KCA UNIVERSITY

INFORMATION SYSTEMS IN AN ENTERPRISE

An information system is a set of interrelated components that work together to collect, process, store,
and disseminate information to support decision making, coordination, control, analysis and
visualization in an organization.

Components of an information system

1. Hardware
Include the computer and all of its support equipment. Among the support equipment are input and
output devices, storage devices and communications devices.
2. Software
Are the programs which support the installation of the information systems such as operating
systems.
3. Database
Databases are required to support the operations and management functions of the information
system.
4. Procedures
Procedures for using, operating, and maintaining an information system are part of its
documentation. For example, procedures need to be established to run a payroll program, including
when to run it and who is authorized to run it.
5. People
Qualified people are a vital component of any information system. Technical personnel include
development and operations managers, business analysts, systems analysts and designers, database
administrators, programmers, computer security specialists, and computer operators. In addition,
all workers in an organization must be trained to utilize the capabilities of information systems as
fully as possible

TYPES OF INFORMATION SYSTEMS

This information systems support managers at all the levels of management to make decisions which
will enable them to achieve the organizations objectives. They do not replace managers in decision
making. They include
1. Transaction processing systems (TPS)
2. Decision support system (DSS)
3. Executive support systems (ESS)
4. Expert systems (ES)
5. Management information system (MIS)
6. Knowledge work systems (KWS)
7. Office automation system (OAS)
TRANSACTION PROCESSING SYSTEMS

Transaction processing systems are used to record day to day business transactions of the organization.
They are used by users at the operational management level. The main objective of a transaction
processing system is to answer routine questions such as;

 How printers were sold today?

 How much inventory do we have at hand?
 What is the outstanding due for John Doe?

The primary objectives of any transaction processing system is to support the capturing, processing,
storage of transactions and production of a variety of documents related to routine business activities
The four important characteristics of a TPS are rapid response, reliability, inflexibility and controlled
processing.
1. Rapid response. Fast performance with a rapid response time is critical. Businesses cannot afford
to have customers waiting for a TPS to respond. The turnaround time from the input of the
transaction to the production of the output must be a few seconds or less.
2. Reliability. Many organizations rely heavily on their TPS. A breakdown will disrupt operations or
even stop the business. For a TPS to be effective, its failure rate must be very low. If a TPS does
fail, then quick and accurate recovery must be possible. This makes well-designed backup and
recovery procedures essential.
3. Inflexibility. A TPS wants every transaction to be processed in the same way regardless of the
user, the customer or the time of day. If a TPS were flexible, there would be too many
opportunities for non-standard operations. For example, a commercial airline needs to consistently
accept airline reservations from a range of travel agents. Accepting different transaction data from
different travel agents would be a problem.
4. Controlled processing. The processing in a TPS must support an organization’s operations. For
example, if an organization allocates roles and responsibilities to particular employees, then the
TPS should enforce and maintain this requirement.

Examples of transaction processing systems include;

 Point of Sale Systems – records daily sales

 Payroll systems – processing employees salary, loans management, etc.
 Stock Control systems – keeping track of inventory levels
 Airline booking systems – flights booking management

Transaction processing systems capture and process data describing business transactions. Then they
update organizational files and databases and produce a variety of information products for internal
and external use. Transaction processing systems generally go through a five-stage cycle involving
1. Data entry activities
2. Transaction processing activities including batch and real time processing
3. File and database processing
4. Document and report generation
5. Inquiry processing activities involves making inquiries and receiving responses concerning the
results of transaction processing activities
MANAGEMENT INFORMATION SYSTEMS (MIS)

Management Information Systems (MIS) are used by tactical managers to monitor the organization's
current performance status. The output from a transaction processing system is used as input to a
management information system.

The MIS system analyzes the input with routine algorithms i.e. aggregate, compare and summarizes
the results to produced reports that tactical managers use to monitor, control and predict future
performance.

For example, input from a point of sale system can be used to analyze trends of products that are
performing well and those that are not performing well. This information can be used to make future
inventory orders i.e. increasing orders for well-performing products and reduce the orders of products
that are not performing well.

Examples of management information systems include;

 Sales management systems – they get input from the point of sale system
 Budgeting systems – gives an overview of how much money is spent within the organization
for the short and long terms.
 Human resource management system – overall welfare of the employees, staff turnover, etc.

