The Finance Function's Relationship with IT

Question 1

Explain the main role of the IT department

Answer 1

Enables knowledge management systems (KMS) between other departments

Question 2

What are the different types of systems?

Answer 2

Closed system
Open system
Expert system
Data processing system
Management information system
Executive information system
Decision support system
Knowledge management system
Cloud based system

Question 3

Define closed system

Answer 3

Has little to no interaction with its environment

Question 4

Define open system

Answer 4

Has high level of interaction with its environment

Question 5

Define expert system

Answer 5

Simulates problem-solving techniques by human experts - eg tailor-made automatically generated car insurance quotes from answering online questions

Question 6

Define data processing system (DPS)/Transaction processing system (TPS)

Answer 6

Large volume processing easily captured. Usually simple and well defined information. Vital day-to-day operations. Older systems likely to be inflexible (legacy system)

Question 7

Define management information systems (MIS)

Answer 7

Extension of DPS allows much greater reporting, normally has a report writing package attached. Helps with budgeting, forecasting and controlling

Question 8

Define executive management system (EIS)

Answer 8

For senior executives that contain internal and external data, supports strategic decision making. Graphing and charting things like KPIs

Question 9

Define decision support systems (DSS)

Answer 9

Data modelling software that uses mathematical formula to replicate organisational activity. Can be used in scenario planning

Question 10

Define knowledge management systems (KMS)

Answer 10

Capture and manage knowledge

Question 11

Define cloud based system

Answer 11

Applications, services or resources made available to users on demand via the internet

Question 12

How can internet connect employees and stakeholders?

Answer 12

Connects computer networks, individual users and organisational computer facilities across the world

Question 13

How can intranet connect employees and stakeholders?

Answer 13

A mini internet using the company’s own networked computers and internet technology. Useful to share knowledge internally

Question 14

How can extranet connect employees and stakeholders?

Answer 14

A secure extension of a company’s private intranet and can be accessed by authorised outsiders such as suppliers/customers

Question 15

How can Web 2.0 connect employees and stakeholders?

Answer 15

Second generation internet based services. They emphasise collaboration and two way communication rather than one party pushing information to another party
Examples of Web 2.0 tools: blogs, Twitter, Facebook, YouTube

Question 16

How can social media connect employees and stakeholders?

Answer 16

Internet based applications that allow the creation and exchange of user-generated content
Communicate and collaborate with customers/potential customers and build a relationship which will bring benefits, eg improved customer satisfaction and retention

Question 17

How can E-commerce connect employees and stakeholderrs?

Answer 17

Conducting business, including transaction processing, electronically
Enhances communications between employees
Cheaper information exchange with suppliers
Creation and maintenance of customer relationships

Question 18

How can digital markets connect employees and stakeholders?

Answer 18

Any market available online - eg Amazon, high street retailers, individuals (eBay)

Question 19

How can digital goods connect employees and stakeholders?

Answer 19

A product that can be transferred or consumed electronically - eg ebook, an app, a film streaming service

Question 20

Threats to IT systems and controls

Answer 20

Threats:
Hackers
Viruses
Hoaxes
Denial of Service Attacks
Human error
Natural disasters
Fire

Controls:
IT general controls (ITGC) - control over IT environment. computer operations, access to programs and data, program development and program changes. An essential control is an effective Disaster Recovery Plan, or Business Continuity plan
IT application controls - transaction processing controls/input-processing-output controls. Specific to individual applications

Question 21

How can finance interact with IT?

Answer 21

Discuss with finance how investment in technical aspirations can be financed
How company can use the many benefits from technology throughout its (financial) activities
Finance is also a customer of IT in relation to its operational and data needs

Question 22

Define Electronic Data Interchange (EDI)

Answer 22

A standardised method of transferring data between different computer systems, typically used for transferring data that traditionally would have been included in paper documents such as despatch notes, delivery nots, goods received notes, invoices and related documentation
Often facilitates close relationship between organisations - eg between organisation and customer/supplier

Question 23

Features of EDI

Answer 23

Errors arising from data entry will be reduced
Organisations can transmit a large amount of data
System cannot be easily adapted if processes change
Systems are time consuming to introduce

Question 24

Advantages of Database Management System (DBMS)

Answer 24

Reduced duplication of data
Ensures data integrity, accuracy and consistency
Consistent for all data users
Improved security and control over data
Provision of more flexible reports

Question 25

Disadvantages of Database Management Systems (DBMS)

Answer 25

High set up costs
Risk of failure
May not meet all users’ needs
Additional security considerations required

Question 26

Data engineering & extraction vs Data strategy & planning vs Data modelling, manipulation and analysis vs Data insight and communication

Answer 26

Data engineering & extraction - ensures data is in suitable format
Data strategy & planning - How data can be used to support overall business strategy
Data modelling, manipulation and analysis - Documenting systems and changing data to be more relevant
Data insight & communication - Communicate findings in an understandable way to key stakeholders