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Turban and Volonino
Chapter 9 Transaction Processing, Functional Applications and Integration Information Technology for Management Improving Performance in the Digital Economy 7th edition John Wiley & Sons, Inc. Slides contributed by Dr. Sandra Reid Chair, Graduate School of Business & Professor, Technology Dallas Baptist University
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Chapter Outline
9.1 Functional Information Systems and Transaction Processing Systems
9.2 Managing Production/Operations and Logistics
9.3 Managing Marketing and Sales Systems
9.4 Managing Accounting and Finance Systems
9.5 Managing Human Resources Systems
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3. Chapter Outline (cont’d)
9.6 Integrating Functional Information Systems
9.7 Managerial Issues
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4. Copyright 2010 John Wiley & Sons, Inc.
Learning Objectives
Relate functional areas and business processes to the value chain model.
Define a functional management information system, and list its characteristics.
Understand the transaction processing system and demonstrate how it is supported by IT.
Analyze the support provided by IT and the Web to production/operations management, including logistics.
Describe the support provided by IT and the Web to marketing and sales.
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5. Learning Objectives – cont’d
Understand the support provided by IT and the Web to accounting and finance.
Analyze the support provided by IT and the Web to human resources management.
Describe the benefits and issues of integrating functional information systems.
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Figure IT 7eU provides opportunity to discuss overview of IT’s role in corporate strategy setting and its intricate importance to performance as business solutions and the resulting profitability. Throughout the “semester” student learning will be evolving surrounding this chart making it good to begin by going back to it to integrate learning.
Figure IT7eU
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Problem – Medical supplies inventory shortages, overstock of unneeded items, costly rush ordering, & nurses not appropriate personnel to manage process.
Solution – Connect wireless handheld devices with purchasing & inventory management information systems.
Results – Inventory levels reduced 50%; IT solution cost repaid in months. Consistent materials available for improved patient care.
Click image for homepage.
Discuss the direct benefits to the patient & to the health service provider with implementation of the solution described. Proper supplies
available to meet needs of patient for better healthcare service.
Where beyond healthcare is this an attractive solution? Manufacturing.
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Figure 9.1
Informational slide. There is a need to integrate functional systems applications among themselves, with TPS & with other applications.
These relationships are shown in this figure.
The functional areas, TPS, and integration connection. Note the flow of information from the TPS to the functional systems. Flow of information between and among functional systems is done via the integration component.
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9. Copyright 2010 John Wiley & Sons, Inc.
9.1 Functional Information Systems & Transaction Processing Systems
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10. Transaction Processing Information Systems
TPS monitors, collects, stores, processes, & disseminates information for all routine core business transactions.
Characteristics of Transaction Processing Systems:
Rapid Processing
Processes transactions virtually instantly
Reliability
Ensures transactions never slip past the net, & systems themselves are operational permanently
Standardization
Acquires identical data for each transaction.
Controlled Access
Access is restricted to only those employees who require their use.
Click image to relevant wikipedia location.
Data from TPS are input to functional IS applications, CRM & other systems. Provides critical data on customers & their purchasing history.
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Table 9.1
Informational slide. TPS is usually automated & is constructed with the major characteristics shown in this table.
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12. TPS – Traffic Control at Airports
It is hard to think of air traffic control systems as being examples of TPS!
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13. TPS – In-flight Card Payments
Many airlines now accepting plastic for in-flight purchases
Many airlines go cashless for in-flight purchases
Click hot links to articles for further reading and discussion.
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14. Batch vs. Online Processing
Benefits of Batch:
Benefits of Online:
Allows sharing of computer resources among many users and programs,
Data are processed as soon as transaction occurs.
Shifts the time of job processing to when the computing resources are less busy.
Allows sharing of computer resources among many users.
Avoids idling the computing resources with minute-by-minute human interaction and supervision.
Better amortizes the cost of a computer, especially an expensive one.
Avoids idling the computing resources without minute-by-minute human interaction and supervision.
Atomic unit of processing.
