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ITEC 1010 Information and Organizations Chapter 8 Transaction Processing, Electronic Commerce, and Enterprise Resource Planning Systems.

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Presentation on theme: "ITEC 1010 Information and Organizations Chapter 8 Transaction Processing, Electronic Commerce, and Enterprise Resource Planning Systems."— Presentation transcript:

1 ITEC 1010 Information and Organizations Chapter 8 Transaction Processing, Electronic Commerce, and Enterprise Resource Planning Systems

2 ITEC 1010 Information and Organizations TPS, MIS, DSS, and AI/ES Hierarchy: AI/ES DSS MIS TPS Information Data LessMoreLessMore Less Routine Decision support Input & output Sophistication & complexity of processing & analysis

3 ITEC 1010 Information and Organizations 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

4 ITEC 1010 Information and Organizations 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

5 ITEC 1010 Information and Organizations Batch Schematic Data entry of accumulated transactions Input (batched) Output

6 ITEC 1010 Information and Organizations On-line Schematic Output Terminal Immediate processing of each transaction

7 ITEC 1010 Information and Organizations Integration of TPSs Applications software People Schematic [ ] x n =

8 ITEC 1010 Information and Organizations

9 ITEC 1010 Information and Organizations 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

10 ITEC 1010 Information and Organizations Simplified Overview of a Transaction Processing System Schematic

11 ITEC 1010 Information and Organizations 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 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 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 Documents: pick list cheques to vendors receiving notices paycheques Operational reports: finished product inventory status raw materials; packing materials; spare parts; inventory status

12 ITEC 1010 Information and Organizations Data Processing Activities Common to TPSs A transaction processing cycle Data collection Data editing Data correction Data manipulation Data storage Document production Schematic

13 ITEC 1010 Information and Organizations Data collection Data edit Data manipulation Data storage Document production Data correction Original data

14 ITEC 1010 Information and Organizations 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

15 ITEC 1010 Information and Organizations Point-of-Sale Transaction Processing System Customers 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

16 ITEC 1010 Information and Organizations 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?

17 ITEC 1010 Information and Organizations Traditional TPS – Order Processing Order processing Processing an order from entry to delivery, including traditional accounting transactions Schematic

18 ITEC 1010 Information and Organizations 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 & routes Pick list Shipped orders Inventory status Products Invoice

19 ITEC 1010 Information and Organizations Data Flow Diagram of an Order Entry System Schematic

20 ITEC 1010 Information and Organizations 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 Customer notification Orders Product numbers, inventory levels D6 Inventory Products, price information Orders Credit status Open orders Rejected, partly filled orders Rejected orders

21 ITEC 1010 Information and Organizations Order Processing Support Systems - Sales Configuration Sales configuration Ensures that products and services ordered are sufficient to accomplish customers objectives and will work well together

22 ITEC 1010 Information and Organizations 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) LOCLINKITEM NUMBERDESCRIPTIONORDEREDSHIPPEDBO L1L S S FASENTING TOOL STAPLE ¾ INCH STAPLE 1 INCH SHIPPING CHARGE 3 15 EACH CASE

23 ITEC 1010 Information and Organizations 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

24 ITEC 1010 Information and Organizations 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

25 ITEC 1010 Information and Organizations Order Processing Support Systems - Invoicing Invoicing Generates customer invoices based on records received from the shipment execution TPS E.g., see Figure 8.11

26 ITEC 1010 Information and Organizations Order Processing Support Systems - Customer Interaction System Customer interaction A system that monitors and tracks each customer interaction with the company

27 ITEC 1010 Information and Organizations Request for proposal Sale Problem, idea, request for information Other contacts Market research Sales Marketing Quality control Product development Customer interaction system Customer

28 ITEC 1010 Information and Organizations 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

29 ITEC 1010 Information and Organizations Purchasing System Schematic

30 ITEC 1010 Information and Organizations 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 request

31 ITEC 1010 Information and Organizations 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 organizations control over purchasing, improves cash flow increases profitability, and provides more effective management of current liabilities

32 ITEC 1010 Information and Organizations P.O. Example (Click to view)

33 ITEC 1010 Information and Organizations

34 ITEC 1010 Information and Organizations Accounting System Accounting systems Consist of… Budget Accounts receivable Accounts payable Payroll Asset management General ledger

35 ITEC 1010 Information and Organizations Accounts Payable Example (Click to view)

36 ITEC 1010 Information and Organizations

37 ITEC 1010 Information and Organizations Financial Systems Schematic

38 ITEC 1010 Information and Organizations 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

39 ITEC 1010 Information and Organizations 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

40 ITEC 1010 Information and Organizations Statement of Account Example (Click to view)

41 ITEC 1010 Information and Organizations

42 ITEC 1010 Information and Organizations Financial Systems – Accounts Receivable Accounts receivable aging report Tells managers what bills are overdue, either customer by customer or in a summary format

43 ITEC 1010 Information and Organizations Aging Report Example (Click to view)

44 ITEC 1010 Information and Organizations

45 ITEC 1010 Information and Organizations Financial Systems - Payroll Payroll… Generates payroll checks and stubs, as well as W-2 statements at the end of the year for tax purposes

46 ITEC 1010 Information and Organizations Financial Systems - Payroll Payroll journal Helps managers monitor total payroll costs for an organization and the impact of those costs on cash flow

47 ITEC 1010 Information and Organizations Financial Systems - Asset Management Asset management transaction processing system A system that controls investments in capital equipment and manages depreciation for maximum tax benefits

48 ITEC 1010 Information and Organizations Financial Systems - General Ledger

49 ITEC 1010 Information and Organizations 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

50 ITEC 1010 Information and Organizations Five Stage Model of E-Commerce The stages consumers experience in the sales life cycle Schematic

51 ITEC 1010 Information and Organizations Buyer 1. Search and Identify 5. After sales service 4. Product & service delivery 2. Selection & negotiation 3. Purchasing Traditional delivery Electronic distribution

52 ITEC 1010 Information and Organizations Buying Over the Internet Prepare list of items needed Log on to internet Access suppliers home page Browse suppliers catalog Pick items Fill out request for quotation form Review response to request for quotation Place order Input sent to suppliers order entry system

53 ITEC 1010 Information and Organizations Forecasted Volume of E-Commerce Mode Consumer$0.5 billion$7 billion Business$8.0 billion$66 billion

54 ITEC 1010 Information and Organizations Purchasing Products and Services Electronically Establish credit with suppliers Secure E-commerce transactions Secure financial transaction (SFT) SET = secure electronic transaction CyberCash

55 ITEC 1010 Information and Organizations 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

56 ITEC 1010 Information and Organizations SET Discussion (2) the merchant being able to see the number. The first applications based on SET are expected appeared in 1998.

57 ITEC 1010 Information and Organizations 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

58 ITEC 1010 Information and Organizations ERP Examples Software VendorName of Product Avalon SoftwareAvalon CIM qad.incMRG/PRO OracleOracle Manufacturing SAP AmericaSAP R/3 BaanTriton PeopleSoft J.D. EdwardsWorld

59 ITEC 1010 Information and Organizations 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

60 ITEC 1010 Information and Organizations SAP Three-Tier Client/Server Architecture Client desktop computers Application servers Database server

61 ITEC 1010 Information and Organizations 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

62 ITEC 1010 Information and Organizations End of Chapter 8 Chapter 9


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