DECISION SUPPORT SYSTEMS

Decision support systems are used by senior management to make non-routine decisions. Decision
support systems use input from internal systems (transaction processing systems and management
information systems) and external systems.

The main objective of decision support systems is to provide solutions to problems that are unique and
change frequently. Decision support systems answer questions such as;

 What would be the impact of employees' performance if we double the production lot at the
factory?
 What would happen to our sales if a new competitor entered the market?

 They are information systems which combine data and sophisticated analytical models or data
analysis tools to support decision making
 DSS can handle large amount of data from different sources or can deal with mixed knowledge for
example advanced DBMS have allowed decision makers to search databases for information when
databases stored in different computer systems.
 DSS offers both textual and graphical orientation. Some decision makers prefer a straight text
interface while others prefer a decision support system that helps them to make attractive
informative graphical presentations or computer screens. Today decision support system can
produce text, tables, line drawings, trend lines, pie-charts etc. Decision support systems therefore
help managers to convey information to various groups of people.
 Support drill down analysis. A manager can get more levels of details by drilling down through
data for example the manager can view the overall project cost then drill down and see the cost for
each project face activity and task.

DSS COMPONENTS
1. Data Management Component
The data management component performs the function of storing and maintaining the information
that you want your Decision Support System to use. The data management component, therefore,
consists of both the Decision Support System information and the Decision Support System
database management system.
2. Model Management Component
The model management component consists of both the Decision Support System models and the
Decision Support System model management system. A model is a representation of some event,
fact, or situation.
3. User Interface Management Component
The user interface management component allows you to communicate with the Decision Support
System. It consists of the user interface management system. This is the component that allows you
to combine your know-how with the storage and processing capabilities of the computer.
4. Knowledge Management Component
The knowledge management component, like that in an expert system, provides information about
the relationship among data that is too complex for a database to represent. It consists of rules that
can constrain possible solution as well as alternative solutions and methods for evaluating them.

TYPES OF DSS

Communication-driven DSS
Most communications-driven DSSs are targeted at internal teams, including partners. Its purpose are to
help conduct a meeting, or for users to collaborate. The most common technology used to deploy the
DSS is a web or client server.
Examples include chats and instant messaging software, online collaboration and net-meeting systems.

Data-driven DSS
Most data-driven DSSs are targeted at managers, staff and also product/service suppliers. It is used to
query a database or data warehouse to seek specific answers for specific purposes. It is deployed via a
main frame system, client/server link, or via the web.
Examples include computer-based databases that have a query system to check (including the
incorporation of data to add value to existing databases.

Document-driven DSS
Document-driven DSSs are more common, targeted at a broad base of user groups. The purpose of
such a DSS is to search web pages and find documents on a specific set of keywords or search terms.
The usual technology used to set up such DSSs are via the web or a client/server system.

Knowledge-driven DSS:
Knowledge-driven DSSs or 'knowledgebase' are they are known, are a catch-all category covering a
broad range of systems covering users within the organization setting it up, but may also include others
interacting with the organization - for example, consumers of a business. It is essentially used to
provide management advice or to choose products/services. The typical deployment technology used
to set up such systems could be server systems, the web, or software running on stand-alone PCs.

Model-driven DSS
Model-driven DSSs are complex systems that help analyse decisions or choose between different
options. These are used by managers and staff members of a business, or people who interact with the
organization, for a number of purposes depending on how the model is set up - scheduling, decision
analyses etc. These DSSs can be deployed via software/hardware in stand-alone PCs, client/server
systems, or the web.

Examples of decision support systems include;

 Financial planning systems – it enables managers to evaluate alternative ways of achieving

goals. The objective is to find the optimal way of achieving the goal. For example, the net
profit for a business is calculated using the formula Total Sales less (Cost of Goods +
Expenses). A financial planning system will enable senior executives to ask what if questions
and adjust the values for total sales, the cost of goods, etc. to see the effect of the decision and
on the net profit and find the most optimal way.
 Bank loan management systems – it is used to verify the credit of the loan applicant and
predict the likelihood of the loan being recovered.

