Overview of business systems

 Management Functions

Levelsof Management and their information

requirements
 Establish Organizational Mission,
Goals, objectives And Policies

Develop Strategic, Tactical

And Operational Plans

Execute Plans

Measure And Evaluate Performance

Against Budgets/Targets
Classical Management functions have been
enumerated as:
 Planning

 Organising

 Staffing

 Directing

 Controlling

 Integrating
 Planning includes formulation of:

 Mission
 Objectives
 Policies
 Programmes
 Budgets
 Schedules
 Procedures
Organising:

 Establishment of authority-responsibility
relationships.
 It includes:
Identification and grouping of activities
Definition & delegation(authorizing subordinates
to make certain decisions) of responsibility
Authority
Staffing :
 Provision of adequate human resources

 It includes:

Selection
Communication
Participation
Counselling
Training
Compensation
Dismissal
Directing:

 It includes :
Supervising
Guiding
Communication & Motivating
Decision-making
Controlling :

It includes :
Laying down performance standards
Performance measurement
Variance interpretation
Corrective action
The decisions, a manager takes depend upon the
manager’s responsibilities and his position in
the organizational hierarchy.

 Top Level Managers

 Middle Level Managers
 Low level Managers
 Top Level Managers: These must have general
understanding of the organization's activities. Since
they have charged with risks and making major
policy decisions on such matters as new product
development, new plant authorizations and etc they
need to type information that will support these
long-range strategic plans and decisions.
 Middle Level Mangers: These are responsible for
making tactical decisions that will allocate the
resources and establish the control needed to
implement the top level plans.
 Low Level Managers: These make day-to-day
operational decisions to schedule and control specific
tasks. The actual results of an operation may be
checked against planned expectations and take
 The word data is the plural of datum, which
means fact. Data are independent entities and
are unlimited in number.
 The term information is generally considered
to designate data arranged in ordered and
useful form.
 Thus, information will usually be thought of as
relevant knowledge, produced as output of
processing operations
 Information is needed in virtually every field
of human thought and action. At a personal
level, if you always had high-quality
information you could take better advantage of
your future career opportunities and you
would be better equipped to make other
personal decisions
 But besides being essential to individuals,
information is also needed by managers in
organizations. Managers at all levels must
perform such basic management tasks or
functions as planning, organizing, staffing, and
controlling
Managers at the lower operating levels
need information to help them make
day-to-day operating decision. At the top
levels, however, information is needed to
support long range planning and policy
decisions.
   

In figure above, we see that at the lower managerial

level’s more time is generally spent in performing
control activities, while at the upper levels more time
is spend on planning
 Planning is most pervasive of all managerial
functions.
 It also requires maximum information support

for decision making.

 Normally planning is undertaken at three

levels in organizations:
1. Strategic or long term planning
2. Tactical or medium term planning
3. Operational or short-term planning
 Effective functioning of any organization
depends on existence of a system which
manages flow of data and supplies relevant
information to concerned decision makers.
 This system is the means by which data flows
from one person or department to another and
it can encompass everything from inter office
mail and telephone links to a computer system
that generates periodic reports for various
users.
 Information systems, serve all the functions or
department of a business, linking them in such a way
that they effectively work towards the organizational
purpose.
 Modern organizations have to maintain large
volumes of data about various entities of interest -
products, processes, people, customers, competitors,
equipment, facilities, suppliers, etc.
 Therefore efficient data management / information
systems are essential for managing organizations
effectively.
 Data is basic building block of organizational
information system.
 
 Primary key is the key data element which will
identify the entity uniquely. With this data
element we can enter other data elements. It is
possible that there are two or more data
elements which can uniquely identify an entity.
Example: A student can be identified
uniquely both by his/her roll number as well
as student registration number
Data elements, other than the primary data
element, are called secondary data
elements.

Example: For a invoice, invoice number is

the primary key and other details such as
its date, customer number, value etc. are
secondary data elements.
 Used for reference and analysis
purposes.
 Organization stores data for planning,
forecasting and taking different decisions
and actions.
 These actions are largely based on the
historical data.
Information has economic value-costs,
benefits, and opportunity costs.
Therefore, we would like to
maximize its value.
Accuracy:

It is a ratio of correct information to the total

amount of information produced over a period.

