Marketing Information System

:
The marketing information system is the most important for any business house.
Computer Network:
Computer Network means an interconnection of autonomous (standalone)
computers for information exchange. The connecting media could be a copper wire,
optical fiber, microwave or satellite.
Networking Elements – The computer network includes the following networking
elements:
1. At least two computers
2. Transmission medium either wired or wireless
3. Protocols or rules that govern the communication
4. Network software such as Network Operating System
Network Criteria:
The criteria that have to be met by a computer network are:
1. Performance – It is measured in terms of transit time and response time.
• Transit time is the time for a message to travel from one device to another
• Response time is the elapsed time between an inquiry and a response.
Performance is dependent on the following factors:
• The number of users
• Type of transmission medium
• Capability of connected network
• Efficiency of software
2. Reliability – It is measured in terms of
• Frequency of failure
• Recovery from failures
• Robustness during catastrophe
3. Security – It means protecting data from unauthorized access.

Goals of Computer Networks: The following are some important goals of

computer networks:
1. Resource Sharing –
Many organization has a substantial number of computers in operations, which
are located in different location .So using computer network a group of office
workers can share a common printer, fax, modem, scanner etc. In similar
manner you can share the software.
2. High Reliability –
If there are alternate sources of supply, all files could be replicated on two or,
three machines. If one of them is not available, due to hardware failure, the
other copies could be used.
3. Inter-process Communication –
Network users, located geographically apart, may converse in an interactive
session through the network. In order to permit this, the network must provide
almost error-free communications.
4. Flexible access –
Files can be accessed from any computer in the network. The project can be
begun on one computer and finished on another.

Other goals include

• Distribution of processing functions
• Centralized management.
• Allocation of network resources.
• Compatibility of dissimilar equipment and software.
• Good network performance,
• Scalability
• Saving money.
• Access to remote information.
• Person to person communication etc.

Types of computer

area networks – LAN, MAN and WAN:

The Network allows computers to connect and communicate with different

computers via any medium. LAN, MAN and WAN are the three major types of the
network designed to operate over the area they cover. There are some similarities
and dissimilarities between them. One of the major differences is the geographical
area they cover, i.e. LAN covers the smallest area; MAN covers an area larger than
LAN and WAN (wide Area network )covers the largest area of all.
There are other types of Computer Networks as
follows :
• PAN (Personal Area Network)
• SAN (Storage Area Network)
• EPN (Enterprise Private Network)
• VPN (Virtual Private Network)
Local Area Network (LAN) :–
LAN or Local Area Network connects network devices in such a way that
personal computer and workstations can share data,s/w tools and programs.
• The group of computers and devices are connected together by a
switch, or stack of switches, using a private addressing scheme (as
defined by the TCP/IP protocol).
• Private addresses are unique for all computers on the local network.
• Routers are found at the boundary of a LAN and routers are connected to the
larger WAN.
• Here the data are transmitted at a very fast rate as the numbers of computers
linked/connected are limited.
• By definition, the connections must be high speed and relatively inexpensive
hardware are used (Such as hubs, network adapters and Ethernet cables).
• LANs cover smaller geographical area (Size is limited 10 kilometers) .these
are privately owned. One can use it for an office building, home, hospital,
schools, etc. LAN is easy to design and maintain.
• A Communication medium used for LAN is twisted pair cables and coaxial
cables. It covers a short distance, and so the error and noise are less.
• Early LAN’s had data rates in the 4 to 16 Mbps range. Today, speeds are
normally 100 or 1000 Mbps. Propagation delay is very short in a LAN. The
smallest LAN may only use two computers, while larger LANs can
accommodate thousands of computers.
 • A LAN typically relies mostly on wired connections for increased speed and
security, but wireless connections can also be part of a LAN. The fault
tolerance of a LAN is more and there is less congestion in this network. For
example : A bunch of students playing Counter Strike in the same room
(without internet).

