Learning Objectives
By the end of this chapter, you will be able to:
- Define a Business Information System.
- Provide examples of information systems used in Finance and Accounting.
- Provide examples of information systems used in Marketing.
- Provide examples of information systems used in Human Resources.
- Provide examples of information systems used in Manufacturing.
- Classify information systems by management level (TPS, MIS, DSS, ESS).
- Explain why functional systems need to be integrated.
Business Information Systems
A Business Information System (BIS) is a type of information system that is designed to support a specific functional area within an organization. These systems are tailored to the unique processes and data needs of each department.
Every information system follows the same basic cycle: input (data is captured), processing (data is calculated, sorted, or summarized), output (reports and documents), storage, and feedback (results used to correct the input or process).
Financial and Accounting Information Systems
These systems are used to manage the financial assets of the organization and to maintain all accounting records.
- Examples: Accounts Payable/Receivable systems, General Ledger, and systems for managing cash, credit, and investments.
- Typical outputs: trial balance, profit and loss statement, balance sheet, cash-flow forecasts, and VAT reports.
Marketing Information Systems
These systems are used to support all aspects of the marketing function, from identifying customers and creating campaigns to managing customer relationships.
- Examples: Customer Relationship Management (CRM) systems, sales force automation systems, and tools for managing advertising and promotions.
- Typical outputs: sales by region or product, campaign performance, customer segments, and sales forecasts.
Human Resource Information Systems (HRIS)
An HRIS is used to manage the entire employee lifecycle, from recruitment to retirement.
- Examples: Systems for managing payroll, benefits, employee records, training, and performance reviews.
- Typical outputs: monthly payslips, attendance and leave reports, tax deductions (TDS), and Social Security Fund contributions.
Manufacturing and Production Information Systems
These systems are used to manage all activities related to the production of goods and services.
- Examples: Inventory management systems, systems for production scheduling, quality control systems, and Computer-Aided Manufacturing (CAM) systems.
- Typical outputs: production schedules, raw-material reorder alerts, defect rates, and machine utilization.
Summary of functional systems
| Functional area | System | Main users | Example output |
|---|---|---|---|
| Finance | Accounting IS, general ledger | Accountants, CFO | Balance sheet, VAT return |
| Marketing / Sales | Marketing IS, CRM | Sales and marketing staff | Sales by region, campaign results |
| Human resources | HRIS, payroll | HR officers | Payslips, leave report |
| Manufacturing | Inventory, CAM, scheduling | Production managers | Production plan, reorder list |
Systems by Management Level
Information systems can also be classified by who uses them:
| Level | System | Purpose | Example |
|---|---|---|---|
| Operational staff | TPS (Transaction Processing System) | Record daily transactions | POS billing, ATM withdrawals |
| Middle management | MIS (Management Information System) | Summary reports for control | Weekly sales report by branch |
| Middle / senior managers | DSS (Decision Support System) | “What-if” analysis for semi-structured decisions | Pricing or loan-approval models |
| Top executives | ESS (Executive Support System) | Big-picture dashboards and trends | CEO dashboard of group performance |
A TPS feeds data into the MIS, DSS, and ESS, so accurate transaction recording is the foundation of all higher-level information.
Why Integration Matters
When each department runs its own separate system, problems arise: sales may promise stock that manufacturing does not have, or HR and finance may hold different staff numbers. This is why organizations move towards integrated enterprise systems such as ERP (next chapter).
Nepal Scenario
A noodle manufacturer in Nepal uses:
- Accounting software (such as Tally) for ledgers and VAT returns.
- A CRM/sales app used by field sales staff to record dealer orders on their phones.
- An HRIS for factory attendance, payroll, and SSF contributions.
- An inventory system that tracks flour, oil, and packaging and alerts purchasing before stock runs out.
When these systems are connected, a large dealer order before Dashain automatically updates production plans, raw material purchases, and expected revenue.
Summary
Business Information Systems are specialized systems that cater to the specific needs of different functional areas within a company. From the financial systems that manage money to the HR systems that manage people, each department relies on its own set of information systems to perform its tasks efficiently and effectively. Systems can also be classified by management level, from TPS at the operational level to MIS, DSS, and ESS for managers and executives. The challenge for the modern organization is to integrate these separate systems to get a unified view of the business.
Key Takeaways
- Business Information Systems are designed to support specific functional areas.
- Financial IS manages money and accounting records.
- Marketing IS supports customer-related activities.
- HRIS manages the employee lifecycle.
- Manufacturing IS manages the production process.
- TPS, MIS, DSS, and ESS serve different management levels.
Discussion Questions
- Why does the marketing department need a different type of information system than the finance department?
- What are some of the potential problems if a company’s inventory management system is not integrated with its marketing information system?
- Choose one of the systems mentioned (e.g., CRM, HRIS) and describe in more detail how it would be used on a day-to-day basis.
Exam-Style Questions
Short answer
- What is a Business Information System?
- What is an HRIS? List three of its functions.
- Differentiate between TPS and MIS.
Long answer
- Explain the information systems used in finance, marketing, HR, and manufacturing with examples.
- Classify information systems by management level. Why is integration between systems important?
