Business has its origins in primitive societies – food gathering, hunting and eventually agriculture were essential to sustain even a basic form of life and were more effective when people formed themselves into organised groups or communities. The making of tools, implements and clothing gave rise to today’s manufacturing industry. In this environment, organisations have developed that are able to specialise in the manufacture of specific ranges of products.
A large number of organisations currently make use of computer based information systems. These organisations vary in size, and in the aims and objectives that they are attempting to achieve. For example they may be:
* business organisations which are trying to make a profit by providing a product or a service
* charities trying to raise money or highlight a specific problem
* service organisations such as the health service
* special interest groups such as animal welfare or environmental groups trying to change public opinion
* clubs and societies such as golf clubs or social clubs.
Each of these organisations has an objective or a set of objectives which it is trying to achieve. These objectives may sometimes be difficult to identify and may not be the objectives which the organisation publicly adopts. Sometimes there may be contradictions between the different objectives of the organisation.
In order to achieve its objectives an organisation must decide on what policies to implement and what actions to take. It must monitor the effects of those policies and actions and decide whether they are helping to achieve the objective and if necessary take corrective action.
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If we look at a business organisation we can see that its main objective is usually to make a profit in either the long or the short term though other aims such as defending market share may also be important. Within a business there are usually a range of identifiable functions. While in a small or one-person business they may all be carried out by one individual, in large corporations, departments consisting of several hundred people, perhaps, may be committed to a single function.
In the main, large organisations consist of different departments, each of which has specific tasks and duties to carry out in order to achieve the objectives set for it by its board of directors or senior management.
For example, a typical business might have the following departments:
* Sales:
Whose task is to sell the products of the business. The business which is unable to sell its products in sufficient numbers is unlikely to survive. A well-organised and motivated sales team ensures that sufficient orders are placed by customers so as to guarantee the business’s continued existence and healthy development. It would be embarrassing if the sales force is too successful and the business is unable to meet all of its customer’s orders. Equally, it would also be embarrassing if production is greatly in excess of customers’ orders. It is therefore important that there is close liaison between the sales and production functions of the organisation.
Often identified as a sub-system of either sales or production the Warehousing and Distribution function ensures that the customers receive their orders. The distribution activity, depending on the size of the organisation and its range of products, can be a simple delivery operation or a complex scheduling and distribution headache.
* Production:
While the increasing use of technology in business – in both the production of goods and services and in the administration of the business – has substantially reduced the need for human involvement, even the most highly automated factory would have great difficulty in operating without the contribution of people. The role of people is crucial to manufacturing and service organisations and it is usually in the production or operations area that most of the people are employed. Where the range of products is limited the task of management is limited and straightforward. However, it is not unusual for a business to offer a wide range of products – with each one requiring a range of production processes. Irrespective of whether the production process is make to order, order from stock or flow production, production management has the task of ensuring that work is carried out effectively and as safely as possible while ensuring, as far as possible, that the employment meets the ambitions and expectations of the employees.
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* Marketing:
While production is concerned with the internal processes of actually producing the goods, marketing is concerned with the external links to the prospective customers and embraces activities such as market research, advertising and public relations. It is often thought of as the front end of the business, and is concerned with determining the possible demand for a product or service, motivating its purchase and use at a profit to the producing organisation.
In some organisations the distinction between marketing and production is not always as clear as this. Sometimes it is the responsibility of the marketing department to distribute goods and in other instances – even in the same industry – it is the responsibility of production. The distinction in service industries is even less clear because of the close links between production – or more correctly operations in the service sector – and the customer. It is quite usual for an employee in operations to have the added responsibility of marketing.
* Purchasing:
To enable the organisation to produce products for its customers it may be necessary to buy in raw materials and/or services from suppliers. This will involve contracts with suppliers for goods and services, which are competitively priced and will ensure that materials/services are available in the required quantities at the appropriate time. It may also be necessary to store the materials supplied so that warehousing and stock control will be involved. It may also be desirable to monitor the quality of supplies, so that some element of quality control and testing will be necessary.
The Research paper on Course Outline of Production Operation Management (Pom)
The primary objective of the course is to provide the students with an understanding of the theories, models, problems, issues, and techniques related to the management of operations both in manufacturing and service sectors. This includes analyses of various tasks performed and decisions made by operation managers, both tactically and strategically. The operations function plays a vital role in ...
