Integrated Applications

UNIT 10 TRANSACTION PROCESSING

SYSTEMS-I: HUMAN RESOURCE
AND MARKETING MANAGEMENT
Structure
10.1 Introduction
10.2 Objecitves
10.3 Human Resource Management Sub-system
10.3.1 Recruitment
10.3.2 Retention/Service Conditions
10.3.3 Retirement
10.3.4 Advantages of Computerization
10.4 Marketing Management Sub-systems
10.4.1 Sales Management
10.4.2 Sales Forecasting
10.4.3 Advertising and Promotion, Information System
10.4.4 Market Research
10.5 Use of Computers in Marketing Management
10.6 Summary
10.7 Unit End Exercises
10.8 References and Suggested Further Readings

10.1 INTRODUCTION
Management information system, in general, consists of all business transactions of
the organization. Every information system has many subsystems like transaction
processing system, decision support system, office automation system etc., to have a
larger utility of database created for business analysis. Data stored in the form of
computer database need to be retrieved properly to satisfy the information
requirement of different operational areas of management. The decision makers do
retrieval of information from the master data through a set of well-defined tools. For
example, to calculate the net salary of an employee, we need to supply different
inputs like basic salary, number of days present, existing DA, and HRA levels.
Accounts department uses this information to calculate the final receivable salary of
an employee. This process is called transaction process of the data for payroll
calculation. As this is a part of the information system, it can be called as a
subsystem. Preparation of transaction documents such as pay slips, invoices, and
receipts is important and routine task performed in managerial functions. The general
view of transaction processing system is shown below:

Transa
Modu
Central
General Processing
Database
Transa
Modu Etc,

Output
Formats
1
Figure 10.1: General View of Transaction Processing System
Information Systems -toIIget the desired information through the specific tools of
Data manipulation
management is called transaction process. As applicable in other cases, different
areas of management like HRM, Finance, Operations, and Marketing have various
business data processing and hence the sub systems to generate required output are
needed.

10.2 OBJECTIVES
After reading this unit you should be able to:
• Describe the role of transaction processing system in managerial functions;
• Identify transaction modules in a subsystems;
• Integrate subsystems to get desired output;
• Discuss the subsystems in Human Resource Management;
• Explain the subsystems in Marketing; and
• Enumerate the advantages of computer oriented transaction processing.

10.3 HUMAN RESOURCE MANAGEMENT

SUB-SYSTEM
In Human Resource Management, the Personnel Manager has the responsibility of
executing multifarious activities pertaining to recruitment, training of the employees,
retirement benefits of the employees etc. Planning, executing, and controlling of these
activities about the existing employees is carried out by the personnel manager
through the information system called personnel information system developed for
this purpose. The personnel information system deals with the flow of information
about people working in the organization as well as future personnel needs. In most
of the organizations, the system is concerned primarily with five basic subsystems of
the personnel function: recruiting, placement, training, compensation, and
maintenance.

Let us discuss three of these subsystems separately:

1) Recruitment
2) Retention/Service Conditions
3) Retirement

Recruitment Human
Resource
Management

Retirement Output of the

Formats/
Results

Figure 10.2: Transaction Modules in Human Resource Management

2
10.3.1 Recruitment Integrated Applications

Role of personnel department starts with recruitment of personnel. If properly

managed, the recruitment system forecasts personnel needs and skills and recruits
the personnel at the proper time to meet organizational needs. Personnel department
on the basis of retirements/resignations either identifies requirements, or concerned
department sends requirement to personnel department. On the basis of the
requirements, personnel department initiates process of recruitment, which is divided
into the following steps:
• Finalizing the requirement for various posts • Interviews
• Publicity as per requirement • Final selection
• Receipt of application forms from candidates • Issuing appointment letters
• Initial screening
Development proper information system giving the necessary inputs for generation of
reports pertaining to the above cases lead to a subsystem for this purpose.

10.3.2 Retention/Service Conditions

This is an important aspect in the functioning of personnel department. Personnel
department maintains records of all the employees about the nature of the job,
department etc. The major activities undertaken and related data requirements here
are:
• Training/ Seminars/Refresher • Performance Reports
courses for employees • Salary/Compensation
• Job • Organizational Structure
• Promotion • Job Description
• Increments • Liaison
• Leave Accounting
Information on each of the areas is compiled from the master database created and
made available in the organization.

