Defining Information Systems and Component of Information Systems

• “Information systems (IS) is the study of complementary networks of hardware and software that people and
organizations use to collect, filter, process, create, and distribute data.”
• “Information systems are combinations of hardware, software, and telecommunications networks that people build and
use to collect, create, and distribute useful data, typically in organizational settings.”
• “Information systems are interrelated components working together to collect, process, store, and disseminate
information to support decision making, coordination, control, analysis, and visualization in an organization.”

An information system depends on the resources of people (end users and IS specialists),hardware (machines and
media), software (programs and procedures), data (data and knowledge basis), and networks (communications media
and network support) to perform input, processing, output, storage, and control activities that convert data resources
into information products.
An information system depends on the resources of people (end users and IS specialists),hardware (machines and
media), software (programs and procedures), data (data and knowledge basis), and networks (communications media
and network support) to perform input, processing,output, storage, and control activities that convert data resources
into information products.
This information system model highlights the relationships among the components and activities
of information systems. It provides a framework that emphasizes four major concepts that can be
applied to all types of information systems:
• People, hardware, software, data, and networks are the five basic resources of information systems.
• People resources include end users and IS specialists, hardware resources consist of machines and media, software
resources include both programs and procedures, data resources can include data and knowledge bases, and network
resources include communications media and networks.
• Data resources are transformed by information processing activities into a variety of information products for end users.
• Information processing consists of input, processing, output, storage, and control activities.
People Resources: People are required for the operation of all information systems. These people resources include end
users and ARE specialists.
End users (also called users or clients) are people who use an information system or the information it produces. They
can be accountants, salespersons, engineers, clerks, customers, or managers. Most of us are information system end
users.
IS Specialists are people who develop and operate information systems. They include systems analysts, programmers,
computer operators, and other managerial technical, and clerical IS personnel. Briefly, systems analysts design
information systems based on the information requirements of end uses, programmers prepare computer programs
based on the specifications of systems analysts, and computer operators operate large computer systems.

Hardware Resources: The concept of Hardware resources includes all physical devices and materials used in information
processing. Specially, it includes not only machines, such as computers and other equipment, but also all data media, that
is, all tangible objects on which data is recorded, from sheets of paper to magnetic disks. Example of hardware in computer
based information systems are:

Computer systems, which consist of central processing units containing micro processors, and variety of
interconnected peripheral devices. Examples are microcomputer systems , midrange computer systems, and large
mainframe computer systems.
Computer peripherals, which are devices such as a keyboard or electronic mouse for input of data and commands, a
video screen or printer for output of information, and magnetic or optical disks for storage of data resources.
Software Resources: The concept of Software Resources includes all sets of information processing instructions. This
generic concept of software includes not only the sets of operating instructions called programs, which direct and
control computer hardware, but also the sets of information processing instructions needed by people, called
procedures. It is important to understand that even information systems that don’t use computers have a
software resource component. This is true even for the information systems of ancient times, or the manual and
machine-supported information systems still used in the world today. They all require software resources in the form
of information processing instructions and procedures in order to properly capture, process, and disseminate
information to their users. The following are the examples of software resources:
System Software, such as an operating system program, which con controls and supports the operations of a
computer system.
Application Software, which are programs that direct processing for a particular use of computers by end users.
Examples are a sales analysis program, a payroll program, and a work processing program.
Procedures, which are operating instructions for the people who will use an information system. Examples are
instructions for filling out a paper form or using a software package.