Metropolitan Area Network (MAN) –

MAN or Metropolitan area Network covers a larger area than that of a LAN and
smaller area as compared to WAN. It connects two or more computers that are apart
but resides in the same or different cities. It covers a large geographical area and
may serve as an ISP (Internet Service Provider). MAN is designed for customers
who need a high-speed connectivity. Speeds of MAN ranges in terms of Mbps. It’s
hard to design and maintain a Metropolitan Area Network.
The fault tolerance of a MAN is less and also there is more congestion in the
network. It is costly and may or may not be owned by a single organization. The
data transfer rate and the propagation delay of MAN is moderate. Devices used for
transmission of data through MAN are: Modem and Wire/Cable. Examples of a
MAN are the part of the telephone company network that can provide a high-speed
DSL line to the customer or the cable TV network in a city.

MAN stands for metropolitan area network and it is basically a computer network
that is made by connecting multiple LAN’S . MAN covers a geographical area
which is known as the metropolitan area. It serves as a connection which is larger
than LAN(Local Area Network) but smaller than WAN(Wide Area Network). It
generally covers the area of a city. It connects different LAN’s in an area by point to
point connection. MAN also provides sharing of regional resources. MAN is very
effective to use in large area like a city or a large campus.

Examples:
Cable TV network and telephone networks

Characteristics :
• Area Covered –
It covers an area from 5 km to 50 km which can cover a city.
• Ownership –
MAN is owned by a group of users rather than a single company.
• High speed –
MAN provides high speed network which uses shared regional resources.
• Size –
Size of MAN is in between WAN and LAN.
Advantages :

• MAN covers a larger area than LAN.

• It has less implementation cost and it uses less resources.
• It provides higher security than WAN.
• It can cover area as large as a city.
• MAN is a faster way to connect two fast LANs together. This is due to the
fast configuration of links.
• In some installation of MANs, users can share their internet connection. So
multiple users can get the same high-speed internet.

Disadvantages :

• MAN is not easily manageable as it becomes very complex.

• It requires highly skilled people to look after it.
• It requires more cables for connecting the LAN’s.
• It has high management cost
• It covers smaller area than WAN.
• It is only used in metropolitan areas.
•
Examples of metropolitan area network (MAN) :
Some of the examples of MAN are:-
• Digital cable television
• Used in government agencies
• Used to connect several branches of the local school
• A network of fire stations
• University campuses
• Networking between community colleges within the country
• Cable broadband

• Wide Area Network (WAN) –

WAN or Wide Area Network is a computer network that extends over a large
geographical area, although it might be confined within the bounds of a state
or country. A WAN could be a connection of LAN connecting to other
 LAN’s via telephone lines and radio waves and may be limited to an
enterprise (a corporation or an organization) or accessible to the public. The
technology is high speed and relatively expensive.
• There are two types of WAN: Switched WAN and Point-to-Point WAN.
WAN is difficult to design and maintain. Similar to a MAN, the fault
tolerance of a WAN is less and there is more congestion in the network. A
Communication medium used for WAN is PSTN(The public switched
telephone network) or Satellite Link. Due to long distance transmission,
the noise and error tend to be more in WAN.

• WAN’s data rate is slow about a 10th LAN’s speed, since it involves
increased distance and increased number of servers and terminals etc. Speeds
of WAN ranges from few kilobits per second (Kbps) to megabits per second
(Mbps). Propagation delay is one of the biggest problems faced here. Devices
used for transmission of data through WAN are: Optic wires, Microwaves and
Satellites. Example of a Switched WAN is the asynchronous transfer mode
(ATM) network and Point-to-Point WAN is dial-up line that connects a home
computer to the Internet.

Conclusion –
There are many advantages of LAN over MAN and WAN, such as LAN’s provide
excellent reliability, high data transmission rate, they can easily be managed, and
shares peripheral devices too. Local Area Network cannot cover cities or towns and
for that Metropolitan Area Network is needed, which can connect city or a group of
cities together. Further, for connecting Country or a group of Countries one requires
Wide Area Network.

