1. Organizational Information Systems
CHAPTER 8
Organizational Information Systems

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

3. 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.

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

5. 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.

6. 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.

7. How Transaction Processing Systems Manage Data

8. 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.

9. 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.

10. Examples of Information Systems Supporting the Functional Areas

11. 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.

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

13. 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.

14. 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.

15. 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

16. 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.

17. 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.

18. 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.

19. Problems with information silos

20. 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
BW – business information warehouse
WF – workflow
Industry solutions
Workplace
New Dimension products such as CRM, PLM, SRM, APO etc

21. 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.

22. 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.

23. 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.

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