Data Resources: Data is more than the raw material of information systems. The concept of data resources has been
broadened by managers and information systems professionals. They realize that data constitutes a valuable
organization resource. Thus, you should view data as data resources that must be managed effectively to benefit all
end users in an organization. Data can take many forms, including traditional alphanumeric data, composed of
numbers and alphabetical and other characters that describe business transactions and other events and
entities. Text data, consisting of sentences and paragraphs used in written communications; image data, such as
graphic shapes and figures; and audio data, the human voice and other sounds, are also important forms of data.
The data resources of information systems are typically organized into:
• Database that hold processed and organized data.
• Knowledge bases that hold knowledge in variety of forms such as facts, rules, and case examples about successful
business practices.
For example, data about sales transactions may be accumulated and stored in a sales database for subsequent processing
that yields daily, weekly, and monthly sales analysis reports for management. Knowledge bases are used by knowledge
management systems and expert systems to share knowledge and give expert advice on specific subjects.

Network Resources: Telecommunications networks like the Internet, intranets, and extranets have become essential to the
successful operations of all types of organizations and their computer-based information systems. Telecommunications
networks consist of computers, communications processors, and other devices interconnected by communications media
and controlled by communications software. The concept of Network resources emphasizes that communications
networks are a fundamental resource component of all information systems.
Network resources include:
Communication media, Examples include twisted pair wire, coaxial cable, fiber-optic cable, microwave systems, and
communication satellite systems.
Network Support, This generic category includes all of the people, hardware, software, and data resources that
directly support the operation and use of a communications network. Examples include communications control
software such as network operating systems and Internet packages.
In summary, these five components together make up the five component framework, which are the five fundamental
components of an information system. First you will need the hardware in order to start off your system. Then you must
use the software in order to run you hardware. After you have set up your hardware and loaded up the software to run it,
you will need data to input into your hardware. Once you have your data ready you will need procedures set in play to
properly store your data within the system, and last you will need people in order to put in the data and keep the system
up and running properly at all times. As you can see, you will need every component in order to ensure that you have a
functional running information system.
Types of information systems
A typical organization is divided into operational, middle, and upper level. The information requirements for users at
each level differ. Towards that end, there are number of information systems that support each level in an organization.
Businesses tend to have several "information systems" operating at the same time. For most businesses, there are a
variety of requirements for information:
• Senior managers need information to help with their business planning
• Middle management need more detailed information to help them monitor and control business activities
• Employees with operational roles need information to help them carry out their duties The different types of date /
information / knowledge that are processed at different levels in the organization, we can create a five level model.

Five level pyramid model

based on the processing
requirement of different levels
in the organization
While there are several different versions of the pyramid model, the most common is probably a four level model based
on the people who use the systems. Basing the classification on the people who use the information system means that
many of the other characteristics such as the nature of the task and informational requirements are taken into account
more or less automatically.

Four level pyramid model based on the different levels of hierarchy in the organization
Transaction Processing System (TPS)

A Transaction Processing System is a set of information which processes the data transaction in database system that
monitors transaction programs. The Information systems that process data generated from business transactions are
known as transaction processing systems. In other words, the main job of a transaction processing system is to collect
data generated from the transactions, store it, and, at times, control the decisions that are taken arising out of the
transactions. Such transactions can be in the form of purchases, sales, deposits, withdrawals, etc. For instance, booking
an airline ticket, withdrawing money from an ATM, depositing cash in the bank, etc are all example of transactions.
Generally, these transactions occur on a day-to-day-basis. A sale or purchase of an item triggers many other transactions
like credit checks, billing, and changes in the inventory. Thus, transactions generate additional data.

• An Information system that processes data arising from the occurrence of business transactions. Transaction
processing systems (TPS) are aimed at improving the routine business activities on which all organizations depend.
• A transaction is any event or activity that affects the organization which occur as part of doing business, such as
sales, purchases, deposit, withdrawals, refunds and payments.
• Common transactions include placing orders, billing customers, hiring employees, and depositing cheques.
• The types of transactions that occur vary from organization to organization.
• Transaction processing, the set of procedures for handling the transactions, often includes the activities like
calculation, storage and retrieval, classification, summarization, sorting.
• Transaction processing procedures are often called standard operating procedures.