EXECUTIVE SUPPORT SYSTEMS (ESS)

 ESS is an enterprise wide DSS that helps top level executives to analyse, compare and highlight
trends in important variables so that they can monitor performance and identify opportunities.
 They are special decision support systems which support strategic level managers to make strategic
decisions.
 They are designed to address unstructured decision making using advanced graphics and
communication techniques and to incorporate data about external and internal events
 ESS enables strategic level managers to drill down into the organization strategic problems
 ESS can help with situations that have a high degree of uncertainity
 Support for strategic planning which involves determining the long term objectives by analyzing
the strength and weakness of the organization predicting future trends and projecting development
of new product lines. Executive support system also involves planning the acquisition of new
equipment, analyzing merge possibilities and making difficult decisions concerning down sizing
 Support for strategic control which involves monitoring and managing the overall operation of the
organization. Goal seeking can be done for each major area to determine what performance these
areas need to achieve in order to reach corporate expectations

EXPERT SYSTEMS
 They are artificial intelligence systems which reproduce the performance of one or more experts.
They capture the knowledge of experts and store it in the knowledge base. Artificial intelligence
systems are scientific systems which can suggest how specific problems can be solved. They
support the capturing and processing of large volumes of data which cannot be done by human
 intelligence systems.Artificial intelligence systems are not affected by environmental changes or
factors as is in the case with human intelligence systems.
 Expert systems cannot deal with mixed knowledge for example an expert system for production
department cannot be used by accountants or members of the administration department
 Expert systems can explain how and why a decision or solution was reached for example an expert
system can explain behind the conclusion to approve a particular loan application. Due to this
capability, the user of expert system gain access to reasoning behind the conclusion.
 Expert systems can display intelligent behavior by proposing new ideas or approaches to problem
solving for example in medical diagnostic, an expert system can propose a widal test.
 They can provide portable knowledge by capturing human expertise that might be lost e.g. an
expert system called delta was developed to preserve the expertise of retiring engineers who are
competent and can handle many highly technical repairs.
 Expert systems can be expensive to develop when using traditional programming language and
approaches.

When to use expert systems

The following is a list of factors that normally make expert systems worth the expenditure of time and
money in an organization.
 To capture and to reserve irreplaceable human expertise.
 Provide a high potential pay off or significantly reduce risk.
 To develop systems which are more consistent than human experts.
 To provide the expertise needed at a number of location at the same time in a hostile environment
that is dangerous to human health.
 To provide expertise that is expensive or rate.
 Expert systems can be used to develop a solution faster than human expert.

Components of expert systems

Knowledge base
It stores the knowledge that has been captured from experts. The captured knowledge can be shared so
that it can be remotely accessed by other decision makers in the organization
Inference engine
This is the part of expert system that seeks information and relationships from the knowledge base and
provides answers predictions and suggestions similar to the way a human expert would. The inference
engine must find the right facts, interpretations and rules before assembling them. This means that the
inference engine must make logical sense out of the information contained in the knowledge base.
Explanation component
This component explains to the decision maker how and why a particular decision or option was
suggested by the expert systems
Knowledge acquisition component
This component captures the knowledge of experts and stores the knowledge in the knowledge base.
User interface
It enables decision makers to interact with the expert systems

MANAGEMENT REPORTING SYSTEMS (MRS)

 They are an organized approach to gathering information from company operations and making a
strategic management decisions. Developing quality characteristics for gathering information is
essential to making solid management decisions.
 The primary purpose of an management reporting system is to help an organization achieve its goal
by providing managers with insight into the regular operations of the organization so that they
control, organize and plan more effectively and efficiently.
 It provides reports with fixed and standard formats (hard copy and soft copy reports) and it uses
internal data stored in the computer system
 Each management reporting system is an integrated collection of sub systems which are typically
organized along functional lines within an organization. Thus a functional management
information system includes sub systems that address financial reporting, profit and loss analysis
and management of funds.
 MRS allows end users to develop their own custom report. Although analyst and programmers may
be involved in developing and implementing complex management information system reports that
require data from many sources end users are increasingly developing their own simple programs
to query a database and produce a basic report.