Hot links provided for informational slide so that students can compare characteristics of processing types.
According to wikipedia:
Batch processing is execution of a series of programs ("jobs") on a computer without human interaction.
Transaction processing is designed to maintain a computer system (typically, but not limited to, a database or some modern filesystems) in a known, consistent state, by ensuring that any operations carried out on the system that are interdependent are either all completed successfully or all canceled successfully.
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Figure 9.2
Task students to follow a live example & to present it to others in the class.
The flow of information in transaction processing.
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16. Modernizing TPS Saved Time & Money
Behind Microsoft's Tellme Acquisition: Pizza To Go
Blaze Advisor drives modernization of legacy systems at the California DMV
Click hot links related to IT At Work, 9.1.
Could FedEx Office operate completely without employees at their outlets? What would you recommend & why? Even if they could, there would
be a disconnect with their customers. Without the human behind it, any “robot” could provide the service making it just a matter of time
before the competition took over.
What effect does Carnival’s smart-card reader have on security?
Whose time is being saved at UPS & Sprint? That of the company employees.
Copy Services no longer need employees to complete your purchase…
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Taxis in Singapore
ORBITAL AWARDED $13 MILLION TRANSIT FLEET MANAGEMENT SYSTEMS CONTRACT IN SINGAPORE Contract Represents Major International Win for Orbital's Transportation Management Systems Division, Already the U.S. Market Leader
What TPS tasks do computers execute in this order processing system? Point of sale, payment, payroll, inventory.
What kinds of priorities can be offered to frequent taxi customers? Record of credit cards used for payment option. Call ahead service.
Record of identity for efficiency.
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Web Analytics Tools
Web analytics is the measurement, collection, analysis and reporting of internet data for purposes of understanding and optimizing web site usage.[1]
There are two categories of web analytics; off-site and on-site web analytics.
5 Great (Free) Analytics Tools You Might Not Know About Yet
Hot links. Students to discuss tools listed in the article; it is critical thinking assignment.
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Table 9.2
Informational slide. Typical TPS activities are summarized in this table.
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9.2 Managing Production/Operations & Logistics
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Figure 9.3
Informational slide. The production & operations management (POM) function in an organization is responsible for the processes that transform
inputs into useful outputs (illustrated in this figure). POM area is very diversified as are its supporting information systems. It also
differs considerably among organizations. Manufacturing companies use completely different processes than do service organizations,
and a hospital operates much differently from a university.
The production/operations management functions transform inputs into useful outputs. (Source: J.R. Meredith and S. M. Shafer, Operations Management. New York: Wiley, Reprinted by permission of John Wiley & Sons, Inc.)
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22. In-House Logistics & Materials Management
Deals with ordering, purchasing, inbound logistics (receiving), & outbound logistics (shipping) activities.
Purchasing results in incoming materials & parts.
Parts inspected for quality then stored.
Activities supported by information systems.
Discuss the competitive benefits of close relationships with upline & downline suppliers. Each look for efficiencies that will benefit
all participants that can be passed on. Each will contribute to the improvement of the whole. IT facilitates this process/extent
of involvement with extranets, EDI, etc.
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e-Procurement
E-procurement (electronic procurement, sometimes also known as supplier exchange) is the business-to-business or business-to-consumer or Business-to-government purchase and sale of supplies.
Information systems that support logistics & materials management:
Radio-frequency identification (RFID) is the use of an object (typically referred to as an RFID tag) applied to or incorporated into a product, animal, or person for the purpose of identification and tracking using radio waves. Some tags can be read from several meters away and beyond the line of sight of the reader.
Discuss how e-procurement differs from traditional procurement processes. Electronic allows for just-in-time inventory concepts
to be implemented, payments, data mining for trends while the traditional processes will not.
Robots perform distribution & materials handling.
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24. Quality Control Systems
Can be standalone systems.
May be part of enterprise-wide total quality management (TQM) effort.
Provide information about quality of incoming materials & parts; quality of in-process semi-finished & finished products.
May compare results to metrics such as Six Sigma.