Example: The routines associated with general banking transactions typify the use of standard operating procedures for
the handling of deposits and withdraws, cashing of cheques, and other processes.
Objective of TPS

• Carrying out the day-to-day transactions of the organization on a regular basis.

• Collecting, processing, editing, updating, storing the data, and generating the required reports or documents.
• Supplying the necessary information to the organization, this would enable proper functioning of the business.
• Providing reports and documents which would help in making timely decisions.
• Supplying data to other information systems.

Essentially, transaction processing systems should capture data and process it with great speed and accuracy. After
capturing and processing the data, the transaction processing system updates organizational databases and produces a
variety of information products for internal as well as external use.

Types of TPS
Batch processing: Processes several transactions at the same time, with a time delay.
Real-time processing: Deals with one transaction at a time and does not have a time delay.
Feature of TPS
• Rapid Response: The response time of a transaction processing system (TPS) is important because a business
cannot afford to have their customers waiting for long periods of time before making a transaction.
• Reliability: A good TPS must be very reliable because if it were to break down businesses could lose a huge
portion of revenue because customers would not be able to purchase their products.
• Inflexibility: The TPS must work the same way for every transaction as long as the TPS is being used. The formality
and structure should never change.
• Controlled processing: The TPS must be able to allow authorized employees to be able to access it at any time.

Storing and Retrieving Data: A TPS must be able to easily be accessed by authorized employees so that information
in the TPS can be retrieved. The information that goes through a TPS must never be deleted so that there will not be
any confusion of what orders have gone through it. It is a good idea to have a back up hard drive so that older
information can still be stored, but will not slow down the server which houses the TPS.
Components of TPS
• Inputs: Source documents such as Customer orders, invoices, purchase orders, etc. serves as Inputs to the TPS system.
• Processing: Once the inputs are provided, they are further processed to get an output.
• Storage: Ledgers serves as a source of storage.
• Output: Any document generated is termed as output.

These were the fundamentals behind the Transaction Processing System. It is a very helpful, reliable & secured system of
processing transactions at an ease.

Diagram illustrates a cycle in which the basic transaction processing activities take place.
Transaction Processing cycle

Transaction processing systems capture and process data describing business transactions. Then they update
organizational files and databases and produce a variety of information products for internal and external use.
Transaction processing systems generally go through a five-stage cycle viz.
1) Data entry activities
2) Transaction processing activities
3) File and database processing
4) Document and report generation
5) Inquiry processing activities.

Data Entry: The input activity in transaction processing systems involves a data entry process. In this process, data is
captured, or collected by recording, coding, and editing activities. Then the data may be converted to a form that can be
entered into a computer system. Data entry activities have always been a bottleneck in the use of computers for
transaction processing.

Transaction Processing: Transaction processing systems process data in two ways.

a) Batch processing
b) Real-time processing
Batch processing : In a batch processing system, transaction data is accumulated over a period of time and processed
periodically.

It usually involves the following activities.

• Gathering source documents originated by business transactions, such as sales orders and invoices, into group called
batches.
• Recording transaction data on an input medium , such as magnetic disks or magnetic tapes.
• Sorting the transactions in a transaction file in the same sequence as records in a sequential master file.
• Processing transaction data and creating an updated master file and a variety of documents (such as customer
invoices or pay cheques) and reports
• Capturing and storing batches of transactions data at remote sites, and then transmitting it periodically to central
computers for processing. This is called remote job entry or RJE.
Real-time Processing involves the following:
• Real-time processing systems process transaction data immediately after they are generated and can provide
immediate output to end users.
• In full-fledged real-time processing systems, data is processed as soon as it is originated or recorded, without waiting
to accumulate batches of data.
• Data is fed directly into the computer system from online terminals, without being sorted, and it is always stored
online in direct access files.
• Files and databases are always up to data since they are updated as and whenever data is originated, regardless of
its frequency.
• Responses to end users' inquiries are immediate, since information stored on direct access devices can be retrieved
almost instantaneously.
• Real-time processing depends on telecommunication networks of online terminals and computers.
File and database processing are the basic activities of transaction processing systems. These are also known as file and
database maintenance. This term emphasizes that an organization's files and databases must be maintained by its
transaction processing systems so that they are always correct and up to date.
Transaction processing systems update and make changes to corporate databases, which are then
used to
a) Provide data needed to produce proper information products
b) Provide data needed for further processing by management information systems.