Types of MRS reports

Schedule reports
They are produced periodically or on schedule such as daily, weekly or monthly. For example the
payroll is a report which is produced monthly and advices the financial controller manager on the
financial position of the organization.
Key indicator reports
This report summarizes the previous day’s critical activities and is typically available at the beginning
of each working day. It can be used to summarize inventory levels, production activity etc.
Demand reports
Demand reports are developed to give certain information at a managers request e.g. if the production
manager wants to know about the production of a certain item then he will demand a report from the
head of the section.
Exception reports
These are reports that are automatically produced when a situation is unusual or requires management
action for example a manager may set a parameter that generates a report of all inventory items with
less than the equivalent of five days of sales.
Drill down reports
These reports provide detailed data about a situation. Through the use of drilled down reports, decision
makers can see data at high level first, them at a more detailed level and finally at a very detailed level.

KNOWLEDGE WORK SYSTEMS (KWS)

 They are information systems which enable knowledge workers at the knowledge level of
management to create, integrate and distribute knowledge. Knowledge workers are people who
hold university degrees or diplomas and are members of recognized professions such as
accounting, engineering and medicine
 They provide knowledge workers with specialized tools such as powerful graphics, analytical tools,
communication tools and document management tools.
 These systems require great computing power in order to rapidly handle the sophisticated graphics
or complex calculations necessary when finding solutions to problems
 Because knowledge workers are so focused on knowledge on external world these systems must
give the workers quick and easy access to the external database.
 They provide a user friendly interface which saves time by allowing users to easily perform the
required tasks
OFFICE AUTOMATION SYSTEMS (OAS)

Office automation is the use of information technology to support knowledge work and automate
business processes e.g. making payments, job executions, sharing information etc.

Commonly referred to as office systems, they support the computerization of office or organization’s
activities. They primarily aid data workers though they can also be used by knowledge workers
Data workers have less formal advanced diplomas or degrees or are in the process of acquiring degrees
or diplomas. They tend to process rather than create information. OAS supports data workers to
coordinate diverse information units and functional areas.

Types of Office Automation Systems

Electronic Data Interchange (EDI)

Refers to the electronic transmission of data between organizations or trading partners.

Is the electronic interchange of business information using a standardized format; a process which
allows one company to send information to another company electronically rather than with paper.

Business entities conducting business electronically are called trading partners (suppliers and
customers).

A business entity is an entity that is formed and administered as per corporate law in order to engage
in business activities, charitable work, or other activities allowable.

Most often, business entities are formed to sell a product or a service.

For example, consider the difference between the traditional paper purchase order and its electronic
counterpart:

Benefits of EDI

a) Cost saving e.g. reduces expenses associated with paper, printing.

b) Faster transaction speed.
c) Minimizes human intervention.
d) Timely i.e. no delays associated with paperwork. Can lead to effective decision making.
e) Sharing data is much quicker.

NOTE: EDI is a software that runs on a computer system

 It is the structured transmission of data between organizations by electronic means. It is used to

transfer electronic documents or business data from one computer system to another computer
system, i.e. from one trading partner to another trading partner without human intervention
 Electronic data interchange (EDI) is the software or system used by companies to exchange
information, files and documents. EDI has replaced the fax machine and mailing list when it comes
to information sharing. Using EDI, sharing of data is much quicker and cost effective.
 EDI and other similar technologies save a company money by providing an alternative to, or
replacing information flows that require a great deal of human interaction and materials such as
paper documents, meetings, faxes, etc.
 Information transmitted using electronic data interchange is timely and can be used for effective
decision making.

Electronic funds transfer (EFT)

Electronic funds transfer (EFT) are electronic transfer of money from one bank account to another,
either within a single financial institution or across multiple institutions, via computer-based systems,
without the direct intervention of bank staff i.e. No paper work is involved.

Through EFT, the money (wages) can be transferred to the workers’ bank account at any time and
there is no need for the manager to leave the comfort of his office to perform this transaction.

Examples of EFT

a) Direct Deposit, in which payroll is deposited straight into an employee's bank account
b) Credit card (A credit card is a payment card issued to users (cardholders) to enable the
cardholder to pay a merchant for goods and services based on the cardholder's promise to the
card issuer to pay them for the amounts plus the other agreed charges.)
c) ATM
d) Fedwire (Federal Reserve Wire Network) funds transfer system in the United States.
e) Point-of-sale (POS) transactions.

