FUNCTIONAL AREA
APPLICATIONS
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Functional Areas
What is a functional area?
Individual
operating
entity, which
can include
departments,
centers, and
divisions
Most are
organized in
a hierarchy
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Human Resource Systems
Manages human resources functions
Planning to meet the personnel needs of the
business
Recruitment, selection, and hiring
Performance appraisals
Employee benefits analysis
Training and development
Health, safety, and security
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Accounting Systems
Record and report business transactions and
other economic events
Major accounting system categories
Inventory Control
Processes data reflecting changes in items in
inventory
Helps provide high-quality service while
minimizing investment in inventory and
inventory carrying costs
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Accounting Systems (Cont’d)
Order processing
Captures and processes customer orders and
produces data needed for sales analysis and
inventory control
Accounts Receivable
Keeps records of amounts owed by customers
from data generated by customer purchases and
payments
Accounts Payable
Keeps track of data concerning purchases from,
and payments to suppliers
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Accounting Systems (Cont’d)
Payroll
Receives and maintains data from employee
time cards and other work records
General Ledger
Consolidates data received from accounts
receivable, accounts payable, payroll, and
other accounting systems
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Financial Management Systems
Supports financial managers in decisions
concerning
The financing of the business
The allocation and control of financial
resources within the business
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Financial Management Systems (Cont’d)
Major financial management system categories
Cash Management
Collects information on all cash receipts and
disbursements on a real-time or periodic basis
Investment Management
Helps the financial manager make or buy, sell or
hold decisions for each type of security
Helps the financial manager develop the optimum
mix of securities in order to minimize risk and
maximize return
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Financial Management Systems (Cont’d)
Capital Budgeting
Involves evaluating the profitability and financial
impact of proposed capital expenditures
Allows financial managers to analyze long-term
expenditure proposals for plant and equipment
Financial Forecasting and Planning
Evaluate the present and projected financial
performance of the company
Help determine financing needs and analyze
alternative methods of financing
Explore what-if and goal-seeking questions
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Manufacturing Systems
Support the production/operations function
Assists firms in planning, monitoring, and
controlling inventories, purchases, and the
flow of goods and services
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Manufacturing Systems (Cont’d)
What is computer-aided design (CAD)?
Uses special
software to aid in
product design
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Manufacturing Systems (Cont’d)
What is computer-aided manufacturing (CAM)?
Use of computers to control production equipment
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Manufacturing Systems (Cont’d)
What is Material Requirements Planning (MRP)?
Uses software to monitor and control
production processes
Focuses on inventory of parts
Helps in scheduling and tracking production
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Marketing and Sales Systems
Provide information technologies that
support the marketing and sales functions
Major marketing and sales categories
Interactive Marketing
Customer focused marketing process
Establishes two-way communications
between customers or potential customers and
the business
Customers become involved in product
development, delivery, and service issues
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Marketing and Sales Systems (Cont’d)
What is sales force automation (SFA) software?
Tools for
traveling
salespeople
Runs on
smartphones,
PDAs or
notebook
computers
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Marketing and Sales Systems (Cont’d)
Sales Force Automation
The sales force is connected to marketing websites
on the Internet, extranets, and the company
intranet
Increases productivity of sales force
Speeds up the capture and analysis of sales data
Allows management to provide improved delivery
of information and better support of the sales force
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CROSS-FUNCTIONAL
ENTERPRISE
APPLICATIONS
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How Enterprise Systems Work
Enterprise
systems feature a
set of integrated
software modules
and a central
database by which
business
processes and
functional areas
throughout the
enterprise can
share data
Source: Laudon, K.; Laudon, J.: Management Information Systems, 2019
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Enterprise Systems (Cont’d)
What are Cross-Functional Enterprise Applications?
