Transaction Processing & Enterprise Resource Planning Systems

Transaction Processing & Enterprise Resource Planning Systems
Chapter 9 Chapter 9 addresses the oldest type of information system used in business – transaction processing systems – and its latest evolution, enterprise resource planning systems. All organizations have manual and automated transaction processing systems. These are key systems for businesses since they perform routine business activities, process key business activities and maintain records about them. Although they do not themselves explicitly support decision-making, transaction processing systems also collect and update data used by many other business information systems, such as management information systems or decision support systems. After studying chapter 9, you should be able to address the learning objectives described in the next 2 slides. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Principles and Learning Objectives
An organization’s TPS must support the routine, day-to-day activities that occur in the normal course of business and help a company add value to its products and services. Identify the basic activities and business objectives common to all transaction processing systems. Describe the inputs, processing, and outputs for the transaction processing systems associated with order, purchasing, and accounting business processes. Transaction processing systems handle the routine, day-to-day activities of a business or organization. Transaction processing systems help businesses add value to products and services and can be leveraged strategically. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

TPSs help multinational corporations form business links with their business partners, customers, and subsidiaries. Identify the challenges that multinational corporations must face in planning, building, and operating their TPSs. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Implementation of an enterprise resource planning system enables a company to achieve numerous business benefits through the creation of a highly integrated set of systems. Define the term enterprise resource planning system and discuss the advantages and disadvantages associated with the implementation of such a system. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

An Overview of Transaction Processing Systems
Transaction processing systems handle routine business operations and maintain records related to those activities. Transaction processing systems typically transform large numbers of inputs to outputs, using simple processing logic and operations. Order entry, inventory control and accounts payable systems are all examples of transaction processing systems. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

TPS, MIS/DSS, and Special Information Systems
MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Traditional Transaction Processing Methods & Objectives
Batch processing systems On-line transaction processing (OLTP) On-line entry with delayed processing Process data generated by and about transactions Process data generated for and about transactions Maintain a high degree of accuracy and integrity Produce timely documents & reports The first transaction processing systems used batch processing. That is, all transactions for a period of time would be collected in a group (called a batch), input & processed as a unit. This was normally done at regular intervals, such as every hour, day, or week. The biggest problem with batch processing is that the master file is never current. Although this is okay for some applications, such as processing end of semester grades or payroll, it is unacceptable for others, such as financial transactions. Think about the problems that would arise if your bank only processed deposits and withdrawals once a day! However, batch processing is fast and cost effective for many applications. Online transaction processing is interactive & each transaction is processed as it occurs. Files are always current when online processing is used. The drawback to OLTP is the high costs associated with the necessary security & fault tolerance features. When online entry with delayed processing is used, data is input as the transaction occurs and is stored online, but files are not updated. Files are updated later in batch. For example, orders taken over the phone may be entered into the system, but not processed until a slow time, such as at night. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Traditional Transaction Processing Methods & Objectives
Increase labor efficiency Help provide improved service Help build and maintain customer loyalty Achieve competitive advantage In the early days of transaction processing systems, it was obvious that transaction processing systems could replace many people. Increased labor efficiency is still a huge advantage of transaction processing systems. In our increasingly service-oriented economy, outstanding customer service has become a goal of virtually all companies. Transaction processing systems can be very useful for improving customer service. For example, at a store website, a transaction processing system can check inventory and tell a customer an item is out of stock, or check production or other systems to tell the customer when the item will be in stock. Although transaction processing systems are the oldest type of business information system in use, most strategic systems are transaction processing systems or based on them. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Batch versus On-Line Transaction Processing

Integration of a Firm’s TPSs

Examples of Transaction Processing

Transaction Processing Systems

Transaction Processing Activities
Data collection Should be collected at source Should be recorded accurately, in a timely fashion Data editing Data correction MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Document Production and Reports