Benefits of EFT

a) Provides an easy, cheaper and faster method of transferring money.

b) Cost saving i.e. printing checks as well as the time to deliver or collect checks.
c) The money moves to the recipients account much faster since there is no manual moving of
checks
d) It is more efficient
e) Has less administrative procedures, hence reduced labor and staff costs
f) Electronic fund transfers are also much safer and secure. For instance, they do not involve
carrying huge amounts of money.
g) Reliable i.e. trust in the system rather than manual human intervention.

 Electronic Funds Transfer (EFT) is a system of transferring money from one bank account directly
to another without any paper money changing hands. It is used for both credit transfers, such as
payroll payments, and for debit transfers, such as mortgage payments.
 EFT is secure, efficient, and less expensive than paper based payments
 Through EFT, the money (wages) can be transferred to the workers’ bank account at any time and
there is no need for the manager to leave the comfort of his office to perform this transaction
 EFT eliminates the need for cheques or cash and experiences no delays connected with paperwork
 It is very expensive to develop EFT information systems and hackers may monitor transactions and
obtain confidential information

Electronic point of sale (EPOS)

 It is an office automation system found in supermarkets and other retail outlets. It is a self-
contained, computerized equipment that performs all tasks of a store checkout counter.
 It allows payments by bank or credit cards, verifies transactions, provides sales reports, coordinates
inventory data, and performs several other services normally provided by employees.

EPOS parts include

a) Bar code reader,
b) A display system,
c) A printer, a mouse and
d) A keyboard.

EPOS reports include

a) Daily sales analysis report,
b) Inventory control report
c) Customer payment receipts.

Benefits of EPOS
a) Customers will be served much more quickly.
b) Reduces human errors i.e. Because of the barcode an EPoS systems will reduce the chance of
human errors, data duplication, and data entry mistakes.
c) Includes a terminal, scanning equipment, credit card reader and a receipt printer.

Disadvantages of EPOS
a) Requires computer literacy
b) Requires operational training

Teleworking

Is a work arrangement in which employees do not commute or travel to a central place of work, such
as an office building.

 Teleworking or telecommuting allows employees to work at home or at a local telework center one
or more days per week using communication tools, such as such as phone, fax, modem, Internet
teleconferencing, e-mail or IM, to perform work duties from a remote location.
 Advances in IT and telecommunications have made telecommuting far more widespread and
productive. Easier-to-use computers, virtual private networks, ubiquitous email, digital phone
systems that allow calls to be easily forwarded and voice messages to be sent by email, electronic
collaboration systems, broadband telecommunications and other new applications and technologies
have made it much easier to work at home.
Benefits of teleworking to employers
1. Saves office space and parking requirements
2. Increases productivity and job performance
3. Reduces absenteeism and healthcare related costs
4. Can reduce long term disability costs
5. Reduces business disruptions due to emergencies
6. Increases flexibility to staff during peak workloads
Drawbacks of teleworking to employers
1. High startup and operating costs in relation to telework policy, guidelines, training and evaluation
2. Management resistance and skepticism
3. May compromise the security of information and files
4. Can disrupt "teamwork" and organizational culture
Benefitsof teleworking to teleworkers
1. Reduces stress, while improving morale, work satisfaction and motivation
2. Fewer interruptions allows greater focus and improved personal productivity
3. Reduces commuting time
4. Gives job access to those in geographically remote areas
5. Meets demands for new lifestyles and flexible work environments
6. Can improve supervisor to employee communications
Drawbacksof teleworking to teleworkers
1. Some colleagues can be jealous, especially if they are refused the chance to telework
2. Reduced social interaction can lead to social and professional isolation
3. Fewer career and promotional opportunities and reduced office influence
4. Reduced level of IT support
EXERCISE
Discuss the impact of office automation systems to organizations

KASNEB PAST PAPER QUESTIONS

May 2018 Q3b&c, Q5a, Q6b & c
Dec 2017 Q1b, Q2a, Q4a, Q5a, Q6a
May 2017 Q4c, Q5c
Nov 2016 Q1c(ii), Q4b&c, Q6e
Nov 2015 Q2, Q4c, Q5, Q6a
Sept 2015 Q2c, Q3b, Q6b
May 2015 Q4
Dec 2014 Q3b, Q6b
May 2014 Q1, Q2c, Q4b
Dec 2013 Q1b

INFORMATION SYSTEMS FROM A FUNCTIONAL PERSPECTIVE.

