and their sources.

Financial Control

The primary tools of financial control are budgets. A budget specifies the resources
committed to a plan for a given project or time period. Fixed budgets are independent of
the level of activity of the unit for which the budget is drawn up. Flexible budgets commit
resources depending on the level of activity. Spreadsheet programs are the main budgeting
tools. Spreadsheets are the personal productivity tools in use today in budget preparation.

Along with budgets and performance reports, financial control employs a number of
financial ratios indicating the performance of the business unit. A widely employed
financial ratio is return on investment (ROI). ROS shows how well a business unit uses its
resources. Its value is obtained by dividing the earnings of the business unit by its total
assets.
Internal Auditing

The audit function provides an independent appraisal of an organization's accounting,

financial, and operational procedures and information. All large firms have internal
auditors, answerable only to the audit committee of the board of directors

Marketing information system:

The Marketing Information System refers to the systematic collection, analysis,
interpretation, storage and dissemination of the market information, from both the internal
and external sources, to the marketers on a regular, continuous basis.

The marketing information system distributes the relevant information to the marketers
who can make the efficient decisions related to the marketing operations viz. Pricing,
packaging, new product development, distribution, media, promotion, etc.

Every marketing operation works in unison with the conditions prevailing both inside and
outside the organization, and, therefore, there are several sources ( viz. Internal, Marketing
Intelligence, Marketing Research) through which the relevant information about the
market can be obtained.

Components of Marketing Information System:

1. Internal Records: The Company can collect information through its internal
records comprising of sales data, customer database, product database, financial
data, operations data, etc. The detailed explanation of the internal sources of data is
given below:

 The information can be collected from the documents such as invoices, transmit
copies, billing documents prepared by the firms once they receive the order for the
goods and services from the customers, dealers or the sales representatives.
 The current sales data should be maintained on a regular basis that serves as an
aide to a the Marketing Information System. The reports on current sales and the
inventory levels help the management to decide on its objectives, and the marketers
can make use of this information to design their future sales strategy.
 The Companies maintain several databases such as*Customer Database- wherein
the complete information about the customer’s name, address, phone number, the
frequency of purchase, financial position, etc. is saved.

*Product Database- wherein the complete information about the product’s price,
features, variants, is stored.

*Salesperson database, wherein the complete information about the salesperson, his
name, address, phone number, sales target, etc. is saved.

 The companies store their data in the data warehouse from where the data can be
retrieved anytime the need arises. Once the data is stored, the statistical experts
mine it by applying several computer software and techniques to convert it into
meaningful information that gives facts and figures.

2. Marketing Intelligence System: The marketing intelligence system provides the

data about the happenings in the market, i.e. data related to the marketing
environment which is external to the organization. It includes the information about
the changing market trends; competitor’s pricing strategy, change in the customer’s
tastes and preferences, new products launched in the market, promotion strategy of
the competitor, etc. In order to have an efficient marketing Information System, the
companies should work aggressively to improve the marketing intelligence system
by taking the following steps:

 Providing the proper training and motivating the sales force to keep a check on the
market trends, i.e. the change in the tastes and preferences of customers and give
suggestions on the improvements, if any.
 Motivating the channel partners viz. Dealer, distributors, retailers who are in the
actual market to provide the relevant and necessary information about the
customers and the competitors.
 The companies can also improve their marketing intelligence system by getting
more and more information about the competitors. This can be done either by
purchasing the competitor’s product, attending the trade shows, reading the
competitor’s published articles in magazines, journals, financial reports.
  The companies can have an efficient marketing information system by involving the
loyal customers in the customer advisory panel who can share their experiences and
give advice to the new potential customers.
 The companies can make use of the government data to improve its marketing
Information system. The data can be related to the population trends, demographic
characteristics, agricultural production, etc. that help an organization to plan its
marketing operations accordingly.
 Also, the companies can purchase the information about the marketing environment
from the research companies who carry out the researches on all the players in the
market.
 The Marketing Intelligence system can be further improved by asking the customers
directly about their experience with the product or service via feedback forms that
can be filled online.

