1.

Business Information System:

Business information systems are sets of inter-related procedures using IT infrastructure in a

business enterprise to generate and disseminate desired information.

Such systems are designed to support decision making by the people associated with the
enterprise in the process of attainment of its objectives.

2. Information System
Many organizations work with large amounts of data. Data are basic values or facts and are
organized in a database. Many people think of data as synonymous with information;
however, information actually consists of data that has been organized to help answers
questions and to solve problems. An information system is defined as the software that helps
organize and analyse data. So, the purpose of an information system is to turn raw data into
useful information that can be used for decision making in an organization.

3. Strategic Information System (SIS)

The strategic role of information systems involves using information technology to develop
products, services, and capabilities that give a company strategic advantages over the
competitive forces it faces in the global marketplace. This creates strategic information
systems, information systems that support or shape the competitive position and strategies of
an enterprise. So a strategic information system can be any kind of information system (TPS,
MIS, DSS, etc.) that helps an organization:
1. Gain a competitive advantage
2. Reduce a competitive disadvantage
3. Meet other strategic enterprise objectives
4. Strategic moves and use of Strategic Information System
A variety of strategies can be developed to help a firm confront these include

Cost Strategy - Become a low cost producer of products and services

- Find ways to help suppliers or customers reduce their costs
- Increase the costs of competitors.

Differentiation Strategy -Develop ways to differentiate products and services from

competitors.
- Reduce the differentiation advantages of competitors.

Innovation Strategy - Find new ways of doing business:

a) Develop new products & services
b) Enter new markets or marketing segments.
c) Establish new business alliances
d) Find new ways of producing products/services
e) Find new ways of distributing products/services

Growth Strategies -Significantly expand the company=s capacity to produce goods

and services.
- Expand into global markets
- Diversify into new products and services
- Integrate into related products and services.

Alliance Strategies Establish new business linkages and alliances with customers,
suppliers, competitors, consultants and other companies (mergers,
acquisitions, joint ventures, forming virtual companies, etc.).
Knowledge Management Systems

Knowledge management has become one of the major strategic uses of information
technology. Many companies are building knowledge management systems to manage
organizational learning and business know-how. The goal of KMS’s is to help knowledge
workers create, organize, and make available important business knowledge, wherever and
whenever it’s needed in an organization. This includes processes, procedures, patents,
reference works, formulas, “best practices,” forecasts, and fixes. Internet and intranet web
sites, groupware, data mining, knowledge bases, discussion forums, and videoconferencing
are some of the key information technologies for gathering, storing, and distributing this
knowledge.

5. Inventory Control
Objectives:

(i) To minimise capital investment in inventory by eliminating excessive stocks;

(ii) To ensure availability of needed inventory for uninterrupted production and for meeting
consumer demand;

(iii) To provide a scientific basis for planning of inventory needs;

(iv)To tiding over the demand fluctuations by maintaining reasonable safety stock;

(v) To minimise risk of loss due to obsolescence, deterioration, etc.;

(vi)To maintain necessary records for protecting against thefts, wastes leakages of inventories
and to decide timely replenishment of stocks.

Advantages of Inventory Control:

Scientific inventory control provides the following benefits:

1. It improves the liquidity position of the firm by reducing unnecessary tying up of capital in
excess inventories.

2. It ensures smooth production operations by maintaining reasonable stocks of materials.

3. It facilitates regular and timely supply to customers through adequate stocks of finished
products.

4. It protects the firm against variations in raw materials delivery time.

5. It facilitates production scheduling, avoids shortage of materials and duplicate ordering.

6. It helps to minimise loss by obsolescence, deterioration, damage, etc.

7. It enables the firms to take advantage of price fluctuations through economic lot buying
when prices are low.

Limitations of Inventory Control:

(i) Efficient inventory control methods can reduce but cannot eliminate business risk.

(ii) The objectives of better sales through improved service to customer; reduction in
inventories to reduce size of investment and reducing cost of production by smoother
production operations are conflicting with each other.

(iii) The control of inventories is complex because of the many functions it performs. It
should be viewed as shared responsibilities.

6.Functional Areas of Business

Introduction

Just as different functions in the human body are performed and regulated by different
organs, different functions within a business are performed and controlled by different parts
of the business. One of the reasons for separating business operations into functional areas is
to allow each to operate within its area of expertise, thus building efficiency and
effectiveness across the business as a whole. The key functional areas of a business are the
following:

 Management
 Operations
 Marketing
 Accounting
 Finance

Management

The primary role of managers in business is to supervise other people’s performance. Most
management activities fall into the following categories:

 Planning: Managers plan by setting long-term goals for the business, as well short-
term strategies needed to execute against those goals.
 Organizing: Managers are responsible for organizing the operations of a business in
the most efficient way, enabling the business to use its resources effectively.
 Controlling: A large percentage of a manager’s time is spent controlling the activities
within the business to ensure that it’s on track to achieve its goals. When people or
processes stray from the path, managers are often the first ones to notice and take
corrective action.
 Leading: Managers serve as leaders for the organization, in practical as well as
symbolic ways. The manager may lead work teams or groups through a new process
or the development of a new product. The manager may also be seen as the leader of
the organization when it interacts with the community, customers, and suppliers.
Operations

Operations is where inputs (factors of production) are converted to outputs (goods and
services). Operations is like the heart of a business, pumping out goods and services in a
quantity and of a quality that meets the needs of the customers. The operations manager is
responsible for overseeing the day-to-day business operations, which can
encompass everything from ordering raw materials to scheduling workers to produce tangible
goods.

