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IT for Management: On-Demand Strategies for Performance, Growth, and Sustainability

Eleventh Edition

Turban, Pollard, Wood

Chapter 9

Functional Business Systems

Learning Objectives (1 of 5)

Business Management Systems and Functional Business Systems

Two types of information systems support different areas or activities in an organization:

Business Management Systems (BMS)

designed to support planning and the implementation process across the entire organization

Functional Business Systems (FBS)

designed to improve the efficiency and performance of a specific functional area within the organization

Business Management Systems Modules

Business Management Systems (BMS) aid leadership teams by using technology to improve the organizational planning and implementation process. Typical modules in a BMS are:

Definition of Organizational Mission

Identification of Strengths Weakness Opportunities and Threats (SWOT Analysis)

Establishing Goals and Measurable Objectives

Defining Strategies, and Key Performance Indicators (KPIs)

Articulation of Tactical or Action Plans – Assigning Responsibilities and Time Tables

Monitoring and Reporting Progress and Performance

Business Management Systems Overview

Mission

Set of outcomes an enterprise wants to achieve.

Strategic Plan

A document used to communicate the company’s goals and the actions needed to achieve them.

Management Levels

Planning occurs at three levels of the organization – strategic, managerial, and operational.

Managers at each level operate with a different timeframe, which transitions from long-term (a few years) at the strategic level to “in the moment” (daily) at the operations level.

Business Management Systems Management Levels

Figure 9.3 Three organizational levels, their concerns, and strategic and tactical questions, planning, and control.

Functional Business Systems

Traditional Functional Business Areas

Finance and Accounting

Production/Operations & Supply Chain Management

Marketing and Sales

Human Resources Management

Cross Functional Coordination and Integration

Departments or functions must be able to coordinate in the development of strategic plans and the performance of operations level actions.

Integration makes it easier to identify problems or barriers to achieving objectives and develop solutions to those problems.

Complex processes are managed more effectively through Standard Operating Procedures (SOP), a set of written instructions on how to perform a function or activity.

Standard Operating Procedures: Data Properties

The SOP documents three related data properties in company information systems:

Data security

the protection of data from malicious or unintentional corruption, unauthorized modification, theft, or natural causes such as floods.

Data validity

tests and evaluations used to detect and correct errors, for instance mistakes that might occur during data entry in fields, such as customer name and address.

Data integrity

the maintenance of data accuracy and validity over its life-cycle including the prevention of unintended modification or corruption.

Transaction Processing Systems

Transaction Processing

information processing that is divided into distinct, undividable operations called transactions.

used in the functional business systems of all areas.

For example:

Production/Operations: The tracking of materials or component parts as they enter and exit a warehouse or manufacturing facility.

Marketing and Sales: Management of sales orders and order fulfillment.

Human Resources: Processing of payroll and employee records.

Finance/Accounting: Processing of credits and debits to a customer’s checking account at a bank

Transaction Processing Systems: The ACID Test

Transaction processing systems (TPSs) collect, monitor, store, process and distribute transactional data according to certain criteria referred to as the ACID test.

ACID Test

Atomicity: If all steps in a transaction are not completed, then the entire transaction is cancelled.

Consistency: Only operations that meet data validity standards are allowed.

Isolation: Transactions must be isolated from each other.

Durability: Backups by themselves do not provide durability.

Transaction Processing Systems: Batch and Real Time Processing

Transactions can be processed two ways:

Batch: all events or transactions are processed together (in a batch) during scheduled times.

Real Time: events or transactions are processed as soon as they occur.

Increasingly, organizations today are employing Online Transactions Processing Systems (OTPS).

Client server systems that allow transactions to run on multiple computers on a network, processing transactions in real time.

Transaction Processing Systems: Batch and Real Time Processing

Transactions can be processed two ways:

Batch: all events or transactions are processed together (in a batch) during scheduled times.

Real Time: events or transactions are processed as soon as they occur.

Increasingly, organizations today are employing Online Transactions Processing Systems (OTPS).

