1. Copyright 2010 John Wiley & Sons, Inc.
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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2. Copyright 2010 John Wiley & Sons, Inc.
Chapter Outline
Functional Information Systems and Transaction Processing Systems
Managing Production/Operations and Logistics
Managing Marketing and Sales Systems
Managing Accounting and Finance Systems
Managing Human Resources Systems
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3. Chapter Outline (cont’d)
Integrating Functional Information Systems
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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6. Copyright 2010 John Wiley & Sons, Inc.
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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7. Copyright 2010 John Wiley & Sons, Inc.
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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8. Functional Information Systems
Composed of smaller systems
Integrated or independent
Interfaces
Support all levels (operational, managerial, strategic)

9. 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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10. Copyright 2010 John Wiley & Sons, Inc.
Informational slide. TPS is usually automated & is constructed with the major characteristics shown in this table.
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11. Online Transaction Processing

12. TPS – Online Transaction Processing Systems
With OLTP and Web technologies such as an extranet, suppliers can look at the firm’s inventory level or production schedule in real time. The suppliers themselves, in partnership with their customers, can then assume responsibility for inventory management and ordering.
Interactive Internet TPS expands OLTP to provide enhanced real time transaction processing over the Internet or intranets. Multi-store chains can access a centralized computer system no longer requiring in-store processors.

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TPS – Examples
Traffic Control at Airports
In-flight Card Payments in American Airlines
Tax filing
Organizational payroll
Cruise ships operators
Order processing
It is hard to think of air traffic control systems as being examples of TPS!
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14. Example: Taxis in Singapore
Task students to follow a live example & to present it to others in the class.
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15. 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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16. Transaction Processing on the Web
Web analytics is the measurement, collection, analysis and reporting of internet data for purposes of understanding and optimizing web site usage.
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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Informational slide. Typical TPS activities are summarized in this table.
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9.2 Managing Production/Operations & Logistics
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19. Managing Production/Operations & Logistics
The production and operations management (POM) function in an organization is responsible for the processes that transform inputs into useful outputs. In comparison to the other functional areas, POM is very diversified as are the supporting TPS. It also differs considerably among organizations.
A few of the IT supported POM areas are:
In-house logistics and materials management
Planning production/operations
Computer-integrated manufacturing (CIM)
Product lifecycle management (PLM)
Automating design work and manufacturing

20. Copyright 2010 John Wiley & Sons, Inc.
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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21. 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.
Inventory management
Goal is to minimize costs of keeping inventory, ordering and shortage. .
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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22. Copyright 2010 John Wiley & Sons, Inc.
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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23. 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.
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24. Managing Production/Operations & Logistics
POM planning is a major component of operational systems
Material Requirements Planning (MRP) is software that facilitates the plan for purchasing or producing parts, subassemblies, or materials in the case of interdependent items. It integrates Master Production Schedules, BOM’s, and Inventory levels.
Manufacturing Resource Planning (MRP II) adds functionalities to a regular MRP system by determining the costs of parts and the associated cash flow. It also estimates costs of labor, tools, equipment repair, and energy while generating a requirements report.
Just-in-Time Systems is an approach that attempts to minimize waste of all kinds (space, labor, materials, energy, etc.) and to continuously improve processes and systems. The JIT concept is used in mass customization and build-to-order environments.
Project Management. A project is usually a one-time effort composed of many interrelated activities, costing a substantial amount of money, and lasting for weeks or years. Software tools such as: program evaluation and review technique (PERT) and the critical path method (CPM) are used to manage milestones, resources, costs, etc.
Work Management Systems (WMS) automatically manages the prioritization and distribution of work. These systems deal with resource allocation and reallocation.

25. Computer-Integrated Manufacturing
Managing Production/Operations & Logistics
Computer-Integrated Manufacturing
CIM is a concept that promotes the integration of various computerized factory systems. It has three basic goals: (1) the simplification of all manufacturing technologies and techniques, (2) automation of as many of the manufacturing processes as possible, and (3) integration and coordination of all aspects of design, manufacturing, and related functions via computer hardware and software.
Typical integrated technologies are:
FMS - Flexible-manufacturing systems
JIT – Just-in-Time
MRP – Materials Requirements Planning
CAD – Computer Aided Design
CAE – Computer Aided Engineering
GT - Group technology

