1. Lead Black Slide Powered by DeSiaMore1

2. 2 Chapter 10 Business Operations

3. Powered by DeSiaMore3 Our Agenda Increasing Business Operations Efficiency Transaction Processing Systems Basic Business Information Systems Other Business Information Systems Enterprise Resource Planning Systems

4. Powered by DeSiaMore4 Learning Objectives Give an example of a computer information system that increases the efficiency of business operations. Explain the purpose and structure of transaction processing systems. Describe the functions of transaction processing systems.

5. Powered by DeSiaMore5 Learning Objectives (cont’d.) Describe several ways of controlling transaction processing systems. Explain the difference between batch processing and on-line transaction processing. Summarize the characteristics of basic business information systems.

6. Powered by DeSiaMore6 Learning Objectives (cont’d) List several examples of accounting, financial, marketing, manufacturing, and human resource information systems. Explain what an enterprise resource planning system is.

7. Powered by DeSiaMore7 Increasing Business Operations Efficiency Business Operations

8. Powered by DeSiaMore8 Increasing Business Operations Efficiency Efficiency has to do with how much a system produces relative to the resources, such as people and money, used by the system. To be competitive today, most businesses require some form of computer information system for their basic operations.

9. Powered by DeSiaMore9 Transaction Processing Systems Business Operations

10. Powered by DeSiaMore10 Transaction Processing Systems The main type of information system used for operational support in a business is the transaction processing system (TPS).

11. Powered by DeSiaMore11 Transaction Processing System Structure Three elements of a transaction processing system: 1.Keep records about the state of the organization. 2.Process transactions that affect these records. 3.Produce outputs that report on transactions that have occurred, that report on the state of the organization, and that cause other transactions to occur.

12. Powered by DeSiaMore12 Transaction Processing System Functions Transaction processing systems consist of four main functions to accomplish their purposes. They are: 1.Input function 2.Storage function 3.Processing function 4.Output function

13. Powered by DeSiaMore13 Input Function Before transaction data can be brought into a transaction processing system, it must be acquired from its source – a step called data capture. Data is often captured from a source document. Data once captured, it is put into the system – a step called data entry.

14. Powered by DeSiaMore14 Input Function (cont’d.) As data is entered into the system, a program must check it for errors, a step called data validation.

15. Powered by DeSiaMore15 Storage Function Data in a transaction processing system is stored in data files and databases. Two types of data commonly found in transaction processing systems: 1.Master data – is the main data used by the system. 2.Transaction data – is data about the transactions that have occurred.

16. Powered by DeSiaMore16 Processing Function Processing involves manipulating data within the system. Two operations in the processing function: Computation – doing calculations with data. Decision making – checking a condition that causes processing to continue in different ways depending on the result of the decision.

17. Powered by DeSiaMore17 Output Function Output from a transaction processing system can be displayed on a screen or printed on paper. Three types of reports 1.Detail report – lists detailed information 2.Summary report – contains summarized information 3.Exception report – lists exceptions to norm

18. Powered by DeSiaMore18 Controlling Transaction Processing Systems Procedures to ensure the completeness of the data processing and to minimize the chance of error are called controls. They include: Control Totals Audit Trails Backup and Recovery Procedures Processing Data in Transaction Processing Systems

19. Powered by DeSiaMore19 Control Totals A control total is a number that is computed when data enters a system and then computed again after the system has processed the data. Sometimes several control totals are calculated and checked in the system to be sure all data has been processed accurately.

20. Powered by DeSiaMore20 Audit Trails An audit trail is a way of tracing the effect of data through a system. A good audit trail is one in which someone can start with the output and go back through the system to the source document, or vice versa.

21. Powered by DeSiaMore21 Backup and Recovery Procedures Backing up means that the data is copied periodically to another storage media. Recovery means that the backup copy of the data can be used to re-create the original data stored on the system. Without adequate backup and recovery procedures, there is a great risk of losing data permanently.

22. Powered by DeSiaMore22 Processing Data in Transaction Processing Systems Two basic approaches to processing data in a transaction processing system: 1.Batch processing – transactions to be processed are prepared in a form understandable by the computer before actual processing begins. 2.On-Line Transaction Processing (OLTP) – permits a person to use a keyboard and screen at the time the processing is done.

23. Powered by DeSiaMore23 Basic Business Information Systems Business Operations

24. Powered by DeSiaMore24 Basic Business Information Systems Eight basic information processing activities: 1.Entering customer orders 2.Billing customers 3.Collecting customer payments 4.Keeping track of inventory 5.Purchasing stock and materials 6.Paying bills 7.Paying employees 8.Reporting financial information

25. Powered by DeSiaMore25 Entering Customer Orders An order entry system permits entry of customer orders for goods and services and prepares the orders in a form that can be used by the business.

