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6 Chapter 1
systems. And many financial organizations write their own proprietary systems for
market trading, thinking that gives them a leg up on their competition. Some of the
more sophisticated financial products, such as hedge funds and derivatives, are
generated via complex programs. In addition, a great deal of financial tracking is
performed on spreadsheets, which may not be connected to any integrated system.
The end result of these unintegrated systems is a lack of consistent data across
systems, which can lead to an inaccurate assessment of risk. Most financial systems
written today are honed for rapid trading, not for regulation or for tracking anomalies
that could lead to problems. Some IT experts claim that the global financial networks are
now unstable and that the fast quantitative trading programs in place could lead rapidly
to potentially disastrous outcomes.
Question:
1. Do you think some of the problems associated with the financial crisis of 2008
could have been avoided if financial firms had more integrated information?
If so, how, or if not, why not?

FUNCTIONAL AREAS AND BUSINESS PROCESSES
OF A VERY SMALL BUSINESS

Next, we will look at the way business processes involve more than one functional area,
using a fictitious small business as an example—a coffee shop that you own. We will
examine the business processes of the coffee shop and see why coordination of the
functional areas helps achieve efficient and effective business processes. You will see the
role that information plays in this coordination and how integration of the information
system improves your business.
Even though just a few people can run a small coffee shop, the operation of the
business requires a number of processes. Coordinating the activities within different
functional areas requires accurate and timely information.

Marketing and Sales
Marketing and Sales (M/S) functions include developing products, determining pricing,
promoting products to customers, and taking customers’ orders. Marketing and Sales also
helps create a sales forecast to ensure the successful operation of the coffee shop.
For the most part, this is a cash business, but you still need to keep track of your
customers so you can send flyers or occasional thank-you notes to repeat customers. Thus,
your records must not only show the amount of sales, but also identify repeat customers.
Product development can be done informally in such a simple business; you gather
information about who buys which kind of coffee and note what customers say about each
product. You also analyze historical sales records to spot trends that are not obvious.
Deciding whether to sell a product also depends on how much it costs to produce the
product. For example, some customers might be asking for a fair-trade decaffeinated coffee
or a chai tea. To determine whether the new product could be profitably produced and
sold, you could analyze data from Supply Chain Management, including production

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