Per wikipedia.org, Six Sigma is a business management strategy, originally developed by Motorola, that today enjoys widespread application in many sectors of industry.
Copyright 2010 John Wiley & Sons, Inc.

25. Planning Production / Operations
Just-in-time – inventory strategy minimizes inventories & continuously improves processes.
Project management is enhanced by tools such as PERT (program evaluation & review technique) & CPM (critical path method).
Computer-integrated manufacturing promotes integration of various computerized factory systems & has 3 basic goals: simplification, automation, & integration and coordination.
According to wikipedia:
Just-in-time (JIT) is an inventory strategy implemented to improve the return on investment of a business by reducing in-process inventory and its associated carrying costs. In order to achieve JIT the process must have signals of what is going on elsewhere within the process.
PERT is a method to analyze the involved tasks in completing a given project, especially the time needed to complete each task, and identifying the minimum time needed to complete the total project.
Critical Path Method, abbreviated CPM, or Critical Path Analysis, is a mathematically based algorithm for scheduling a set of project activities. It is an important tool for effective project management.
Computer-Integrated Manufacturing (CIM) in engineering is a method of manufacturing in which the entire production process is controlled by computer. Typically, it relies on closed-loop control processes, based on real-time input from sensors. It is also known as flexible design and manufacturing.
Discuss the competitive importance of effectively utilizing these strategies. For instance, with JIT inventory systems, there is less
expense associated with warehousing raw materials, less obsolescence, less damaged goods costs, etc. PERT & CPM systems
allow real time project status, a more focused strategy for keeping projects on time & within budget.
Is there ever a true “sustainable competitive advantage?” Defend your answer. It depends. Really, no….ultimately, all things being
equal, nothing will be something a competitor cannot imitate over time.
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9.3 Managing Marketing & Sales Systems
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Figure 9.4
Discuss the value of each system within the Channel System. Is one more important than another? What if one is weak, what is the
impact upon the overall organization? No organization can reach its potential with weak marketing channel systems. Marketing
is critical to an organization’s ability to remain viable. Without marketing, there is no business. Without goods and/or services
there is no business, but without effectively advertising, selling, distributing, pricing…there are no customers.
Marketing channel systems.
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28. Improving Shopping & Checkout at Retail Stores
Macy's expands consumer electronics kiosks program
Electronic check scans win retailers' acceptance (WalMart)
……..Embedded with an RFID device……..
Home Depot Employs Self Checkout
Articles for discussion & expanding student’s critical thinking.
Copyright 2010 John Wiley & Sons, Inc.

29. Internet Market Research & Proctor & Gamble
Whitestrips introduced & offered for sale on the Internet.
Spent months identifying target market.
Collected data via online questionnaires rather than mail-outs.
Data mining revealed most enthusiastic groups.
Buzz created a huge demand for product by the time it hit the shelves.
Discuss:
How did the Internet decrease time-to-market in this situation? P&G used social groups, provided incentives to respond. They
created a demand for the product before it was launched.
What is the role of data mining? To identify trends. To determine needs & wants, current & future.
Why is so much testing needed? To avoid expensive failures.
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9.4 Managing Accounting & Finance Systems
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31. Major Benefits of Using Budgeting Software
Reduces time & effort in the budget process.
Possible to easily explore & analyze implications of organizational & environmental changes.
Can facilitate integration of corporate strategic objectives with operational plans.
May make planning an ongoing, continuous process.
Automatically monitor exceptions for patterns & trends.
Search on the Internet for examples of software available. Quicken, Budget Maestro, YNAB, Excel, MyBudgetPlanner, Peachtree.
Task students to determine the strengths & weaknesses of a few.
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Figure 9.5
Collection of standard accounting modules. User can integrate as many of the modules as needed for the business. Software includes
an e-commerce module, which provides dynamic Web access to MAS 90.
Integrated accounting business software.
Copyright 2010 John Wiley & Sons, Inc.

