How the finance function interacts with IT

Question 1

Information Systems (IS)

Answer 1

Provision and management of information to support the running of the organisation.

Question 1

Information Technology (IT)

Answer 1

Supporting equipment to (hardware) that provides infrastructure to run the information systems.

Question 2

What is the IT function responsible for?

Answer 2

Planning, evaluating, installing, operating and maintaining the hardware, software, networks and data centres required by the organisation.

Question 3

Management Information System (MIS)

Answer 3

Converts internal and external data into useful information which is then communicated to managers at all levels and across all functions to enable them to make time timely and effective decisions for planning, directing and controlling activities.

Question 4

Executive Information System (EIS)

Answer 4

Gives senior management access to internal and external information. Information is presented in a flexible, user-friendly, summarised form with the option to ‘drill down’ to a greater level of detail.

Question 5

Decision Support System (DSS)

Answer 5

Aids managers in making decisions. The system predicts the consequences of a number of possible scenarios and and the manager then uses their judgement to make the final decision.

Question 6

Transaction Processing System (TPS)

Answer 6

Mainly used by operational managers to make decisions. Records all daily transactions of an organisation and summarises them so they can be reported on a routine basis.

Question 7

Expert System

Answer 7

Hold specialist knowledge, for example on law and taxation, and allow non-experts to interrogate them for information, advice and recommended decisions. Can be used at all levels of management.

Question 8

Data

Answer 8

Raw facts.

Question 9

Information

Answer 9

Processed, organised data.

Question 10

Knowledge

Answer 10

Application of a cognitive process to the information so that it becomes useful.

Question 11

Explicit Knowledge

Answer 11

Knowledge that the company knows it has, for example customer information.

Question 12

Tacit Knowledge

Answer 12

Personal knowledge and expertise held by people within the organisation that has not been formally documented.

Question 13

Knowledge Management

Answer 13

Process of acquisition, sharing, retention and utilisation of knowledge.

Question 14

Knowledge Management Systems

Answer 14

Any type of IT that helps capture, store, retrieve and use knowledge to enhance the knowledge management process.

Question 15

Groupware

Answer 15

Technology designed to help people collaborate. E.g. E-mail, file sharing technology, video conferencing.

Question 16

Intranets

Answer 16

Private network within the organisation allowing the sharing of information and resources with employees.

Question 17

Extranets

Answer 17

Extension of intranet to include suppliers, customers and other business partners.

Question 18

Virtual Organisation

Answer 18

Outsources most or all of its functions to other organisations and simply exists as a network of contracts, with very few, if any, function being kept in-house.

Question 19

Virtual Team

Answer 19

Group of people who interact through independent tasks guided by a common purpose and work across space, time and organisational boundaries with links strengthened by IT.

Question 20

What are the potential threats of information systems (IS)?

Answer 20

Natural Disasters
Malfunction
Unauthorised access, usage, damage or theft
Viruses
Hackers
Human Errors
Human Resource Risk

Question 21

Systems Architecture

Answer 21

The way systems infrastructure is organised together to support the organisation’s functions and its overall goals.

Question 22

Centralised Systems Architecture

Answer 22

When the whole IT function or the entire IS is based out of a single, central location.

Question 23

Decentralised Systems Architecture

Answer 23

When the IT function or the IS is spread out throughout the organisation’s location.

Question 24

Data Flow

Answer 24

The movement of data through a process or system including;
Data Inputs (raw data)
Data Processing (turning raw data into meaningful information)
Data Outputs (‘good’ information, i.e. accurate, timely, relevant etc.)
Data Storage

Question 25

Reasons why the finance function needs to interact with IT

Answer 25

Smarter investment in IT
Information security and compliance
Data analytics
Cost-benefit analysis