* Accounting:
Before an organisation can start up in business it will require substantial financial support. This can be in the form of capital from shareholders and/or loans from banks or other financial institutions. Much of the financial resources will be spent in purchasing buildings and equipment – the fixed assets of the organisation – and the remainder will be required to pay the running costs of the business, for example, raw materials/services, payroll, maintenance and the repayment of interest on any loans.
The main purpose of accounting is to record what is happening to the money employed by the organisation to run the business. There are two aspects to this. Firstly there is the historical view of what has happened to the money as it passes from one area to another – from inside the business to pay the suppliers for materials provided and from the outside, from customers in payment for the goods they have received. Conventional accounting practice requires that on at least one occasion a year the Financial Accountant should produce a complete view of the company’s finances – the balance sheet. Financial Accounting is concerned with monitoring the use of capital to produce goods and services whose sale will cause cash to flow back into the organisation i.e. reporting the past.
The second area looks at how effectively the capital has been used, is being used and will be used within the organisation and is aimed at helping the organisation to take decisions regarding its future. This is the role of Management Accounting.
What is the difference between financial and management accounting?
Corporate Management
There are often conflicts between the different functions in an organisation particularly if each follows a path in pursuit of its own objectives at the expense of the overall organisation objectives. For example, there is frequently a conflict between the marketing and production functions. Production prefers a uniform output of a limited range of products throughout the year – this allows maximum use of the plant, no requirement for resetting machines and no difficulty in raw materials supplies or storage of finished products. On the other hand, marketing is likely to encourage as wide a range of products as possible so as to increase its chances of establishing a wider customer base and perhaps coming up with a product which will become an established market leader. Both of these functions and, in fact, all of the areas of an organisation are subject to many constraints, particularly financial ones.
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There is little point in debating the production levels and market strategy for products unless they are going to be profitable. There is an obvious need to co-ordinate the financial and operational aspects of an organisation. Someone has to adopt an overall view – to determine if overall objectives are being met and to make the necessary decisions. It is the province of corporate management to co-ordinate all of the organisation’s functions. This is normally the role of a board of directors which will be constituted from the main functions. The board will decide on the priorities and resolve conflicting policies, with management accounting, in particular, providing the necessary views of the organisation. Figure 1.1 shows some of interrelationships between these departments.
*Personnel:
Traditionally the production manager was responsible for all aspects of his workers employment – recruitment, training, payment and discipline. However because of the complexities of human management the specialist role of personnel has evolved. A major driving force in the development of the personnel function was the plethora of Government legislation relating to people at work.
It is not unusual for the personnel function to embrace the following activities:
* manpower planning
* recruitment and selection
* education and training
* payment
* industrial relations
* employment conditions
* discipline and termination procedures
While personnel may deal with a lot of the general problems that arise – and those that it may even cause – day-to-day management still rests with the production and other management whose skills and experience in handling staff will have a major influence in a company achieving its objectives.
ORGANISATIONAL GOALS
While its objectives may not be recognised or formally stated an organisation will be working towards some goal. This may be to:
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* achieve a profit
* provide a better standard of living
* to do the job better than others
* to provide a good level of services
* to produce a product at minimum cost
* to produce a good quality product
The most obvious objective for many organisations is to achieve a profit. While this might be acceptable to many organisations a number of questions arise:
* Is it acceptable to local and national government services such as education and health and to the legal system?
* Should commercial organisations be aiming at achieving maximum profit or is there some acceptable and respectable level of profit?
* What should be done with the profit – should it be distributed among the shareholders or reinvested in new plant and equipment to ensure the continued health and long-term future of the organisation?
* What is best for the employees whose efforts contribute to the profit making?
* Does the organisation have a responsibility to provide rewarding and satisfying work and healthy and pleasant working conditions for its employees?
Where trade union influence is strong those objectives which ensure that employees interests are considered will be given a high level of priority. On the other hand where a business is operating in a highly competitive market the priority will be to reduce costs and increase market share. With a greater public consciousness of environmental damage, pressure groups – and even government – will force organisations to include objectives which are designed to meet the overall needs of society by minimising pollution and improving the environment. A variety of influences are constantly being brought to bear on organisations. These influences may change with time and therefore the objectives of organisations will also have to change in response. Figure 1.2 illustrates the profit objective.