Document & Report generation

The final stage in the transaction processing cycle is the generation of information products such as documents and reports.
Documents produced by transaction processing systems are called transaction documents. There
are various types of documents such as
• Action documents that initiate actions or transactions on the part of their recipient. For e.g., a pay cheque authorizes a bank
to pay the customer.
• Information documents relate, confirm or prove to their recipients that transactions have occurred. For e.g., sales receipts,
customer statements etc.
• Turnaround documents say that some types of transaction documents are designed to be read by magnetic or optical
scanning equipment. Forms produced in this manner designed to be returned to the sender. For e.g., many computer-
printed invoices consist of a turnaround portion, which is returned to the customer along with his/her payment.
Transaction processing systems also produce several types of reports and are used by managers.Such reports provide an
audit trail for transaction control purposes. For example,
• Control listings, are detailed reports that describe each transaction occurring during a period. They are also called logs.
For example, a payroll register lists every pay cheque printed on a specified payday by a payroll system.
• Edit reports, describe errors detecting during processing. For e.g., invalid Account Number, missing data etc would be
presented in edit reports.
• Accounting statements are such reports that legally document the financial performance or status of a business. For
e.g., statements of cash flow, income statements etc.

Inquiry Processing
Many transaction processing allows us to use Internet and Web browsers or database management query languages to
make inquiries and receive responses concerning the results of transaction processing activity. Typically responses are
displayed in a variety of pre specified formats or screens. For e.g., checking balance in A/C and receive immediate
response on PC
Decision support systems (DSS) are interactive software-based systems intended to help managers in decision-making
by accessing large volumes of information generated from various related information systems involved in organizational
business processes, such as office automation system, transaction processing system, etc.DSS uses the summary
information, exceptions, patterns, and trends using the analytical models. A decision support system helps in decision-
making but does not necessarily give a decision itself. The decision makers compile useful information from raw data,
documents, personal knowledge, and/or business models to identify and solve problems and make decisions.

Programmed and Non-programmed Decisions

There are two types of decisions - programmed and non-programmed decisions.
Programmed decisions are basically automated processes, general routine work, where:
• These decisions have been taken several times.
• These decisions follow some guidelines or rules.
For example, selecting a reorder level for inventories, is a programmed decision.

Non-programmed decisions occur in unusual and non-addressed situations, so:

• It would be a new decision.
• There will not be any rules to follow.
• These decisions are made based on the available information.
• These decisions are based on the manger's discretion, instinct, perception and judgment.
• For example, investing in a new technology is a non-programmed decision.
Attributes of a DSS
• Adaptability and flexibility
• High level of Interactivity
• Ease of use
• Efficiency and effectiveness
• Complete control by decision-makers
• Ease of development
• Extendibility
• Support for modeling and analysis
• Support for data access
• Standalone, integrated, and Web-based

Characteristics of a DSS
• Support for decision-makers in semi-structured and unstructured problems.
• Support for managers at various managerial levels, ranging from top executive to line
• managers.
• Support for individuals and groups. Less structured problems often requires the involvement
• of several individuals from different departments and organization level.
• Support for interdependent or sequential decisions.
• Support for intelligence, design, choice, and implementation.
• Support for variety of decision processes and styles.
• DSSs are adaptive over time.
Benefits of DSS
• Improves efficiency and speed of decision-making activities.
• Increases the control, competitiveness and capability of futuristic decision-making of the
• organization.
• Facilitates interpersonal communication.
• Encourages learning or training.
• Since it is mostly used in non-programmed decisions, it reveals new approaches and sets up
• new evidences for an unusual decision.
• Helps automate managerial processes.

