Chapter 7

Disadvantages of ERP

• Expense and time in implementation
• Difficulty implementing change
• Difficulty integrating with other systems
• Risks in using one vendor
• Risk of implementation failure

Transaction Processing Systems (TPSs)

• Process detailed data necessary to update records about fundamental business operations
• Include order entry, inventory control, payroll, accounts payable, accounts receivable, general ledger, etc.
• Provide data for other business processes (Management Information System/Decision Support System and Special-purpose information systems)

Traditional Transaction Processing Methods

Batch Processing System

• Accumulate transactions over a period of time and then process them as a single unit or batch

Online Transaction Processing (OLTP)

• Process each transaction immediately

Objectives of Traditional Transaction Processing

• Process data generated by and about transactions
• Maintain a high degree of accuracy and integrity
• Avoid processing fraudulent transactions
• Produce timely user responses and reports
• Increase labor efficiency
• Help improve customer service
• Help build and maintain customer loyalty
• Achieve competitive advantage

Transaction Processing Activities

• Capture and process data that describes fundamental business transactions
• Update databases
• Produce a variety of reports

Transaction Processing Cycle

• Data collection
• Data editing
• Data correction
• Data manipulation
• Data storage
• Document production

Data Collection

• Capturing and gathering all data necessary to complete the processing of transactions
• Can be manual or automated via special input devices (scanners, point-of-sale devices, terminals)

Data Editing

• Checking data for validity and completeness to detect any problems
• Examples: quantity and cost data must be numeric, names must be alphabetic, verification of codes associated with an individual transaction

Data Correction

• Re-entering data that was not typed or scanned properly
• Error messages must specify the problem so proper corrections can be made
• Software tools can be used to identify bad data

Data Manipulation

• Performing calculations and other data transformations related to business transactions
• Examples: classifying data, sorting data into categories, performing calculations, summarizing results, storing data in the organization's database for further processing

Data Storage

• Updating one or more databases with new transactions
• Data can be further processed and manipulated by other systems

Document Production

• Generating output records, documents, and reports (hard-copy paper reports, displays on computer screens)
• Results from one TPS can be inputs to another system
• Typical uses: checks and invoices, management information, decision support, and compliance with local, state, and federal regulations

TPS Applications

• Order Processing Systems (order entry, sales configuration, shipment planning, shipment execution, inventory control, and accounts receivable)
• Purchasing Systems (inventory control, purchase order processing, receiving, and accounts payable)
• Accounting Systems (budget, accounts receivable, payroll, asset management, and general ledger)

Electronic Commerce (EC)

• Conducting business transactions electronically over computer networks (Internet, extranets, and corporate networks)
• B2C (business-to-consumer), B2B (business-to-business), C2C (consumer-to-consumer)

Mobile Commerce (M-commerce)

• Relying on wireless devices (personal digital assistants, mobile phones, smartphones) to transact

Production and Supply Chain Management

• ERP production plan process: draws on the information available in the ERP system database
• Sales forecasting: estimates future customer demand
• Sales and operations plan: takes demand and current inventory levels to determine production for future demands
• Demand management: develops master production schedule

Customer Relationship Management (CRM)

• Helps a company manage all aspects of customer encounters
• Includes: marketing and advertising, sales, customer service after the sale, and programs to retain loyal customers

International Issues Associated with Operational Systems

• Challenges that must be met by an operational system of a multinational company include:
  • Different languages and cultures
  • Disparities in IS infrastructure
  • Varying laws and customs rules
  • Multiple currencies
  • ERP software vendors help meet these challenges

Enterprise Resource Planning (ERP) System

• A set of integrated programs that manage a company's vital business operations for an entire multisite, global organization