1. Information Systems within the Organization
CHAPTER 10
Information Systems within the Organization

2. CHAPTER OUTLINE 10.1 Transaction Processing Systems
10.2 Functional Area Information Systems
10.3 Enterprise Resource Planning Systems
10.4 Reports

3. LEARNING OBJECTIVES
1. Explain the purposes of transaction processing systems, and provide at least one example of how businesses use these systems.
2. Define functional area information systems, and provide an example of the support they provide for each functional area of the organization.

4. LEARNING OBJECTIVES (continued)
3. Explain the purpose of enterprise resource planning systems, and identify four advantages and four drawbacks to implementing an ERP system.
4. Discuss the three major types of reports generated by the functional area information systems and enterprise resource planning systems, and provide an example of each type.

5. Opening Case: Is Baseball a Science?
Source: Fotoline/Shutterstock

6. 10.1 Transaction Processing Systems (TPS)
Batch Processing
Online Transaction Processing (OLTP)
This grocery store clerk is using a bar code scanner that produces data captured by a transaction processing system
Note: the barcode scanner is an example of source data automation
Transaction processing system (TPS) monitors, collects, stores and processes data
generated from all business transactions.
Batch Processing is when the firm collects data from transactions as they occur, placing
them in groups or batches, then prepares and processes the batches periodically (say,
every night).
Online Transaction Processing (OLTP) is when business transactions are processed
online as soon as they occur.
Source data automation involves collecting data from sensors (e.g., barcode scanners)
and entering the data directly into a computer without human intervention.
© Stockbroker/Age Fotostock America, Inc.

7. How Transaction Processing Systems Manage Data

8. 10.2 Functional Area Information Systems
Functional Area Information Systems are designed to support a functional area by increasing its internal effectiveness and efficiency in the following areas:
Accounting
Finance
Marketing
Operations (POM)
Human Resources Management
Functional area information systems provide information mainly to lower- and
middle-level managers in the functional areas via a variety of reports.

9. Examples of Information Systems Supporting the Functional Areas

10. 10.3 Enterprise Resource Planning Systems (ERP)
Enterprise Resource Planning (ERP) systems integrate the planning, management and
use of all resources of the organization. That is, ERP systems are designed to break down
the information silos of an organization.
Many information systems were developed for specific functional areas and did not communicate
with systems in other functional areas. Therefore, these systems are referred to as information silos.
© Toh Kheng Ho/Age Fotostock America, Inc.
ERP systems integrate the functional areas of the organization by enabling seamless information flows across them.

11. SAP Modules SAP Solutions: Financials Human Resources
Customer Relationship Management
Supplier Relationship Management
Product Lifecycle Management
Supply Chain Management
Business Intelligence
SAP is moving away from describing their system as a set of modules, and now is using
the term “solutions.” On their Website, SAP has structured their Solutions tab as follows:
Customer Relationship Management
Human Resources
Financials
Product Lifecycle Management
Supplier Relationship Management
Business Intelligence
Supply Chain Management
FI Financial Accounting – essentially your regulatory ‘books of record’
SAP modules:
Tax
Book close
General ledger
Consolidation
Accounts payable
Accounts receivable
Cost elements
CO Controlling – basically your internal cost/management accounting
Special ledgers
Cost centers
Activity based costing
Internal orders
Profit centers
AM Asset Management – track, value and depreciate your assets
Product costing
Depreciation
Sale
Purchase
PS Project Systems – manage your projects, large and small
Tracking
Third party billing (on the back of a project)
Plant shut downs (as a project)
Make to order
Employment history
HR Human Resources – people
Career management
Training
Payroll
Succession planning
Material
Labor
PM Plant Maintenance – maintain your equipment
MM Materials Management – underpins the supply chain
Down time and outages
Goods receipts
Purchase orders
Requisitions
Bills of Material
Inventory management
Planning
QM Quality Management – improve the quality of your goods
Master raw materials, finished goods etc
Inspections
Execution
Capacity planning
PP Production Planning – manages your production process
Certificates
Master production scheduling
SD Sales and Distribution – from order to delivery
Shop floor
Material requirements planning
Sales orders
RFQ
Packing
Picking (and other warehouse processes)
Pricing
CA Cross Application – these lie on top of the individual modules
Shipping
Office – for
BW – business information warehouse
WF – workflow
Industry solutions
Workplace
New Dimension products such as CRM, PLM, SRM, APO etc

12. ERP Systems (continued)
A business process is a set of related steps or procedures designed to produce a specific outcome.
The image shows an example of a business process, namely an order process.
© Toh Kheng Ho/Age Fotostock America, Inc.

13. ERP Systems (continued)

14. Benefits of ERP Systems
They can make organizations more flexible, agile, and adaptive. They can improve managers’ ability to make better, more timely decisions. They can improve customer service, production, and distribution.

15. Limitations of ERP Systems
May require organizations to change existing business processes to fit the predefined business processes of the ERP software. Can be complex, expensive, and time consuming to implement.

16. 10.4 Functional Area Information Systems Reports
Routine reports
Ad hoc (on demand) reports
Drill-down reports
Key-indicator reports
Comparative reports
Exception reports
Functional area information systems generate a wide variety of reports.

17. Types of Reports Summary Report Detailed report Drill-down report
Key-indicator report
Comparative report
Exception Report
Summary reports provide summarized information, with less detail.
Detailed reports provide high levels of detailed data, often in support of summary reports.
A drill-down report allows users to click on an item in a report and be able to access
underlying details about that item.
A key indicator report summarizes the performance of critical activities.
Exception reports include only information that falls outside certain threshold standards.
Monthly sales report.

18. Chapter Closing Case
The Problem
The Solution
The Results