Business Functional Information System in MIS

Table of Contents:-

• Functional Information System in MIS
• Marketing Information System,
• Manufacturing Information System,
• Human Resource Information System,
• Account Information System, and
• Financial Information System.

Business Information System/Functional Information System in MIS

A functional information system in MIS refers to a system that performs specific functions within an organisational structure of information technology. A functional information system in MIS is designed to support specific functions and processes performed within an organisation such as finance, accounting, human resources, marketing, sales, and operations.​

A business system or business model typically constitutes a business organization or association comprising a considerable number of businesses, tradespersons, or professionals in the same or related fields, which share information, pool resources, or provide other benefits for their members. Business information systems are also recognized as functional information systems.

Functional Information System in MIS

The functional information system in MIS collects, processes, stores, and shares information related to its specific functions. It helps organizations simplify complex processes, make correct decisions and successfully achieve their business objectives.

To operate any business successfully, it is imperative to develop a system. Organisations must maintain transparency regarding the sourcing of raw materials, the manufacturing process, and sales strategies. To accomplish all these tasks, manpower is necessary, and managing them requires having managers.

Additionally, individuals directly accountable for the unit’s profit and loss exist above the managerial level. From small-scale employees to the managing director, everyone is vested in the company’s welfare. Therefore, the system must be capable of ensuring success in all aspects of business operations performed.

The functional information system in MIS is based on various business operations such as production, marketing, finance, and HR. These operations performed by an organisation are known as functional areas of business. Each functional area requires applications to complete all information processing related to the function.

A business system can however be broadly described as consisting of the following:

1. Purchasing
2. Research
3. Manufacturing
4. Sales/Marketing Research
5. Billing
6. Shipping
7. Accounting
8. Personnel
9. Payroll

The image above shows the grouping of information systems into various business function classes. Consequently, the information systems have been analyzed by considering a few prime examples in which they provide support. This helps in understanding the different types of functional business systems that may be used in businesses of various sizes.

An information system that facilitates a particular function is comprised of several sub-systems responsible for providing information to accomplish the tasks associated with that function.

Some of the main functional systems that are being used in most of the firms are as follows:

1. Marketing Information System,
2. Manufacturing Information System,
3. Human Resource Information System,
4. Account Information System, and
5. Financial Information System.

Marketing Information System

A Marketing Information System (MIS) is a computerized system that operates in conjunction with other functional information systems within the organization. The primary task of the MkIS is to help management in solving problems that are related to product marketing of the company.

The main components of the system are equipment, people and methods that are used in collecting, and sorting. analysing, evaluating and distributing error-free and timely information to marketing decision-makers. The primary responsibility of the Marketing Information System (MkIS) is to establish the specific information required by the marketing manager. Once done, it develops the framework for data collection, and after that, the information is distributed on time to the end users.

The primary objective of marketing management is to ensure customer satisfaction. This consists of:

1. Identification of the needs of the customers,
2. Development of the product concept,
3. Product designing.
4. Product positioning in the market, and
5. Appropriate pricing of the product so that it can be sold in the market.

The functions of marketing management are closely related to production and financial management because marketing management is fully dependent on adequate inventory and stock, as well as a continuous supply of goods at various locations. Marketing management controls sales to increase income. Additionally, the marketing department has other responsibilities, such as ensuring the retention of market share, penetrating new markets, and assessing the response given by customers in the new market.

Some of the prime duties carried out by marketing management have been given below:

1. Forecasting sales,
2. Evolving marketing strategies.
3. Pricing,
4. Designing products, and
5. Launching products.

Model of Marketing Information System

The image below shows a conceptual model of Marketing Information System:

The Marketing Information System (MkIS) comprises various parts, including:

1) Input sub-systems: The input sub-system consists of the following points –

i) Transaction Processing System (TPS): This subsystem gathers data from external and internal sources, which is then stored in the database.

ii) Marketing Research Sub-system: This subsystem conducts specialized studies to collect external and internal data systematically. It is used to gather, analyze, and interpret information about specific marketing subjects within set timeframes and objectives.

iii) Marketing Intelligence Sub-system: This sub-system provides general information on the development of the marketing environment within the firm, enabling managers to adapt and develop marketing plans. It encompasses sources and procedures for information gathering, often through unplanned data collection.