Components of the Decision Support System:

• Database Management System (DBMS): To solve a problem the necessary data may come from internal or external
database. In an organization, internal data are generated by a system such as TPS and MIS. External data come from
a variety of sources such as newspapers, online data services, databases (financial, marketing, human resources).
• Model Management System: It stores and accesses models that managers use to make decisions. Such models are
used for designing manufacturing facility, analyzing the financial health of an organization, forecasting demand of a
product or service, etc.
• Support Tools: Support tools like online help; pulls down menus, user interfaces, graphical analysis, error correction
mechanism, facilitates the user interactions with the system.
Classification of DSS
• Text Oriented DSS − It contains textually represented information that could have a bearing on decision. It allows
documents to be electronically created, revised and viewed as needed.
• Database Oriented DSS − Database plays a major role here; it contains organized and highly structured data.
• Spreadsheet Oriented DSS − It contains information in spread sheets that allows create,view, modify procedural
knowledge and also instructs the system to execute self-contained instructions. The most popular tool is Excel and
Lotus 1-2-3.
• Solver Oriented DSS − It is based on a solver, which is an algorithm or procedure written for performing certain
calculations and particular program type.
• Rules Oriented DSS − It follows certain procedures adopted as rules.
• Rules Oriented DSS − Procedures are adopted in rules oriented DSS. Export system is the example.
• Compound DSS − It is built by using two or more of the five structures explained above.

Types of DSS
• Status Inquiry System: It helps in taking operational, management level, or middle level management decisions,
for example daily schedules of jobs to machines or machines to operators.
• Data Analysis System: It needs comparative analysis and makes use of formula or an algorithm, for example cash
flow analysis, inventory analysis etc.
• Information Analysis System: In this system data is analyzed and the information report is generated. For
example, sales analysis, accounts receivable systems, market analysis etc.
• Accounting System: It keeps track of accounting and finance related information, for example, final account,
accounts receivables, accounts payables, etc. that keep track of the major aspects of the business.
• Model Based System: Simulation models or optimization models used for decision-making are used infrequently
and creates general guidelines for operation or management.
Role of Decision Support System in MIS:
• Decision support system is a special class of system which facilitate decision making. As in an organization, at each
and every point and time, decisions are to be taken irrespective of their nature. Some decisions may be routine and
programmed decisions while other may be strategic, and non-programmed decisions.
• Decision making is done at all level of management.
• Decision support system involves the packages which help the managers to take right and timely decisions.
• Decision support systems use data from the general management information system and they are
• used by a manager or a decision maker for decision support.
• The basic characteristic of the decision support system is that it is based on some tool, technique or model. These
systems are used sometimes for testing new alternatives, training and learning. They are also used for sensing the
various parameters of the model.
• The MIS designer has to look for all such situations and design the decision support system for integration in the
system.
• The decision support system plays a dominant role in the management information system as a
• support to decision making.
Executive Support System
Executive support systems are intended to be used by the senior managers directly to provide support to non-
programmed decisions in strategic management. These information are often external, unstructured and even uncertain.
Exact scope and context of such information is often not known beforehand.
This information is intelligence based:
• Market intelligence
• Investment intelligence
• Technology intelligence

