Functional Business Systems

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Overview of Functional Business Systems

Functional business systems provide decision-makers feedback and information on the daily operation of the business. Transaction processing, management information, decision support and many more information systems supports business functions, such as accounting, finance, marketing, operations management and human resource management.[1] Although, functional business sytems are grouped into the five main areas listed above and shown in the diagram below, in the day to day operations of a business, many times the lines are blurred. These cross-functional systems enable businesses provide vital, time sensitive information that enable a business to both maintain its critical competitive edge as well as enhance it. [2]

Business systems.jpg

Marketing Information System

This system supports managerial activities and is mainly concerned with product development, distribution, pricing decisions, promotional effectiveness and sales forecasting. In order to compete effectively in today’s fast changing environment companies rely on Information technologies to help them when performing critical marketing functions.[3]

Inputs to Marketing MIS - The TPS (Transaction Processing Systems), External sources - (1) The competition (2) The market

Marketing MIS Subsystems and Outputs - Marketing research , Product development , Web based market research , Promotion and advertising , Product pricing


Human Resource System

The Human Resource Management system basically deals with of the activities related to employees and future employees of the organization.

Inputs to the Human Resource MIS - Strategic plan or corporate policies; The TPS: (1) Payroll data (2) Order processing data (3) Personnel data (4) External sources

Human Resource MIS Subsystems and Outputs - Human resource planning, Personnel selection and recruiting, Training and skills inventory, Scheduling and job placement , Wage and salary administration.[4]

HR diagram.jpg

Why is Financial Management Important?

Responsible management of a company's finances is more than just the safe guarding of asssets, it is the basis for solid growth, stability of the company, and maintenance of a competitive edge. Sound financial management systems should provide quality, up-to-date information that will assist upper management with such tasks as cash management, credit management, investment management, captial budgeting, and financial forecasting. Effective management of these critical elements of a business can enable the entity to:

Accounting Information Systems

For the typical small business in the United States, the most common accounting software used is QuickBooks. Many large companies use software produced by such names as Cisco, Manatron, and Oracle, just to name a few. It doesn't matter whether a business is producing 5,000 widgets a month or 500,000, the management of the company needs to know certain accounting related data to function effectively. The type of data depends on the management level and yet each is inter-dependent on the other. The owner of a business needs to know how much money he needs for payroll, materials, and accounts payable. The factory foreman needs to know how to schedule the workers to meet production deadlines and needs. This information comes from the sales manager who not only needs to know what his sales force has sold, but forecasted sales as well. The inventory clerk needs to know what to order, and the list goes on. The scenario above is indicative of the over-lapping functions of each department and involves the need for real-time data as opposed to historical data such as profit and loss statements. Typical types of accounting management data are:

Production/Operations Management Systems

"A production (or manufacturing) planning and control (MPC) system is concerned with planning and controlling all aspects of manufacturing, including materials, scheduling machines and people, and coordinating supplieers and customers." [7] None of activities listed in the previous quote would be considered a function unto itself but rather, a cross over between all five of the areas shown in overview section of this page. Other factors which should be taken into consideration are:


  1. O’Brien, J.A., Marakas, G. M., (2009). “Introduction to Information Systems”. 15th Ed. NY: The McGraw Hill-Companies, Inc.
  2. Anatoly Sachenko,Introduction to e-Business, May 25, 2011,
  3. Blog.Maia.Intelligence (2008), Navneet Mehta; Filed under: Business Intelligence
  4. Blog.Maia.Intelligence (2008), Navneet Mehta; Filed under: Business Intelligence
  5. How Does Good Financial Management Help Your Business?,May 25, 2011,,
  6. "What Is Management Accounting?",May 25, 2011, eHow,
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