2) Database: The database stores data from the input sub-systems (TPS, Marketing Research, and Marketing Intelligence Subsystem) for use by the output sub-systems.

3) Output Sub-systems: The output sub-system consists of the following points –

i) Product Sub-system: Provides information about the firm’s products.

ii) Place Sub-system: Offers information about the firm’s distribution network.

iii) Promotion Sub-system: Provides information on the firm’s personal selling activities and advertising.

iv) Price Sub-system: Assists managers in price-related decision-making.

v) Integrated Mix Sub-system: Enables managers to develop strategies considering the integrated effects of various components.

Manufacturing Information System

The primary objective of manufacturing information systems is to use computer technology to enhance the efficiency and processes of the manufacturing system. Additionally, it ensures the production of higher-quality products and reduces the cost of manufacturing. Manufacturing systems use information and process it to produce better end products as output, incorporating information systems technology, data, material management, and equipment as inputs.

The transformation process, which converts raw materials into usable materials or components, can be considered as the central point around which manufacturing systems are designed. These systems include value-added processes such as material processing, as well as support systems like scheduling.

“Manufacturing Information System is a complete set of tools for managing the flow of manufacturing production data throughout the enterprise. This IS was designed to provide tools for both IT and Operations Personnel who would deliver services to anyone in the plant.”

Manufacturing plant control addresses various types of manufacturing-related operations, including different types of operational and tactical functions. The disciplinary areas that constitute manufacturing include product engineering, facility design, fabrication, scheduling, and quality control management. Information systems can greatly help in their improvement.

The major functions of Manufacturing Information Systems are tracking, scheduling and controlling manufacturing processes. They also collect data such as the number of hours the machine operates per month and the hours per day the machine is idle.

Model of Manufacturing Information System

The image shows a conceptual model of the manufacturing information system.

The components of the manufacturing information system are as follows:

1) Input Sub-systems

 The following sub-systems are involved within this system:

i) Transaction Processing System (TPS): The transaction processing system populates the database with data gathered from both external and internal sources.

ii) Industrial Engineering Sub-system: This sub-system includes the activities generated by Industrial Engineers (IEs) who conduct studies of manufacturing operations to ensure efficiency. IE’s set up standards in the production domain against which actual performance is compared.

iii) Manufacturing Intelligence Sub-system: Manufacturing Intelligence (MI) refers to the software used by corporations to consolidate manufacturing-related data. This data can then be reported, analyzed, visually summarized, and transmitted between the plant floor and enterprise-level systems.

Data gathered from various sources can be logically combined and given new context or structure, allowing users to find the required information without concern for the source. The main objective is to derive meaningful insights from the vast amount of manufacturing data. These insights can then be used to gain a competitive advantage in business.

2) Database

The database is responsible for providing data to the output sub-systems. It obtains data from the three input sub-systems of the manufacturing information system.

3) Outputs Sub-systems

It comprises the following sub-systems:

i) Production Sub-system: Production data can be gathered and processed quickly using terminals throughout the production floor. The collected data can be utilized in all phases of production control and also for billing purposes.

ii) Inventory Sub-system: This sub-system manages raw materials inventories. In most cases, the purchasing department maintains vendor data. However, in certain situations, the manufacturing department may procure specific raw materials. Regardless of the case, the manufacturing department must always be aware of the origin of the raw materials, the various types of new products offered by vendors, and their current prices.

iii) Quality Sub-system: This sub-system is responsible for checking the quality of the product after it has been manufactured to ensure it meets the required standards.

iv) Cost Sub-system: This sub-system compares costs with other options once they have been identified.

Human Resource Information System (HRIS)

The prime objective of the personnel information system is to provide information about the individuals working within an organization seamlessly and to forecast the personnel needs for the future.

Personnel Information Systems (PIS), Human Resource Information Systems (HRIS), or Human Resource Management Systems provide information to the people working in the personnel department, enabling them to make decisions easily and carry out tasks effectively.

