Transaction Processing

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Transaction Processing Enterprise Resource
Planning Systems

• Chapter 9

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Principles and Learning Objectives

• An organizations 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.

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Principles and Learning Objectives

• 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.

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Principles and Learning Objectives

• 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.

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An Overview of Transaction Processing Systems
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Decision-Making Levels of an Organization
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MAJOR TYPES OF SYSTEMS

• EXECUTIVE SUPPORT SYSTEMS (ESS)
• DECISION SUPPORT SYSTEMS (DSS)
• MANAGEMENT INFORMATION SYSTEMS (MIS)
• KNOWLEDGE WORK SYSTEMS (KWS)
• OFFICE AUTOMATION SYSTEMS (OAS)
• TRANSACTION PROCESSING SYSTEMS (TPS)

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Decision-Making Levels of an Organization

• Executive level (top)
• Long-term decisions
• Unstructured decisions
• Managerial level (middle)
• Decisions covering weeks and months
• Semistructured decisions
• Operational level (bottom)
• Day-to-day decisions
• Structured decisions

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IS for Decision-making

• The Three Types of Systems That Support Employee
  Decision Making

Transaction Processing Systems
All three types of systems support decision maki
ng
Management Information Systems
ORGANIZATIONS INFORMATION NEEDS
Executive SupportSystems
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TPS, MIS/DSS, and Special Information Systems
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General Types of Information Systems

• Transaction Processing Systems (TPSs)
• Transactions
• Used at Operational level of the organization
• Goal to automate repetitive information
  processing activities
• Increase speed
• Increase accuracy
• Greater efficiency

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Transaction Processing System (TPS)

• A system that records company transactions, in
  which a transaction is defined as an exchange
  between two or more business entities.

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Typical TPS
(1) Student selects course
student
(2) Student file checked
Course registration process
Class list
Master student file
(4) Class list generated
Master course file
(3) Course file checked
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Transaction Processing systems

• Operational decisions
• Capture data to conduct business
• Examples
• Supermarket
• ATM
• Help desk

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General Types of Information Systems

• Transaction Processing Systems (TPSs)
• Examples
• Payroll
• Sales and ordering
• Inventory
• Purchasing, receiving, shipping
• Accounts payable and receivable

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TYPICAL TPS APPLICATIONSSales Marketing Systems

• MAJOR FUNCTIONS OF SYSTEMS
• Sales management, market research, promotion,
  pricing, new products
• MAJOR APPLICATION SYSTEMS
• Sales order info system, market research system,
  pricing system

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TYPICAL TPS APPLICATIONSHuman Resources Systems

• MAJOR FUNCTIONS OF SYSTEMS
• Personnel records, benefits, compensation, labor
  relations, training
• MAJOR APPLICATION SYSTEMS
• Payroll, employee records, benefit systems,
  career path systems, personnel training systems

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TYPICAL TPS APPLICATIONSCollege Example

• MAJOR FUNCTIONS OF SYSTEMS
• Admissions, grade records, course records, alumni
• MAJOR APPLICATION SYSTEMS
• Registration system, student transcript system,
  curriculum class control system, alumni
  benefactor system

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Steps in Transaction Processing
Step 1
Step 2
Step 3
Enter data
Validate data
Process the data into information
Step 4
Step 5
Step 6
Store the processed data
Generate output
Support user queries
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Transaction processing
Data Entry Input of data Source document
Step 1
Enter data
Documents generated where and when a transaction
occurs the source of data for the transaction
processing system
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Transaction Processing
Accuracy Reliability Identification names and
passwords What is an example of validation?
Step 2
Validate data
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Transaction Processing
Processing Batch processing Transactions are
accumulated over a certain period of time and
processed at periodic intervals. On-line
transaction processing Transaction data that are
processed instantaneously.
Step 3
Process the data into information
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Transaction processing
Storage Issues Types of storage media Access to
stored data sequential access random access
Step 4
Store the processed data
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Transaction Processing
Output Generation Data-gtInformation-gtUseful
Format Reports
Step 5
Generate output
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Transaction Processing
Query Support How to ask the systems questions.
Step 6
Support user queries
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Transaction Processing Systems
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On-Line versus Batch Transaction Processing
On-line
Data input device is linked to the transaction
processing system, so data are processed as soon
as they are generated. Data are updated at
certain intervals, such as daily, weekly monthly,
and so on.
Batch
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Batch versus On-Line Transaction Processing
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General Types of Information Systems

• Transaction Processing Systems (TPSs)
• Online processing
• Batch processing
• Data input
• Manual data entry
• Semi-automated data entry
• Fully automated data entry

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Integration of a Firms TPSs
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Examples of Transaction Processing
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Transaction Processing Activities

• Data collection
• Should be collected at source
• Should be recorded accurately, in a timely
  fashion
• Data editing
• Data correction

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Document Production and Reports
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Control Management Issues

• Business resumption planning
• Disaster recovery
• Backups

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Transaction Processing Audit

• Does the system meet its business requirements?
• Are there procedures and controls?
• Are the procedures controls properly used?

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Order Processing Systems

• Order entry
• Sales configuration
• Shipment planning
• Shipment execution
• Invoicing
• Customer relationship management (CRM)
• Routing and scheduling
• Scheduling systems

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Document Production Reports
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Traditional Transaction Processing
Applications
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Order Processing Systems
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Order Processing Systems
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Order Entry System
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Shipment Planning
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Inventory Status Report
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Invoicing
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Customer Relationship Management
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The 15 Top-Rated CRM Software Packages
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Purchasing Systems

• Inventory control
• Purchase order processing
• Receiving
• Accounts payable

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Purchasing Systems
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Accounts Payable
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Accounts Payable
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Accounting Systems
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Accounts Receivable
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Accounts Receivable Aging Report
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Typical Paycheck Stub
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Payroll Journal
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General Ledger
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General Ledger
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ERP Software Vendors
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International Issues

• Different languages and cultures
• Disparities in information systems infrastructure
• Varying laws and custom rules
• Multiple currencies

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Summary Characteristics of a Transaction
Processing System
1. Records internal and external transactions
that take place in a company 2. Is used mostly by
lower-level managers to make operational
decisions 3. Stores data that are frequently
accessed by other systems 4. Is ideal for
routine, repetitive tasks 5. Records transactions
in batch mode or on-line 6. Requires six steps to
process a transactiondata entry, validation,
data processing, storage, output generation, and
query support
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Enterprise Resource Planning
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Enterprise Resource Planning

• Real-time monitoring of business functions
• Supports human resources, sales, and distribution
• Accommodates the different ways each company runs
  business

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Advantages of ERP

• Eliminates costly, inflexible legacy systems
• Improved technology infrastructure
• Improved work processes
• Increased data access for decision making

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Disadvantages of ERP

• Expense time
• Radical change
• Integrating with other systems
• One vendor risks

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ERP System
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Business Application Programming Interface (BAPI)
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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
  companys vital business operations for an entire
  multisite, global organization