Internet :

• The Internet is the biggest world-wide communication network of

computers. The Internet has millions of smaller domestic, academic,
business, and government networks, which together carry many
 different kinds of information. The short form of internet is the 'net'. It
is used by billions of people all over the world.
• The Internet (or internet) is the global system of interconnected
computer networks that uses the Internet protocol suite (TCP/IP-) to
communicate between networks and devices.
• The Internet is a massive network of networks. It connects millions
of computers together globally, forming a network in which any
computer can communicate with any other computer as long as they
are both connected to the Internet.

Intranet:
• An intranet is a private network, operated by a large company or
other organisation, which uses internet technologies, but is insulated
from the global internet. An extranet is an intranet that is accessible
to some people from outside the company, or possibly shared by
more than one organisation.

• An intranet is a private network, operated by a large company or

other organisation, which uses internet technologies, but is insulated
from the global internet.
• An extranet is an intranet that is accessible to some people from
outside the company, or possibly shared by more than one
organisation.
• Intranets typically start by publishing web pages about company
events, health and safety policies, and staff newsletters. Popular
applications follow, such as forms to reclaim expenses or request
holidays. All these help eliminate paperwork and speed up workflows.
• As more features are added, an intranet can become essential to the
operation of an organisation. It becomes a portal that provides access
to all the things that the workers need.
• The intranet is protected from the global internet by firewalls and by
the need to log on with a secure password. Staff working outside the
organisation may be able to access the intranet by using a VPN
(virtual private network). This means all communications between the
intranet and the user’s personal computer are encrypted.
Password : alok
Encryption logic :code it by adding 3 character to the existing
character.
 Password: dkrn (coded password)

Extranets:
• Extranets take this process a step further, by providing access to
people who work for different organizations. For example, a company
could provide access to a supplier for online ordering, order tracking
and inventory management. Instead of sending information to
suppliers, it fetches the data to extranet. Another example would be a
hospital providing local GPs with access a booking system so that
they can make appointments for their patients.
• An extranet should be more efficient because everyone has access to
the same data in the same format. Because all extranet
communications are encrypted over the VPN, it should be more
secure than sending data over the public internet.

Accounting information system

An Accounting information system (AIS) is a structure that a business uses to collect,

store, manage, process, retrieve, and report its financial data so it can be used by
accountants, consultants, business analysts, managers, chief financial officers (CFOs),
auditors, regulators, and tax agencies.

Specially trained accountants work in-depth with AIS to ensure the highest level of
accuracy in a company's financial transactions and record-keeping, as well as make
financial data easily available to those who legitimately need access to it while keeping
data intact and secure.

KEY POINTS

• An accounting information system (AIS) is used by companies to collect, store,

manage, process, retrieve, and report financial data.
• AIS can be used by accountants, consultants, business analysts, managers,
chief financial officers, auditors, and regulators.
• An AIS helps the different departments within a company work together.
• An effective AIS uses hardware and software to effectively store and retrieve
data.
 • The internal and external controls of AIS are critical to protecting a company's
sensitive data.

Understanding Accounting Information Systems (AIS)

An accounting information system is a way of tracking all accounting and business
activity for a company. Accounting information systems generally consist of six primary
components:

1)people.

2)procedures and instructions

3)data

4)software,

5) information technology infrastructure and

6) Internal controls.

Below is a breakdown of each component in detail.

1. AIS People
The people in AIS are the system users. AIS help the different departments within a
company work together. Professionals who may need to use an organization's AIS
include:

• Accountants
• Consultants
• Business analysts
• Managers
• Chief financial officers
• Auditors

For example, management can establish sales goals for which staff can order the
appropriate amount of inventory. The inventory order notifies the accounting department
of a new payable. When sales are made in a business, the people and departments
involved in the sales process could include the following:

1. Salespeople enter the customer orders into the AIS.

2. AIS bills or sends an invoice to the customer.
 3. The warehouse assembles the order.
4. The shipping department sends the order out to the customer.
5. The accounting department gets notified of a new accounts receivable, which is
an IOU from the customer that's typically paid within 30, 60, or 90 days.
6. The customer service department tracks the order and customer shipments.
7. Management uses AIS to create sales reports and perform cost analysis, which
can include inventory, shipping, and manufacturing costs.

