Internal feedback

Internal feedback from this information will initiate the inventory ordering process to replenish the inventories. Similarly, external feedback about the level of uncollected customer accounts can be used to adjust the organization’s credit-granting policies.

Information System Objectives
Each organization must tailor its information system to the needs of its users. Therefore, specific information system objectives may differ from firm to firm. Three fundamental objectives are, however, common to all systems: 1. To support the stewardship function of management. Stewardship refers to management’s responsibility to properly manage the resources of the firm. The information system provides information about resource utilization to external users via traditional financial statements and other mandated reports. Internally, management receives stewardship information from various responsibility reports. 2. To support management decision making. The information system supplies managers with the information they need to carry out their decision-making responsibilities. 3. To support the firm’s day-to-day operations. The information system provides information to operations personnel to assist them in the efficient and effective discharge of their daily tasks.

Acquisition of Information Systems
We conclude this section with a brief discussion of how organizations obtain information systems. Usually, they do so in two ways: (1) they develop customized systems from scratch through in-house systems development activities and (2) they purchase preprogrammed commercial systems from software vendors. Larger organizations with unique and frequently changing needs engage in in-house development. The formal process by which this is accomplished is called the system development life cycle. Smaller companies and larger firms that have standardized information needs are the primary market for commercial software. Three basic types of commercial software are turnkey systems, backbone systems, and vendor-supported systems. Turnkey systems are completely finished and tested systems that are ready for implementation. Typically, they are general-purpose systems or systems customized to a specific industry. In either case, the end user must have standard business practices that permit the use of canned or off-the-shelf systems. The better turnkey systems, however, have built-in software options that allow the user to customize input, output, and processing through menu choices. However, configuring the systems to meet user needs can be a formidable task. Enterprise resource planning (ERP) systems such as Oracle and SAP are examples of this approach to systems implementation. ERP systems are discussed later in this chapter. Backbone systems consist of a basic system structure on which to build. The primary processing logic is preprogrammed, and the vendor then designs the user interfaces to suit the client’s unique needs. A backbone system is a compromise between a custom system and a turnkey system. This approach can produce satisfactory results, but customizing the system is costly. Vendor-supported systems are custom (or customized) systems that client organizations purchase commercially rather than develop in-house. Under this approach, the software vendor designs, implements, and maintains the system for its client. This is a popular option with healthcare and legal services organizations that have complex systems