Introduction
Information systems are systems within a business organization that integrate business processes and computing knowledge for processing, storing, and transmission of important information for the decision-making process in the organization. Management information provides information on performance issues and suggests mitigation measures for management action. The smooth flow of information in a business enterprise is essential for the survival of the business.
All employees in an organization from low management levels to top management require information for the accomplishment of their errands. Nowadays, the way businesses operate has changed and continues to take a different shape as a result of continuous advance in technology. Most information in various organizations is computerized and a lot of business deals are now executed over the Internet.
Advancements in information technology have made the world to shift from the conventional way of doing things. Without proper flow of information in any business enterprise, the operations of the whole enterprise would be jeopardized.
However, information systems have greatly evolved and business information systems used nowadays are different from those that were used in 1910. This has had several impacts on accounting function of business enterprises and given the continuous evolution of business information systems the future seems unpredictable.
Differences between Ancient and Modern Business Information Systems
Business information systems like face-to-face communication, telephones, telegraphs and paper-based record keeping had a limited scope in information storage and processing. The modern business information systems such as ERP, CRM, and SCM have wider scope in information storage and processing (Gómez, Serna & Badenes 2009).
The traditional information systems were mainly used in data entry and record keeping, whereas the modern information systems allow for accurate data processing. More information can be processed and stored in a relatively shorter time in the modern systems as compared with the traditional systems.
Ancient systems like face-to-face communication and telephone do not provide information for record keeping. This can lead to massive loss of information that is important for decision making in the future, or even for reference purpose. Human beings have a tendency of forgetting things, and thus, important information for the success of a business enterprise is always at stake when it is not stored in a proper manner.
On top of that, modern business information systems are more technology oriented unlike the information systems used in the early periods. In order to operate the modern business information systems, an individual must possess relevant skills in the field of information systems.
The enterprise personnel must undergo some training to familiarize with the use of the information systems in the company. On the contrary, in the ancient systems either no technical know-how or simple basics were required to operate the systems since they were not as complicated as the modern systems (Monk & Wagner 2008).
Modern business information systems provide managers with useful information to be used during decision making process. They involve implementation of products of advanced technology to analyze business performances, locate problems in the operation processes and provide possible solutions to the identified problems (Joia 2003).
Therefore, unlike the ancient information systems, modern business information systems support the decision-making process of business enterprises in a more interactive manner. They make available critical information that is essential for management in making effective decisions besides making the process of retrieving stored information easy for managers.
In addition to that, much of the work in the modern information systems is done using computers and nearly all operations of the companies have been computerized. Little or no paperwork is required in the modern information systems which has changed recording and processing procedures as compared to the early systems of information. ERP permits global integration in terms of currency, culture and other factors by universalizing the differences hence promoting data integration across the whole world.
On top of that, it also eradicates the need to constantly update data in a computer. Besides monitoring, modern business information systems also allow operation management which is not possible with business information systems used in 1910 (Gómez, Serna & Badenes 2009). The system integrates all the data for the production processes and this enables the manager to concentrate on improving areas with problems.
ERP II embraces the use of CRM and SCM functionality and is also Internet enabled unlike the conventional business information systems. Due to the limited scope of the traditional information systems, there was little functionality in the management of business enterprise.
The modern business information systems have increased the functionality of business operations and the integration levels for efficient management of business enterprises (Gómez, Serna & Badenes 2009). Larger organizations have particularly benefited from the modern information systems and their many departments can now operate effectively in a harmonized way. This was not possible with conventional information systems because they provided very limited areas of functionality (Monk & Wagner 2008).
Business enterprises can utilize advances in information technology to improve their competitive advantage. Advanced technological tools when applied in the operations of a business organization can improve the management of the key functions of the business organizations. Competitive advantage can be realized through improved efficiency in decision-making process, improved speed in the execution of duties, and better customer relationship through meeting their expectations.
Changes Over the Past Century and Future Trends In Business Information Systems
Business information system has been evolving from simple accounting operation to general business management systems. In early periods, the major application of information systems was electronic data processing (EDP) or transaction processing systems (TPS). Electronic data processing refers to the application of computers in data entry and storage. The main use of information systems coined around transaction processing, record keeping, and accounting (Hall 2010).
By 1960s, computers were further subjected to processing of organizational data, thus the emergence of management information system (MIS). MIS provided managers with vital and relevant information for their decision-making processes. However, the dynamics of business management demands more than just reports for efficient decision making.
As a result of unsatisfied managerial quest for decision-making process, the idea of decision support system (DSS) was created to make the decision-making process of business managers easier and effective. The system provided managers with interactive environment during decision-making process (Joia 2003).
In the next decade, there was the birth of microcomputers that greatly transformed information systems of organizations. This rapid development in technology led to the creation of executive information system (EIS), which relayed the information contained in the MIS, DSS, and other relevant sources that were important to the top management.