33. Integrated Accounting Software
See Top 7 Accounting, Financial & Inventory Software
XBRL is a standards-based way to communicate business and financial information. These communications are defined by metadata set out in taxonomies. Taxonomies capture the definition of individual reporting concepts as well as the relationships between concepts and other semantic meaning.
What are some of the questions relevant to ask prior to selecting an integrated accounting software solution? What about maintenance?
Training? Recurring cost? Functionality?
When is cheaper not necessarily better? When functionality is limited; when there are security gaps; when audit is difficult. When compatibility
is low.
Why do we need a programming language & international standard for electronic transmission of business & financial information such as XBRL?
Generate cleaner data, including written explanations & supporting notes.
Produce more accurate data with fewer errors that require follow up by regulators (better quality).
Transmit data faster to regulators & meet deadlines.
Increase number of cases & amount of information that staffers can handle.
Make information available faster to regulators & public.
Address issues & concerns in their filings rather than after the fact.
Reduce report cycle time.
Lead to more efficient capital market.
Source: wikipedia.org
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Figure 9.6
Informational slide. Illustrates how XBRL works. Such submission allows government analysts to validate information
submitted in hours instead of 2 to 3 weeks.
How XBRL works.
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9.5 Managing Human Resources Systems
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HRIS Applications
Payroll
Work Time
Benefits Administration
Recruiting
Training
Performance Records
What are the benefits of automating such applications? Typically, reduced cost & increased efficiency. Quicker review of applicants’
credentials versus requirements of the position. Training moved to employees instead of employees having to come in for training
for most needs. Maintenance of employee performance records, attendance, etc. Automated time & attendance for more effective
payroll administration. To support internal & external reporting requirements. Survey administration. It is infinite, the list of
benefits.
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Figure 9.7
Students with experience / knowledge should enlighten others.
HRM activities.
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38. Copyright 2010 John Wiley & Sons, Inc.
Recruitment
Search engines on the Web can help with attracting & repelling appropriate candidates.
Internet makes advertising much simpler process, although large numbers may result.
Embedded intelligence to help manage entire recruitment process.
Social networking sites such as Jobster & LinkedIn have gained widespread popularity.
List some of the pros & cons of utilizing such methods for recruitment. Some good employees may be overlooked while some less
desirable may be selected. However, the risks should be no higher/lower than with manual systems. Less bias may be present.
Copyright 2010 John Wiley & Sons, Inc.

39. HR Maintenance & Development
Performance evaluation – supervisor, peer, &/or subordinate. Wage reviews are also related to performance evaluations.
Training & HR development – planning classes & tailoring specific training programs to meet needs of organization & employees. May include career development plan for each employee.
IT supports planning, monitoring & control of these activities.
Has IT made maintenance & development more practical & effective? If so, in what ways?
Much easier to quickly assess training cost by electronically determining extent of proposed initiative.
Much easier to determine cost of salary/benefit changes.
Much quicker to pull together data for succession planning purposes, etc.
Much quicker to assess performance versus objectives by individuals, departments, entire organizations.
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Training Devices
Web-based video clips.
Mobile devices.
Virtual reality.
Interactive simulations.
What are the potential benefits of such systems? Reduced cost & increased efficiency.
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9.6 Integrating Functional Information Systems
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42. Software Helps Cirque du Soleil
Cirque du Soleil - Saltimbanco Arena Show 2008
Issues such as:
Logistics
Applications such as finance, accounting, marketing
Unable to share data
Ineffective employee productivity
Company implemented IBM WebSphere Business Integration software to connect all systems & applications: *Replaced manual work *Data sharing resulted in fewer missing items *Cut development time for new applications
After considering IT At Work, 9.6, consider the following critical thinking questions:
Why is it necessary to integrate functional applications?
Could the company grow so rapidly otherwise? If so, how?
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9.7 Managerial Issues
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Managerial Issues
Integration of functional information systems
Priority of transaction processing
Finding innovative applications
Using the Web
Systems integration
Ethical issues
Why are HRM applications especially prone to ethical & legal considerations? Because it involves fair labor laws & practices, discrimination, etc.
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