Topic: Business Information Systems
Organizations are made up systems which coordinate to accomplish the purpose of their existence. Therefore, information system is one way through which business organizations can attain their full potential cost effectively.
Businesses are established with the main purpose of making profit. However, these organizations operate in an environment characterized by high competition and existence of many substitute products. These factors reduce the ability of the business to make the profits they desire. In order to overcome these challenges, the managements of many businesses are constantly engaged in strategic meetings aimed at finding ways of creating a competitive edge. One way through which they are able to establish an edge in the market is through efficient cost management. Many businesses use management information systems to automate their operations as well as gathering data for management purposes (Chaffey, 2006).
Management Information System
Management information system is the use of technology and people within the organization to coordinate the activities of the business enterprise with the main aim of enhancing efficiency and productivity. Management information system helps business organizations to realize maximum benefits from its investment in equipments, people as well as business processes. Management information system is people oriented, which emphasizes on delivery of services through technology. Business organizations use management information systems at all levels of its operations with the aim of collecting, processing and storing data. Business managers aggregate and disseminate the collected data in the form of the needed information to carry out business operations.
Types of Management Information System
Different functional units, managers and operational areas have different information needs. Therefore, many organizations tailor their information systems to meet specific needs in different areas within the business. Information system plays a critical role in business organizations. These systems help the companies to improve their efficiency, productivity and customer service. Information systems that are networked help companies to share data and knowledge within the organization, giving executives, managers, key employees and project teams, access to the information they require to manage operations and make decisions. Information management systems are widely used at all levels of operations within a business organization (Chaffey, 2006). These systems include the transaction processing systems, executive system, and customer service management systems among others.
Operations support systems are some of the most commonly used information systems. These systems are mainly used by the lower level managers to help them in the day to day running of business operations and making decisions that are routine in nature. The main types of the operations support systems include the transaction system, design and production systems as well as the processing systems. The main objective of the transaction processing systems (TPS) is to record and process daily activities within the organization. These systems receive data and convert it into the information needed for various uses. The data consists of financial and nonfinancial transactions that affect business organizations.
Financial transactions involve economic events which are measured in monetary terms. These economic events include purchase of inventory, sales of goods, as well as payment of salaries to employees. Nonfinancial events include those activities aimed at enhancing customer value and experience in the organization. Transaction information systems improve efficiency and productivity of employees in addressing issues related to internal and external customers. Processing control system is also used in business organizations. This system makes use of technology to control and monitor physical processes within an organization. Process control system collects data periodically on various processes. This data is then analyzed through a computer program, which signals to operators or makes adjustments to these processes. The use of the process control system improves customer experience since it enables the management to address various customer issues promptly.
Many business organizations rely on technology to design and manufacture their products. One of the most important systems that play this role is the computer-aided design (CAD), which uses computer technology to create models that represent the design of the final product. Through the use of software, the designers are able to test digital models before they proceed to the prototype stage. Some companies create a link between computer-aided design systems and the computer-aided manufacturing (CAM) system using the computer technology to control equipment and production processes. These systems instructs machines to do necessary tasks, as well as the determination of steps needed to produce components. The CAD/CAM systems can also be expanded using computer integrated manufacturing (CIM) system to integrate various operations with functional activities that range from taking of orders to the final shipment of goods(Chaffey, 2006).
Management support systems are the other class of information systems commonly used in business organizations. These systems are mainly used by middle and top management to retrieve and process information needed mainly for decision making. The major systems in this category include management information systems, executive support systems, decision support systems and expert systems. The management information system (MIS) is used to extract data from the database and summarize them for use by managers for the purpose of decision making. This system compiles data into various forms of reports such as inventory level, sales analyses and financial statements, which inform the top management before making strategic business decisions. The form and the type of reports generated by the management information system depends the information needs of the management.
Decision support system (DSS) is another type of the management support system. This is an interactive system that mines, integrates and summarizes data from multiple sources with the aim of helping managers to make decisions that are not routine in nature. In many cases, decision support systems help managers during strategic decision making process. This system first extracts data from internal sources in order to help the management to gauge the financial strength of the company. The system also extracts external data which helps the management to draw out the new direction for the company. Decision support system makes use of both external and internal data in a model, which management can interpret and analyze. Therefore, this system makes decision making process easy since it provides relevant data to the managers.
The executive information system helps senior managers in planning and making strategic decisions. These managers set performance targets and scan external business environments for threats and opportunities. In order to accomplish these tasks, the managers require relevant information that is easy to understand. This information is readily available in the executive information system (Chen, 2007). Therefore, this system provides top management with strategic information that is customized to their needs and in a form that is convenient to them.
The expert systems are also another type of information systems used in business organizations. The expert systems mimic experts in making judgments by making use of a set of rules similar to those that are followed by experts. These systems play a critical role in credit assessment and portfolio management. Customer management systems are also critical in the management of customers. These systems provide information on customers’ purchasing patterns and preferences. These systems also hold data on inquiries, sales records, marketing campaign responses, customer complaints and service requests. Customer relationship management system generates data that is necessary in the development of marketing campaign and the creation of personalized offers for customers.