Reliability:

Ensures that system should not produce

dangerous or costly failures when it is used in a
reasonable way.
Timeliness:

 The value of information also depends on

when it is made available to the decision maker
and how quickly system responds to user
request for information.
 All these qualities of information are major
concerns of the information system manager.
 Not only the information must be readily
available but if not stored properly, intact in a
classified and indexed manner, its retrieval
time will be high even for a computer.
Computer-based data processing systems can
be used in practically all areas of business to
improve efficiency and increase
productivity.

Major Applications:

Listed below are some of the major data

processing applications in a typical
manufacturing organization:
Marketing and sales management:
 Market research

 Order processing

 Sales analysis

Production management:

 Production planning and scheduling

 Progress monitoring and control
 Maintenance planning and control
Materials management:
 Materials requirement planning

 Purchasing

 Stores and inventory control

Human resources management:

 Manpower planning

 Recruitment and selection

 Training and development

Accounting and financial management:

 Payroll

 Budgeting and budgetary control

 Financial
 A typical business data processing system consists of
the five parts as shown below.
 
 Outputs:
• The very purpose of designing a business system is
to produce outputs which should help managers in
taking various decisions.
Inputs:
• For producing outputs, the system will require data
about various activities that are taking
place both within as well as outside the organization.
Stored Data:
For producing useful outputs, a business system
needs to store a lot of data about entities of concern
to the system. The stored data may relate to the past
as well as current status of business.
Processing Logic:

• Step-By-Step logic of generating outputs, starting

with inputs and using stored data. This becomes the
basis for writing computer programs.

Procedures:

• Procedures are designed to link and tie-up the above

mentioned four components of business system
together. Procedures lay down the methods,
schedules, and responsibilities for various activities
necessary to operate the business system
successfully.
Examples for business Processing
Applications:

 The Payroll System

 The Inventory Control System
 The Financial Accounting System
The Payroll System:
• The purpose of the system is to ensure accurate and
prompt payment of wages and salaries to all
employees.
• Various parts of the system will be as follows:
Inputs : Employee-no, attendance date, overtime
date, loan, etc.
Outputs : Pay-slip, pay ledger.
Stored Data : Employee-no, name, designation,
department, salary grade, basic salary,
increment date, leave record, cumulative salary data,
etc.
 Processing Logic
• Compute salary using basic salary and attendance
and leave data. Add poverty payment to get gross
salary.
• Compute deductions - P.F., income tax, loan recovery
etc.
• Compute net salary.
• Print pay slip, pay ledger, etc.
Procedures
• Attendance data will be provided by the time office
by first of every month for the previous month.
• Leave records will be provided by the head of
the department in which employee is working.

• Input data will be used to update employee

record as well as produce various outputs. The
data processing department, will process data
and distribute the outputs to the concerned
departments.
 Inventory Control System
This system controls the contents and changes
made in the inventory of various items in the
organization.
• Supporting data files contain details of all items
in the inventory and related costs.
Input: Vendor invoices; Memos of Goods :
Received, Returned Transferred; Requests for
stock, etc.
Output: Listings of All Inventory Items; Stock on
Order; Specially Ordered Goods; Critical Stock
Items; Cost data are the outputs. Considering
the AJC of money that can be tied-up in an
inventory, management must have reliable
information.
Financial Accounting System:
The classification, recording and summarization of
monetary transactions is defined as financial
accounting.
Although there is some management information
generated in financial accounting, the primary
purpose is to paint a financial picture of the
organization for investors and creditors and to
satisfy legal requirements.
Monetary transactions receipts and expenditure of
funds are made available to the financial accounting
module through the database and are maintained in
journals.
Periodically, journals are used to update basic
financial statements, such as
• Balance sheet
• Income statement, etc.
• The process involved in the preparation of these
statements rarely go beyond simple calculation
and report generation