10.3.3 Retirement
Personnel department keeps track of retiring employees. It completes all the formali-
ties necessary and issues orders for providing retirement package through account
department. The calculation requires various inputs about the employees from the
personnel records.

There are other subsystems also like Compensation & Maintenance etc. Another
interesting subsystem could be Skills inventory program, which identifies and locate
the talent resources of the organization to maximize their use. The concept of “Skill
banks” or “manpower assessment program” is applied. This could be one of the
subsystems to develop and support the main system.

10.3.4 Advantages of Computerization

Consider an organization where there are more than one hundred employees. In such
an organization, the staff of personnel department has to do a lot of paperwork to
keep record of courses, seminars, previous experience etc. for all the employees. It is
a voluminous task. During the process of maintenance of individual records, leave
details, course appraisal reports etc. at least one folder per employee is maintained in
3
Information Systems
manual system. - II a large number of folders are opened for various welfare
Also,
activities. Personnel department also has to look after legal side i.e. implementation of
industrial rules and regulations, liaison with employee unions and follow civil suits in
courts etc. Thus a lot of data needs to be stored and number of files are opened and
used continuously. Also information on employees is sought very frequently for the
employees themselves as well as for other departments. Most of the time staff has to
search the information kept in different files under a number of enclosures.

On computerization of personnel management system, on-line data will be available

and outputs can be taken in desired formats. Queries can be put to get required
information. Thus a lot of time is saved which can be utilized effectively for additional
welfare activities for employees.

Further, the data pertaining to personnel information about the employees are
confidential in nature. In manual system there is always the possibility of unauthorized
access to these data. With the computer system, the access can be controlled through
the password and hence the confidentiality can be maintained.
Let us make a comprehensive list of uses of computers in HR area.
The main uses to which computers can be put in human resource departments are:
Keeping Records: Replacing card indexes and filing cabinets by compact discs.
Listings: Quickly providing listings of employees by department, occupation, grade,
pay level, length of service, age, sex, qualifications, skills, etc.
Automatic Letter Writing: Producing standard letters and forms for recruitment,
promotion, transfer, upgrading, appraisal, pay review and new contracts of
employment.
Manpower Planning: Using manpower data to forcecast the future demand and
supply of people. Manpower models can be used, for the following forecasting
model for examining a hierarchy of grades by age. Useful for gaining general
understanding of future movement of staff and changes in age/grade structure
Labour Turnover Analysis: Providing labour turnover statistics.
Career Development: As a development of manpower planning models, computer-
ised personnel information can be used to improve succession planning.
Recruitment: The computer can, in effect, be used as a filing cabinet to store details
of cash applicant, date of receipt of application, when called for interview and the
outcome. If an applicant contacts the company, he can be informed of the progress of
his application. Managers can be given details of the number of applicants and how
many have been interviewed, Lists and automatic letters can be produced when
calling for interview rejecting applicants or making offers.
Training: Records can be kept to check on who has received training or on progress
through other training schemes. Listings of skills and qualifications be department or
occupation can be produced to identify gaps and training needs.
Pay: Information can be drawn from both personnel and pay-roll systems to analyse
pay-roll costs and ratios and to assess the impact of various pay increase options on
the pay stucture and on total pay-roll costs. Budgetary control systems can be
computerised to show actual pay-roll costs against budget and project future costs.
Salary Administration: Salary analysis reports can be produced which give
information by employee on occupation, salary position in salary range, total
percentage increases over previous years and annual appraisal. Individual forms and
departmental schedules can be generated for salary reviews and analysis can be
4made of the salary structure (e.g. comparisons).
Job Evaluation: Data bases can be created to hold and process Integrated Applications
the information on
job evaluations, such as grades and point scores. Weightings of job evaluation factors
can be determined by multiple regression analysis and the recording and analysis can
be computerised. In a job evaluation exercise, the information system can be used to
point out the names of those whose jobs are to be evaluated. Details of job, grade,
function, location, sample size and current point ratings can be programmed in. The
data base can link together similar posts in different parts of the organisation. Listings
of all gradings, re-gradings and points/scored can be produced.
Absence and Sickness: Absence and sickness can be recorded by employee, with
reasons and analysis can be produced of absenteeism and sickness.
Health and Safety: Records can be maintained on accidents and absence due to
health hazards. Trends can be analysed and information produced on who has
worked in certain areas, or who has used certain processes and for how long.
Activity A
Critically evaluate the use of computers by your organization for Human Resource
Management decision-making.
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................

