Overview of Transaction Processing and ERP Systems Chapter 2 Overview of Transaction Processing and ERP Systems Copyright © 2012 Pearson Education

Learning Objectives Describe the four major steps in the data processing cycle. Describe the major activities in each cycle. Describe documents and procedures used to collected and process data. Describe the ways information is stored in computer-based information systems. Discuss the types of information that an AIS can provide. Discuss how organizations use ERP systems to process transactions and provide information. Copyright © 2012 Pearson Education

Data Processing Cycle Input Process Output Storage Copyright © 2012 Pearson Education

The Data Processing Cycle Determines What data is stored? Who has access to the data? How is the data organized? How can unanticipated information needs be met? Copyright © 2012 Pearson Education

Data Input—Capture As a business activity occurs data is collected about: Each activity of interest The resources affected The people who are participating Copyright © 2012 Pearson Education

Paper-Based Source Documents Data are collected on source documents E.g., a sales-order form The data from paper- based will eventually need to be transferred to the AIS Turnaround Usually paper-based Are sent from organization to customer Same document is returned by customer to organization Org. Cust. Turnaround Document Copyright © 2012 Pearson Education

Source Data Automaton Source data is captured In machine-readable form At the time of the business activity E.g., ATM’s; POS Copyright © 2012 Pearson Education

Data Input—Accuracy and Control Well-designed source documents can ensure that data captured is Accurate Provide instructions and prompts Check boxes Drop-down boxes Complete Internal control support Prenumbered documents Copyright © 2012 Pearson Education

Data Storage Types of AIS storage: Paper-based Ledgers Journals Computer-based Copyright © 2012 Pearson Education

A/P $600 Ledgers A/R $1000 General Summary level data for each: Joe Smith $250 Patti Jones $750 A/P $600 ACME Inc.$150 Jones, Inc $350 General Summary level data for each: Asset, liability, equity, revenue, and expense Subsidiary Detailed data for a General Ledger (Control) Account that has individual sub- accounts Accounts Receivable Accounts Payable Copyright © 2012 Pearson Education

Journals General Specialized Infrequent or specialized transactions Repetitive transactions E.g., sales transactions Copyright © 2012 Pearson Education

Coding Techniques Digit Position Meaning 1–2 Sequence Items numbered consecutively Block Specific range of numbers are associated with a category 10000–199999 = Electric Range Group Positioning of digits in code provide meaning Mnemonic Letters and numbers Easy to memorize Code derived from description of item Chart of accounts Type of block coding Digit Position Meaning 1–2 Product Line, size, and so on 3 Color 4–5 Year of Manufacture 6–7 Optional Features 1241000 12 = Dishwasher 4 = White 10 = 2010 00 = No Options Copyright © 2012 Pearson Education

Computer Based Storage Entity Person, place, or thing (Noun) Something an organization wishes to store data about Attributes Facts about the entity Fields Where attributes are stored Records Group of related attributes about an entity File Group of related Records Copyright © 2012 Pearson Education

File Types Transaction Contains records of a business from a specific period of time Master Permanent records Updated by transaction with the transaction file Database Set of interrelated files Transaction File Master before Update Updated Master File Copyright © 2012 Pearson Education

Data Processing Four Main Activities Create new records Read existing records Update existing records Delete records or data from records Copyright © 2012 Pearson Education

Data Output Types Soft copy Hard copy Displayed on a screen Printed on paper Copyright © 2012 Pearson Education

ERP Systems Copyright © 2012 Pearson Education

Enterprise Resource Planning (ERP) Integrate an organization’s information into one overall AIS ERP modules: Financial Human resources and payroll Order to cash Purchase to pay Manufacturing Project management Customer relationship management System tools Copyright © 2012 Pearson Education

ERP Advantages Integration of an organization’s data and financial information Data is captured once Greater management visibility, increased monitoring Better access controls Standardizes business operating procedures Improved customer service More efficient manufacturing Copyright © 2012 Pearson Education

ERP Disadvantages Cost Time-consuming to implement Changes to an organization’s existing business processes can be disruptive Complex Resistance to change Copyright © 2012 Pearson Education