INFORMATION AND DECISION-MAKING
Organisational decision-making depends on a number of factors, but principally on the type of decision to be made and on management philosophy and behaviour. Since we are normally concerned with the purpose of the decision making process within organisations it is convenient and practical to view this in the framework of the accepted structure associated with management. The following three levels are usually identified:
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* Operational Management
* Tactical Management
* Strategic Management
Operational managers or frontline managers – such as foremen, senior clerks, office administrators – are concerned with ensuring that particular tasks are planned and efficiently performed within an office, factory or workshop. Their concern is with decisions of a routine nature which are made many times a week and, perhaps, even frequently during a day. The information required for this level of decision-making could include such items as:
* hours worked by employees in a week
* vacancies
* current stock levels
* outstanding orders
* work-in-progress levels.
Tactical managers are responsible for implementing the short term or strategic plans of the company. Such managers might be departmental heads – middle management – and their priorities are to allocate resources and control these so that they are used effectively to achieve strategic objectives. The type of information required to sustain decision-making at this level would include such items as:
* productivity – output per person hour or per machine hour
* sales analyses by salesperson or by sales area
* cash flow projections
* departmental staffing levels
* profit results within a department.
Tactical decisions will relate to the business, its suppliers and customers, will cover the present and the near future, and will have to be made less frequently than operational decisions, perhaps weekly or monthly.
Strategic management is concerned with long term plans, the province of top management who will define the objectives of the organisation, assess if these are being met in practice and revise them where necessary. The information required to make such decisions would embrace such items as:
* reports on overall profitability
* the profitability of major sections of the business or of products
* total cash requirements
* studies of current market trends
* projections of future market prospects.
Strategic plans cover a relatively long-term future period. For example, a large multi-national corporation may plan up to ten years ahead, whereas a smaller company which may be subject to the vagaries of changing fashion would find it unprofitable to plan more than two or three years ahead.
At all three levels decisions relating to a broad spectrum of organisational functions will be taken, but at particular levels greater emphasis is placed on some of these functions at the expense of others.
It is interesting to note the characteristics of the decisions made and the information on which they are based at the different levels. At operational level the information required arises from mainly internal sources, while at strategic level the information is almost exclusively external. The net result of this is that computer based information systems have tended to be developed in order to take the operational decisions since the data is readily available and is reliable.
Another influence is, of course, the mechanism for reaching the decision. At operational level the decisions which, while being frequent in number, are usually structured with simple decision rules. For example, the calculation of employees overtime pay, or the decision on whether a customer should be supplied with goods in relation to his/her outstanding balance. In contrast, at a strategic level, decisions are required much less frequently, occur on an irregular basis and tend to be complex and unstructured. For example, deciding to market a completely new product or to pursue new marketing opportunities overseas. The results of these decisions are unpredictable since the decision making is not clearly defined nor is the necessary information readily available.
Computers then tend to be used more frequently at the operational level since decisions are more clearly defined and can therefore be easily represented in the form of computer programs. As operational information systems frequently replace significant numbers of employees financial benefits are much easier to quantify. However, this does not suggest that computers will only be of benefit if used at this level. Strategic and tactical information systems may well be much more difficult and expensive to develop, but in the long-term promise much greater overall benefits to the organisation. Figure 1.3 illustrates levels of management, the information required and the corresponding use of computer based decisions.
Management and Information
COMPUTER BASED INFORMATION SYSTEMS
Computer based information systems have existed at operational level for many years – initially in the form of magnetic tape based batch processing systems. While magnetic disc is the normal method of storage nowadays, many batch systems continue to operate efficiently and form the major part of many data processing departments activity. The input to such systems is predictable and might include such items as:
* the hours worked by paid employees
* customers orders
* payments.
The processing is well defined and normally results in master files being brought up to date. The output is often in printed form – for example, invoices, statements, pay advice notes, receiving reports, etc. Such systems are often referred to as transaction processing systems.
Middle or tactical management are charged with controlling the organisation’s resources and as such require accurate up to date summary information. The nature of this information is well known in advance and therefore programs are provided which abstract the necessary details from the information stored by the operational systems and provide the required details in report form. Exception reporting is the norm – only reports on those items which require action. Report systems are usually batch oriented since the content and timing of the report are well known in advance. Where there is a requirement for information on an ad hoc basis – when the form, content, and timing of the enquiry are not known in advance – an on-line enquiry processing system is required. Since the precise nature of the enquiry and its timing are not known in advance, enquiry systems must be flexible enough to cope with a wide variety of requests. It is extremely important that the interface to such systems is well designed to facilitate access by what can only be described as infrequent users.