10.4 MARKETING MANAGEMENT SUB-SYSTEM

As we have seen in the previous unit, the business function of marketing deals with
different activities like planning, promotion, and sale of existing products and exploring
the market trend for the existing and new products. Information system specially
designed taking into account all these factors can only supply the required competitive
information for the benefit of customers and management.

Different categorical decision systems like strategic, tactical and operational

information help in the activities of the marketing managers in product planning,
pricing of the product, planning for advertising, sales promotion and expenditure,
forecasting market potential for new and existing product and deciding about the
distribution channel etc.

Control reporting systems support the efforts of marketing mangers to control the
efficiency and effectiveness of selling and distribution of products and services.
Analytical reports provide information on firm’s actual performance versus planned
marketing objectives.
The major marketing subsystems are:
• Sales Management
• Sales Forecasting
• Advertising and Promotion
• Marketing Research
5
Information Systems - II

Sales Sales
Management Forecasting

Adv. Market
Promotion Research

Figure 10.3: Transaction Modules in Marketing Area

10.4.1 Sales Management

Sales Management system provides information to help sales managers plan and
monitor the performance of the sales organization. In most firms, this system
produces sales analysis reports, which provide information analysis of:
a) Product sales trends,
b) Product profitability on a product-by-product basis,
c) The performance of each sales region and sales branch,
d) Sales persons performance.
To fully support the sales systems, invoices should contain information about product
type, product quantity, price discount terms, customer identity and type, sales region
and sales person.

The sales reports must contain information about the profitability of products, product
lines, sales territories, and individual salespersons. Profitability reporting requires
information about product administration and selling costs.

The sales analysis system also provides information used to evaluate the performance
of sales personnel. By reclassifying sales by sales person rather than by product or
sales unit, it is easy for the sales supervisors to identify whether each salesperson has
met the assigned sales quota. If marginal costs are also assigned by salesperson,
each salesperson’s contribution margin can be established as one criterion for
performance evaluation.

The primary types of information as inputs used for the sales analysis
subsystem are:
i) Information about customer invoices and back orders that is provided by the
sales transaction processing systems,
ii) Information derived from the oral and written reports of sales personnel,
iii) Product cost information obtained from the cost accounting information systems,
iv) Information about the sales transactions may be available from the sales files or
the customer files.,

10.4.2 Sales Forecasting

Sales forecasting is important for planning sales and promotion strategies and for post
period
6
evaluation of salesperson’s performance. Sales forecasts are generally the
first step in the profit planning cycle of the entire organization e.g.Integrated Applications
they initiate the
short-term financial and marketing planning cycles. If forecasts for the period are
seriously in error, the organizations entire budgeting activity will be based upon the
wrong level of activity.

The basic functions of sales forecasting can be grouped into the two categories of
short-range forecasting and long-range forecasting. Short-range forecasting deals
with forecasts of sales for periods up to one year, whereas long-range forecasting is
concerned with sales forecasts for a year or more into the future. Forecasting
requires the application of mathematical and statistical methods, which consists of
structured procedure. Methods like time series analysis, regression models etc., are
used for sales forecasting.

Production planning, work force planning, and production scheduling are based on
sales forecasting. Materials are ordered and personnel are employed and reassigned
according to the expected sales pattern for the next period. If sales are overestimated
either finished product inventory levels or materials inventory will be excessive, or
personnel will have to be laid off. Conversely, if the sales forecast is too low, either
sales would be lost because of inventory shortages, or higher costs will be incurred as
a result of overtime and need to secure additional materials in a hurry.
The basic information needed for sales forecasting is as follows:
i) Past sales, provided by the sales analysis information system
ii) Market conditions, provided by the market information system
iii) Competitor’s activities provided by the competitor intelligence information system
iv) Promotion and advertising plans, provided by the information system for this
function.