Integrated combinations of information subsystems
that share information resources and support
business processes across the functional units
A strategic way to use IT to share information
resources and improve efficiency and effectiveness
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Enterprise Application Architecture
Source: O'Brien, J. A.; Marakas, G. M: Management Information Systems, 2011
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Customer Relationship Management (CRM)
Provides customer-facing employees with a single,
complete view of every customer at every touch
point and across all channels
Provides the customer with a single, complete view
of the company and its extended channels
Integrates and automates customer serving
processes
Integrates customer processes with the rest of the
company’s business operations
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Customer Relationship Management (Cont’d)
Major Application Components
Source: O'Brien, J. A.; Marakas, G. M: Management Information Systems, 2011
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Customer Relationship Management (Cont’d)
Major Application Components
Contact and Account Management
Helps capture and track relevant data about past
and planned contacts with prospects & customers.
Sales
Provides sales representatives with software tools
and company data needed to support and manage
their sales activities
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Customer Relationship Management (Cont’d)
Marketing & Fulfillment
Helps capture and manage prospect and customer response
data
Helps in fulfillment by quickly scheduling sales contacts
and providing appropriate information on products &
services to them
Customer Service and Support
Provides software tools and real-time access to the
common customer database
Helps create, assign, and manage requests for service from
customers
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Customer Relationship Management (Cont’d)
Retention and Loyalty Programs
Helps the company to identify and reward
their most loyal and profitable customers
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Customer Relationship Management (Cont’d)
Benefits
Allows a business to identify its best
customers
Makes possible real-time customization and
personalization of products and services
based on customer wants, needs, buying
habits, and life cycles
Enables a company to provide a consistent
customer service experience
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Enterprise Resource Planning (ERP)
Serves as a cross-functional enterprise backbone
that integrates and automates internal business
processes
Helps companies gain the efficiency, agility, and
responsiveness needed to succeed
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Enterprise Resource Planning (Cont’d)
Gives a company an integrated real-time view of its
core business processes
ERP software suites typically consist of integrated
modules of
Manufacturing
Distribution
Sales
Finance and Accounting
Human Resource Management
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Enterprise Resource Planning (Cont’d)
Benefits
Quality and efficiency
Helps improve the quality and efficiency of customer
service, production, and distribution by creating a
framework for integrating and improving internal
business processes
Decreased Costs
Reductions in transaction processing costs and
hardware, software, and IT support staff
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Enterprise Resource Planning (Cont’d)
Decision support
Provides cross-functional information on business
performance to assist managers in making better
decisions
Enterprise agility
Results in more flexible organizational structures,
managerial responsibilities, and work roles
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Enterprise Resource Planning (Cont’d)
Challenges
Costs of ERP
The costs and risks of failure in implementing a
new ERP system are substantial
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Enterprise Resource Planning (Cont’d)
Typical Costs of Implementing a new ERP System
Source: O'Brien, J. A.; Marakas, G. M: Management Information Systems, 2011
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Enterprise Resource Planning (Cont’d)
Causes of ERP failures
Underestimating the complexity of the planning,
development, and training required
Failure to involve affected employees in the planning and
development phases and change management programs
Trying to do too much, too fast
Insufficient training
Believing everything the software vendors and/or
consultants say
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Supply Chain Management
A cross-functional inter-enterprise system that uses IT
to help support and manage the links between a
company’s key business processes and those of its
suppliers, customers, and business partners.
Goal is to create a fast, efficient, and low-cost
network of business relationships.
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Supply Chain Management (Cont’d)
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Nike’s Supply Chain
This figure illustrates the major entities in Nike’s supply chain and the flow of information
upstream and downstream to coordinate the activities involved in buying, making, and moving
a product. Shown here is a simplified supply chain, with the upstream portion focusing only on
the suppliers for sneakers and sneaker soles.
Source: Laudon, K.; Laudon, J.: Management Information Systems, 2019
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Supply Chain Management (Cont’d)
Benefits
Can provide faster, more accurate order
processing
Reductions in inventory levels
Quicker time to market
Lower transaction and materials costs
Strategic relationships with suppliers
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