1010-Chapter8

Chapter 8: 

Chapter 8 Transaction Processing, Electronic Commerce, and Enterprise Resource Planning Systems

TPS, MIS, DSS, and AI/ES: 

TPS, MIS, DSS, and AI/ES Hierarchy: AI/ES DSS MIS TPS Information Data Less More Less More More More Less Less Routine Decision support Input & output Sophistication & complexity of processing & analysis

Transactions: 

Transactions Transactions… Basic business operations such as customer orders, purchase orders, receipts, time cards, invoices, and payroll checks in an organization Transaction processing systems (TPS) Perform routine operations and serve as a foundation for other systems

Batch vs. On-Line Transaction Processing: 

Batch vs. On-Line Transaction Processing Two types of TPS: Batch processing A system whereby business transactions are accumulated over a period of time and prepared for processing as a single unit or batch On-line transaction processing (OLTP) A system whereby each transaction is processed immediately, without the delay of accumulating transactions into a batch

Batch Schematic: 

Batch Schematic Data entry of accumulated transactions Input (batched) Output

On-line Schematic: 

On-line Schematic Output Terminal Terminal Terminal Terminal Terminal Terminal Immediate processing of each transaction

Integration of TPSs: 

Integration of TPSs Applications software People Schematic [ ] x n =

Objectives of TPS: 

Objectives of TPS Process data generated by and about transactions Maintain a high degree of accuracy Ensure data and information integrity and accuracy Produce timely documents and reports Increase labour efficiency Help provide increased and enhanced service Help build and maintain customer loyalty Achieve competitive advantage

Simplified Overview of a Transaction Processing System: 

Simplified Overview of a Transaction Processing System Schematic

PowerPoint Presentation: 

Data entry & input Processing Documents & reports Database Internally generated transactions: shipped orders purchase orders employee time cards Externally generated transactions: customer orders vendor invoices customer payments Database update: customer orders inventory purchase orders customers suppliers Documents: pick list cheques to vendors receiving notices paycheques Operational reports: finished product inventory status raw materials; packing materials; spare parts; inventory status

Data Processing Activities Common to TPSs: 

Data Processing Activities Common to TPSs A transaction processing cycle Data collection Data editing Data correction Data manipulation Data storage Document production Schematic

PowerPoint Presentation: 

Data collection Data edit Data manipulation Data storage Document production Data correction Original data

Source Data Automation: 

Source Data Automation Source data automation The process of capturing data at its source with minimal manual effort Data are entered directly into the computer

Point-of-Sale Transaction Processing System: 

Point-of-Sale Transaction Processing System Customer’s receipt Inventory database Management information system Exception report Purchases database Scanner Point-of-sale transaction processing system Item database UPC and quantity Item, quantity, date, time, price UPC Price UPC Quantity, Date, time

Control and Management Issues: 

Control and Management Issues Business resumption planning The process of anticipating and providing for disasters. Disaster recovery The implementation of the business resumption plan. Transaction processing system audit An examination of the TPS in an attempt to answer three basic questions Does the system meet the business need? What procedures and controls have been established? Are the procedures and controls being properly used?

Traditional TPS – Order Processing: 

Traditional TPS – Order Processing Order processing Processing an order from entry to delivery, including traditional accounting transactions Schematic

PowerPoint Presentation: 

Customer Order entry/ sales configuration Shipment planning Routing Scheduling Shipment execution Invoicing Finished product inventory Customer order in person or via mail, phone, EDI, internet Orders Planned shipments Planned shipments & routes Pick list Shipped orders Inventory status Products Invoice

Data Flow Diagram of an Order Entry System: 

Data Flow Diagram of an Order Entry System Schematic

PowerPoint Presentation: 

D1 Products/prices D2 Customer payment history D3 New orders D4 Back orders D5 Rejected orders 3. Authorize credit 2. Verify product numbers & stock on hand 1. Collect order info 4. Notify customer Customer Back orders Back orders Customer notification Orders Product numbers, inventory levels D6 Inventory Products, price information Orders Credit status Open orders Rejected, partly filled orders Rejected orders