10.4.3 Advertising and Promotion Information System

Promotion and advertising department within marketing devotes its attention to
planning and executing advertising campaigns and to carry out various product
promotions such as package coupons, contest, special sales and trade shows. This
department’s activities are focused on increasing sales revenue without an equivalent
increase in costs.
Marketing managers need information to help them achieve sales objectives at the
lowest possible costs for advertising and promotion. Sales analysis provided by the
sales information system can assist the advertising and promotion group by
highlighting trends that may influence the allocation of promotion and advertising
expenditures. Additionally, a time series sales analysis that correlates advertising and
promotion activities with subsequent sales will indicate which are the most effective
promotion campaigns for particular products.
The market research information system can supply the promotion and advertising
information system with information about market size and about characteristics for
each product for the market. This is helpful for tailoring promotion to specific market
segments.
The promotion and advertising information system should be storehouse of
information that helps mangers build on past experience with promotion and
advertising. By systematically organizing and analyzing this information, an
organization can eventually establish a body of knowledge about what the market is
like and how it responds to each of several types of promotional activities for each
product. However, the complexities of markets can change rapidly, and the
information systems already described should continuously ‘refresh’ and modify this
promotion and advertising information base in light of the most current information
available. 7
Information Systems - II
10.4.4 Market Research
Market research focuses on the entire market for an organization’s product. One
purpose of market research is to assess the overall size of the market for each
product line and for each product within a product line. Potential market size can
change rapidly as economic conditions and technology change.

The market research information system provides marketing intelligence to help

managers to make more effective decisions. It also provides marketing managers
with information to help them plan and control the market research projects of the
firm.
The key information needs for a market product potential analysis are:
i) Information about the economy and economic trends and the probable impact of
these trends on demand for the product
ii) Information about past sales and sale trends for the entire industry and
iii) Information about competing ‘substitution’ products.
Usually the market research department assumes responsibility for gathering and
analyzing this information.

10.5 USE OF COMPUTERS IN MARKETING

MANAGEMENT

Computers and statistical analysis software help the market research activity collect,
analyze, and maintain information on a wide variety of market variables that are
subject to continuous change. This includes information on customers’ prospects,
consumers, competitors; market economic and demographic trends. Data can also be
gathered through telemarketing and computer aided telephone-interviewing
techniques (CATI).
The main benefits derived from computer- based marketing information system are:
1) Control of market costs
2) Diagnosis for poor sales performance
3) Management of fashion goods
4) Forecasting
5) Promotional planning and corporate long-range planning
6) Purchasing

Activity B
Prepare a brief report on the market planning and publicity planning of your
organization, and the role computers and MIS can play in that

.............................................................................................................................

.............................................................................................................................

.............................................................................................................................

.............................................................................................................................

.............................................................................................................................
8
 Integrated Applications
10.6 SUMMARY
In this unit, you have learnt about the role of transaction processing in data retrieval.
Two important areas of the functional management say marketing and human
resource management. As each of the sub-systems perform specific operations/
transactions to support the main system, various inputs required for these subsystem
have been discussed in detail. By now you have come to know how the development
of the system require to be assisted by the different subsystems in the transaction
process.

10.7 UNIT END EXERCISES

1) Identify the role of transaction processing system in the development

information system.
2) Suggest few modules, you would like to add to improve the Marketing
Information System.
3) List the analytical methods, which could be used effectively in the modules of
human resource management for the development of subsystem.
4) How does computerized Personnel Information systems help in managing human
resources more efficiently?

10.8 REFERENCES AND SUGGESTED FURTHER

READINGS

Course material designed by IGNOU for the programs of Computer and Information
Sciences.

Murdick, and Thomas C. Fuller. “Subsystems for MIS”. Journal of Systems

Management, June 1979.

Murdick, Robert G. MIS: Concepts and Design. Englewood Cliffs, N.J. Prentice-
Hall, 1980

Robert G. Murdick, Joel E. Ross and James R Claggett. Information Systems for
Modern Management, Prentice Hall of India, 1997