3. Marketing Research: The Marketing Research is the systematic collection,

organization, analysis and interpretation of the primary or the secondary data to
find out the solutions to the marketing problems. Several Companies conduct
marketing research to analyze the marketing environment comprising of changes in
the customer’s tastes and preferences, competitor’s strategies, the scope of new
product launch, etc. by applying several statistical tools. In order to conduct the
market research, the data is to be collected that can be either primary data (the first-
hand data) or the secondary data (second-hand data, available in books, magazines,
research reports, journals, etc.)

The secondary data are publicly available, but the primary data is to be collected by
the researcher through certain methods such as questionnaires, personal
interviews, surveys, seminars, etc.

A marketing research contributes a lot in the marketing information system as it

provides the factual data that has been tested several times by the researchers.

4. Marketing Decision Support System: It includes several software programs that

can be used by the marketers to analyze the data, collected so far, to take better
marketing decisions. With the use of computers, the marking managers can save the
huge data in a tabular form and can apply statistical programs to analyze the data
and make the decisions in line with the findings.

Thus, the marketers need to keep a check on the marketing environment, i.e. both the
internal (within the organization) and the external (outside the organization, so that
marketing policies, procedures, strategies can be designed accordingly.

Marketing activities are directed toward planning, promoting, and selling goods and
services to satisfy the needs of customers and the objectives of the organization.
Marketing information systems support decision making regarding the marketing mix.
These include:
1. Product
2. Price
3. Place
4. Promotion
 The Marketing identification Function
 The purchase motivation function
 Physical distribution function
 Communication function
Marketing research software supports statistical analysis of data. It enables the firm to
correlate buyer behavior with very detailed geographic variables, demographic variables,
and psychographic variables.
Production information system:
Production is some process through which goods and services are created.
Production/Operations is the heart for an organization and add value to some object
enhancing its usefulness. This is done by bringing men, machines and materials together as
inputs to get the desired output.
Production information system performs an integrating role within the production system
of any organization. Management of activities/operations in a production system is
concerned with decision making related to different components of the system so as to
accomplish the desired output.

Production /manufacturing Information System

The manufacturing information system is a system that supports the manufacturing

functions of purchasing, receiving, quality control, inventory management, material
requirements planning, capacity planning, production scheduling, and plant design. The
term manufacturing information system actually applies to both manufacturing and service
environments.

Manufacturing information systems are integral to the modern manufacturing facility. They
are computer software platforms used to track to and document the transformation of raw
materials to finished goods. With the implementation of a manufacturing and production
information system, facility managers and decision makers can understand how conditions
in the production process can be optimized and improved for increased output. The
manufacturing information system operates in real-time, covering the full range of
production elements in the process, including machines, inputs, personnel, and more.

The manufacturing and production function is responsible for actually producing the firm’s
goods and services. Manufacturing and production systems deal with the planning,
development, and maintenance of production facilities; the establishment of production
goals; the acquisition, storage, and availability of production materials; and the scheduling
of equipment, facilities, materials, and labor required to fashion finished products.
Manufacturing and production information systems support these activities.

Table shows some typical manufacturing and production information systems arranged by
organizational level. Strategic-level manufacturing systems deal with the firm’s long-term
manufacturing goals, such as where to locate new plants or whether to invest in new
manufacturing technology. At the management level, manufacturing and production
systems analyze and monitor manufacturing and production costs and resources.
Operational manufacturing and production systems deal with the status of production
tasks.

Most manufacturing and production systems use some sort of inventory system, as
illustrated in Figure 2-10. Data about each item in inventory, such as the number of units
depleted because of a shipment or purchase or the number of units replenished by
reordering or returns, are either scanned or keyed into the system. The inventory master
file contains basic data about each item, including the unique identification code for each
item, a description of the item, the number of units on hand, the number of units on order,
and the reorder point (the number of units in inventory that triggers a decision to reorder
to prevent a stock out).
Information systems can guide the actions of machines and equipment to help
pharmaceutical and other types of firms monitor and control the manufacturing
process.

This system provides information about the number of items available in inventory to support
manufacturing and production activities.

