MIS490 1
Enterprise Systems Configuration for Business
MIS 490
CHAPTER 1
Business Functions and Business Processes
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Objectives
After completing this chapter, you will be able to:
• Name the main functional areas of operation used in business
• Differentiate between a business process and a business function
• Identify the kinds of data each main functional area produces
• Identify the kinds of data each main functional area needs
• Define integrated information systems, and explain why they are essential in today’s globally competitive business environment
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Introduction
• Enterprise Resource Planning (ERP) programs: Core software used by companies to coordinate information in every area of business • Help manage companywide business processes
• Use common database and shared management reporting tools
• Business process: Collection of activities that takes some input and creates an output that is of value to the customer
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Functional Areas of Operation
• Marketing and Sales (M/S)
• Supply Chain Management (SCM)
• Accounting and Finance (A/F)
• Human Resources (HR)
• Business functions: Activities specific to a functional area of operation
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Functional Areas of Operation
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Business Processes
• Collection of activities that takes one or more kinds of input and creates an output that is of value to customer • Customer can be traditional external customer or internal customer
• Thinking in terms of business processes helps managers to look at their organization from the customer’s perspective
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Business Processes (cont’d.)
Figure 1-2 Sample business processes related to the sale of a
personal smartphone
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Business Processes (cont’d.)
• Information system (IS): Computers, people, procedures, and software that store, organize, and deliver information • Standalone Systems
• Sharing data effectively and efficiently between and within functional areas leads to more efficient business processes
• Integrated information systems: Systems in which functional areas share data • ERP
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Business Processes (cont’d.)
Figure 1-3 A process view of business
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Business Processes (cont’d.)
• Businesses take inputs (resources) and transform these inputs into goods and services for customers • Inputs: Material, people, equipment
• Managing inputs and business processes effectively requires accurate and up-to-date information
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Marketing and Sales
• Functions of Marketing and Sales • Developing products
• Determining pricing
• Promoting products to customers
• Taking customers’ orders
• Helping create a sales forecast
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Marketing and Sales (cont’d.)
Figure 1-4 The Marketing and Sales functional area exchanges data with customers and with the Human Resources, Accounting and Finance, and Supply Chain Management functional areas
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Supply Chain Management
• Needs information from various functional areas
• Production plans based on information about product sales (actual and projected) that comes from Marketing and Sales
• With accurate data about required production levels: • Raw material and packaging can be ordered as needed
• Inventory levels can be kept low, saving money
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Functional Areas of Operation
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Supply Chain Management (cont’d.)
Figure 1-5 The Supply Chain Management functional area exchanges data
with suppliers and with the Human Resources, Marketing and Sales, and
Accounting and Finance functional areas
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Accounting and Finance
• Needs information from all other functional areas
• A/F personnel: • Record company’s transactions in the books of account
• Record accounts payable when raw materials are purchased and cash outflows when they pay for materials
• Summarize transaction data to prepare reports about company’s financial position and profitability
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Functional Areas of Operation
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Accounting and Finance (cont’d.)
Figure 1-6 The Accounting and Finance functional area exchanges data with
customers and with the Human Resources, Marketing and Sales, and Supply
Chain Management functional areas
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Human Resources
• HR needs information from the other departments
• Tasks related to employee hiring, benefits, training, and government compliance are all responsibilities of HR
• HR needs accurate forecasts of personnel needs from all functional units
• HR needs to know what skills are needed to perform a particular job and how much the company can afford to pay employees
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Functional Areas of Operation
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Human Resources (cont’d.)
Figure 1-7 The Human Resources functional area exchanges data with the
Accounting and Finance, Marketing and Sales, and Supply Chain
Management functional areas
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Role of ERP Systems
• Significant amount of data is maintained by and shared among the functional areas
• Timeliness and accuracy of these data critical to each area’s success and to company’s ability to make a profit and generate future growth
• ERP software allows all functional areas to share a common database • Allows accurate, real-time information to be available
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Summary • Basic functional areas: Marketing and Sales, Supply Chain
Management, Accounting and Finance, and Human Resources
• Marketing and Sales: Sets product prices, promotes products through advertising and marketing, takes customer orders, supports customers, and creates sales forecasts
• Supply Chain Management: Develops production plans, orders raw materials from suppliers, receives raw material, manufactures products, maintains facilities, and ships products to customers
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Summary (cont’d.)
• Accounting and Finance: Financial accounting to provide summaries of operational data in managerial reports, controlling accounts, planning and budgeting, and cash-flow management
• Human Resources: Recruits, hires, trains, and compensates employees, ensures compliance with government regulations, and oversees the evaluation of employees
• Information systems capture, process, and store data to provide information needed for decision making
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Summary (cont’d.)
• Employees working in one functional area need data from employees in other functional areas • Functional area information systems should be integrated, so shared data are
accurate and timely
• Managers think in terms of business processes that integrate the functional areas • Need to share information between functions and functional areas
• ERP software provides this capability by means of a single common database