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9.3 Managing Marketing & Sales Systems
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27. Copyright 2010 John Wiley & Sons, Inc.
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. Marketing and Sales Systems
Customer Relations
It is essential for companies to know who their customers are and to treat them properly. Innovative products and services, successful promotions, customization, and customer service are a necessity for most organization.
Customer Profiles and Preference Analysis. Sophisticated information systems are being developed to collect data on existing and potential customers, their demographics (age, gender, income level), and preferences.
Prospective Customer Lists and Marketing Databases. All firms need to know and track who their existing and potential customers are. These prospective-customer lists can be analyzed and sorted by classification for direct mailing, ing, or telemarketing.
Mass Customization. Today’s customers prefer customized products. Through mass customization, the practice of maintaining WIP inventory, manufacturers can offer different product configurations at reasonable prices.
Personalization. Special product offers are made, based on where the customer spent their time and on what they may have purchased.
Advertising and Promotions. Special promotions or coupons are presented to the customer via mails, , wireless and pervasive computing applications.

29. Distribution Channels & In-Store Innovations
Marketing and Sales Systems
Distribution Channels & In-Store Innovations
Organizations can distribute their products and services through a variety of delivery channels. A company may use its own outlets, representatives, or distributors.
IT-Supported Distribution Channels
Internet
Location Based Mapping
Self-service convenience stores
Improving Shopping and Checkout at Retail Stores
Hand-held wireless devices that scan the bar code
Smart card or credit card
Information kiosk enable customers to view catalogs in stores
Self-checkout machines
Check-writers attached to cash registers
Computerization of various activities in retail stores
Video-based systems count and track shoppers in a physical store

30. Marketing and Sales Systems
Marketing Management
Many marketing management decision applications are supported by computerized information systems.
Pricing of Products or Services. Sales volumes are largely determined by the prices of products or services as is profit.
Salesperson Productivity. Salespeople differ from each other in selling skill. Sales-force automation increases salesperson productivity by providing them with mobile devices, access to information, etc.
Profitability Analysis profit contribution of certain products and services can be derived from cost-accounting systems
Sales Analysis And Trends. Marketing. TPS collect sales figures that can be searched for trends and relationships.
New Products, Services, and Market Planning. New products and services can be an expensive risk. “Will it sell?” Requires careful analysis, planning, forecasting, and market research.
Web-Based Systems support marketing and sales through data capture

31. 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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32. Copyright 2010 John Wiley & Sons, Inc.
9.4 Managing Accounting & Finance Systems
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33. 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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34. Accounting and Finance Systems
Accounting and finance functional areas manage the inflow and outflow of organizational assets. This involves all functions of an organization including payroll, billing, cash management, etc.
Financial Planning and Budgeting
Financial and Economic Forecasting
Planning for Incoming Funds
Budgeting
Capital Budgeting
Buy vs. lease
Standard financial model used (e.g. IRR, NPV, payback period)
Managing Financial Transactions

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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.
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36. Accounting and Finance Systems (Continued)
E-Commerce Applications of Financial Transactions
Global stock exchanges and multiple currencies
E-Bonds
Factoring online
Electronic re-presentment of checks
Electronic bill presentment and payments
Investment Management
Financial Analysis
Access to Financial and Economic Reports
Control and Auditing
Risk analysis
Budgetary Control and Auditing
Financial Ratio Analysis
Profitability Analysis and Cost Control
Product Pricing

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9.5 Managing Human Resources Systems
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38. Copyright 2010 John Wiley & Sons, Inc.
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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39. Copyright 2010 John Wiley & Sons, Inc.
Students with experience / knowledge should enlighten others.
HRM activities
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40. Human Resources Systems
Recruitment is finding employees, testing them, and deciding which ones to hire. The Web has enhanced the recruitment process.
Position Inventory
HRM Portals and Salary Surveys
Employee Selection
Human Resources Maintenance and Development
Performance Evaluation
Training and Human Resources Development
Web-based video clips.
Mobile devices.
Virtual reality.
Interactive simulations.

41. Human Resources Systems (Continued)
Human Resources Planning and Management
Personnel Planning
Labor –Management Negotiations
Payroll and Employees’ Records
Benefits Administration
Employee Relationship Management (ERM)

42. Integrating Functional Information Systems
Functional information systems are mainly independent, often custom- or in-house -made
Information Systems that serve business processes need to be integrated
Using middleware
ERP software
Web 2.0 tools, web services, etc.
Front-office back-office integration
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43. Copyright 2010 John Wiley & Sons, Inc.
Managerial Issues
Integration of functional information systems
Priority of transaction processing
Finding innovative applications
Using the Web
Ethical issues
HRM
CRM
Why are HRM applications especially prone to ethical & legal considerations? Because it involves fair labor laws & practices, discrimination, etc.
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