There was also the development of the expert systems (ES) and knowledge management systems (KMS). The ES provide guidelines and consultation services to the users, whereas KMS sustain the transmission of important business information within a business entity. In late 90s, there was the emergence of enterprise resource planning (ERP) information systems. This system encompasses all the functions of a business enterprise (Gómez, Serna & Badenes 2009).
Because of the rapid development in information technology, the scope of information system widened too. The Internet has become a common ground for executing business operations and business management functions. The basic principles of management, however, are still the same with advance technology but are now done with greater efficiency. Many businesses now utilize e-commerce applications to carry out their daily business routines. The Internet has increased connectivity in the business field (Monk & Wagner 2008).
Enterprise resource planning system is currently concentrated in big business enterprises, but the information system software is likely to be available to small and medium enterprises in the near future. The development of more departments in business enterprises for efficient management calls for designing information systems that will offer a centralized management of company’s information. A number of functionalities have emerged to match integrated information systems for the enterprise management.
From the trend in development in information technology, it can be argued out that information systems for business enterprises is likely to be place high by the year 2020 (Gómez, Serna & Badenes 2009). It has been argued that the current information system has made the world to be a global village.
However, looking at the current trend of the information technology, 2020 would see the information technology make the world be people in the same room. It would be easy for a client to get any information passed from one corner to another, without any delay at all.
The Impact of Information Systems in Accounting
Information system has wide-spread effects on various business industries, as well as functions of business enterprises. The accounting function is one of the key areas of the organization that has been greatly influenced by the development in information systems. The accounting function is a very important section of an organization.
It relays financial information for the whole organization and gives a reflection of the company’s performance over a given period and its position as at a given date. The accounting function records all the financial transactions of the firm and also transmits transaction information to operation managers for the completion of their duties (Hall 2010).
The accounting function of any organization is one of the sections that utilize information technology to a great extent. The accounting information must be presented accurately to the users, hence, the need for more advanced information systems.
Accountants must be involved in the development of systems in order to eliminate the possibility of system failures that would in turn compromise accounting information. Accountants are charged with financial information systems, which were physically managed. The traditional system of information management was based on examination and was so uncertain (Gómez, Serna & Badenes 2009).
Recently, the introduction of computers has replaced manual data handling procedures to electronic data processing. This has improved the quality of processed information because of the elimination of human error. Accountants had rough time in manual data processing procedures, especially when extensive paperwork is involved. The application of computers has completely transformed this and has also heightened the security of stored data (Hall 2010).
The surge into the computer era demanded for the integration of skills in the accounting field and computing. Accountants must have skills on how to use various accounting software developed by computer programmers. Accountants play an important role in the development of system software through instituting theoretical design, which is in line with the nature of information to be relayed to the users of the information.
Most organization currently uses Information Technology (IT) auditing as a replacement for physical auditing procedures. The IT auditor is accountable for making an opinion as regard the effectiveness of the client’s IT internal controls. Internal control systems of most organizations are computerized making it easy for operation of various departments of the organization (Joia 2003).
Accounting information systems (AIS) provide high-quality information on accounts of the company necessary for planning, evaluation, and analysis of the company’s operations. Information technology has altered greatly the manner in which conventional accounting operates (Hall 2010).
Accounting function has shifted to computerized operations in which accounting data is processed, stored, and transmitted to the users whenever required by means of IT-oriented information systems. Development in technology has permitted massive processing and storage of useful accounting information.
However, IT-based accounting also presents itself with some complication. The issue of data value has met many questions in the use of AIS. The value of information relayed by AIS is highly dependent on the data quality. Consideration must thus be given to those factors that can compromise the quality of data in accounting information system (Joia 2003). Most organizations are quitting elaborate paper record keeping and embracing the use of modern accounting packages that rely entirely on information technology development.
Conclusion
The world has revolutionized in many areas. The information system has helped the world grow and change for the better. The revolution has helped the business sector in so many ways, more so the management which has been in the able to increase its efficiency of operations in so many ways.
Information storage and retrieval has been boosted in a very big way, increasing efficiency of operations and carrying out business. The technology is however dynamic and it is expected to continue changing over a period of time in the future; hence it is not even possible to project where the system will be in the next 10 years.
References
Gómez, H. G., Serna, M. D. A., & Badenes, R. F. O. (2009). Evolution and Trends of Information Systems for Business Management: The M-Business. A Review, 163(77), 181-193. Web.
Hall, J. A. (2010). Accounting Information Systems. Cincinnati: South-Western college publishers.
Joia, L. A. (2003). It-Based Management: Challenges and Solutions. Hershey: Idea Group Publishing.
Monk, E. F., & Wagner, B. J. (2008). Concepts in Enterprise Resource Planning. Stanford: Cengage Learning.