Survey of Business Information Systems

1. Survey of Business Information Systems “The value of a program is proportional to the weight of its output. “ Laws of Computer Programming, VI

2. Levels of Business Activity • Operational • Tactical • Strategic • Supported by Information Systems • Transaction Processing Systems • Management Information Systems • Decision Support Systems Strategic Tactical Operational

3. Operational Activities External Environment Corporation • Day-to-day activities • Acquire and consume resources • Transaction Processing System • Acquire data about an event • Update corporate database • Generate an appropriate response • Example - invoice/payment Event TPS Response Database

4. Characteristics of TPS • Real inputs and outputs (cash) - accuracy is important • On-line • Foundational data, to be summarized for higher-level applications

5. Tactical Activities • Monitoring activities • Allocating and organizing resources • Management information systems • Provides information about company to support management decision making • Output consists of reports • Regular • Ad hoc • Exception • Transforming data into information • Summarizing • Aggregating • Put into context

6. Strategic Activities • Deciding on long-term goals, organization, governing policies • Unstructured decision making process • Decision support systems

7. Decision Support Systems • Relatively new category - still developing • “Toolkit” of components • Query of corporate data (OLAP) • Statistical analysis (SPSS, SAS) • Scenario modeling, forecasting (spreadsheet) • Environmental scanning (Internet, LEXIS/NEXIS)

8. Accounting Information Systems • One of the earliest • Most mature category • Well-established set of rules • Package software • The accounting equation • Assets = Liabilities + equity

9. Accounting Information Systems (cont.) • Equation has to be kept in balance • Receiving an invoice • Paying a bill • Double-entry bookkeeping • Standard accounting reports • Income statement • Balance sheet

10. Accounting Information Systems (cont.) • Package features • Customizable chart of accounts • Modular • Heavy security and data integrity features • Set of standard reports, with report-writing features

11. Accounting Information Systems (cont.) • Chart of accounts • Package may impose a general numbering system that can be customized: • 1xxx = asset accounts • 2xxx = liabilities • 3xxx = equity • Will have to develop organization’s chart of accounts

12. Accounting Information Systems (cont.) • For conversion purposes, must determine initial balances • Define accounting rules (i.e.: capitalization thresholds)

13. Accounting Information Systems (cont.) • Accounting modules • General ledger • Accounts payable • Accounts receivable • Inventory/Order entry • Payroll (Human Resource) A/P A/R G/L Inventory Payroll

14. Accounting Information Systems (cont.) • General Ledger • Heart of the system • Maintain balances in the accounts • Entry, editing and posting of entries • G/L account inquiry • Produce income statement and balance sheet

15. Accounts Receivable Uses and maintains G/L data Also maintains separate data Customer file Open invoices Sales history Records sales, receipts Prints invoices Postings to G/L A/R Cash Exception processing Partial or incorrect payment Discounts Interest or other charges (bounced checks) Credit memos Corrections to invoices Management reports Aged A/R report Accounting Information Systems (cont.)

16. Accounts Payable Uses and maintains G/L data, plus Vendor file Invoice file Records invoices received Determines when invoices should be paid. How? Invoice must be approved (link to a P.O.) May be a check-writing module attached G/L postings Cash A/P Discounts taken Exception processing Disputed invoices Credit memos Duplicate invoices Accounting Information Systems (cont.)

17. Inventory/Order entry Tracks inventory based on sales and purchasing activity Reconcile against physical inventory Records sales, generate “picking tickets, packing slips Valuation of inventory (LIFO vs. FIFO, other methods) Allow on-line query of order status Generate back-orders or purchasing advice when needed Exception processing Adjustments to reconcile to physical inventory Cancelled orders Accounting Information Systems (cont.)

18. Payroll Maintain employee master file (what kind of information?) Compute pay Gross (salary, wages, bonus) Deductions (taxes, FICA, benefits) Maintain employee totals for year-end forms Maintain leave balances Exception processing Garnishee of pay Medical savings accounts Bonuses Accounting Information Systems (cont.)