With a well-designed AIS, everyone within an organization can access the same system
and retrieve the same information. An AIS also simplifies the process of reporting
information to people outside of the organization, when necessary.

For example, consultants might use the information in an AIS to analyze the
effectiveness of the company's pricing structure by looking at cost data, sales data, and
revenue. Also, auditors can use the data to assess a company's internal controls,
financial condition, and compliance with regulations such as the Sarbanes-Oxley
Act (SOX).1

The AIS should be designed to meet the needs of the people who will be using it. The
system should also be easy to use and should improve, not hinder efficiency.

2. Procedures and Instructions

The procedure and instructions of AIS are the methods it uses for collecting, storing,
retrieving, and processing data. These methods are both manual and automated. The
data can come from both internal sources (e.g., employees) and external sources (e.g.,
customers' online orders). Procedures and instructions will be coded into the AIS
software. However, the procedures and instructions should also be "coded" into
employees through documentation and training. The procedures and instructions must
be followed consistently in order to be effective.

3. AIS Data
An AIS must have a database structure to store information, such as structured query
language (SQL), which is a computer language commonly used for databases. SQL
allows the data that's in the AIS to be manipulated and retrieved for reporting purposes.
The AIS will also need various input screens for the different types of system users
and data entry, as well as different output formats to meet the needs of different users
and various types of information.
The data contained in an AIS is all of the financial information pertinent to the
organization's business practices. Any business data that impacts the company's
finances should go into AIS.

The type of data included in an AIS depends on the nature of the business, but it may
consist of the following:

• Sales orders
• Customer billing statements
• Sales analysis reports
• Purchase requisitions
• Vendor invoices
• Check registers
• General ledger
• Inventory data
• Payroll information
• Timekeeping
• Tax information

The data can be used to prepare accounting statements and financial reports, including
accounts receivable aging, depreciation or amortization schedules, a trial balance, and
a profit and loss statement. Having all of this data in one place—in the AIS—facilitates a
business's record-keeping, reporting, analysis, auditing, and decision-making activities.
For the data to be useful, it must be complete, accurate, and relevant.

On the other hand, examples of data that would not go into an AIS include memos,
correspondence, presentations, and manuals. These documents might have a
tangential relationship to the company's finances, but, excluding the standard footnotes,
they are not really part of the company's financial record-keeping.

4. AIS Software
The software component of AIS is the computer programs used to store, retrieve,
process, and analyze the company's financial data. Before there were computers, an
AIS was a manual, paper-based system, but today, most companies are using
computer software as the basis of the AIS. Small businesses might use Intuit's
Quickbooks or Sage's Sage 50 Accounting, but there are others.2 3 Small to mid-sized
businesses might use SAP's Business One.4 Mid-sized and large businesses might use
Microsoft's Dynamics GP, Sage Group's MAS 90, or MAS 200, Oracle's PeopleSoft, or
Epicor Financial Management.

Quality, reliability, and security are key components of effective AIS software. Managers
rely on the information it outputs to make decisions for the company, and they need
high-quality information to make sound decisions.
AIS software programs can be customized to meet the unique needs of different types
of businesses. If an existing program does not meet a company's needs, the software
can also be developed in-house with substantial input from end-users or can be
developed by a third-party company specifically for the organization. The system could
even be outsourced to a specialized company.

