2. Principles of Information Systems, Seventh Edition2 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 Explain some key control and management issues associated with transaction processing systems Describe the inputs, processing, and outputs for the transaction processing systems associated with order processing, purchasing, and accounting business processes

3. Principles of Information Systems, Seventh Edition3 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

4. Principles of Information Systems, Seventh Edition4 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 Discuss the advantages and disadvantages associated with the implementation of an enterprise resource planning system

5. Principles of Information Systems, Seventh Edition5 An Overview of Transaction Processing Systems A transaction processing system (TPS) provides data for other business processes Management information system/decision support system (MIS/DSS) Special-purpose information systems

6. Principles of Information Systems, Seventh Edition6 Figure 9.1: TPS, MIS/DSS, and Special Information Systems in Perspective

7. Principles of Information Systems, Seventh Edition7 An Overview of Transaction Processing Systems (continued) TPSs Process the detailed data necessary to update records about the fundamental business operations Include order entry, inventory control, payroll, accounts payable, accounts receivable, the general ledger, and more

8. Principles of Information Systems, Seventh Edition8 Traditional Transaction Processing Methods and Objectives Batch processing system: method of computerized processing in which business transactions are accumulated over a period of time and prepared for processing as a single unit or batch Online transaction processing (OLTP): computerized processing in which each transaction is processed immediately, without the delay of accumulating transactions into a batch

9. Principles of Information Systems, Seventh Edition9 Figure 9.2: Batch Versus Online Transaction Processing

10. Principles of Information Systems, Seventh Edition10 Traditional Transaction Processing Methods and Objectives (continued) Online entry with delayed processing: transactions are entered into the computer system when they occur, but they are not processed immediately Organizations expect their TPSs to: Process data generated for and about transactions Maintain a high degree of accuracy and integrity Produce timely documents and reports

11. Principles of Information Systems, Seventh Edition11 Traditional Transaction Processing Methods and Objectives (continued) Organizations expect their TPSs to (continued): Increase labor efficiency Help provide increased service Help build and maintain customer loyalty Achieve competitive advantage

12. Principles of Information Systems, Seventh Edition12 Figure 9.3: Integration of a Firm’s TPSs

13. Principles of Information Systems, Seventh Edition13 Transaction Processing Activities TPSs Capture and process data that describes fundamental business transactions Update databases Produce a variety of reports Transaction processing cycle: the process of data collection, data editing, data correction, data manipulation, data storage, and document production

14. Principles of Information Systems, Seventh Edition14 Figure 9.4: A Simplified Overview of a Transaction Processing System

15. Principles of Information Systems, Seventh Edition15 Figure 9.5: Data Processing Activities Common to TPSs

16. Principles of Information Systems, Seventh Edition16 Transaction Processing Activities (continued) Data collection Should be collected at source Should be recorded accurately, in a timely fashion Data editing Data correction

17. Principles of Information Systems, Seventh Edition17 Transaction Processing Activities (continued) Data manipulation Data storage Document production and reports

18. Principles of Information Systems, Seventh Edition18 Control and Management Issues Business continuity planning: identification of the business processes that must be restored first in the event of a disaster and specification of what actions should be taken and who should take them to restore operations Disaster recovery: actions that must be taken to restore computer operations and services in event of disaster

19. Principles of Information Systems, Seventh Edition19 Transaction Processing System Audit Does the system meet the business need for which it was implemented? What procedures and controls have been established? Are these procedures and controls being used properly? Are the information systems and procedures producing accurate and honest reports?

20. Principles of Information Systems, Seventh Edition20 Table 9.2: The Systems That Support Order Processing, Purchasing, and Accounting Functions

21. Principles of Information Systems, Seventh Edition21 Order Processing Systems Order entry Sales configuration Shipment planning Shipment execution

22. Principles of Information Systems, Seventh Edition22 Order Processing Systems (continued) Inventory control Invoicing Customer relationship management Routing and scheduling

23. Principles of Information Systems, Seventh Edition23 Figure 9.7: Order Processing Systems

24. Principles of Information Systems, Seventh Edition24 Order Processing Systems (continued) Order entry system: captures the basic data needed to process a customer order Sales configuration system: ensures that the products and services ordered are sufficient to accomplish the customer’s objectives and will work well together Shipment planning system: determines which open orders will be filled and from which location they will be shipped

25. Principles of Information Systems, Seventh Edition25 Figure 9.8: Data Flow Diagram of an Order Entry System

26. Principles of Information Systems, Seventh Edition26 Order Processing Systems (continued) Shipment execution system: coordinates the outflow of all products from the organization, with the objective of delivering quality products on time to customers Inventory-control system: updates the computerized inventory records to reflect the exact quantity on hand of each stock-keeping unit