Client server systems that allow transactions to run on multiple computers on a network, processing transactions in real time.

Solving Business Challenges at All Management Levels

Figure 9.4 Information flows triggered by a transaction or event.

Solving Business Challenges at All Management Levels: Review

Explain the purpose of Business Management Systems (BMS).

Define what a standard operating procedure (SOP) is and give an example.

Explain each component of the ACID test.

Explain the differences between batch and online processing.

Explain the relationship between Transaction Processing Systems (TPS) and Functional Business Systems (FBS).

Suggested Answers:

1. Business Management Systems (BMS) are information systems designed to support planning and the implementation process across the entire organization. Functional Business Systems are information systems designed to improve the efficiency and performance of a specific functional area within the organization.

2. A SOP is a set of written instructions on how to perform a function or activity. SOPs provide the framework for complex processes to be managed more effectively.

Answers may vary. SOPs are written, for example, for handling purchase orders, order fulfillment, customer complaints, recruitment and hiring, emergency response, and disaster recovery.

3. The ACID test is short for atomicity, consistency, isolation, and durability:

Atomicity: If all steps in a transaction are not completed, then the entire transaction is cancelled.

Consistency: Only operations that meet data validity standards are allowed. For instance, systems that record checking accounts only allow unique check numbers for each transaction. Any operation that repeated a check number would fail to insure that the data in the database is correct and accurate. Network failures can also cause data consistency problems.

Isolation: Transactions must be isolated from each other. For example, bank deposits must be isolated from a concurrent transaction involving a withdrawal from the same account. Only when the withdrawal transaction is completed successfully will the new account balance be reported.

Durability: Backups by themselves do not provide durability. A system crash or other failure must not cause any loss of data in the database. Durability is achieved through separate transaction logs that can be used to re-create all transactions from a known checkpoint. Other ways include database mirrors that replicate the database on another server.

4. In online transaction processing (OLTP), events or transactions are processed as soon as they occur. Data are accessed at that time directly from the database, including updates.

With batch processing, like transactions are grouped together and the entire group is processed at a later time. This type of processing is more efficient and less costly, but results, including updates to the database, have to wait until the group is processed.

5. Transaction processing is information processing that is divided into distinct, undividable operations called transactions. While transaction processing certainly applies to the financial transactions that take place in a business (i.e. the data generated by a store cash register), transaction processing is used in the functional business systems of all areas. For example:

Production/Operations: The tracking of materials or component parts as they enter and exit a warehouse or manufacturing facility.

Learning Objectives (2 of 5)

Production and Operations Management

Production Operations Management

Production/Operations is sometimes viewed in the larger context of supply chain management and supporting information systems.

Production operations management and supply chain management information systems both play a critical role in managing these important functions.

These systems facilitate coordination between different divisions within an organization or between the organization and its partners.

Production and Operations Management: SCM

Figure 9.5 Companies recognize that careful management of supply chain processes is critical for success in the highly competitive global economy

Transportation Management Systems

Relied on to handle transportation planning including shipping consolidation, load and trip planning, route planning, fleet and driver planning, and carrier selection.

Four trend factors contributing to TMS growth:

Outdated transportation systems need to be upgraded or replaced

Growth of intermodal transport

TMS vendors add capabilities

TMSs handle big data

Logistics Management

Inbound logistics refers to receiving.

Outbound logistics refers to shipping.

Inventory control systems are stock control or inventory management systems.

Logistics management systems:

Optimize transportation operations

Coordinate with all suppliers

Integrate supply chain technologies

Synchronize inbound and outbound flows of materials or goods

Manage distribution or transport networks

Inventory Control Systems

Important because they minimize the total cost of inventory while maintaining optimal inventory levels. Inventory control systems minimize the following three cost categories:

Inventory holding costs

Ordering and shipping costs

Cost of shortages

Safety Stock

Extra inventory used as a buffer to reduce the risk of stockouts. Also called buffer stock.

Stockouts

Inventory shortage arising from unexpected demand, delays in scheduled delivery, production delays or poor inventory management.

