Effective and Efficient Business Functions

Effective and Efficient Business Functions

Chapter 9

Effective and Efficient Business Functions

Prepared by Dr. Derek Sedlack, South University

Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.

Learning Objectives

Manufacturing, Production, and Transportation Management Systems

Sales and Marketing Systems

Accounting, Finance, and Regulatory Systems

Human Resource Systems, Compliance, and Ethics

Solving Business Challenges at All Management Levels

Solving Business Challenges at All Management Levels

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.

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Solving Business Challenges at All Management Levels

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Figure 9.5 Three organizational levels, their concerns, and strategic and tactical questions, planning, and control.

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Solving Business Challenges at All Management Levels

Order Fulfillment Process

Moving products from customer order to the customer, including checking credit, collecting payment, picking shipping departments to pack products, printing mailing labels, preparing for shipment, and notifying departments.

Standard Operating Procedures

Set of written instructions on how to preform a function or activity.

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Solving Business Challenges at All Management Levels

Basic Functional Area Systems

Manufacturing and production: materials purchasing, quality control, scheduling, shipping, receiving.

Accounting: accounts receivable, accounts payable, general ledger, and budgeting. Accounting systems keep account balances up to date, disburse funds, and post statements.

Finance: Finance: cash management, asset management, credit management, financial statement reporting to comply with federal and industry-specific regulations and government agencies.

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Solving Business Challenges at All Management Levels

Basic Functional Area Systems

IT: cloud computing services, SLA management, software license management, user accounts management, information and network security.

Sales and marketing: pricing, social media promotions, market research, demand forecasts, sales campaign management, order tracking, and online and mobile order processing and sales.

HR: payroll, recruitment and hiring, succession planning, employee benefits, training, compensation, performance appraisal, compliance with federal and state employment regulations.

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Solving Business Challenges at All Management Levels

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.

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Solving Business Challenges at All Management Levels

Transaction Processing

Transaction processing systems monitor, collect, store, process, and distribute all financial and nonfinancial transactions.

Batch: events or transactions are processed during scheduled times.

Online (OLTP): events or transactions are processed as soon as they occur.

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Solving Business Challenges at All Management Levels

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Figure 9.7 Information flows triggered by a transaction or event.

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Solving Business Challenges at All Management Levels

Explain the core concerns and time horizons of each level of management.

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

Explain each component of the ACID test.

4Explain the differences between batch and online processing.

Describe the flow of information in transaction processing.

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Suggested Answers:

1. There are three levels of Management (Robert Anthony’s Management hierarchy): strategic, managerial (tactical, or administrative) and operational.

 

At the strategic level, senior or top level management plan and make decisions that set or impact the long-term direction of the entire organization. They set priorities, focus energy and human and technology resources, strengthen operations, and ensure that employees and business partners work toward common goals. These decisions are visionary and future-oriented.

 

At the managerial level, middle-level managers define business models and make tactical decisions that are shorter range. Middle-level managers design business processes, procedures, and policies to implement strategic plans.

 

At the operational level, managers and supervisors depend on detailed data, in real time or near real time. Decision making is mostly immediate or short-term, because decisions are made to control ongoing activities and operations. Feedback and control are vital to identify deviations from goals as soon as possible in order to take corrective action.

 

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. The flow of information in transaction processing consists of the basic input-process-output model. Internal and/or external data are entered (input), processed against data from the database by TPS programs which handle changes to the database (processing) and generating reports (output.)

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Learning Objectives

Manufacturing, Production, and Transportation Management Systems

Sales and Marketing Systems

Accounting, Finance, and Regulatory Systems

Human Resource Systems, Compliance, and Ethics

Solving Business Challenges at All Management Levels

Manufacturing, Production, and Transportation Management Systems

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Figure 9.9 Production operations management (POM) systems process and transform inputs into outputs.

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Manufacturing, Production, and Transportation Management Systems

Production Operations Management

Transparency: being able to access current data to learn what is needed in order to make informed decisions without delay.

Quick response: being able to respond appropriately to changes in conditions, demand, or new opportunities.

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Manufacturing, Production, and Transportation Management Systems

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.

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Manufacturing, Production, and Transportation Management Systems

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.

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Manufacturing, Production, and Transportation Management Systems

Safety Stock

Needed in case of unexpected events, such as spikes in demand or longer delivery times.

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

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Manufacturing, Production, and Transportation Management Systems

Just-in-Time Inventory

Deciding when to order and how much to order is used to answer both questions is the economic order quantity (EOQ) model, taking 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.

