How the finance function interacts with IT Flashcards
Information Systems (IS)
Provision and management of information to support the running of the organisation.
Information Technology (IT)
Supporting equipment to (hardware) that provides infrastructure to run the information systems.
What is the IT function responsible for?
Planning, evaluating, installing, operating and maintaining the hardware, software, networks and data centres required by the organisation.
Management Information System (MIS)
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.
Executive Information System (EIS)
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.
Decision Support System (DSS)
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.
Transaction Processing System (TPS)
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.
Expert System
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.
Data
Raw facts.
Information
Processed, organised data.
Knowledge
Application of a cognitive process to the information so that it becomes useful.
Explicit Knowledge
Knowledge that the company knows it has, for example customer information.
Tacit Knowledge
Personal knowledge and expertise held by people within the organisation that has not been formally documented.
Knowledge Management
Process of acquisition, sharing, retention and utilisation of knowledge.
Knowledge Management Systems
Any type of IT that helps capture, store, retrieve and use knowledge to enhance the knowledge management process.
Groupware
Technology designed to help people collaborate. E.g. E-mail, file sharing technology, video conferencing.
Intranets
Private network within the organisation allowing the sharing of information and resources with employees.
Extranets
Extension of intranet to include suppliers, customers and other business partners.
Virtual Organisation
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.
Virtual Team
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.
What are the potential threats of information systems (IS)?
Natural Disasters
Malfunction
Unauthorised access, usage, damage or theft
Viruses
Hackers
Human Errors
Human Resource Risk
Systems Architecture
The way systems infrastructure is organised together to support the organisation’s functions and its overall goals.
Centralised Systems Architecture
When the whole IT function or the entire IS is based out of a single, central location.
Decentralised Systems Architecture
When the IT function or the IS is spread out throughout the organisation’s location.
Data Flow
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
Reasons why the finance function needs to interact with IT
Smarter investment in IT
Information security and compliance
Data analytics
Cost-benefit analysis