Inventory Costs

Figure 9.6 Inventory Control Systems help companies balance inventory ordering and carrying costs against the cost of inventory shortages.

Just-in-Time Inventory Management Systems

JIT inventory management attempts to minimize holding costs by not taking possession of inventory until it is needed in the production process.

Eliminates costs associated with carrying large inventories at any given point in time.

Higher ordering costs because of more frequent orders.

Higher risk of stockouts

Must have cooperative production and/or supply partners to succeed

Lean Manufacturing Systems

Leverages suppliers delivering small lots on a daily or frequent basis, and production machines are not necessarily run at full capacity.

Empowers workers so that production decisions can be made by those who are closest to the production processes.

JIT success factors also apply to lean manufacturing.

Requires quality, on-time inventory

Quality Control Systems

Stand-alone or part of an enterprise-wide total quality management (TQM) effort providing data about the quality of incoming materials or parts, as well as the quality of in-process semi-finished and finished products.

Data collection by sensors or RFID and interpreted in real-time, or stored in a database for future analysis.

Computer-integrated Manufacturing (CIM) Systems

Custom-designed software that controls day-to-day shop floor activities

Data-driven automation

Benefits:

It simplifies manufacturing technologies and techniques

Automates as many of the manufacturing processes as possible,

Integrates and coordinates all aspects of design, manufacturing, and related functions.

Manufacturing Execution Systems (MESs) Systems

Manage operations in shop factories, sometimes a few critical machines, sometimes all operations on the shop floor.

Typically broader infrastructure than CIM.

Based on standard reusable application software instead of customer-designed software.

Manufacturing, Production, and Transportation Management Systems Review

What is the function of supply chain management in an organization?

What trends are contributing to the growing use of TMS?

Define logistics management.

What are the three categories of inventory costs?

What are the objectives of JIT?

Explain the difference between EOQ and JIT inventory models.

What is the goal of lean manufacturing?

What is CIM?

Suggested Answers:

Supply chain management coordinates all of the factors that contribute to customer value, including supplier relationships, logistics, inventory management across the supply chain, leading to order fulfillment.

2. Four factors contribute to the growth of TMS:

1. Outdated transportation systems need to be upgraded or replaced. Many systems were installed over 10 years ago—before tablet computers and mobile technologies had become widespread in business. Similar to most legacy (old) systems, they are inflexible, difficult to integrate with other newer systems, and expensive to maintain.

2. Growth of intermodal transport. Intermodal transportation refers to the use of two or more transport modes, such as container ship, air, truck, and rail, to move products from source to destination. Many more companies are shipping via intermodals and their older TMSs cannot support or deal with intermodal movement, according to Dwight Klappich, a research vice president for Gartner.

When brick-and-mortar manufacturers began selling online, for example, they learned that their existing TMSs are inadequate for handling the new line of business. Shippers that expand globally face similar challenges when they try to manage multiple rail, truck, and ocean shipments. Thus, there is a growing need for more robust TMSs to handle multidimensional shipping arrangements.

3. TMS vendors add capabilities. The basic functions performed by a TMS include gathering data on a load to be transported and matching those data to a historical routing guide. Then the TMS is used to manage the communication process with the various carriers. New feature-rich TMSs are able to access information services to help the shipper identify optimal routes given all current conditions. For example, the latest TMSs can interact directly with market-data benchmarking services. An automated, real-time market monitoring function saves shippers time, errors, and cuts costs significantly.

4. TMS handle big data. Transportation tends to generate a high volume of transactional data. Managing the data isn’t easy. TMS vendors are developing systems that make valuable use of the big data that are collected and stored. By drilling down into specific regions or focusing on particular market trends, for example, shippers can use their big data to make better decisions.

3. Logistics management deals with the coordination of several complex processes, namely ordering, purchasing or procurement, inbound logistics (receiving), and outbound logistics (shipping) activities.