Marketing

Marketing consists of all that a company does to identify customers’ needs and design
products and services that meet those needs. The marketing function also includes promoting
goods and services, determining how the goods and services will be delivered, and
developing a pricing strategy to capture market share while remaining competitive. In
day’s technology-driven business environment, marketing is also responsible for building
and overseeing a company’s Internet presence (e.g., the company Web site, blogs, social
media campaigns, etc.). Today, social media marketing is one of the fastest growing sectors
within the marketing function.

Accounting
Accountants provide managers with information needed to make decisions about the
allocation of company resources. This area is ultimately responsible for accurately
representing the financial transactions of a business to internal and external parties,
government agencies, and owners/investors. Financial Accountants are primarily
responsible for the preparation of financial statements to help entities both inside and outside
the organization assess the financial strength of the company. Managerial
accountants provide information regarding costs, budgets, asset allocation, and performance
appraisal for internal use by management for the purpose of decision-making.

Finance
Although related to accounting, the finance function involves planning for, obtaining, and
managing a company’s funds. Finance managers plan for both short- and long-term
financial capital needs and analyse the impact that borrowing will have on the financial well-
being of the business. A company’s finance department answers questions about how funds
should be raised (loans vs. stocks), the long-term cost of borrowing funds, and the
implications of financing decisions for the long-term health of the business.

Use this quiz to check your understanding and decide whether to (1) study the previous
section further or (2) move on to the next section.
8. Human Resource Management
Human resource management determines how the organization should move from its
current manpower position to its desired manpower position through planning
management strikes to have the right number and the right kind of people at the right
places, at the right time, doing things which result in the organization and the individual
receiving maximum long run benefit.

Elements of Human Resource Management –

The basic elements of human resource management are as –

(i) Developing the sound recruitment and selection procedure.

(ii) Proper utilization of available manpower.

(iii) Controlling and reviewing the cost of work in valued through manpower.

(iv) Forecasting the future needs of manpower.

Objectives of Human Resource Management –

Following are the specific objectives of human resource management –

(i) Managing the manpower according to the need of enterprise. .

(ii) Making correct estimate of manpower requirements.

(iii) Helps in recruitment and selection.

(iv) Maintaining pro9uction level.

(v) Minimisation in labour wastages.

{vi) Reduction in labour costs.

(vii) Making employees development programme effective.

(viii) Establishing industrial peace.

9. OLAP
Stands for "Online Analytical Processing." OLAP allows users to analyse database
information from multiple database systems at one time. While relational databases are
considered to be two-dimensional, OLAP data is multidimensional, meaning the information
can be compared in many different ways. For example, a company might compare their
computer sales in June with sales in July, then compare those results with the sales from
another location, which might be stored in a different database.
10. Artificial Intelligence System
Artificial Intelligence System (AIS) was a distributed computing project undertaken by
Intelligence Realm, Inc. with the long-term goal of simulating the human brain in real time,
complete with artificial consciousness and artificial general intelligence.

Expert System
An Expert System is defined as an interactive and reliable computer-based decision-making
system which uses both facts and heuristics to solve complex decision-making problems. It is
considered at the highest level of human intelligence and expertise. It is a computer
application which solves the most complex issues in a specific domain.

11. Executive Information System (EIS)

An executive information system (EIS) is a decision support system (DSS) used to assist
senior executives in the decision-making process. It does this by providing easy access to
important data needed to achieve strategic goals in an organization. An EIS normally features
graphical displays on an easy-to-use interface.

Executive information systems can be used in many different types of organizations to

monitor enterprise performance as well as to identify opportunities and problems.

12. Systems Analysis

It is a process of collecting and interpreting facts, identifying the problems, and
decomposition of a system into its components.

System analysis is conducted for the purpose of studying a system or its parts in order to
identify its objectives. It is a problem solving technique that improves the system and ensures
that all the components of the system work efficiently to accomplish their purpose.

Analysis specifies what the system should do.

