Information Systems and

Data Analytics
 Learning Objectives

 Identify the accounting information requirements and describe the

different types of information systems used for strategic planning,
management control, operational control and decision-making
 Define and discuss the main characteristics of transaction processing
systems; management information systems; executive information systems;
enterprise resource planning systems and customer relationship
management systems
 Describe the characteristics (volume, velocity, variety) of Big Data
 Explain the uses of Big Data for enhancing decision-making
 Performance Management Information
Systems
 There are three levels of planning and control within an organisation
Level of Control Key characteristics Example of accounting
information
requirements
Strategic Takes place at the top of the organisation. Long-term forecasts
planning Concerned with setting a future course of
action for the organisation
Management Concerned with the effective use of resources Budgetary measures,
control (tactical) to achieve targets set at strategic planning productivity measures,
labour statistics
Operational Concerned with the day-to-day Detailed short-term
control implementation of the organizational plans transactional data
 Types of information system

 The strategic level of management requires summarized internal and external

information in order to plan the long-term strategies of the organisation. The
decisions are long-term and complex (aim to be market leader)
 The tactical level of management requires information and instructions from the
strategic level of management, together with routine and regular quantitative
information from the operational level of management. Information would be in
a summarised form, but detailed enough to allow tactical planning of resources
and manpower. The decisions are medium-term and less complex (may have
to launch a new product or service or open new branches)
 The operational level of management requires information and instructions from
the tactical level of management. It is primarily concerned with the daily
performance of tasks and most of the information obtained from internal
sources. The decisions are done on a daily basis (ordering supplies to ensure
new product lines are stocked)
Information Systems at different
business levels
 Transaction Processing Systems (TPS)

 It records historic information and represents the simple automation of

manual systems.
 TPS routinely captures, processes, stores and output the low level
transaction data.
 It records all the daily transactions of the organisation and summarises them
so they can be reported on a routine basis.
 They are used mainly by operational managers to make basic decisions.
 E.g. it can record the sales for a bookstore, producing a summary of how
many of each type of book has been sold daily.
 Management Information Systems
(MIS)

 A management information system (MIS) converts internal and external

data into useful information which is then communicated to managers at
all levels/functions to enable them to make timely and effective decisions
for planning, directing and controlling activities.
 Information is provided to all levels of management to enable them to
make timely and effective decisions for planning and controlling the
activities for which they are responsible.
 Executive Information Systems

 EIS systems provide strategic managers with flexible access to information

from the entire business, as well as relevant information from the external
environment.
 It enables senior management to easily model the entire business by
turning its data into useful, summarized reports.
 Expert Systems

 ES systems can be used at all levels of management and hold specialist

knowledge. (on law or taxation)
 ES systems allows non-experts to interrogate them for information, advice and
recommend decisions.
 It is a computer program that captures human expertise in a limited domain of
knowledge.
 It uses a knowledge base that consists of facts, concepts and the relationships
between them and uses pattern-matching techniques to solve problems.
e.g. An accountant could use an ES to calculate a client’s personal tax liability. The
accountant will input the relevant information about the client’s circumstances.
The ES will then access its databases of rules and regulations about personal tax,
decide which rules apply to the client and then use them to calculate a tax
liability.
 Enterprise Resource Planning (ERP)

 ERPS systems integrate the data from all operations within the organisation
e.g. operations, sales and marketing, HR and purchasing, into one single
system.
 It ensures that everyone is working off the same system and includes
decision support features to assist management with decision making.
 Customer Relationship Management
(CRM) Systems
CRM systems aim to form and sustain long-term business with customers.
It consists of processes a company uses to track and organize its contacts with
current and prospective customers.
 Selection – identification of customers through normal segmentation,
targeting and positioning process.
 Acquisition – getting new customers
 Retention – keeping the existing customer by understanding their needs.
 Extension – additional sales by either reselling same product, cross-selling or
up-selling.
 After-sales service technology to provide answers to frequently asked
questions and handling of complaints.
 Big Data

 Big Data is commonly used referring to large volumes of data beyond the
normal processing, storage and analysis capacity of typical database
application tools. (petabytes and exabytes)
 Big Data will often include much more than simply financial information
and can involve other organisational data which is operational in nature
along with other internal and external data.
 Managing such data can lead to significant business benefits such as
greater competitive advantage, improved productivity and increasing
levels of innovation.
 The four V’s of Big Data

They represent the defining characteristics of Big Data:

 Velocity: Data is now streaming from sources such as social media sites at a
virtually constant rate and current processing servers are unable to cope with
this flow and generate meaningful real-time analysis.
 Volume: More sources of data and an increase in data generation in the digital
age combine to increase the volume of data to a potentially unmanageable
level.
 Variety: Traditionally data was structured and in similar and consistent formats
such as Excel spreadsheets and standard databases. Data can now be
generated and collected in a huge range of formats including rich text, audio
and GPS data amongst others.
 Veracity: Because of so many different sources there is an increased risk of
inaccuracies
 Big Data Benefits

Several major business benefits arise from the ability to manage Big Data
successfully:
 Driving innovation by reducing time taken to answer key business questions
and therefore make decisions
 Gaining competitive advantage
 Improving productivity
 Big Data Risks

 Availability of skills to use Big Data systems which is compounded by the

fact that many of the systems are rapidly developing and support is not
always easily and readily available. There is also an increasing need to
combine data analysis skills with deep understanding of industry being
analysed and this need is not always recognised.
 Security of data is a major concern in the majority of organisations and if
the organisation lacks the resource to manage data then there is likely to
be a greater risk of leaks and losses.
 Data Protection issues as organisations collect a greater range of data from
increasingly personal sources (e.g. Facebook).