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20/06/2012 07:54:43 PM

The Business Information System

The Business Information System

Business owners always need information for making decisions. They need to know the market demand of their products so they can set the selling prices; they need to know the cost and revenue to calculate their profits; they need to know the price fluctuation in the market so they can buy raw materials at the best price possible. Without knowing this information, they cannot control their business effectively. Before the use of computer, many have to obtain these information from the newspapers, from radios, from government’s directions, from their own intuition, or even from market rumors. With information system, they can get all information that they need to make decision without have to leave their desks, and these information are much more accurate with more details.

Business Information System can be defined as a system that processes data generated by business and creates information that helps management making decisions, solves problems, reduces risks, and controls the business. Today information system is based on computers and telecommunication technology that access, collect, and process data from all over the world, 24 hours a day and 7 days a week. It would be difficult to find a business that does not depend on information systems. Today, these systems collect market data via the Web, processes business transactions in India or China when managers in the U.S are still in bed. They process, analyze, and develop full reports for managers when they enter their office in the morning.

Before the use of computer and the internet, all information have to be collected via newspapers, radios, and phone calls between offices around the world. Business transactions have to be entered, processed and prepared by several people manually. They have to be analyzed by business specialists then typed into reports by secretaries, using typewriters. These reports are sent to several offices for managers to review before compiled into an executive report to the company owner. Such a manual system will typically takes several weeks or months to generate reports. They were also exposed to errors at several points, and could be modified by managers at certain levels before it reaches the company owner. Information systems using computers, could process all data, doing elaborate analysis, and generates reports in a matter of hours. Therefore, company owner has all the information to make decision quickly.

Information systems process data by special business software written for particular purpose. Such software can command the computer to analyze data in numerous ways and produce different kinds of reports. Different managers get the data analyzed in different ways to suit their roles, responsibility of their jobs. For example, managers at the factory will only see factory data so they can make decision at the factory level. Sales and marketing managers will only see sale data so they can make decision about advertising and marketing to increase product sale. Of course, company owner will see everything if he wishes but mostly he needs important data that allows him to make strategic decision. These types of reports would have been impossible in a manual system.

With the advancement of information technology, many information systems have specific sophisticated functions that analyze data for different purposes. Since data are organized and stored in database for retrieval and update. There specific business intelligence software will search them to analyze for trends in business and generate special reports to senior executives or company owner. These software applies data mining, data analysis and search technology to identify inaccuracy, flaws, or even fraud within the systems. It starts by create certain standards targets then accumulate data along and make it possible to check whether actual performance is meeting these standards and whether targets have been changed or are likely to be modified. It can summarize both internal and external data in graphic formats to alert senior management of certain issues in the company. When needed, it allows senior managers to look for any specifics to further investigations. These software also collect external information such as industry and market data to help managers understand emerging trends.

Development of these information system starts with the analysis of specific requirements. Each company has different needs and different ways to do business so their requirements will vary. Software developers who design these systems must understand their needs and write different programs for each company. As more companies are buying information systems, they need more developers to write specific software. Suddenly the demand for software developers and IT workers exploded all over the world. That is why today the demand for IT workers is much higher and the shortage of IT skilled workers become critical as more companies need these information systems.

To operate such robust information systems requires a new type of managers who are knowledgeable about technology. A good information system manager can provides senior managers and company owner with up-to-date status reports and also point out problem areas. They can organize certain reports based on internal operational or external market. Today several of these information systems have been standardized into an Enterprise Resource Planning (ERP); Customer Relations Management (CRM); and Supply Chain Management (SCM) that help global companies to manage their operations all over the world.
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Prof. Vu
Carnegie Mellon University

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