Finance, accounts, and budgets are the main modules related to the Computer-Based Personnel Information System (CBPIS). CPIS is a database that contains all the posts and service details of every employee working in government organizations. Organizations collect, maintain, analyze, and store information about the people working and their respective jobs with the help of methods provided by PIS.

Recruiters, career planners, trainers, and other human resource professionals use the information contained in PIS to manage human resources. Information is required at both the macro and micro level. HRIS provides solutions for training, recruitment, payroll, benefits, and HR.

Models of Human Resource Information Systems

The HRIS model is shown in the image below:

The different components of the Personnel Information Systems model are as follows:

1) Input Sub-systems: The sub-systems comprising this system are as follows:

i) Transaction Processing System (TPS): This sub-system provides input data to Personnel Information Systems using a format similar to that used in MkIS.

ii) Human Resources Research Sub-system: This sub-system conducts special studies related to human resources.

iii) Human Resources Intelligence Sub-system: This sub-system gathers data related to HR issues.

2) Database: The database supplies data for use in the output sub-systems. In turn, the three input sub-systems provide data to the database.

3) Output Subsystems: The output sub-system of the HRIS addresses each specific aspect of HR management, including planning, recruiting, workforce management, employee compensation, employee benefits, and preparation of HR reports required by the environment. In this manner, the output systems can be determined, and users engage with the output subsystem with great interest.

Accounting Information Systems

An Accounting Information System (AIS) helps the firm’s accounting operations and involves high data processing. This system contains four essential tasks: 

1. Data gathering, 
2. Data manipulation, 
3. Data storage and 
4. document preparation. 

AIS collects data and helps decision-makers, such as investors, creditors, and managers, to make informed decisions. It is a record-keeping system that a business maintains for its accounting processes, including purchases, sales, and other financial transactions.

The Accounting Information System studies the structure and operation of the planning and control processes, aiming to achieve the following:

1) Providing information to both internal and external stakeholders to ensure accountability and effective decision-making, in compliance with quality specifications conducive to effective decision-making conditions.

2) Providing suitable conditions for effective decision making.

3) Ensuring that no assets of the company illegally exit the company.

Model of Accounting Information System

The image below illustrates the Accounting Information System model. The foundation of the company lies in the input, transformation and output elements of the physical system.

Data is collected from the physical system and the environment. The collected data is then processed by software, transforming it into information for management, individuals, and other organizations within the business environment.

Financial Information System

A Financial Information System is a CBIS system that provides information regarding various financial matters of the firm to both internal and external individuals or groups.

Information is typically presented in the form of expert system advice, results of mathematical simulations, special reports, electronic communications, and periodic reports.

Financial information generated by a financial MIS is used not only by executives but also by individuals who make daily decisions based on financial matters. The efficiency and accuracy of transaction reporting can be improved with the help of Financial Management Information Systems (MIS).

Financial management satisfies the organization’s financial needs. It also ensures compliance with statutory requirements by submitting various returns and reports to tax authorities and governments and by declaring financial results.

Financial management helps the organization in achieving its goals using various tools, including:

1. Ratio analysis,
2. Management accounting,
3. Cost analysis, cash flow projections,
4. Break-even analysis,
5. Capital budgeting,
6. Financial modelling, and so on.

Model of Financial Information System

The image below shows the model of a Financial Information System:

The different components of the financial information system are as follows:

1) Input Sub-systems: This sub-system consists of the following:

i) Transaction Processing System (TPS): This sub-system provides input data to the system in a format similar to that used by MkIS.

ii) Internal Audit Sub-system: To ensure that the financial data of the firm is processed correctly, internal auditors carry out an internal audit by analyzing the conceptual system of the company.

iii) Financial Intelligence Sub-system: This sub-system gathers environmental data related to financial issues.

2) Database: The database supplies data to be used by the output sub-systems. It receives data from the input sub-systems (TPS, financial intelligence sub-system, and internal audit sub-system).

3) Output Sub-systems: The financial information system consists of the following output sub-systems:

i) Forecasting Sub-system: This sub-system plans how long the firm’s activity will last in the economic environment.

ii) Fund Management Sub-system: The main aim of the fund management sub-system is to keep the fund positive and balanced by managing the flow of money.

iii) Control Sub-system: Managers can effectively use various resources with the help of the control sub-systems.