Order Processing Support Systems - Sales Configuration: 

Order Processing Support Systems - Sales Configuration Sales configuration Ensures that products and services ordered are sufficient to accomplish customer’s objectives and will work well together

Order Processing Support Systems - Shipment Planning: 

Order Processing Support Systems - Shipment Planning Shipment planning A system that determines which open orders will be filled and from which location they will be shipped E.g., (from Figure 8.9) LOC LINK ITEM NUMBER DESCRIPTION ORDERED SHIPPED BO 8 105 10 L1L16028 20 S8276 30 S8279 40 FASENTING TOOL STAPLE ¾ INCH STAPLE 1 INCH SHIPPING CHARGE 3 15 15 EACH CASE CASE 3 15 12 3

Order Processing Support Systems - Shipment Execution: 

Order Processing Support Systems - Shipment Execution Shipment execution A system that coordinates the outflow of all products and goods from the organization, with the objective of delivering quality products on time to customers

Order Processing Support Systems - Inventory Control: 

Order Processing Support Systems - Inventory Control Inventory control A system that updates the computerized inventory records to reflect the exact quantity on hand of each stock keeping unit Status reports Summarize all inventory items in stock, or shipped over a specified period of time E.g., see Figure 8.10

Order Processing Support Systems - Invoicing: 

Order Processing Support Systems - Invoicing Invoicing Generates customer invoices based on records received from the shipment execution TPS E.g., see Figure 8.11

Order Processing Support Systems - Customer Interaction System: 

Order Processing Support Systems - Customer Interaction System Customer interaction A system that monitors and tracks each customer interaction with the company

PowerPoint Presentation: 

Request for proposal Sale Problem, idea, request for information Other contacts Market research Sales Marketing Quality control Product development Customer interaction system Customer

Order Processing Support Systems - Routing and Scheduling: 

Order Processing Support Systems - Routing and Scheduling Routing A system that determines the best way to get goods and products from one location to another Scheduling A system that determines the best time to deliver goods and services

Purchasing System: 

Purchasing System Schematic

PowerPoint Presentation: 

Raw materials Packing materials Spare parts Inventory control Purchase order processing Receiving Accounts payable Employees Supplier Inventory control status report Purchase order Material Cheque Invoice Receiving notice Purchase order Purchase order request

Purchasing System: 

Purchasing System Inventory control Maintains stock of items such as raw materials, packing materials, spare parts, and supplies Purchase order (P.O.) processing A system that helps purchasing department complete transactions quickly and efficiently Receiving A system that creates a record of expected and actual receipts Reconciles purchase orders with what is actually received Accounts payable A system that increases an organization’s control over purchasing, improves cash flow increases profitability, and provides more effective management of current liabilities

P.O. Example: 

P.O. Example (Click to view)

Accounting System: 

Accounting System Accounting systems Consist of… Budget Accounts receivable Accounts payable Payroll Asset management General ledger

Accounts Payable Example: 

Accounts Payable Example (Click to view)

Financial Systems: 

Financial Systems Schematic

PowerPoint Presentation: 

Customer Accounts receivable Asset management Accounts payable Payroll Budget Customer General ledger Time cards Paycheques Labour costs Expense transactions Asset depreciation Amounts owed by company Amounts paid by company Cost of assets Payments Amounts owed by customers Amounts paid by customers

Financial Systems - Accounts Receivable: 

Financial Systems - Accounts Receivable Accounts receivable A system that manages the cash flow of the company by keeping track of the money owed the company on charges for goods sold and services performed

‘Statement of Account’ Example: 

‘Statement of Account’ Example (Click to view)

Financial Systems – Accounts Receivable: 

Financial Systems – Accounts Receivable Accounts receivable aging report Tells managers what bills are overdue, either customer by customer or in a summary format