Logistics management systems:

Optimize transportation operations

Coordinate with all suppliers

Integrate supply chain technologies

Synchronize inbound and outbound flows of materials or goods

Manage distribution or transport networks

4. The three inventory cost categories are:

1. Inventory holding costs: warehousing costs (see Figure 9.10), security costs, insurance, losses due to theft or obsolescence, and inventory financing costs based on the interest rate.

2. Ordering and shipping costs: employees’ time spent ordering, receiving, or processing deliveries; and shipping fees.

3. Cost of shortages: production delays and missed sales revenues because of stockouts.

5. The main objective of JIT inventory management is to minimize holding costs by not taking possession of inventory until it is needed in the production process. With JIT, costs associated with carrying large inventories at any given point in time are eliminated. However, the tradeoff is higher ordering costs because of more frequent orders.

6. To minimize the sum of the three categories of inventory costs, the POM department has to decide when to order and how much to order. One inventory model that is used to answer both questions is the economic order quantity (EOQ) model. The EOQ model takes all costs into consideration.

JIT inventory management attempts to minimize holding costs by not taking possession of inventory until it is needed in the production process. With JIT, costs associated with carrying large inventories at any given point in time are eliminated. However, the tradeoff is higher ordering costs because of more frequent orders.

Because of the higher risk of stockouts, JIT requires accurate and timely monitoring of materials’ usage in production.

7. In a lean manufacturing system, suppliers deliver small lots on a daily or frequent basis, and production machines are not necessarily run at full capacity. One objective of lean manufacturing is to eliminate waste of any kind; that is, to eliminate anything that does not add value to the final product. Holding inventory that is not needed very soon is seen as waste, which adds cost but not value. A second objective of lean manufacturing is to empower workers so that production decisions can be made by those who are closest to the production processes.

8. Computer integrated manufacturing (CIM) systems control day-to-day shop floor activities. In the early 1980s, companies invested greatly in CIM solutions even though they were complex, difficult to implement, and costly to maintain. They had required the integration of many products and vendors. Today’s CIM systems provide scheduling and real-time production monitoring and reporting. CIM data-driven automation affects all systems or subsystems within the manufacturing environment; design and development, production, marketing and sales, and field support and service. CIM systems can perform production monitoring, scheduling and planning, statistical process monitoring, quality analysis, personnel monitoring, order status reporting, and production lot tracking.

Learning Objectives (3 of 5)

Sales and Marketing Systems

Digital advertising

Social media monitoring and promotions

Sales and customer support

Automated ad placement and media buying

Market research

Intelligence gathering

Distributing products and services to customers

Order tracking

Online and mobile order processing

Online and mobile payment methods

Sales and Marketing Systems and Subsystems

Figure 9.7 Sales and Marketing systems and subsystems.

Data-Driven Marketing

Data-driven, fact-based decision making relies on hot, current data, that has immediate impact on the business.

Pay-per-click (PPC) advertising is one use of this type of data.

FaceBook pushes ads to people based on their self-reported demographics

Sales and Distribution Channels

Ways to optimize product and service distribution.

Example channels:

Electronic channels.

Mobile channels.

Physical channels.

Social Media Customer Service

Monitoring Social Media

Many companies now employ customer support representatives to monitor social media platforms.

Offer support and solutions to customer problems

Retains the customer’s loyalty and demonstrates the brand’s commitment to customer satisfaction.

Companies stand to benefit by demonstrating their responsiveness to a wide audience of prospective customers

Marketing Management

Pricing of Products or Services

Sales volumes as well as profits are determined by the prices of products or services.

Salesperson Productivity

Collected in the sales and marketing TPS and used to compare performance along several dimensions, such as time, product, region, and even the time of day.

Profitability Analysis

Profit contribution or profit margin of certain products and services derived from the cost accounting system.

Sales and Marketing Systems

Explain pay-per-click marketing.

List two sales and distribution channels.

Describe profitability analysis.

How do some online businesses determine the prices they will charge to customers?