Information systems can be classified by the specific organizational functions that they perform as well
as the organizational levels. When information systems are looked at from this perspective four levels
of an organization are important namely strategic, management, knowledge and operational levels

Typical information systems that support the major business functions include
1) Sales and marketing systems
2) Manufacturing and production systems
3) Finance and accounting systems
4) Human resource systems
SALES AND MARKETING SYSTEMS

The sales and marketing area of your business is the part of your business that is responsible for
finding clients, making sales, and generating revenue.

These systems help the organization to

1. Identify the customers for their products and services
2. To plan and develop products or services in order to meet customer needs
3. To promote products and services through advertising
4. To provide continuous customer support

At the strategic level these systems

 Monitor trends affecting new products and sales opportunities
 Support planning for new products
 Monitor the performance of competitors

At the management level these systems (critical decisions have to be made by top level managers)
 Support market research
 Support advertising and promotional campaigns
 Support pricing decisions
 Analyses sales performance and performance of sales staff

At the knowledge level these systems

 Support market analysis (A market analysis is a quantitative and qualitative assessment of a
market i.e. the various customer segments and buying patterns, the competition.)
 Support the development of procedures to estimate the sales volumes (Sales volume is the number
of units sold within a reporting period. This figure is monitored by investors to see if a business
is expanding or contracting.)

At the operational level these systems

 Support location of prospective customers
 Support the processing of customer orders
 Ensure effective customer service

Examples of sales and marketing information systems

Sales trend forecasting systems

They support the preparation of long term sales projections at the strategic level

Pricing analysis systems (What does pricing depend on?)

They help to determine prices for products and services at the management level

Order processing systems

They support the entry of orders, processing of the orders and distribution of results at the operational
level
Market analysis systems
They support the identification of customers and markets using data on markets, consumer behavior
and buying trends. They are relevant at the knowledge level of management

MANUFACTURING AND PRODUCTION INFORMATION SYSTEMS

These systems are responsible for producing goods and services in the organization.

These systems are relevant to the manufacturing and production functions in an organization which
produces goods and services. They therefore
 Deal with planning, development and maintenance of production facilities.
 Support the acquisition, storage and ensure availability of production materials
 Deal with scheduling of equipment and labour (people) to support the development of products

At the strategic level

 They enable the organization to define the long term manufacturing and production goals such as
where to locate new plants or whether to invest in new technologies.
E.g. Pepsi Plant in babadogo next to EPZ.
 They support the organization to acquire manufacturing and production information from internal
and external sources E.g. Employees (internal sources), Suppliers and customers (external
sources)

At management level
 They support the analysis of manufacturing and production procedures
 They enable managers to analyse production costs and resource utilization

At the knowledge level

 They support the creation and distribution of manufacturing and production related knowledge
 They enable managers to ensure that the expertise which drives the production process has been
defined

At the operational level these systems

 Deal with the status of production tasks i.e. tasks that must be completed or executed for a
product to be produced.
 Enable production and manufacturing personnel to gather information about manufacturing
resources

Examples of manufacturing and production information system

Machine control system
They control actions of machines and equipment at operational level

Facilities location systems

They support strategic level managers to decide where to locate new production facilities

Production planning systems

They support management level managers to decide when the products are to be produced and the
number to be produced
Computer aided design
They support the design of new products using computer systems at the knowledge level.

FINANCE AND ACCOUNTING SYSTEMS

These are information systems which keep track of the organization’s financial resources. They
therefore
 Enable finance managers to manage the financial assets including cash, stocks and bonds
 Support the capitalization of the firm which includes findings new financial assets in stocks and
bonds

At the strategic level these systems

 Help to establish long term investment objectives (plan for long term financial plan)
 Provide long term forecasts of the firm’s financial performance
 Enables strategic managers to define policies which will govern acquisition and management of
financial resources

At management level these systems

 Help managers to ensure and control the organizations financial resources
 Enable managers to ensure proper implementation of the finance and accounting policies

At the knowledge level these systems

 Support financial systems by providing analytical tools which aid knowledge workers to design
appropriate financial systems
 Support knowledge workers to analyze various sources of income to the organization

