Introduction to Information Technology Turban, Rainer and Potter John Wiley & Sons, Inc.

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APPLYING IT FOR COMPETITIVE ADVANTAGE

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Transaction Processing, Functional Application, and Integration

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Chapter Outline
Functional information systems Transaction processing information systems Managing the accounting and finance systems Managing production/ operations and logistics Managing human resource systems Integrating functional information systems

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Learning Objectives
Describe the drivers and characteristics of functional information systems. Describe MISs . Describe the transaction processing system and how it is supported by IT Describe the support provided by IT and the Web to accounting and finance. Describe the support provided by IT and the Web to marketing and sales. Describe the support provide by IT and the Web to production / operations management, including logistic Describe the support provided by IT and the Web to human resources management Describe the benefits and issues of integrating functional information systems.
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7.1 Functional Information Systems

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Functional Information Systems cont

Functional information Systems can be divided into two general categories: functionspecific and function- general . The most common type of function-general system, is management information systems (MISs)

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Management Information System (MIS)

A system that provides information to managers in the functional areas, in order to support managerial tasks of planning, organizing, and controlling operations.

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An MIS produces routine, ad-hoc (ondemand) and exception report:

Ad-hoc ( on- demand) reports: Nonroutine reports. Drill- down report: Reports that show a greater level of detail than is included in routine reports. Key- indicator reports. Reports that summarize the performance of critical activities . Comparative reports. Reports that compare performance of different business units or time periods. Exception report. Report that include only information that exceeds certain threshold standard

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Information systems can also be function-specific

Typical function- specific system are accounting, finance, marketing, operations (POM), and human resources management

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Major characteristic of functional information systems

Frequently composed of smaller systems Integrated or independent Interfacing Supportive of different organizational levels

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7.2 Transaction Processing Information Systems (TPS)

Information system that supports routine, core business transactions.

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Objectives of a TPS
To provide all the information needed by law, by management and / or by organizational policies to keep the business running properly and efficiently to efficiently handle high volume of data, to avoid errors due to concurrent operations to handle large variations in volume To avoid downtime, never lose results, and maintain privacy and security To interface with many IT applications, including epayment, e-procurement and e-marketing.
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Activities and Methods of TPSs

First, data are collected by people or sensors and entered into the computer via any input device. Next the system processes data in one of two basic ways: batch or online processing. Batch processing: processes data in batches at fixed periodic intervals. Online processing: processes data as soon as a transaction occurs.
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The Major Characteristics of a TPS

Typically . Large amounts of data are processed. The source of data are mostly internal , and the outputs is intended mainly for an internal audience . This characteristic is changing somewhat, since trading partners may contribute data and may be permitted to use TPS output directly . The TPS processes information on a regular basis: daily, weekly, biweekly and so on. Large storage (database) capacitv is required.

High processing speed is needed due to the high volume.

The TPS monitors and collects past data Input and output data are structured. Since the processed data are fairly stable, they are formatted in a standard fashion. A high level of detail (raw data, not summarized) is usually observable, especially in input data but often in output as well. Low computation complexity (simple mathematical and statistical operations) is usuallv evident in a TPS. A high level of accuracy, data integrity, and security is needed. Sensitive issues such as privacy of personal data are strongly related to TPSs. High reliability is required. The TPS can be viewed as the lifeblood of the organization . Interruption in the flow of TPS data can be fatal to the organization . Inquiry processing is a must . The TPS enables users to query files and databases ( even online and in real
time)

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The flow of information in TPS

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WebBased and Online TPS

In online transaction processing (OLTP) business transaction are processed online as soon as they occur.

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Typical TPS Activities

Activities The ledger Accounts payable and receivable Receiving and shipping records Inventory-on-hand records Fixed-assets management Description The entire financial accounts: all of the assets, liabilities, and owners (stockholders') equity accounts Record of all account to be paid and those owed by customers. Transaction records of all item send or received and returns Record of inventory levels. Use of barcodes improves ability to count inventory periodically Record of the value of an organizations fixed assets ( e.g. buildings, cars, machine ), including depreciation rate and major improvements made in assets, for taxation purposes All raw and summery payroll records.

Payroll

Personnel files and skills inventory

Reports to government Other periodic reports and statements Copyright 2005 John Wiley & Sons Inc.`

Files of employees history, evaluations, and record of training and performance.

Report on compliance with government regulations , taxes , etc Financial, tax, production, sales and routine reports

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7.3 Managing The Accounting and Finance Systems

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Financial planning and budgeting

Financial and economic forecasting Budgeting Capital budgeting

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Managing financial transactions

E-commerce applications of financial transactions (global stock exchange, multiple currencies, E-bonds, etc.) Virtual close . The ability of a company to close its accounting records quickly and on short notice Expense Management Automation (EMA). Systems that automate data entry and processing of travel and entertainment expenses.
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Investment Management
Access to financial and economic reports Financial analysis

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Control and auditing

Budgetary control Auditing Financial ratio analysis. Product pricing Contract management Profitability analysis and cost control

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7.4 Managing marketing and sales systems

Channel systems. The systems involved in the process of getting a product or services to customers and dealing with all customers needs.

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Marketing Channel Systems

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Customer relations The Customer is King /Queen

Customer profile and preference analysis Prospective customer lists and marketing Databases Mass customization Personalization Advertising and promotions

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Distribution channels and In-store innovations

New IT-support distribution channel

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Marketing Management
Pricing of products or services Salesperson productivity (sales force automation, sales productivity software) Profitability analysis Sales Analysis and trends New products, services and marketing planning Web-based systems in marketing

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7.5 Managing production/ operations and logistics

In-house logistics and materials management Inventory management Quality control

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Planning production and operations

Material requirement planning: A planning process that integrates production, purchasing and inventory management of interdependent items. Manufacturing resource planning: A planning process that integrates an enterprises production, inventory management, purchasing, financing and labor activities. Just- in- time systems: An inventory scheduling system in which materials and parts arrive at a workplace just when needed. Other areas.
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Computer-integrated manufacturing
Computer-integrated manufacturing (CIM). Manufacturing approach that integrates several computerized systems such as CAD, CAM, MRP and JIT into a whole, in a factory.

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The CIM model

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Product lifecycle management (PLM)

A business strategy that enables manufacturers to collaborate on product design and development efforts, using webbased strategies.

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How product life cycle management works?

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7.6 Managing Human Resources Systems: Recruitment

Using he web for recruitment, HRM portals and salary surveys.

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Human Resources Maintenance and Development

Performance evaluation Training and HR development

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Human Resources Planning and Management

Payroll and employees records Benefit administration Employee relationship management

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7.7 Integrating Functional Information Systems

Approaches to integration Integrating front- office and back-office operations Process-centric integration: System integrating solutions designed, developed and managed from a business- process perspective

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