Transaction Processing

1
Transaction Processing Enterprise Resource
Planning Systems

• Pemprosesan Transaksi Perancangan Sumber
  Syarikat
• Chapter 9

2
Introdcution

• This chapter addresses the oldest type of
  information system used in business transaction
  processing systems and its latest evolution,
  enterprise resource planning systems.
• All organizations have manual and automated
  transaction processing systems. These are key
  systems for businesses since they perform routine
  business activities, process key business
  activities and maintain records about them.
  Although they do not themselves explicitly
  support decision-making, transaction processing
  systems also collect and update data used by many
  other business information systems, such as
  management information systems or decision
  support systems.

3
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 processing, purchasing, and accounting
  business processes.

4
Principles and Learning Objectives (add)

• 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.

5
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.

6
An Overview of Transaction Processing Systems
7
TPS

• Transaction processing systems handle routine
  business operations and maintain records related
  to those activities.
• Transaction processing systems typically
  transform large numbers of inputs to outputs,
  using simple processing logic and operations.
• Order entry, inventory control and accounts
  payable systems are all examples of transaction
  processing systems.

8
TPS, MIS/DSS, and Special Information Systems
9
TPS

• In the early days of transaction processing
  systems, it was obvious that transaction
  processing systems could replace many people.
  Increased labor efficiency is still a huge
  advantage of transaction processing systems.
• In our increasingly service-oriented economy,
  outstanding customer service has become a goal of
  virtually all companies. Transaction processing
  systems can be very useful for improving customer
  service. For example, at a store website, a
  transaction processing system can check inventory
  and tell a customer an item is out of stock, or
  check production or other systems to tell the
  customer when the item will be in stock.
• Although transaction processing systems are the
  oldest type of business information system in
  use, most strategic systems are transaction
  processing systems or based on them.

10
Traditional Transaction Processing Methods
Objectives

• Increase labor efficiency
• Help provide improved service
• Help build and maintain customer loyalty
• Achieve competitive advantage

11
Batch versus On-Line Transaction Processing
12
Batch Vs OLTP

• 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.
• OLTP computerize processing in which each
  transaction is processed immediately, without
  delay of accumulating transactions into a batch.
• Online entry with delay compromise between
  batch and OLTP

13
Batch Vs OLTP (example)

• BATCH
• Bank (check processing)
• Petrol Pump ( credit card processing)
• OLTP
• Airline reservation
• ATM process
• Online Entry with delay processing-
• Order through toll free number

14
Integration of a Firms TPSs
15
Examples of Transaction Processing
16
Transaction Processing Systems
Overview of TPS
17
Quick Quiz

• 1.                    True or False A TPS uses
  less sophisticated processing than other types of
  organizational computing.
•  
• 2.                    What type of TPS waits
  until a number of transactions are accumulated
  before processing them?
• 3.                    What type of TPS processes
  transactions as they occur?

18
Quick Quiz -Answer

• 1.                    True or False A TPS uses
  less sophisticated processing than other types of
  organizational computing.
• ANSWER True
• 2.                    What type of TPS waits
  until a number of transactions are accumulated
  before processing them?
• ANSWER Batch
• 3.                    What type of TPS processes
  transactions as they occur?
• ANSWER On-line transaction processing systems
  (OLTP)

19
Traditional Transaction Processing
Applications

• Although there are many different types of
  transaction processing systems,
• well briefly look at three of the most common
• order processing systems,
• purchasing systems, and
• accounting systems.

20
Order Processing Systems
21
Order Processing Systems
22
Order Entry System
23
Shipment Planning
24
Inventory Status Report
25
Invoicing
26
Purchasing Systems

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

27
Purchasing Systems
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Accounts Payable
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Accounts Payable
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Accounting Systems
31
Accounts Receivable
32
Accounts Receivable Aging Report
33
Typical Paycheck Stub
34
Payroll Journal
35
General Ledger
36
General Ledger
37
Quick Quiz

• 1.                    What are the three main
  areas for TPS applications?
• 2.                    What is a financial plan
  that identifies items and dollar amounts that the
  organization estimates it will spend?
•  
• 3.                    What system captures the
  basic data needed to process a customer order?

38
Quick Quiz Answer

• 1.                    What are the three main
  areas for TPS applications?
• ANSWER Accounting, purchasing, and order entry.
• 2.                    What is a financial plan
  that identifies items and dollar amounts that the
  organization estimates it will spend?
• ANSWER Budget
• 3.                    What system captures the
  basic data needed to process a customer order?
• ANSWER Order entry system

39
Enterprise Resource Planning
40
ERP

• Enterprise resource planning (ERP) makes timely
  information easily available for analysis and
  decision-making in companies of all sizes.
• ERP systems monitor business functions in
  real-time to provide timely information in
  manufacturing, finance, distribution, sales or
  human resources. A strength of ERP systems is
  that they integrate data across all functions.
• For example, a manufacturing supervisor would be
  notified when raw material inventory falls below
  a set floor.

41
ERP Software Vendors
42
Enterprise Resource Planning

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

43
Advantages of ERP

• Current business conditions make enterprise- wide
  accessibility of information a key to success.
  ERP software offers that possibility. Deploying
  an ERP system allows a firm to replace numerous
  separate, sometimes isolated, inefficient legacy
  applications with a single set of integrated
  products. This improves the efficiency of
  systems and decreases the cost of maintaining old
  systems. This improves an organizations ability
  to adapt to changing conditions.
• Implementing an ERP system also gives an
  enterprise the chance to upgrade and standardize
  hardware, software and databases, reducing
  support and operations costs.
• ERP systems are designed around the most
  effective and customer-oriented business
  practices found. Thus, deploying an ERP system
  will help an organization follow the industrys
  best practices. Although the adoption of improved
  work processes can be beneficial, as noted on the
  next slide, this can also be a disadvantage.
  Often established processes must be
  re-engineered, possibly causing dissatisfaction
  or turnover among experienced employees.
• Since ERP systems maintain an integrated
  database, decisions can be made based on
  enterprise-wide data. This is far more efficient
  than trying to coordinate decisions across units.

44
Advantages of ERP

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

45
Disadvantages of ERP

• However, ERP systems are time-consuming,
  expensive, and difficult to implement.
• Some companies have spent millions of dollars and
  many years implementing ERP systems not always
  with successful outcomes.
• Many companies have also had problems making ERP
  systems work with existing systems, adding to the
  expense and difficulty of deploying ERP.
• After investing so many resources in implementing
  ERP, switching costs are very high, so an ERP
  vendor essentially holds a business that uses its
  system hostage.
• Even with these problems, however, many
  organizations are successfully using ERP systems.

46
Disadvantages of ERP

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

47
Example of ERP

• SAP
• Refer text book page 399

48
ERP System
49
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

50
Case Study 4.5

• Page 447-449