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Business Processes and Uses of Information Systems

Business Processes and Information Systems

Business process is a collection of activities to perform some task or to product a product or service. In business process activities are organized, coordinated to produce a valuable product or service. The way business processes are designed, coordinated and executed greatly influences performance of a business firm. If business process is well designed, coordinated and executed then it can generate a competitive advantage for the firm otherwise it may prove to be liability. Identifying customers, hiring employees, producing product are some of the examples of the business processes. Basically, business processes are tied to functional area.

Functional Area Business Process
Manufacturing and production
  • Assembling product
  • Making bills
Sales and Marketing
  • Identifying customers
  • Selling product
Finance and accounting
  • Paying creditors
  • Preparing financial statements
Human Resources
  • Hiring employees
  • Evaluating employees

Some business processes may cross more than one functional area. For instance, ordering a product from the supplier. This business process has to first check store, then past sells data, past supplier’s payments, supplier information. These information will be collected from different departments of the business firm.

Information Technology Improves business processes

Information systems help to automate several intermediate steps of the business processes. Many people will be able to see the shared data, that results in elimination of some of the steps of the process, resulting in fast and efficient process. It is necessary to understand how the business process executes the steps, What entities are involved in the business process. This understanding will give user insight where what information is needed.

Types of Information Systems

Business organizations have several business processes for conducting each of the business functions like sales and marketing, human resource management, account and finance, and manufacturing and production. Functional systems operate in team; many organizations have large-scale cross functional systems which combine activities of related business processes and organizational units.

Systems for different management groups

  • Transaction Processing System (TPS)
  • Systems for Business Intelligence: MIS, DSS, ESS
  • System for Linking Enterprise: Enterprise applications (also known as ERP) :SCM, CRM,KMS

Role of Information Systems in Business Today

Business firms are able to respond rapidly to changing customers' demand, keep inventories to lowest possible levels, achieve operational excellence. At the same time, supply chain management has become easy job.

New in Management Information System

Lots of things have changed during last decade because of the improvement in Information technology. Some of the major changes seen are:

  • In the field of communication: mobile digital platform
  • Capacity to store and handle huge volume of data: concept of big data.
  • Virtual storage: cloud computing

Globalization Challenges and Opportunities

The World is flat: According to journalist Thomas Friedman, world has become flat; the Internet and global communications system had reduced the economic and cultural benefits of developed countries; developed countries like USA lost several thousand manufacturing jobs to offshore, to low-wage countries.

It has become challenge to produce high-skilled human resources through education; creating market for goods and services made in own country.

On the flip side, improvement in Internet has reduced the costs of operating and transacting on a large and global scale; communication between any departments located anywhere has become easy and cheap; customers can shop anytime, anywhere. Firms are able to manufacture products in cheaper price as they are able to find low-cost suppliers.

Strategic business objectives of Information Systems

Six strategic business objectives are achieved with Information Systems.

  • Operational excellence
  • new products and services, business models
  • customer and supplier intimacy
  • improved decision making
  • competitive advantage and
  • Survival