Suggested Answers:

1. In pay-per-click (PPC) marketing, ads use data about the person to determine whether the ad should appear; i.e., online advertising that “appears” on the screens of consumers’ devices is based on the user’s location, behavior, interests, or demographic information. This capability creates opportunities for highly targeted advertising programs.

2. Answers may vary. They fall into three categories: electronic, mobile, and physical channels. A PPC advertising campaign with other online and offline advertising initiatives generally provides the best overall results. A dealer is another example of a physical channel.

3. In deciding on advertising and other marketing efforts, managers need to know the profit contribution or profit margin (profit margin 5 sale price minus cost of good) of certain products and services. Profitability metrics for products and services can be derived from the cost accounting system.

4. Online retailers can personalize the webpages shown to individual customers and display a combination of products and prices customized to entice that customer to make a purchase. The automated decisions about what products and prices to display to a customer are determined by a complex algorithm based on the customer’s previous purchases, web viewing history, activity on social media and product searches.

Learning Objectives (4 of 5)

Accounting, Finance, and Regulatory Systems

Income Statement

Summarizes a company’s revenue and expenses for one quarter of a fiscal year or the entire fiscal year.

Also known as a P&L (profit and loss) or earnings statement.

Compliance

Generally accepted accounting principles (GAAP) and the Financial Accounting Standards Board (FASB).

Financial Misrepresentation

Occurs when a company has intentionally deceived one or more other parties.

XBRL Tagging

eXtensible Business Reporting Language (XBRL)

Reporting (disclosure) system designed by the SEC to eliminate document “search and find” difficulties and improve how investors find and use information.

Designed to:

Generate cleaner data, including written explanations and supporting notes.

Produce more accurate data with fewer errors that require follow-up by regulators.

Transmit data more quickly to regulators and meet deadlines.

Increase the number of cases and amount of information that staffers can handle.

Creation of XBRL Documents

Figure 9.9 Overview of the creation of SBRL documents.

Fraud Prevention and Detection

Why Fraud Occurs

Fraud occurs because internal controls to prevent insider fraud – no matter how strong – will fail on occasion.

Terms used for Insider fraud are internal, employment, or occupational fraud.

Insider fraud is a term referring to a variety of criminal behaviors perpetrated by an organization’s employees or contractors.

Fraud Risk Management

A system of policies and procedures to prevent and detect illegal acts committed by managers, employees, customers, or business partners against a company’s interests.

Fraud Risk Factors

A high level of trust in employees without sufficient oversight to verify that they are not stealing from the company.

Relying on informal processes of control.

A mindset (belief) that internal controls and fraud prevention systems are too expensive to implement.

Assigning a wide range of duties for each employee, giving them opportunities to commit fraud.

Internal Controls

Strong Internal Controls to prevent fraud consist of:

Segregation of duties

Job rotation

Oversight

Safeguard of assets

IT policies

Auditing Systems

Auditing Information Systems

Fraud can be easy to commit and hard to detect.

Information systems can provide a federated approach to auditing payroll, scheduling, accounts payable/receivable, and other electronic data.

Federated systems are the combination of independent systems designed with unique functions.

Financial Planning and Budgeting (1 of 2)

Financial Planning and Budgeting

Budgeting: allocation of financial resources among participants, activities, and projects. Includes the process of analyzing and selecting investments with the highest ROI for the organization or capital budgeting.

Forecasting: estimating expenses, inventory, or other corporate assets to secure sufficient cash flow.

Financial Planning and Budgeting (2 of 2)

Financial Planning and Budgeting

Financial Ratio Analysis: used by external parties when they decide whether to invest in an organization, extend credit, or buy it.

Profitability Analysis: understanding the profitability of individual products or services, product lines, or the financial health of the entire organization.

Cost Control: financial management of assets, through proper estimation, to assure financial health and cash flow.

Accounting, Finance, and Regulatory Systems Review

What is eXtensible Business Reporting Language (XBRL)?

Why does the SEC mandate data disclosure, whereby data items are tagged to make them easily searchable?

What is insider fraud? What are some other terms for insider fraud?

What is fraud risk management?

What four factors increase the risk of fraud?