Product life cycle management (PLM) systems are one type of manufacturing and
production system that has become increasingly valuable in the automotive, aerospace, and
consumer products industries. PLM systems are based on a data repository that organizes
every piece of information that goes into making a particular product, such as formula
cards, packaging information, shipping specifications, and patent data. Once all these data
are available, companies can select and combine the data they need to serve specific
functions. For, example, designers and engineers can use the data to determine which parts
are needed for a new design, whereas retailers can use them to determine shelf height and
how materials should be stored in warehouses.

Why implement Manufacturing Information Systems?

Many plant operators are familiar with the ‘old way’ of doing business. When the
manufacturing process is running smoothly, everything is on track. However, as soon as
something goes wrong, it can throw off the entire production system, with potential
negative impacts on the entire supply chain – from raw materials to the finished product, as
well as taking a tremendous amount of time and resources to remediate the problem.
Advantages of a Manufacturing Information System/Production IMS

With a production information system model in place, plant operators have an entirely
different view of their facilities. The system can operate across multiple areas, including
product definitions across the product life cycle, resource scheduling, order execution, and
production analysis. The system creates a real-time record, capturing relevant data
throughout the manufacturing process. This enables optimization of the process, increasing
efficiency and potentially reducing errors and downtime. In today’s competitive landscape,
this is a key advantage of a smart manufacturing system. In addition, the documentation
and record keeping that the system provides is especially useful in heavily regulated
sectors, such as pharmaceuticals or food and beverage.

Manufacturing or production information system provides information on production

/operation activities of an organization and thus facilitates the decision-making process of
production managers of an organization. The main decisions to be taken in manufacturing
system are:

• Product Design

These decisions can be divided as periodic-decisions viz. selection, design and updating of
resources, transformation process and methods, and continual decisions about day-to-day
operation and control of various activities/operations in the system. These decisions can
also be divided in planning, implementation and control categories.

Production planning
Benefits:

Companies that deploy a manufacturing information system realize real benefits to their
business process, including reduced waste and quicker set up times, more accurate data for
key costs such as labor, scrap, tooling, etc., increased uptime, and a paperless workflow. In
addition, many facilities use their manufacturing information system for real-time feedback
and comprehensive information at a single source, to optimize their production process.

Whether facilities are looking to improve their production data collection, manage their
resources better, or execute their production orders quicker, a manufacturing information
system can provide the best solution to fit their business needs.

Human Resource Information System:

HRIS stands for Human Resources Information System. The HRIS is a system that is used to collect
and store data on an organization’s employees.

In most cases, an HRIS encompasses the basic functionalities needed for end-to-end Human
Resources Management (HRM). It is a system for recruitment, performance management,
learning & development, and more.

An HRIS is also known as HRIS software. This is a bit confusing as it implies that different
systems can have different software running on them. However, this is not the case. The
HRIS is, in essence, an HR software package.

The HRIS can either run on the company’s own technical infrastructure, or, more common
nowadays, be cloud-based. This means that the HR software is running outside of the
company’s premises, making it much easier to update.

A HRIS has to ensure the appropriate degree of access to a great variety of internal
stakeholders, including:
Transaction Processing Subsystems and Databases of Human Resource Information
Systems:
At the heart of HRIS are its databases, which are in some cases integrated into a single
human resource database. The record of each employee in a sophisticated employee
database may contain 150 to 200 data items, including the personal data, educational
history and skills, occupational background, and the history of occupied positions, salary,
and performance in the firm. Richer multimedia databases are not assembled by some
firms in order to facilitate fast formation of compatible teams of people with
complementary skills.
Other HRIS databases include:
1. Applicant databases
2. Position inventory
3. Skills inventory
4. Benefit databases
5. External databases

Benefits of an HRIS

As we discuss in our Digital HR Certificate Program, using an HRIS has a number of clear
benefits. That’s why companies of all sizes implement this tool to support their people
operations. Centrally, the HRIS holds employee information. A wide range of employee data
is then easily accessible, in one system.