At operational level these systems

 Support the tracking of the flow of funds
 Enables operational level managers to prepare finance and accounting documents

Examples of finance and accounting systems

Profit planning systems
They are used by strategic level managers for long term profit planning

Budgeting systems
They support management level managers to prepare short-term budgets

Portfolio analysis systems

They help knowledge level managers design systems which will enable them to determine the various
organizations expenditure

Accounts receivable systems

They enable operational managers to record the flow of funds into organization
HUMAN RESOURCE INFORMATION SYSTEMS
These systems support the human resource functions in an organization which is responsible for
attracting, developing and maintaining the organization’s work force.
The human resource information system supports activities such as
1. Identifying potential employees
2. Maintaining complete records on existing employees
3. Creating programs to develop employees skills and talents

At the strategic level these systems

 Supports the identification of manpower for meeting the organization long term goals

At management level these systems

 Help managers to monitor the recruitment, allocation and compensation of employees
 Enable managers to implement policies which are relevant to management of the human resource
function

At knowledge level these systems

 Enable knowledge workers to carry out analysis relating to training of employees and modeling of
employees career paths.

At operational level these systems

 Support the recruitment and placement of employees
 Support the monitoring of the routine employee activities

Examples of human resource systems

Training and development systems
They are used by operational managers to track employee training skills and performance

Career pathing systems

They are relevant to knowledge workers who design career paths for employees

Compensation analysis systems

They are relevant at management level where they enable managers to monitor the distribution of
employee wages and salaries

Human resource planning systems

Strategic managers use them to plan the long term labour force needs of the organization

ENTERPRISE APPLICATIONS AND THE BUSINESS PROCESS INTEGRATION

 One of the major challenges facing firms today is putting together data from the different
information systems in order to make information flow across the enterprise
 E-commerce, e-business and the intensifying global competition are forcing firms to focus on
speed of marketing and improving customer service. These changes require powerful systems
which can integrate information from many different functional areas and organizational units and
coordinate firm activities with those of supplies and other business partners
 Enterprise applications are systems which coordinate activities, decisions and knowledge across
many different functions, levels and business units in an organization. They therefore solve the
problem of having different information systems to support different functions
 The new digitalfirm business environment requires companies to think more strategically about
their business processes.
 Business processes refer to sets of logically related activities for accomplishing a specific business
result. Business processes also refer to the unique ways in which organizations and management
coordinate these activities. A company’s business processes can be a source of competitive strength
if they enable the company to innovate better or to execute better than its rivals. Business processes
can also be liabilities if they are based on outdated ways of working that impede organizational
responsiveness and efficiency.
Enterprise applications include
1. Enterprise systems or enterprise resource planning (ERP) systems
2. Supply chain management systems
3. Customer relationship management systems
4. Knowledge management systems

ENTERPRISE SYSTEMS
 They provide a technology platform where organizations can integrate and coordinate their major
internal business processes
 They address the problem of organizational inefficiencies created by isolated islands of
information, business processes and technology
 Enterprise systems or enterprise resource planning (ERP) systems will solve the problem of
fragmentation by integrating the key business processes of an entire organization into a single
system which allows information to freely flow throughout the organization.
 Enterprise systems have been primarily oriented towards helping companies to manage their
internal manufacturing, sales and marketing, financial and human resource processes however
enterprise software vendors and customers are slowly being linked with the enterprise systems
 The enterprise system collects data from key business processes and stores the data in a single data
repository from where it can be used by other parts of the business.

Business processes supported by enterprise systems are

 Manufacturing processes which include inventory management, production planning and
production scheduling
 Financial and accounting processes which include accounts receivable, cash management and
forecasting, cost accounting and financial reporting
 Sales and marketing processes which include order processing sales planning and sales
management activities
 Human resource processes which include personnel administration, personnel, applicants
tracking processes etc

Benefits of enterprise or ERP systems

1. It supports organizational structures which was not previously possible when the systems were
viewed as single units
2. Enterprise systems support the structuring of information around cross functional business
processes in order to improve management reporting and decision making
3. An enterprise system can supply the management with better data about business processes and the
overall organizational performance
4. Enterprise systems provide organizations with a single unified and all-encompassing information
system technology platform which houses data on all the key business processes
Limitations of enterprise systems
1. They are difficult and costly to build. They require not only large technology investment but also
fundamental changes in the way the business operates
2. Companies need to redesign their business processes in order to make information flow between
them to be successful.
3. Organization’s employees will have to take or accept new job functions or responsibilities when
enterprise systems are introduced. This may lead to resistance from employees.
4. Because of the integration it is difficult to make changes to one part of the system without affecting
other parts.