Explain how accounting ISs can help deter fraud.

Suggested Answers:

1. XBRL: eXtensible Business Reporting Language

XBRL is a language for the electronic communication of business data. Each item, such as cash or depreciation expense, is tagged with information about various attributes, such as calendar year, audited/unaudited status, currency, and so on. XBRLtagged data can be read by any software that includes an XBRL processor, which makes them easy to transfer among computers. Creating XBRL documents does not require XML computer programming. Software is available to tag data, submit tagged data to various recipients, and receive and analyze tagged data from other sources.

XBRL helps companies:

Generate cleaner data, including written explanations and supporting notes.

Produce more accurate data with fewer errors that require follow-up by regulators.

Transmit data faster to regulators and meet deadlines.

Increase the number of cases and amount of information that staffers can handle.

2. The SEC’s financial disclosure system is central to its mission of protecting investors and maintaining fair, orderly, and efficient markets. Since 1934 the SEC has required financial disclosure in forms and documents. In 1984 the SEC began collecting electronic documents to help investors obtain information, but those documents made it difficult to search for and find specific data items To eliminate that difficulty and improve how investors find and use information, the SEC sought a new disclosure system that required data disclosure, whereby data items are tagged to make them easily searchable.

3. Insider fraud refers to a variety of criminal behaviors perpetrated by an organization’s employees or contractors. Other terms for this crime are internal, employment, or occupational fraud.

4. Fraud risk management is a system of policies and procedures to prevent and detect illegal acts committed by managers, employees, customers, or business partners against the company’s interests. Although each corporation establishes its own specific procedures, fraud risk management involves assessing a company’s exposure to fraud; implementing defenses to prevent and detect fraud; and defining procedures to investigate, prosecute, and recover losses from fraud. Analyzing why and how fraud could occur is as important as detecting and stopping it. This analysis is used to identify necessary corporate policies to deter insider fraud and fraud detection systems for when prevention fails.

5. The interaction of the following four factors make companies targets for fraud:

1. A high level of trust in employees without sufficient oversight to verify that they are not stealing from the company

2. Relying on informal processes of control

3. A mindset (belief) that internal controls and fraud prevention systems are too expensive to implement

4. Assigning a wide range of duties for each employee, giving them opportunities to commit fraud

6. Accounting ISs can provide strong internal controls, can prevent some fraud from taking place, can provide transaction tracking, and can provide the perception that if an employee tries to commit fraud, he/she will most likely be caught.

Learning Objectives (5 of 5)

Human Resource Systems, Compliance, and Ethics

HR Information Systems (HRIS)

Systems that focus on legal and compliance responsibilities, employee development, talent management, hiring, and succession planning.

HRIS moved into intranets or clouds, including leasing external information system software as a service (SaaS):

Reduce demand on internal businesses and IT resources.

Dramatically improve time to value without overstretching internal IT resources.

Reduce development/implementation times for new systems.

HR Management Activities

Figure 9.11 HR management activities.

Management and Employee Development Activities

Management and Employee Development

Performance Evaluation

Corporate managers can analyze employees’ performances with the help of intelligent systems, which provide systematic interpretation of performance over time.

Training and Human Resources Development

Provide career development plan for each employee. IT can support the planning, monitoring, and control of these activities by using workflow applications.

HR Planning, Control, and Management

Personnel Planning and HR Strategies

Forecasts requirements for people and skills, planning how to locate sufficient human resources or develop them from within.

Benefits Administration

Salary/wage, bonuses, and other rewards for service.

Employee Relationship Management

Self-service personal information tracking, online training, and other employee-focused tasks.

HRIS Ethics

Ethical Challenges and Considerations

Recruiting, training, and performance evaluation procedures may involve ethical issues.

Information and employee privacy should be protected.

Employment laws make securing HR information necessary for the protection of employees and the organization

Human Resource Systems, Compliance, and Ethics Review

What are the key HR functions?

What are the benefits of moving HRISs to intranets or the cloud?

What concerns have deterred companies from implementing SaaS HR?