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Manufacturing, Production, and Transportation Management Systems

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.

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Manufacturing, Production, and Transportation Management Systems

Quality Control (QC) 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.

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Manufacturing, Production, and Transportation Management Systems

Computer-integrated Manufacturing (CIM)

Control day-to-day shop floor activities to replace disparate information sources frequently late, unreliable, voluminous, and extremely difficult to assimilate.

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.

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Manufacturing, Production, and Transportation Management Systems

Manufacturing Execution Systems (MESs)

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.

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What is the function of POM 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?

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Manufacturing, Production, and Transportation Management Systems

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Suggested Answers:

1. The production and operations management (POM) function is responsible for the processes that transform inputs into value-added outputs. These inputs include human resources, such as workers, staff, and managers; facilities and processes, such as buildings and equipment; they also include materials, IT, and information. Outputs are the goods and services a company produces.

 

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.

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Learning Objectives

Manufacturing, Production, and Transportation Management Systems

Sales and Marketing Systems

Accounting, Finance, and Regulatory Systems

Human Resource Systems, Compliance, and Ethics

Solving Business Challenges at All Management Levels

Sales and Marketing Systems

Data-Driven Marketing

Data-driven, fact-based decision making such as push-through pay-per-click (PPC) marketing.

Push-through ads use data about the person to determine whether the ad should appear.

Pull-through ads appear based on the user’s keyword searches.

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Sales and Marketing Systems

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Figure 9.12 Sales and marketing systems and subsystems.

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Sales and Marketing Systems

Sales and Distribution Channel

Ways to optimize product and service distribution.

Example channels:

Electronic channels.

Mobile channels.

Physical channels.

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Sales and Marketing Systems

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 (profit margin 5 sale price minus cost of good) of certain products and services derived from the cost accounting system.

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Sales and Marketing Systems

Explain push-through marketing and pull-through marketing.

List two sales and distribution channels.

Describe profitability analysis.

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Suggested Answers:

1. In pull-through marketing, ads appear based on the user’s keyword searches. In push-through 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.

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Learning Objectives

Manufacturing, Production, and Transportation Management Systems

Sales and Marketing Systems

Accounting, Finance, and Regulatory Systems

Human Resource Systems, Compliance, and Ethics

Solving Business Challenges at All Management Levels

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.

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Accounting, Finance, and Regulatory Systems

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Figure 9.14 Overview of the creation of XBRL documents.

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Accounting, Finance, and Regulatory Systems

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.

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Accounting, Finance, and Regulatory Systems

Fraud Prevention and Detection

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

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Accounting, Finance, and Regulatory Systems

Internal Controls

Segregation of duties

Job rotation

Oversight

Safeguard of assets

IT policies

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Accounting, Finance, and Regulatory Systems

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.

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Accounting, Finance, and Regulatory 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.

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Accounting, Finance, and Regulatory Systems

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.

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Accounting, Finance, and Regulatory Systems

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.

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Accounting, Finance, and Regulatory Systems

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.

Define capital budgeting.

What is the purpose of auditing?

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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.

 

7. Capital budgeting is the process of analyzing and selecting investments with the highest ROI for the company. The process may include comparing alternative investments; for instance, evaluating private cloud vs. public cloud computing options.

8. The major purpose of auditing is to protect and defend the accuracy and condition of the financial health of an organization. Auditing helps to meet compliance mandates, deter fraud, and facilitate capital budgeting and forecasting.

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Learning Objectives

Manufacturing, Production, and Transportation Management Systems

Sales and Marketing Systems

Accounting, Finance, and Regulatory Systems

Human Resource Systems, Compliance, and Ethics

Solving Business Challenges at All Management Levels

Human Resource Systems, Compliance, and Ethics

HR Information Systems

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.

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Human Resource Systems, Compliance, and Ethics

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.

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Human Resource Systems, Compliance, and Ethics

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

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Human Resource Systems, Compliance, and Ethics

HR Planning, Control, and Management

Employee Relationship Management

Self-service personal information tracking, online training, and other employee-focused tasks resulting in better retention and higher productivity.

Ethical Challenges and Considerations

Recruiting, training, and performance evaluation procedures may involve ethical issues. Information and employee privacy should be protected.

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Human Resource Systems, Compliance, and Ethics

What are the key HR functions?

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

Why have companies implemented SaaS HR?

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?

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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.

 

3. Cost savings and greater effectiveness. SaaS can be an efficient way to transform and improve HR and at lower cost.

 

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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