Control & Management Issues
Business resumption planning Disaster recovery Backups Since transaction processing systems are so fundamental to a business, it can be disastrous if they malfunction for any reason, such as power outages, hurricanes, or mechanical or human error. Business resumption planning is analogous to disaster preparedness. After threats are identified and measures are developed that will safeguard corporate data and keep the system running until normal operations are restored. When a business resumption plan is implemented, it is call disaster recovery. The most important item for disaster recovery is the presence of backup systems. Companies may maintain their own backup systems. Some companies, particularly in the financial sector, for instance, maintain fault tolerant systems as part of normal operations. That is, transactions are processed on two identical servers – often in different locations. Thus, if something happens to cause the main site to fail, the backup server can be used. Other organizations have agreements with third party vendors called “hot sites”. In an emergency, a hot site provides the facility, along with hardware, software and communications facilities identical to the firm’s own, so that a company merely moves in and starts working. A cold site provides the facility, but not the systems, so a company must have another agreement to obtain backup systems. Organizations should keep at least 2 current backup copies of all data – one stored onsite and the other stored elsewhere. After all, an onsite backup would do little good if your office building flooded in a hurricane. Because of the communications network, hardware, and software backups required, business resumption planning can be costly. Businesses must consider the trade off between cost and fault tolerance. The more dependent an organization is on transaction processing systems and data, the more money it will need to invest in fault tolerant systems and networks. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Transaction Processing Audit
Does the system meet its business requirements? Are there procedures and controls? Are the procedures & controls properly used? Transaction processing systems are audited to determine whether they fulfill the requirements for which they were implemented and are correctly used and controlled. Some audits are internal, where an internal auditor examines the system and its documentation. External audits are done by independent auditors and should be a priority in publicly held firms. Traditionally in audits, audit trails are used to trace outputs back to their source to ensure correctness, security, and validity of processing. For example, a payment to a vendor could be traced back to the invoice, which could be traced back to a shipping receipt that was traceable to a purchase order. As business processes become more automated, often audit trails are broken or destroyed, so auditors must use other means to ensure the security and validity of the system. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Order Processing Systems
Order entry Sales configuration Shipment planning Shipment execution Invoicing Customer relationship management (CRM) Routing and scheduling Scheduling systems MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Document Production Reports

Traditional Transaction Processing Applications
Although there are many different types of transaction processing systems, we’ll briefly look at three of the most common: order processing systems, purchasing systems, and accounting systems. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Order Processing Systems

MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan
Order Entry System MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Shipment Planning MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Inventory Status Report

Invoicing MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Customer Relationship Management

The 15 Top-Rated CRM Software Packages

Purchasing Systems Inventory control Purchase order processing Receiving Accounts payable MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Purchasing Systems MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Accounts Payable MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Accounting Systems MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Accounts Receivable MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Accounts Receivable Aging Report

Typical Paycheck Stub MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Payroll Journal MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

General Ledger MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

ERP Software Vendors MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

International Issues Different languages and cultures Disparities in information systems infrastructure Varying laws and custom rules Multiple currencies MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Enterprise Resource Planning
Enterprise resource planning (ERP) makes timely information easily available for analysis and decision-making in companies of all sizes. ERP systems monitor business functions in real-time to provide timely information in manufacturing, finance, distribution, sales or human resources. A strength of ERP systems is that they integrate data across all functions. For example, a manufacturing supervisor would be notified when raw material inventory falls below a set floor. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Enterprise Resource Planning
Real-time monitoring of business functions Supports human resources, sales, and distribution Accommodates the different ways each company runs business MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Advantages of ERP Eliminates costly, inflexible legacy systems Improved technology infrastructure Improved work processes Increased data access for decision making Current business conditions make enterprise-wide accessibility of information a key to success. ERP software offers that possibility. Deploying an ERP system allows a firm to replace numerous separate, sometimes isolated, inefficient legacy applications with a single set of integrated products. This improves the efficiency of systems and decreases the cost of maintaining old systems. This improves an organization’s ability to adapt to changing conditions. Implementing an ERP system also gives an enterprise the chance to upgrade and standardize hardware, software and databases, reducing support and operations costs. ERP systems are designed around the most effective and customer-oriented business practices found. Thus, deploying an ERP system will help an organization follow the industry’s best practices. Although the adoption of improved work processes can be beneficial, as noted on the next slide, this can also be a disadvantage. Often established processes must be re-engineered, possibly causing dissatisfaction or turnover among experienced employees. Since ERP systems maintain an integrated database, decisions can be made based on enterprise-wide data. This is far more efficient than trying to coordinate decisions across units. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Disadvantages of ERP Expense & time Radical change Integrating with other systems One vendor risks However, ERP systems are time-consuming, expensive, and difficult to implement. Some companies have spent millions of dollars and many years implementing ERP systems – not always with successful outcomes. Many companies have also had problems making ERP systems work with existing systems, adding to the expense and difficulty of deploying ERP. After investing so many resources in implementing ERP, switching costs are very high, so an ERP vendor essentially holds a business that uses its system hostage. Even with these problems, however, many organizations are successfully using ERP systems. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

ERP System MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Business Application Programming Interface (BAPI)

Summary Transaction Processing Systems - consist of all components of a CBIS, including databases, telecommunications, and people Transaction Processing Systems Methods - batch, on-line, and on-line with delayed processing Enterprise resource planning (ERP) software - a set of integrated programs that manage a company’s vital business operations for an entire multisite, global organization MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

Transaction Processing & Enterprise Resource Planning Systems

Similar presentations

Presentation on theme: "Transaction Processing & Enterprise Resource Planning Systems"— Presentation transcript:

Similar presentations

About project

Feedback

Log in

Auth with social network:

Transaction Processing & Enterprise Resource Planning Systems

Similar presentations

Presentation on theme: "Transaction Processing & Enterprise Resource Planning Systems"— Presentation transcript:

Similar presentations

About project

Feedback