26. Powered by DeSiaMore26 Entering Customer Orders (cont’d.) Once orders are entered, the following questions must be answered: Does the business have sufficient inventory to fill the order? Should the business extend credit to this customer or require that the customer pay in advance?

27. Powered by DeSiaMore27 Billing Customers The purpose of a billing system is to prepare the customer’s bill or invoice. To prepare the invoice from the sales order data, two types of master data are required: 1.Customer master data 2.Inventory master data

28. Powered by DeSiaMore28 Collecting Customer Payments The accounts receivable system is used to keep track of money owed to the business by its customers and to record customer payments for invoices. To produce the outputs, two types of stored data are used: 1.Accounts receivable data 2.Customer master data

29. Powered by DeSiaMore29 Keeping Track of Inventory The inventory control system is used to keep track of the business’s inventory, to indicate when inventory should be reordered, and to compute the value of the inventory. The stored data needed in this system is the inventory master data.

30. Powered by DeSiaMore30 Purchasing Stock and Materials The purchasing system is used to Determine the best suppliers (also called vendors) from which to purchase items. Prepare documents, called purchase orders, which indicate to the supplier what items are wanted.

31. Powered by DeSiaMore31 Purchasing Stock and Materials (cont’d.) To prepare the purchase order, two types of information are required: 1.Inventory master data 2.Supplier master data

32. Powered by DeSiaMore32 Paying Bills The accounts payable system is used to keep track of money owed by the business for purchases, to pay suppliers for items purchased, and to provide reports of accounts payable to other functions of the business.

33. Powered by DeSiaMore33 Paying Bills (cont’d.) To produce the outputs, two types of stored data are used: 1.Accounts payable data 2.Supplier master data

34. Powered by DeSiaMore34 Paying Employees The payroll system is used to prepare paychecks for employees and to provide reports of payroll. To produce the outputs two types of data are required: 1.Employee work data 2.Employee master data

35. Powered by DeSiaMore35 Reporting Financial Information The general ledger system is used to maintain the business’s financial accounts and to prepare financial statements. To produce the financial statements, the general ledger system uses stored general ledger data.

36. Powered by DeSiaMore36 Other Business Information Systems Business Operations

37. Powered by DeSiaMore37 Accounting Information Systems Accounting Information Systems (AIS) support the accounting function. Several commonly used AIS systems are: Fixed asset accounting Budgeting Tax accounting

38. Powered by DeSiaMore38 Financial Information Systems Financial information systems provide necessary support for the finance function. Some common financial information systems include: Cash management Capital expenditure analysis Financial forecasting Portfolio management Credit analysis

39. Powered by DeSiaMore39 Marketing Information Systems Marketing information systems assist in the marketing function. Common marketing information systems include: Sales analysis Sales forecasting Marketing research Direct mail advertising Electronic commerce Sales force automation

40. Powered by DeSiaMore40 Manufacturing Information Systems Manufacturing information systems provide services to support the manufacturing function. Some common manufacturing information systems include: Production scheduling Materials Requirements Planning (MRP) Manufacturing Resource Planning (MRPII)

41. Powered by DeSiaMore41 Manufacturing Information Systems (cont’d.) Just-In-Time (JIT) Computer-Aided Design (CAD) Computer-Aided Manufacturing (CAM) Robotics Computer-Integrated Manufacturing (CIM) Supply-chain management

42. Powered by DeSiaMore42 Human Resource Information Systems Human Resource Information Systems (HRIS) support the human resource function. Common HRIS include: Performance appraisal Skills inventory Benefits administration Job applicant tracking

43. Powered by DeSiaMore43 Enterprise Resource Planning Systems Business Operations

44. Powered by DeSiaMore44 Enterprise Resource Planning An information system that supports several areas of a business by combining a number of applications with a single database that stores all the data used by the applications. ERP systems are designed for applications that encompass a large portion of a business.

45. Powered by DeSiaMore45 Business Operations Key Terms

46. Powered by DeSiaMore46 Key Terms Accessing Accounting Information System Accounts Payable System Accounts Receivable System Audit Trail Backup Procedure Batch Processing Billing System Control Control Total Data Validation Detail Report Enterprise Resource Planning (ERP) Exception Report

47. Powered by DeSiaMore47 Key Terms (cont’d.) Financial Information System General Ledger System Human Resource Information System (HRIS) Interactive Processing Inventory Control System Manufacturing Information System

48. Powered by DeSiaMore48 Summary Increasing Business Operations Efficiency Transaction Processing Systems Basic Business Information Systems Other Business Information Systems Enterprise Resource Planning Systems

49. Final Black Slide Powered by DeSiaMore49