 Record-keeping. An HRIS is a record-keeping system that keeps track of changes to

anything related to employees. The HRIS can be seen as the single source of truth
when it comes to personnel data.
 Compliance. Some data is collected and stored for compliance reasons. This
includes material for the identification of employees in case of theft, fraud, or other
misbehaviors, first contact information in case of accidents, citizens identification
information for the tax office, and expiration dates for mandatory certification. All
this information can be stored in the HRIS. It is essential that data is stored safely
and securely, in line with GDPR regulations.
 Efficiency. Having all this information stored in one place not only benefits accuracy
but also saves time. Some companies still keep a lot of data about employees as
physical paperwork. Finding the right folder, and locating the right sheet, can take
up a lot of staff time.
 HR strategy. The HRIS permits the tracking of data required to advance the HR and
business strategy. Depending on the priorities of the organization, different data will
be essential to track. This is where the HRIS shines.
 Self-Service HR. A final benefit is the ability to offer self-service HR to employees
and managers. This enables employees to manage their own affairs. When done
right, the HRIS can offer a good employee experience. Keep in mind that not all HRIS
systems offer this in a user-friendly manner!

HRIS functions

 There are different kinds of HRIS systems and software. Because an HRIS
encompasses all the functionalities for HR, all separate functionalities are part of the
system. These functionalities include
 Applicant Tracking System (ATS). This software handles all the company’s
recruiting needs. It tracks candidate information and resumes, enables recruiters to
match job openings to suitable candidates from the company’s application pool, and
helps in guiding the hiring process.
 Payroll. Payroll automates the pay process of employees. Contractual data and
information on new hires is often entered into this system – sometimes combined
with time & attendance data – and at the end of the month, payments orders are
created.
  Benefits administration. Another functionality of the HRIS is benefits
management. Employee benefits are an important aspect of compensation and are
also managed in this system. More advanced systems offer an employee self-service
model for employee benefits. In this case, employees can select the benefits they are
looking for themselves. One may want more paternity leave, the other one a more
expensive company car. This self-service approach to benefits is also called a
cafeteria model.

Time & Attendance. This module gathers time and attendance data from employees.
These are especially relevant for shift workers where employees clock in and out. Back in
the day, employees often wrote down their working hours on a piece of paper. Then, the
manager would manually enter the data into a time tracking system. Based on this data,
payment orders were generated and paid to all employees. Nowadays, workers often check
into work by fingerprint or a card that is synced with an HRIS. This gives an exact time for
arrival and departure. Any issues with lateness are easily detected.
Training. Learning and development is a key element when it comes to employee
management. This module allows HR to track qualification, certification, and skills of the
employees, as well as an outline of available courses for company employees. This module
is often referred to as an LMS, or Learning Management System, when it’s a stand-alone. An
LMS usually includes available e-learning and other courses to be followed by employees.
Performance management. Performance management is a key part of managing people.
Performance ratings are generated once or multiple times a year by the direct manager or
peers of the employee.
Succession planning. Creating a talent pipeline and having replacements available for key
roles in the organization is another key component of an HRIS.
Employee self-service. Employee self-service has already been mentioned. Organizations
are focusing increasingly on having employees and their direct supervisors manage their
own data. Requests like holidays can be asked for by the employee him/herself. After
approval, these are then immediately saved into the system (and registered to track for
payroll and benefits purposes).
Reporting & Analytics. A much rarer module in HRIS systems is reporting and analytics.
Modern systems enable the creation of automated HR reports on various topics like
employee turnover, absence, performance, and more. Analytics involves the analysis of
these insights for better-informed decision making.

Reporting and analytics in an HRIS

The common characteristic for all HRIS systems is that they have been designed as transactional
systems. They are databases that record a company’s transactions. An example of a transaction is
when new employees join the company.

A new employee record is entered, and the person is considered ‘active’. If a person leaves
the company three months later, a new transaction is recorded, setting the person’s status
to ‘terminated’.

The fact that these systems are designed as transactional systems, makes them bad at data
reporting and analytics. They simply haven’t been designed for this. In addition, not all
HRIS systems have all the above capabilities built-in.

Some functionality, like payroll, LMS, or ATS could also be recorded in external systems.
This makes HR reporting even more challenging, as it means that data is dispersed into
multiple systems. In order to report data, a new layer needs to be added on top of all HR
systems to report and analyze the HR data.

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