Enterprise Resource Planning (ERP)

Enterprise resource planning (ERP) is a process used by companies to manage and integrate
the important parts of their businesses. Many ERP software applications are important to
companies because they help them implement resource planning by integrating all of the
processes needed to run their companies with a single system. An ERP software system can
also integrate planning, purchasing inventory, sales, marketing, finance, human resources,
and more.
Need for Enterprise Resource Planning
Separate systems were being maintained during 1960/70 for traditional business functions
like Sales & Marketing, Finance, Human Resources, Manufacturing, and Supply Chain
Management. These systems were often incongruent, hosted in different databases and
required batch updates. It was difficult to manage business processes across business
functions

Advantages of ERP System

 With Enterprise Resource Planning (ERP) software, accurate forecasting can be done.
When accurate forecasting inventory levels are kept at maximum efficiency, this
allows for the organization to be profitable.
 Integration of the various departments ensures communication, productivity and
efficiency.
 Adopting ERP software eradicates the problem of coordinating changes between
many systems.
 ERP software provides a top-down view of an organization, so information is
available to make decisions at anytime, anywhere.

Disadvantages of ERP System

 Adopting ERP systems can be expensive.
 The lack of boundaries created by ERP software in a company can cause problems of
who takes the blame, lines of responsibility and employee morale.

13. Programmed and Non-programmed Decisions

There are two types of decisions - programmed and non-programmed decisions.

Programmed decisions are basically automated processes, general routine work, where −

 These decisions have been taken several times.

 These decisions follow some guidelines or rules.
For example, selecting a reorder level for inventories, is a programmed decision.

Non-programmed decisions occur in unusual and non-addressed situations, so −

 It would be a new decision.

 There will not be any rules to follow.
 These decisions are made based on the available information.
 These decisions are based on the manger's discretion, instinct, perception and
judgment.

For example, investing in a new technology is a non-programmed decision.

14.DSS
Decision support systems (DSS) are interactive software-based systems intended to help managers
in decision-making by accessing large volumes of information generated from various related
information systems involved in organizational business processes, such as office automation
system, transaction processing system, etc.

Decision support systems generally involve non-programmed decisions. Therefore, there will
be no exact report, content, or format for these systems. Reports are generated on the fly.

Attributes of a DSS
 Adaptability and flexibility
 High level of Interactivity
 Ease of use
 Efficiency and effectiveness
 Complete control by decision-makers
 Ease of development
 Extendibility
 Support for modeling and analysis
 Support for data access
 Standalone, integrated, and Web-based

Characteristics of a DSS
 Support for decision-makers in semi-structured and unstructured problems.
 Support for managers at various managerial levels, ranging from top executive to line
managers.
 Support for individuals and groups. Less structured problems often requires the
involvement of several individuals from different departments and organization level.
 Support for interdependent or sequential decisions.
 Support for intelligence, design, choice, and implementation.
 Support for variety of decision processes and styles.
 DSSs are adaptive over time.
Benefits of DSS
 Improves efficiency and speed of decision-making activities.
 Increases the control, competitiveness and capability of futuristic decision-making of
the organization.
 Facilitates interpersonal communication.
 Encourages learning or training.
 Since it is mostly used in non-programmed decisions, it reveals new approaches and
sets up new evidences for an unusual decision.
 Helps automate managerial processes.

Components of a DSS
Following are the components of the Decision Support System −

 Database Management System (DBMS) − To solve a problem the necessary data

may come from internal or external database. In an organization, internal data are
generated by a system such as TPS and MIS. External data come from a variety of
sources such as newspapers, online data services, databases (financial, marketing,
human resources).
 Model Management System − It stores and accesses models that managers use to
make decisions. Such models are used for designing manufacturing facility, analysing
the financial health of an organization, forecasting demand of a product or service,
etc.

Support Tools − Support tools like online help; pulls down menus, user interfaces,
graphical analysis, error correction mechanism, facilitates the user interactions with the
system.

Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows

 Text Oriented DSS − It contains textually represented information that could have a
bearing on decision. It allows documents to be electronically created, revised and
viewed as needed.
 Database Oriented DSS − Database plays a major role here; it contains organized
and highly structured data.
 Spreadsheet Oriented DSS − It contains information in spread sheets that allows
create, view, modify procedural knowledge and also instructs the system to execute
self-contained instructions. The most popular tool is Excel and Lotus 1-2-3.
 Solver Oriented DSS − It is based on a solver, which is an algorithm or procedure
written for performing certain calculations and particular program type.
 Rules Oriented DSS − It follows certain procedures adopted as rules.
 Rules Oriented DSS − Procedures are adopted in rules oriented DSS. Export system
is the example.
 Compound DSS − It is built by using two or more of the five structures explained
above.
Types of DSS
Following are some typical DSSs −

 Status Inquiry System − It helps in taking operational, management level, or middle

level management decisions, for example daily schedules of jobs to machines or
machines to operators.
 Data Analysis System − It needs comparative analysis and makes use of formula or
an algorithm, for example cash flow analysis, inventory analysis etc.
 Information Analysis System − In this system data is analysed and the information
report is generated. For example, sales analysis, accounts receivable systems, market
analysis etc.
 Accounting System − It keeps track of accounting and finance related information,
for example, final account, accounts receivables, accounts payables, etc. that keep
track of the major aspects of the business.
 Model Based System − Simulation models or optimization models used for decision-
making are used infrequently and creates general guidelines for operation or
management.