At strategic level the decisions that are to be made are often difficult to predict and since much of the data required is external to the organisation it is difficult to access. It is therefore very difficult to preprogram the appropriate model to make the decision. Spreadsheet programs are currently used for simple financial modelling and allow various parameters to be varied to test the possible outcomes of changes in management strategy. In the not too distance future it is very likely that knowledge based systems will have a major impact in decision making at this level. Figure 1.4 shows the systems required at each level of management.
Figure 1.4
Management and Systems
SAQ
What are the differences between strategic, tactical and operational levels of management?
Strategic management – top management is concerned with long term plans – the direction of the organisation and use of resources.
Tactical – middle management is responsible for implementing the strategic plans.
Operational management is concerned with the day to day problems of using resources to meet specified targets.
TYPES OF INFORMATION SYSTEMS: DIFFERENT WAYS TO SUPPORT COMMUNICATI0N AND DECISION MAKING
The models of organisational management and the Information Systems traditionally used to support the different levels of decision making referred to in the earlier sections gave a view which doesn’t entirely reflect the situation. The increasing complexity of large organisations coupled with the availability of very powerful and low cost computing resources and communication systems have encouraged changes in structures and individual roles. In some instances management has been able to delegate some of its decision making to a lower level of management in the knowledge that the Information Systems available will provide the necessary support for this lower level decision making. Such systems also provide facilities to enable the higher level manager monitor the work of his subordinates and therefore allow him to delegate with confidence.
One significant development has been the recognition that there is now another layer in the organisational pyramid which is between middle (tactical) management and operational management filled by Knowledge and Data Workers. In many ways this change has been driven by the availability of the technology. Knowledge – Level systems, particularly in the form of workstations and office systems, have developed to support these workers in their roles of integrating new knowledge into the business and helping control the flow of paperwork.
The other significant changes have been the downsizing and ‘flattening’ of management structures combined with the blurring the interfaces between the different levels of organisational management. Boundaries are less rigid and more people have management roles. These changes are a consequence of both business philosophy and technological development. Systems which at one time had a narrow management focus now provide access to and support for a wider range of decision making situations and monitoring facilities which allow senior managers to supervise the activities of their subordinates. System categories are no longer mutually exclusive and often overlap and will change as applications combine new capabilities with old ones.
This ‘new’ situation is reflected in figure 1.6 as is the general increase in technological support for the business. Electronic communication systems have also had a major impact in the way that many businesses operate.
Figure 1.6 Typical Information Systems Applications
SEVEN MAJOR TYPES OF SYSTEMS
In addition to the four types of systems identified earlier – viz. Transaction Processing Systems, Management Information Systems (Reporting Systems, and Enquiry Processing Systems), and Decision Support Systems, we must now add Knowledge Work Systems, Office Automation Systems, Communication Systems and Executive Information Systems (also called Executive Support Systems).
Executive Information Systems
An executive information system (EIS) is a highly interactive MIS system providing managers and executives flexible access to information for monitoring operating results and general business conditions. Sometimes called executive support systems (ESS), these systems attempt to take over where the traditional MIS approach falls short. Although sometimes acceptable for monitoring the same indicators over time, the traditional MIS approach of providing prespecified reports on a scheduled basis is too inflexible for many questions executives really care about, such as understanding problems and new situations.
An EIS provides executives with internal and competitive information through user friendly interfaces that can be used by someone with almost no computer related knowledge. The EIS is designed to help executives find the information they need whenever they need it and in whatever form is most useful. Typically, users can choose. among numerous tabular or graphical formats. They can also control the level of detail that triggers for exception conditions, and other aspects of the information displayed. Most EIS focus on providing executives with the status and performance information they need, as well as helping them understand the causes of exceptions and surprises This leaves executives better prepared to discuss issues with their subordinates.