‘Aging Report’ Example: 

‘Aging Report’ Example (Click to view)

Financial Systems - Payroll: 

Financial Systems - Payroll Payroll… Generates payroll checks and stubs, as well as W-2 statements at the end of the year for tax purposes

Financial Systems - Payroll: 

Financial Systems - Payroll Payroll journal Helps managers monitor total payroll costs for an organization and the impact of those costs on cash flow

Financial Systems - Asset Management: 

Financial Systems - Asset Management Asset management transaction processing system A system that controls investments in capital equipment and manages depreciation for maximum tax benefits

Financial Systems - General Ledger: 

Financial Systems - General Ledger

Electronic Commerce (E-commerce): 

Electronic Commerce (E-commerce) Business-to-business problems Inadequate models Integrating with existing systems Improving relationships with suppliers, customers, distributors. Consumer problems Wait for images to download Security of credit information Figuring out the ordering process Currently a small part of all commerce

Five Stage Model of E-Commerce: 

Five Stage Model of E-Commerce The stages consumers experience in the sales life cycle Schematic

PowerPoint Presentation: 

Buyer 1. Search and Identify 5. After sales service 4. Product & service delivery 2. Selection & negotiation 3. Purchasing Traditional delivery Electronic distribution

Buying Over the Internet: 

Buying Over the Internet Prepare list of items needed Log on to internet Access supplier’s home page Browse supplier’s catalog Pick items Fill out request for quotation form Review response to request for quotation Place order Input sent to supplier’s order entry system

Forecasted Volume of E-Commerce: 

Forecasted Volume of E-Commerce Mode 1997 2000 Consumer $0.5 billion $7 billion Business $8.0 billion $66 billion

Purchasing Products and Services Electronically: 

Purchasing Products and Services Electronically Establish credit with suppliers Secure E-commerce transactions Secure financial transaction (SFT) SET = “secure electronic transaction” CyberCash

SET ‘Discussion’ (1): 

SET ‘Discussion’ (1) Short for Secure Electronic Transaction , a new standard that will enable secure credit card transactions on the Internet. SET has been endorsed by virtually all the major players in the electronic commerce arena, including Microsoft, Netscape, Visa, and Mastercard. By employing digital signatures, SET will enable merchants to verify that buyers are who they claim to be. And it will protect buyers by providing a mechanism for their credit card number to be transferred directly to the credit card issuer for verification and billing without

SET ‘Discussion’ (2): 

SET ‘Discussion’ (2) the merchant being able to see the number. The first applications based on SET are expected appeared in 1998.

Enterprise Resource Planning (ERP): 

Enterprise Resource Planning (ERP) ERP Real-time monitoring of business functions Advantages Eliminate costly, inflexible legacy systems Provide improved work processes Provide access to data for operational decision making Upgrading technology infrastrucutre Disadvantages Time consuming, difficult, expensive to implement Make radical changes in how a company operates Lack of vendor responsiveness in light of high demand

ERP Examples: 

ERP Examples Software Vendor Name of Product Avalon Software Avalon CIM qad.inc MRG/PRO Oracle Oracle Manufacturing SAP America SAP R/3 Baan Triton PeopleSoft PeopleSoft J.D. Edwards World

Example of an ERP System - SAP/R3: 

Example of an ERP System - SAP/R3 Clients in the SAP system Application servers in the SAP system Business application programming interfaces (BAPIs) Database server in the SAP systems Objects in the SAP system Repository Tables

SAP Three-Tier Client/Server Architecture: 

SAP Three-Tier Client/Server Architecture Client desktop computers Application servers Database server

Business Application Programming Interface (BAPI): 

Business Application Programming Interface (BAPI) Business processes BAPI (public interface) SAP software Standard results Results consistent with current version of SAP software Standard request for data or processing Request for data or processing consistent with current version of SAP software

End of Chapter 8: 

End of Chapter 8 Chapter 9