Following are some examples of intelligent information, which is often the source of an ESS:
• External databases
• Technology reports like patent records etc.
• Technical reports from consultants
• Market reports
• Confidential information about competitors
• Speculative information like market conditions
• Government policies
• Financial reports and information
Feature of Executive Support System ( ESS)
Advantage of Executive Support System ( ESS) Disadvantage of Executive Support System ( ESS)
• Functions are limited
• Easy for upper level executive to use • Hard to quantify benefits
• Ability to analyze trends • Executive may encounter information overload
• Augmentation of managers' leadership capabilities • System may become slow
• Enhance personal thinking and decision-making • Difficult to keep current data
• Contribution to strategic control flexibility • May lead to less reliable and insecure data
• Enhance organizational competitiveness in the market place • Excessive cost for small company
• Instruments of change
• Increased executive time horizons.
• Better reporting system
• Improved mental model of business executive
• Help improve consensus building and communication
• Improve office automation
• Reduce time for finding information
• Early identification of company performance
• Detail examination of critical success factor
• Better understanding
• Time management
• Increased communication capacity and quality
Enterprise Resource Planning (ERP) system
ERP is an integrated, real-time, cross-functional enterprise application, an enterprise-wide transaction framework that
supports all the internal business processes of a company. It supports all core business processes such as sales order
processing, inventory management and control, production and distribution planning, and finance.
Objective of ERP :
ERP is very helpful in the following areas:
• Business integration and automated data update
• Linkage between all core business processes and easy flow of integration
• Flexibility in business operations and more agility to the company
• Better analysis and planning capabilities
• Critical decision-making
• Competitive advantage
• Use of latest technologies
Feature of ERP :
Scope of ERP
• Finance − Financial accoun ng, Managerial accoun ng, treasury management, asset management, budget control,
costing, and enterprise control.
• Logistics − Produc on planning, material management, plant maintenance, project management, events
management, etc.
• Human resource − Personnel management, training and development, etc.
• Supply Chain − Inventory control, purchase and order control, supplier scheduling, planning, etc.
• Work flow − Integrate the en re organiza on with the flexible assignment of tasks and responsibility to locations,
position, jobs, etc.

Advantages of ERP Disadvantages of ERP

• Reduction of lead time • Expense and time in implementation
• Reduction of cycle time • Difficulty in integration with other system
• Better customer satisfaction • Risk of implementation failure
• Increased flexibility, quality, and efficiency • Difficulty in implementation change
• Improved information accuracy and decision making capability • Risk in using one vendor
• Onetime shipment
• Improved resource utilization
• Improve supplier performance
• Reduced quality costs
• Quick decision-making
• Forecasting and optimization
• Better transparency
The challenges of implementing ERP system:
ERP Vendors In this competitive environment, selection of the perfect product is necessary to achieve productivity gains. There
are over 500 ERP applications in market. While selecting the perfect ERP application for a business, one should know the vendor‘s
previous projects, industry vertical and experience.

Commitment from the Top Management

Senior managers play a crucial role in any ERP implementation. Their involvement is extremely necessary for the success of a
project. Any form of ignorance may cause ineffective decisions and delayed operations.

Adequate Training
After the implementation of an ERP system, resentment from employees is common. This could heavily degrade the productivity
of processes. Special training and motivation before the implementation is very helpful. This would give the teams, some time to
get familiar with the software.

Implementation Time
Many companies don‘t realize the time consumption of an ERP implementation process. An ERP system is implemented step by
step and because it is very standard, it needs to be designed to a particular business, to handle the processes just the way the
company needs them.

Proper Project Management

Companies, who want to implement the ERP system, need to assign their best employees for successful implementation.
Generally companies appoint external help as well but internal employees are preferred.

Implementation Cost
The entire cost of an ERP implementation is much greater than the initial costs. The total cost depends on customization cost.
Greater the customization, higher will be the final implementation cost.
Employee Retention
It‘s been observed that despite of training, many employees leave the organization after the implementation of ERP
system. This can immensely affect the growth rate of a company.

Sufficient Testing
Testing of ERP system doesn‘t mean whether it‘s working smoothly or not, but to be delighted by its performance and to
see whether it‘s up to your needs. Insufficient testing of the system can attract costly unplanned updating.

Maintenance Cost
An ERP system has maintenance costs attached to it. If managed casually, it has the power to fracture an organization. It
requires time to time maintenance which adds up to the recurring cost.