In a typical sequence of an EIS user starts with a menu listing available types of information, such as sales results, manufacturing results, competitive performance, and e mail messages. The categories are customized for individual executives. The user selects a category from the menu and receives an additional menu identifying available subcategories plus the specific online reports that can be obtained. Often, the executive can customize these reports by choosing options such as selecting a subset of the data, sorting, or providing more detail. For example, while looking at last month’s sales results, a user might select the products with less than 2 percent improvement in volume, sort these sales branches from highest to lowest percentage improvement, and obtain more detail for these branches by looking at results for individual departments within these branches. In addition, users can generate graphical displays such as trend charts and pie charts to make it easier to visualize
For an EIS to operate, technical staff members must ensure that the right data are available and are downloaded to the EIS from other systems in a timely manner. The data in EIS are usually replenished periodically from internal company databases and external databases. Although technical advances in data display and networking capabilities have made EIS much easier to maintain, EIS continually modified to keep up with current business issues still require major efforts and substantial technical maintenance. Even when commercial EIS software is used, the time and effort to customize and maintain an EIS limits use to high level managers. Ideally, the flexibility and ease of access built into EIS should also be built into other systems. Ten years ago, it was much more expensive to provide EIS capabilities to executives. Ten years from now, the interfaces in systems at all organizational levels may mimic or exceed those in today’s EIS. This can be seen in the way some EIS consultants are starting to replace the word executive with the word enterprise, saying that EIS now stands for enterprise information system.
Offlce Automation Systems: Supporting General Offlce Work An office automation system (OAS) facilitates everyday information processing tasks in offices and business organizations. These systems include a wide range of tools, including spreadsheets, word processors, and presentation packages. Although telephones, e mail, v mail, and fax can be included in this category, we will treat communication systems as a separate category.
OAS help people perform personal record keeping, writing, and calculation chores efficiently. Of all the system types, OAS and communication systems are the most familiar. Tools generally grouped within the OAS category include:
Spreadsheets are an efficient method for performing calculations that can be visualized in terms of the cells of a spreadsheet. Although spreadsheet programs seem second nature today, the first spreadsheet program was VisiCalc, which helped create the demand for the first personal computers in the late 1970s.
Text or image processing systems. These systems started with simple word processors but have evolved to include desktop publishing systems for creating complex documents ranging from brochures to book chapters.
Presentation packages help managers develop presentations independently instead of working with typists and technical artists. These products automatically convert outlines into printed pages containing appropriately spaced titles and subtitles.
Personal Database Systems help individuals keep track of their own personal data (rather than the organisation’s shared data).
Typical applications include an appointments book and calendar, a to-do list, and a notepad.
Electronic communication systems
These systems have changed the way many businesses operate. Systems include both group communication systems and systems for transmitting individual messages and documents.
Applications include:
Teleconferencing, Audioconferencing, Computer conferencing, Videoconferencing, E-Mail, Voice Mail and Fax.
Knowledge work systems (KWS) and office automation systems (OAS) serve the information needs at the knowledge level of the organization. Knowledge work systems aid knowledge workers, whereas office automation systems primarily aid data workers although they are also used extensively by knowledge workers.
In general, knowledge workers are people who hold formal university degrees and who are often members of a recognized profession, like engineers, doctors, lawyers, and, scientists. Their jobs consist primarily of creating new information and knowledge. Knowledge work systems (KWS), such as scientific or engineering design workstations, promote the creation of new knowledge and ensure that new knowledge and technical expertise are properly integrated into the business. One example of a KWS is the computer aided design system.
Data workers typically have less formal, advanced educational degrees and tend to process rather than create information. They consist primarily of secretaries, accountants, filing clerks, or managers whose jobs are principally to use, manipulate, or disseminate information. Office automation systems (OAS) are information technology applications designed to increase the productivity of data workers in the office by supporting the coordinating and communicating activities of the typical office. Office automation systems coordinate diverse information workers, geographic units, and functional areas: The systems communicate with customers, suppliers, and other organizations outside the firm and serve as a clearinghouse for information and knowledge flows.
Typical office automation systems handle and manage documents (through word processing, desktop publishing, and digital filing), scheduling (through electronic calendars), and communication (through electronic mail, voice mail, or videoconferencing).