How can companies reduce the cost of recruiting qualified employees?

Describe IT support for HR planning and control.

What are ethical issues related to HRM apps?

Suggested Answers:

1. The key HR functions are:

Planning: Labor needs, skills, sources, strategy

Assessing: Measure performance, evaluate, and assess impact

Recruiting: Attract, select, match, and advertise

Retaining: Retain people, motivate, compensate, engage, and satisfy

Deploying: Assign the right people to jobs, schedule

Developing Human Resources: Train, create teams; improve skills

HR also deals with employment policies, procedures, communications, and compliance requirements. HR will monitor workplace and employment practices to ensure compliance with the Fair Labor Standards Act (FLSA), Occupational Health & Safety Agencies (OSHA), and the antidiscrimination and sexual harassment laws. Effective HR compliance programs are a necessity for all organizations in today’s legal environment.

2. Using intranets, HR apps have shifted many routine tasks to employees who log in to manage their benefits, deductions, direct deposits, health care, and the like. When employees manage their own HR services, HR professionals can focus on legal and compliance responsibilities, employee development, talent management, hiring, and succession planning.

4. Answers may vary.

Three major factors holding companies back from HR SaaS investments include:

Security. SaaS security may be as effective as security associated with in-house data centers, but many companies don’t understand the situation. Some early adopters are keeping highly sensitive applications in house.

Quality of service. The lack of formal service-level agreements (SLA) or performance and availability means quality of service may be a risky issue for some organizations.

Integration. Many companies have questions about their ability to integrate SaaS applications seamlessly with their in-house applications.

5. IT provides the ability to access more potential recruits, collect their information, search the data, and select a pool of applicants based upon specific criteria. This allows a company to evaluate more people with less human intervention.

6. Personnel planning and development: The HR department forecasts requirements for people and skills. In some geographical areas and for overseas assignments, it may be difficult to find particular types of employees. In such cases, the HR department plans how to locate sufficient human resources or develop them from within. Sophisticated HR departments build a career development plan for each employee. IT can support the planning, monitoring, and control of these activities by using workflow applications.

Benefits administration: In some industries, labor negotiation is an important aspect of HR planning and it may be facilitated by IT. For most companies, administering employee benefits is also a significant part of the human resources function. Managing the benefits system can be a complex task, due to its many components and the tendency of organizations to allow employees to choose and trade off benefits. In large companies, using computers for self-benefits selection can save a tremendous amount of labor and time for HR staff. Providing flexibility in selecting benefits is viewed as a competitive advantage in large organizations. It can be successfully implemented when supported by computers. Some companies have automated benefits enrollments. Employees can self-register for specific benefits using the corporate portal or voice technology. Employees can self-select desired benefits from a menu.

Performance evaluations: Evaluations are usually recorded on paper or electronic forms. Using such information manually is a tedious and error-prone job. Once digitized, evaluations can be used to support many decisions, ranging from rewards to transfers to layoffs.

Employee relationship management: In their effort to better manage employees, companies are developing human capital management, facilitated by the Web, to streamline the HR process. These Web applications are more commonly referred to as employee relationship management. For example, self-services such as tracking personal information and online training are very popular in ERM. Improved relationships with employees result in better retention and higher productivity.

Privacy: Employment laws make securing HR information necessary for the protection of employees and the organization. IT can secure access to information based on job function.

7. Training activities that are part of HRM may involve ethical issues in recruiting and selecting employees and in evaluating performance. Likewise, TPS data processing and storage deal with private information about people, their performance, and so forth. Care should be taken to protect this information and the privacy of employees and customers.

The federal law related to workplace substance abuse, the Drug-Free Workplace Act of 1990 requires employers with federal government contracts or grants to ensure a drug-free workplace by documenting and certifying that they have taken a number of steps. Dealing with alcoholism and drugs at work entails legal risks because employees have sued for invasion of privacy, wrongful discharge, defamation, and illegal searches. Employment laws make securing HR information necessary for the protection of employees and the organization.

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