SUPPLY CHAIN MANAGEMENT (SCM) SYSTEMS

 Supply chain management (SCM) systems are more outward facing, focusing on helping the firm
manage its relationship with suppliers to optimize the planning, sourcing, manufacturing, and
delivery of products and services. These systems provide information to help suppliers, purchasing
firms, distributors, and logistics companies coordinate, schedule, and controlbusiness processes for
procurement, production, inventory management, and delivery of products and services.
 Supply chain management systems are one type of inter-organizational system because they
automate the flow of information across organizational boundaries. A firm using a supply chain
management system would exchange information with its suppliers about availability of materials
and components, delivery dates for shipments of supplies and production requirements. It might
also use the system to exchange information with its distributors about inventory levels, the status
of orders being fulfilled, or delivery dates for shipments of finished goods.
 The supply chain is a network of the organizations and business processes for procuring materials,
transforming raw materials into intermediate and finished products and distributing the finished
products to customers. It links suppliers, manufacturing plants, distribution centers, retail outlets
and other suppliers through processes such as procurement, inventory control and distribution. The
figure below provides a simplified illustration of the supply chain
Inventory level and delivery schedule

E 2

Supplier Manufacturer Distributo Retailer Customer

D r

C
1

B
Suppliers’
Orders, return requests and payments
A
Suppliers’’

 The upstream portion includes the organization’s suppliers and their suppliers as well as the
processes for managing the relationship among them
 The downstream portion consists of the organization and the processes for distributing and
delivering products to the final customers
 The manufacturer manages the internal supply chain processes for transforming the materials,
components and services furnished into finished products
 Companies have extended their supply chain management systems to collaborate more closely with
customers, suppliers and other firms in their industry. This has led to the introduction of
collaborative commerce.
 Collaborative commercerefers to the use of digital technology to enable multiple organizations to
collaboratively design, develop, build and manage products through their lifecycles.
 Through collaborative commerce firms can integrate their systems with those of their supply chain
customers in order to coordinate demand forecasting, resource planning and production planning
 Collaborative commerce has enabled many industries to extend their supply chain management
systems to collaborate more closely with suppliers and other firms

CUSTOMER RELATIONSHIP MANAGEMENT (CRM) SYSTEMS

 Instead of treating customers as exploitable sources of income, businesses are now viewing them as
long-term assets to be nurtured through customer relationship management.
 Customer relationship management (CRM) systems focus on coordinating all of the business
processes surrounding the firm’s interactions with its customers in sales, marketing, and service to
optimize revenue, customer satisfaction, and customer retention. The ideal CRM system provides
end-to-end customer care from receipt of an order through product delivery.
 CRM is an application that enables companies to make the move towards being a customer
centered organisation by putting the customer at the centre of all the information that relates to
them and allowing authorized people within the organisation to access the information.
 CRM is both a business and technology discipline that uses information systems to integrate all of
the business processes surrounding the firm’s interactions with its customers in sales
 CRM systems can consolidate customer data from multiple sources and can provide analytical
tools for answering customer questions
Firms can then use the answers to these questions to acquire new customers, provide better service and
support to existing customers, customize their offerings more precisely to customer preferences, and
provide ongoing value to retain profitable customers.

KNOWLEDGE MANAGEMENT SYSTEMS (KMS)

 Knowledge management systems collect all relevant knowledge and experience in the firm and
make it available wherever and whenever it is needed to support business processes and
management decisions. They also link the firm to external sources of knowledge
 Knowledge management systems improve information robustness by adding context and
relationship data to stored documents.
KASNEB PAST PAPER QUESTIONS
May 2018 Q3d
Dec 2017 Q3b&c,
May 2017 Q1c
Nov 2016 Q1c(i)
Nov 2016 Q3e, Q5b(ii)
Nov 2015 Q3c
May 2015 Q3b&c
Dec 2013 Q2b