27. Principles of Information Systems, Seventh Edition27 Order Processing Systems (continued) An invoicing application looks up the full name and address of the customer, determines whether the customer has an adequate credit rating, automatically computes discounts, adds taxes and other charges, and prepares invoices and envelopes Customer relationship management (CRM) system: helps a company manage all aspects of customer encounters, including marketing and advertising, sales, customer service after the sale, and programs to retain loyal customers

28. Principles of Information Systems, Seventh Edition28 Figure 9.12: Customer Relationship Management System

29. Principles of Information Systems, Seventh Edition29 Order Processing Systems (continued) Routing system: determines the best way to get products from one location to another Scheduling system: determines the best time to pick up or deliver goods and services

30. Principles of Information Systems, Seventh Edition30 Purchasing Systems Purchasing transaction processing systems include: Inventory control Purchase order processing Receiving Accounts payable

31. Principles of Information Systems, Seventh Edition31 Figure 9.13: Purchasing Transaction Processing System

32. Principles of Information Systems, Seventh Edition32 Purchasing Systems (continued) Inventory control Purchase order processing system: helps purchasing departments complete their transactions quickly and efficiently

33. Principles of Information Systems, Seventh Edition33 Purchasing Systems (continued) Receiving system: creates a record of expected receipts Accounts payable system: increases an organization’s control over purchasing, improves cash flow, increases profitability, and provides more effective management of current liabilities

34. Principles of Information Systems, Seventh Edition34 Accounting Systems Budget Accounts receivable Payroll Asset management General ledger

35. Principles of Information Systems, Seventh Edition35 Figure 9.16: Financial Systems

36. Principles of Information Systems, Seventh Edition36 Accounting Systems (continued) Budget transaction processing system: automates many of the tasks required to amass budget data, distribute it to users, and consolidate the prepared budgets Accounts receivable system: manages the cash flow of the company by keeping track of the money owed the company on charges for goods sold and services performed

37. Principles of Information Systems, Seventh Edition37 Figure 9.17: An Accounts Receivable Statement

38. Principles of Information Systems, Seventh Edition38 Accounting Systems (continued) Payroll system prepares: Payroll check and stub Payroll register W-2 statements Asset management transaction processing system: controls investments in capital equipment and manages depreciation for maximum tax benefits

39. Principles of Information Systems, Seventh Edition39 Accounting Systems (continued) General ledger system: designed to automate financial reporting and data entry

40. Principles of Information Systems, Seventh Edition40 International Issues Issues that multinational corporations face in planning, building, and operating their TPSs Different languages and cultures Disparities in information system infrastructure Varying laws and customs rules Multiple currencies

41. Principles of Information Systems, Seventh Edition41 Enterprise Resource Planning: An Overview Enterprise resource planning (ERP) systems are used in large, midsized, and small companies Real-time monitoring of business functions Timely analysis of key issues such as quality, availability, customer satisfaction, performance, and profitability

42. Principles of Information Systems, Seventh Edition42 An Overview of Enterprise Resource Planning (continued) Steps in running a manufacturing organization using an ERP system Develop demand forecast Deduct demand forecast from inventory Determine what is needed for production Check inventory for needed raw materials

43. Principles of Information Systems, Seventh Edition43 An Overview of Enterprise Resource Planning (continued) Steps in running a manufacturing organization using an ERP system (continued) Schedule production Assess need for additional production resources Financial forecasting

44. Principles of Information Systems, Seventh Edition44 Advantages and Disadvantages of ERP Elimination of costly, inflexible legacy systems Improvement of work processes Increase in access to data for operational decision making Upgrade of technology infrastructure Expense and time in implementation

45. Principles of Information Systems, Seventh Edition45 Advantages and Disadvantages of ERP (continued) Difficulty implementing change Difficulty integrating with other systems Risks in using one vendor Risk of implementation failure

46. Principles of Information Systems, Seventh Edition46 Summary Transaction processing systems (TPSs): process the detailed data necessary to update records about the fundamental business operations Batch processing system: transactions are accumulated over a period of time and prepared for processing as a single unit or batch Online transaction processing (OLTP): transaction is processed immediately, without the delay of accumulating transactions into a batch

47. Principles of Information Systems, Seventh Edition47 Summary (continued) The transaction processing cycle: data collection, data editing, data correction, data manipulation, data storage, and document production Order processing systems include order entry, sales configuration, shipment planning, shipment execution, inventory control, invoicing, customer relationship management, and routing and scheduling

48. Principles of Information Systems, Seventh Edition48 Summary (continued) Purchasing transaction processing systems include inventory control, purchase order processing, receiving, and accounts payable Accounting systems include budget, accounts receivable, payroll, asset management, and general ledger Enterprise resource planning (ERP) systems permit timely analysis of key issues such as quality, availability, customer satisfaction, performance, and profitability