Typical Ways Each Type of Information System Supports Communication and Decision Making
System Type Typical User Impact on Communication Impact on Decision Making
Office automation system: Provides individuals effective ways to process personal and organisational business data, perform calculations, and create documents Anyone who stores personal data, creates documents, or performs calculations * Provides tools for creating documents and presentations, such as word processors and presentation systems * Provides spreadsheets and other tools for analysing information
* Communication tools also help in implementing decisions
Communication system: Helps people work together by sharing information in many different forms Anyone who communicates with others, including office workers, managers, and professionals
* Telephones and teleconferencing for inactive communication
* E-mail, v-mail, and fax, for communicating using messages and documents
* Telephones and teleconferencing for decision making
* E-mail, v-mail, fax, and other tools for obtaining information
Transaction processing system (TPS): Collects and stores information about transactions; controls some aspects of transactions People whose work involves performing transactions * Creates a database that can be accessed directly, thereby making some person-to-person communication unnecessary * Gives immediate feedback on decision made while processing transactions
* Provides information for planning and management decisions
Management information system (MIS): Converts TPS data into information for monitoring performance and managing an organisation Managers and people who receive feedback about their work * Provides a basic of facts rather than opinions for explaining problems and their solutions * Provides summary information and measures of performance for monitoring results
Executive information system (EIS): Provides executives information in a readily accessible interactive format Executives and high-level managers * Same as MIS but also incorporates e-mail and other communication methods * Provides easy ways to analyse the types of information provided in less flexible form by MIS
Decision support system (DSS): Helps people make decisions by providing information, models, or analysis tools Analysts, managers, and other professionals * Analysis using DSS help provide a clear rationale for explaining a decision * Provides tools for analysing data and building models
* Analysis using a DSS helps define and evaluate alternatives
Knowledge system: Director supports the organization’s value-added work. (For example, helps salespeople sell, doctors practice medicine, or architects design buildings) People who do an organisation’s value-added work, especially if that work involves special skills or knowledge * May support communication or information sharing between people doing different parts of the task
* May help explain the result of the task to customers * May provide tools, information, or structured methods for making decisions
* May store and provide expert knowledge to support decisions in specific areas
Examples of Each Type of Information System in Three Functional Areas of Business
System Type Sales Examples Manufacturing Examples Finance Examples
Office automation systems * Spreadsheet to analyse different possible prices
* Word processor to create sales contract * Spreadsheet to analyse a production schedule
* Word processor to write a memo about how to fix a machine * Spreadsheet to compare several loan arrangements
* Word processor to write a memo about new financial procedures
Communication systems * E-mail and fax used to contact customer
* Videoconference to present new sales materials to sales force * E-mail and v-mail used to discuss a problem with a new machine
* Videoconference to coordinate manufacturing and sales efforts * V-mail and fax to communicate with bank about loan arrangements
* Videoconference to explain effect of financing on factory investments
Transaction processing system (TPS) * Point-of-sale system for sales transactions
* Keeping trace of customer contacts during a sales cycle * Tracking movement of work in process in a factory
* Tracking receipt of materials from suppliers * Processing of credit card payments
* Payment of stock dividends and bond interest
Management information system (MIS) * Weekly sales report by product and region
* Consolidation of sales projections by product and region * Weekly production report by production and operation
* Determination of planned purchases based on a production schedule * Receivables report showing invoices and payment
* Monthly financial plan consolidation
Executive information system (EIS) *Flexible access to sales data by product and region * Flexible access to production data by product and operation * Flexible access to corporate financial plan by line item
Decision support systems (DSS) * System helping insurance sales people test alternatives
* Marketing data and models to analyse sales * System displaying current priroities of machine operator
* Production data and models to analyse production results * System analysing characteristics of customers who pay bills promptly
* Stock database and models to help in selecting stocks to buy or sell
Knowledge Work systems * System to generate competitive bids
* System to help salespeople suggest the best choice for the customer * System to diagnose machine failures
* System to transfer customer requirements to an automated machine cell * System to support a loan approval process
* System to find price inconsistencies between different equity markets
WHAT IS A strategic information SYSTEM AS OPPOSED TO A STRATEGIC LEVEL SYSTEM?
In the last few decades there has been a revolution in the way that we all treat information and information systems. Today, leading companies are using information and information systems as tools for staying ahead of competitors. Organisations have developed a special category of information systems called strategic information systems for this purpose.
Strategic information systems change the goals, operations, products, services, or environmental relationships of organisations to help them gain an edge over competitors. Systems that have these effects may even change the business of organisations. Merrill Lynch, for instance, used information systems to change from the stock brokerage business to the financial services business. In the 1980s, State Street Bank and Trust Co. of Boston transformed its core business from traditional banking services, such as customer checking and savings accounts and loans, to electronic recordkeeping, providing data processing services for securities and mutual funds. Now it is moving beyond computerised recordkeeping into a broad array of financial information services, including a monitoring service that allows pension funds to keep better tabs on their money managers.
Strategic information systems often change the organisations well as its products, services, and internal procedures, driving the organisation into new behavior patterns. Organisations may need to change their internal operations to take advantage of the new information systems technology. Such changes often require new managers, a new work force, and a much closer relationship with customers and suppliers.