For publicly-traded companies, no matter what software program and customization

options the business chooses, Sarbanes-Oxley regulations will dictate the structure of
the AIS to some extent. This is because SOX regulations establish internal controls and
auditing procedures with which public companies must comply.9

5. IT Infrastructure
Information technology infrastructure is just a fancy name for the hardware used to
operate the accounting information system. Most of these hardware items a business
would need to have anyway and can include the following:

• Computers
• Mobile devices
• Servers
• Printers
• Surge protectors
• Routers
• Storage media
• A back-up power supply

In addition to cost, factors to consider in selecting hardware include speed, storage

capability, and whether it can be expanded and upgraded.

Perhaps most importantly, the hardware selected for AIS must be compatible with the
intended software. Ideally, it would be not just compatible, but optimal—a clunky system
will be much less helpful than a speedy one. One way businesses can easily meet
hardware and software compatibility requirements is by purchasing a turnkey system
that includes both the hardware and the software that the business needs. Purchasing a
turnkey system means, theoretically, that the business will get an optimal combination
of hardware and software for its AIS.

Good AIS should also include a plan for maintaining, servicing, replacing, and
upgrading components of the hardware system, as well as a plan for the disposal of
broken and outdated hardware, so that sensitive data is completely destroyed.

6. Internal Controls
The internal controls of an AIS are the security measures it contains to protect sensitive
data. These can be as simple as passwords or as complex as biometric identification.
Biometric security protocols might include storing human characteristics that don't
change over time, such as fingerprints, voice, and facial recognition.

An AIS must have internal controls to protect against unauthorized computer access
and to limit access to authorized users, which includes some users inside the company.
It must also prevent unauthorized file access by individuals who are allowed to access
only select parts of the system.
An AIS contains confidential information belonging not just to the company but also to
its employees and customers. This data may include:

• Social Security numbers

• Salary and personnel information
• Credit card numbers
• Customer information
• Company financial data
• Financial information of suppliers and vendors

All of the data in an AIS should be encrypted, and access to the system should be
logged and tracked. System activity should be traceable as well.

An AIS also needs internal controls that protect it from computer viruses, hackers, and
other internal and external threats to network security. It must also be protected from
natural disasters and power surges that can cause data loss.

Real World Examples of Accounting Information Systems

A well-designed AIS allows a business to run smoothly on a day-to-day basis while a
poorly designed AIS can hinder its operation. The third use for an AIS is that, when a
business is in trouble, the data in its AIS can be used to uncover the story of what went
wrong. The cases of WorldCom and Lehman Brothers provide two examples.

WorldCom
In 2002, WorldCom's internal auditors Eugene Morse and Cynthia Cooper used the
company's AIS to uncover nearly $4 billion in fraudulent expense allocations and other
accounting entries.1 0 Their investigation led to the termination of CFO Scott Sullivan, as
well as new legislation—section 404 of the Sarbanes-Oxley Act, which regulates
companies' internal financial controls and procedures.1 1 1 2

Lehman Brothers
When investigating the causes of Lehman's collapse, a review of its AIS and other data
systems was a key component, along with document collection and review, plus witness
interviews. The search for the causes of the company's failure "required an extensive
investigation and review of Lehman's operating, trading, valuation, financial, accounting,
and other data systems," according to the 2,200-page, nine-volume examiner's report.1 3

Lehman's systems provide an example of how an AIS should not be structured.

Examiner Anton R. Valukas' report states, "At the time of its bankruptcy filing, Lehman
maintained a patchwork of over 2,600 software systems and applications... Many of
Lehman's systems were arcane, outdated or non-standard."1 3

The examiner decided to focus his efforts on the 96 systems that appeared most
relevant. This examination required training, study, and trial and error just to learn how
to use the systems.1 4

Valukas' report also noted, "Lehman's systems were highly interdependent, but their
relationships were difficult to decipher and not well-documented. It took extraordinary
effort to untangle these systems to obtain the necessary information."1 4
The Bottom Line
The six components of an AIS all work together to help key employees collect, store,
manage, process, retrieve, and report their financial data. Having a well-developed and
maintained accounting information system that is efficient and accurate is an
indispensable component of a successful business.