Investment in Internal Hardware

Working on a slow system can be very unproductive and frustrating. ERP applications require
sufficient storage and high work performance. Low investment in internal hardware may result in
various software issues.ERP has gained recognition because of competitive factors, such as an
ever-increasing number of mergers and globally aggressive rivals. A successfully planned and
managed ERP system can increase customer satisfaction and enhance employee productivity. It
can adequately increase the company profits with minimum resources.
Organizational Functions:
1. Sales & Marketing
2. Production
3. Logistics
4. Personnel
5. Finance & Accounting
6. Information Processing
7. Top Management

Sales and Marketing Subsystem: the sales and Marketing includes al activities related to the promotion and sales of
products or services.

The Transactions are sales order, promotion orders, etc.

The Operational control activities include the hiring and training of the sales force, the day-day scheduling of sales
and promotion efforts etc.

Management control concerns comparisons of overall performance against a marketing plan. Information for
management control may include data on customers, competitors, competitors products and sales force
requirement.

Strategic Planning for the marketing function involves consideration of new markets and new marketing strategies.
Production Subsystem: The production functions includes product engineering, planning of production facilities,
scheduling and operation of production facilities, employment and training of production personnel and quality
control and inspection.
• The typical transaction to be processed is production orders, assembly order, finished parts tickets, scarp tickets
and time keeping tickets.
• Operational control requires detailed reports comparing actual performance to the production schedule and
highlighting areas.
• Management control requires summary reports comparing overall planned performance to actual performance
• Strategic planning for manufacturing approaches and alternatives approach to automation.

Logistics Subsystem: The logistics function encompasses such activities as purchasing, receiving, inventory control
and distribution.
• The transaction to be processed includes purchase requisition, purchase order, manufacturing orders.
• The Operational control function uses information contained in reports such as past due purchase, past due
shipments to customers etc.
• Managerial control information for logistics consists of overall comparisons between planned and actual inventory
levels.
• Strategic control involves the analysis of new distribution strategies, new policies with required to vendors.
Personnel subsystem: includes hiring, training, record keeping, payment and termination of
personnel.
• The transaction result in documents describing employment requisition, job descriptions, training, personal data.
• Operational control for personnel requires decision procedures for action such as hiring, training, termination,
changing pay rates, and issuing benefits.
• Management control of the personnel function decision is supported by reports and analysis showing the
variances between actual and planned performance.
• Strategic planning fro personnel is involved with evaluating alternatives for recruiting, salary, training, benefits and
building location to ensure that the organization obtained and retains personnel.

Finance & Accounting subsystem: Finance function covers granting of credit to customer, collection process, cash
management and financing arrangements. Accounting covers the classification of financial transaction and
summarization in to the standard financial reports,preparation of budgets.
• Transaction associated with finance and accounting are credit applications, sales,billing, collection documents,
payement vouchers etc.
• Operational control over the function itself require daily error and exception report,records of processing delays
etc.
• Managerial control level for accounting and finance utilizes information on budgeted versus actual cost of financial
resources and error rates.
• Strategic planning level for accounting finance involves a long run strategy to ensure adequate financing, a long
range tax accounting policy to minimize the impact of taxes.
Information processing subsystem: The information processing function is responsible for ensuring that the other
functions are provided the necessary information processing services and resources.
• Typical transaction for information processing service and resources, requests for corrections or changes in data
and programs, reports of hardware and program performance and projects proposals.
• Operational control of information processing operations requires information on the daily schedule of jobs, error
rates and equipment failures, for new projects development it requires daily or weekly schedules.
• Managerial control over information processing requires data on planned versus actual utilization, equipment
cost, overall programmer performance and progress.
• Strategic planning for information system involves the organization of the function, the overall information system
plan, selection of strategic uses of information and the general structure of the hardware and software
environment.