The supply chain management information system helps companies to share information with business partners and suppliers through a secure network with the aim of controlling costs and improving efficiency throughout the supply chain. Through this system, a business organization can provide members of the supply chain with information related to production and sale requirements (Chen, 2007). In this manner, business organizations can efficiently plan their own operations. The service support system is another form of information system which avails information in a central database for ease of access by project teams. This system holds technical data, as well as customer service record. This system enables project teams to access the necessary data from remote locations.
Information System in Coca Cola Company
Coca Cola Company is the largest carbonated drink company in the world. The flow of information is critical in this company since it provides information, data and knowledge to the management and all employees. This company uses ERP systems and SAP/3 to support decision making. Through this system, the top management is able to make quality decisions on product and cost reductions. All departments such as marketing, operations, accounting, human resource and inventory use a common system that enables a consistent reporting of operational and management units. This system also ensures that customers, suppliers and employees are on a similar frame of reference.
The SAP applications in this company in Atlanta include accounting, procurement, planning and budgeting, as well as employees self services. The manufacturing plants use project systems implementation for inventory management, production planning, material management as well as sales and distribution. This company uses IBM serve RS/6000 which enables about 1000 people to use the system concurrently. Coca Cola Company also uses outsourcing as a strategic tool in management (Chen, 2007). The intention of outsourcing is to gain a competitive advantage by concentrating more on those activities that contribute greatly to the success of the company.
The process of outsourcing began when the company set out to look for new markets for its products. At that time the company had limited financial resources and inadequate time to create a bottling plant in all its production plants. Therefore, the company decided to outsource bottling in order to focus on the key business of quality production and market expansion. However, the bottling business became a key factor in Coca Cola Company, which led to the need to create internal capabilities to carry out this task. Information technology helped the company in this process of outsourcing. Through information system, the company was able to share production needs with the bottling companies in a manner that enhanced the productivity and efficiency of the company.
Coca Cola Company operates across the globe using franchises. In this process, the company in Atlanta manufactures the syrup, which is used in the production of beverages. The roles of producing the final products lie with the franchised companies. Coca Cola Company uses information system to optimize this process. In particular, the company implements SAP R/3 in the supply chain management. Coca Cola Company also has a website which details all the operations of the company (Chaffey, 2006). This company also uses this website and information technology to sell its products to customers.
The information system is also critical in this company since it helps in the collection and processing of data. This process ensures that the top management is up to date with all critical information that is necessary for strategic decision making. The company also implements customer relationship information system, which helps in the efficient management of customers. The company’s website is also designed in a way that helps in tracking of customer orders and answer s queries (Chen, 2007). However, the company outsources some tasks through supply chain management system.
Coca Cola Company uses Barracuda Networks Solutions for network protection. These technologies enhance security of the network and information technology. The Coca Cola Company previously used Oracle Databases that have SQL capabilities. However, the company moved to DB2 from IBM as a result of its SAP application. This migration led to the reduction of costs related to software and hardware. It also led to better retrieval, storage and the security of data. The databases in this company provide vital information to employees, which increase their efficiency and productivity.
Transformation of Coca Cola Company through Information Systems
Coca Cola Company relies heavily on the information system to conduct its businesses across the world. This company is the largest carbonated drink in the world with operations in almost every country in the world. The size of the company creates a challenge in monitoring logistics and finances of its global enterprise. The Coca Cola Company was able to overcome this challenge by implementing information systems across the globe. This company started with a system known as the legacy system. This system was inefficient and not user friendly. These problems led to high costs in the company. In addition, this system did not allow full automation of some processes such preparation of financial plans, which were done manually before their transmission on hard copies.
Therefore, the company was unable to update information globally and it became a big problem when the company took an expansion drive. The expansion of the Coca Cola Company led to the need of an integrated business management system, which could handle various aspects of the company worldwide. The company implemented the Strategic Enterprise Management (SEM) in place of the Legacy system. This system enabled the Coca Cola Company to carry out business planning, data collection, generation of financial reports and sales forecasts. The Coca Cola Company now fully implements information system. The information systems provide Coca Cola Company with baseline information to track the growth of the company, as well as its financial growth (Chen, 2007).
Information Systems and Business Careers
Information systems have become a vital part of business operations. The need to have skilled personnel has led to the creation of the information technology department in which various people with knowledge in web development, business application development and technical support specialist can work. However, to work in this department, a person must have good problem solving skills and ability to think about technology strategically.
Information system is one way through which organizations can establish a competitive edge in the market. Through the use of the information system, business organizations enhance their productivity and efficiency. Organizations are made up systems which coordinate to accomplish the purpose of their existence. Therefore, management information system is one way through which business organizations can attain their full potential cost effectively.
Chaffey D. (2006). Business Information Systems: Technology, Development and Management for the E-business. Financial Times/Prentice Hall
Chen C. (2007). Enterprise Information Systems VII. Berlin: Springer Science & Business Media