Organizational Information Systems CHAPTER 8 Organizational Information Systems

CHAPTER OUTLINE 8.1 Transaction Processing Systems 8.2 Functional Area Information Systems 8.3 Enterprise Resource Planning Systems

LEARNING OBJECTIVES Describe transaction processing systems. Describe functional area information systems and the support they provide for each functional area of the organization. Describe enterprise resource planning systems.

Chapter Opening Case UPS: Synchronizing the world of commerce Clicking on the UPS logo at the top takes you to the UPS home page.

Chapter opening case (continued) UPS Worldport Clicking on the aerial view of the UPS Worldport (top left) will take you to an interesting video of Worldport operations.

8.1 Transaction Processing Systems (TPS) Batch Processing Online Transaction Processing (OLTP) Rudy Giuliani checking out of a Wal-Mart using a bar code scanner that produces data captured by a transaction processing system Note: the barcode scanner is an example of source data automation Transaction processing system (TPS) monitors, collects, stores and processes data generated from all business transactions. Batch Processing is when the firm collects data from transactions as they occur, placing them in groups or batches, then prepares and processes the batches periodically (say, every night). Online Transaction Processing (OLTP) is when business transactions are processed online as soon as they occur. Source data automation involves collecting data from sensors (e.g., barcode scanners) and entering the data directly into a computer without human intervention.

How Transaction Processing Systems Manage Data

8.2 Functional Area Information Systems Functional Area Information Systems are designed to support a functional area by increasing its internal effectiveness and efficiency in the following areas: Accounting Finance Marketing Operations (POM) Human Resources Management Functional area information systems provide information mainly to lower- and middle-level managers in the functional areas via a variety of reports.

The World’s Cheapest Car See IT’s About Business 8.2. Clicking on the Tata logo above will take you to Tata Motors’ home page.

Examples of Information Systems Supporting the Functional Areas

Functional Area Information Systems Reports Routine reports Ad hoc (on demand) reports Drill-down reports Key-indicator reports Comparative reports Exception reports Functional area information systems generate a wide variety of reports.

Summary Report A summary report is one type of routine report Summary reports provide summarized information, with less detail.

Detailed Report A detailed report is another type of routine report Detailed reports provide high levels of detailed data, often in support of summary reports. Note that this detailed report provides the underlying data for “Remove Catch Basin”, which is the second item on the preceding summary report.

Drill-Down Report Drill-down report is a type of ad-hoc report A drill-down report allows users to click on an item in a report and be able to access underlying details about that item. RSSbus is a mashup tool that gives you the tools to quickly create structured feeds out of anything;  not just news and blog postings, but business data or application data that you own or have access to. (Note: RSSBus is not special, it just had an interesting video on drill-down.) Clicking on the image of the report above will take you to a video that shows how RSSBus works and how drill-down works.

Key-Indicator Report Key-indicator report is a type of ad-hoc report A key indicator report summarizes the performance of critical activities. The key indicator in this report is the number of prison inmates per 100,000 of population in 1996-1997.

Comparative Report Comparative report is one type of ad-hoc report. This comparative report compares managed health care to traditional fee-for-service healthcare. Let’s use one example: Advice to smokers to quit. * Fee-for-service has a 37% compliance rate on seven Healthcare Effectiveness Data and Information Set (HEDIS) preventive measures. See purple arrow. * The minimum managed care plans have a 30% compliance rate. (left end of bar) * The maximum managed care plans have a 85% compliance rate. (right end of bar) * The average of all managed care plans (National Health Plan average) is 61% compliance. (see red arrow). We can see that there is quite a bit of information in this graphical comparative report.

Exception Report Exception reports include only information that falls outside certain threshold standards. This image shows a financial transaction exception report using SAP from the University of Toronto in 2003.

8.3 Enterprise Resource Planning Systems (ERP) Enterprise Resource Planning (ERP) systems integrate the planning, management and use of all resources of the organization. That is, ERP systems are designed to break down the information silos of an organization. Many information systems were developed for specific functional areas and did not communicate with systems in other functional areas. Therefore, these systems are referred to as information silos. The major objective of ERP systems: integrate the functional areas of the organization by enabling seamless information flows across them.

Problems with information silos

SAP Modules SAP is moving away from describing their system as a set of modules, and now is using the term “solutions.” On their Website, SAP has structured their Solutions tab as follows: Customer Relationship Management Human Resources Financials Product Lifecycle Management Supplier Relationship Management Business Intelligence Supply Chain Management FI Financial Accounting – essentially your regulatory ‘books of record’ SAP modules: Tax Book close General ledger Consolidation Accounts payable Accounts receivable Cost elements CO Controlling – basically your internal cost/management accounting Special ledgers Cost centers Activity based costing Internal orders Profit centers AM Asset Management – track, value and depreciate your assets Product costing Depreciation Sale Purchase PS Project Systems – manage your projects, large and small Tracking Third party billing (on the back of a project) Plant shut downs (as a project) Make to order Employment history HR Human Resources – people Career management Training Payroll Succession planning Material Labor PM Plant Maintenance – maintain your equipment MM Materials Management – underpins the supply chain Down time and outages Goods receipts Purchase orders Requisitions Bills of Material Inventory management Planning QM Quality Management – improve the quality of your goods Master raw materials, finished goods etc Inspections Execution Capacity planning PP Production Planning – manages your production process Certificates Master production scheduling SD Sales and Distribution – from order to delivery Shop floor Material requirements planning Sales orders RFQ Packing Picking (and other warehouse processes) Pricing CA Cross Application – these lie on top of the individual modules Shipping Office – for email BW – business information warehouse WF – workflow Industry solutions Workplace New Dimension products such as CRM, PLM, SRM, APO etc

ERP Systems (continued) A business process is a set of related steps or procedures designed to produce a specific outcome. The image shows an example of a business process, namely an order process.

ERP II SYSTEM ERP Platform & Database Core ERP Modules Suppliers Manufacturing & Production Module Accounting and Financial Module Business Intelligence Supply Chain Management Module E-Business Module Customer Relationship Management Module Human Resources Module Core ERP Modules Extended ERP Modules Suppliers Customers ERP Platform & Database See Figure 8.3.

The World Bank See IT’s About Business 8.3 Clicking on the logo at the top takes you to the World Bank home page.

Chapter Closing Case Clicking on the logo at the top will take you to the Transportation Security Administration home page.