Chapter 2 Overview of Transaction Processing and ERP Systems Copyright © 2012 Pearson Education 2-1

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 2-2

Data Processing Cycle Copyright © 2012 Pearson Education 2-3

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 2-4

Data Input—Capture  As a business activity occurs data is collected about: 1.Each activity of interest 2.The resources affected 3.The people who are participating Copyright © 2012 Pearson Education 2-5

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 Copyright © 2012 Pearson Education 2-6 Turnaround Document

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 2-7

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 2-8

Data Storage  Types of AIS storage:  Paper-based  Ledgers  Journals  Computer-based Copyright © 2012 Pearson Education 2-9

Ledgers  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 Joe Smith $250 Patti Jones $750 A/R $1000 ACME Inc.$150 Jones, Inc $350 A/P $600 Copyright © 2012 Pearson Education 2-10

Journals  General  Infrequent or specialized transactions  Specialized  Repetitive transactions  E.g., sales transactions Copyright © 2012 Pearson Education 2-11

Coding Techniques  Sequence  Items numbered consecutively  Block  Specific range of numbers are associated with a category  10000– = 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 Copyright © 2012 Pearson Education 2-12 Digit PositionMeaning 1–2Product Line, size, and so on 3Color 4–5Year of Manufacture 6–7Optional Features = Dishwasher 4 = White 10 = = No Options

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 2-13

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 14

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 2-14

Data Processing  Four Main Activities 1.Create new records 2.Read existing records 3.Update existing records 4.Delete records or data from records Copyright © 2012 Pearson Education 2-16

Data Output Types  Soft copy  Displayed on a screen  Hard copy  Printed on paper Copyright © 2012 Pearson Education 2-17

ERP Systems Copyright © 2012 Pearson Education 2-18

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 2-19

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 2-20

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 2-21