6/22/23, 5:17 PM INF 112 Nov Exam + Review Questions
INF 112 Chapter 7- Operational systems
Principles
• An organization must have information systems that support the routine, day-to-day activities that occur in the
normal course of business and help a company add value to its products and services.
• Traditional transaction processing systems support the various business functions of organizations that have not
yet implemented ERP systems
• Electronic and mobile commerce allow transactions to be made by the customer, with less need for sales staff, and
open up new opportunities for conducting business.
• A company that implements an enterprise resource planning system is creating a highly integrated set of systems,
which can lead to many business benefits.
Enterprise Resource Planning
• Enterprise resource planning (ERP) is a set of integrated programs that manage a company’s vital business
operations for an entire multisite, global organization
• ERP systems evolved from materials requirement planning (MRP) systems in the 1970s
- MRPs tied together production planning, inventory control, and purchasing business functions for manufacturing
organizations
• Late 1980s-early 1990s: recognition that legacy transaction processing systems lacked necessary integration for
information sharing
- Y2K provided impetus to upgrade systems
Advantages of ERP
1. Improved Access to Data for Operational Decision Making
- ERP systems operate via an integrated database, using one set of data to support all business functions.
- Allows better customer service and relationships
2. Elimination of Costly, Inflexible Legacy Systems
- Eliminate many separate systems and replace them with a single, integrated set of applications
- These old systems are obsolete in many cases, and difficult to maintain
3. Improvement of Work Processes
- Sellers of ERP systems combine the requirements of leading companies and findings from research to provide the
most effective system
4. Upgrade of Technology Infrastructure
- Can eliminate the multiple hardware platforms, operating systems and databases it is currently using and
standardize on fewer technologies and vendors
Disadvantages of ERP Systems
1. Expense and time in implementation
- Typically takes 3-5 years and a lot of money to implement a successful system
2. Difficulty implementing change
- Can cause some experienced workers to retire
3. Difficulty integrating with other systems
- Sometimes requires additional software
4. Difficulty in Loading Data into New ERP System
- While most of the data for the new system will come from the
files of existing legacy systems, some data items may need to
be pulled from manual systems or may even need to be
created for the new system.
5. Risks in using one vendor
- Customer support may decline once system is implemented,
and high cost of implementation prohibits change in vendors.
6. Risk of implementation failure
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,6/22/23, 5:17 PM INF 112 Nov Exam + Review Questions
Transaction Processing Systems (TPSs)
Overview
• Input includes basic business transactions such as order placings, buying of supplies etc.
• Processing activities include data collection, data editing, data correction, data manipulation, data storage
and document production.
• Result of processing business transactions is that the organization’s records are updated to reflect the
status of the operation at the time of the last processed transaction.
• Furthermore, it collects data which is input to other essential information systems – management
information systems, decision support systems and other special-purpose information systems
Traditional Transaction Processing Methods and Objectives
Me
Metho
tho
thods
ds
• Batch processing systems- A form of data processing where business transactions are accumulated over a
period of time and prepared for processing as a single unit or batch.
• Online transaction processing (OLTP)- A form of data processing where each transaction is processed
immediately, without the delay of accumulating transactions into a batch.
- essential for businesses that require access to current data such as airlines, ticket agencies and stock
investment firms.
Obj
Objecti
ecti
ectives
ves
1. Process data generated by and about transactions- primary objective
2. Maintain a high degree of accuracy and integrity- used to execute key operational activities, thus must be
accurate and complete
3. Avoid processing fraudulent transactions
4. Produce timely user responses and reports-
essential to meet deadlines
5. Increase labour efficiency- reduces manual
labour
6. Help improve customer service
7. Helps build and maintain customer loyalty- a
means for customers to communicate, must
thus be satisfactory
8. Achieve competitive advantage
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Transaction processing activities
• Main activities
1. Capture and process data that describes fundamental business transactions
2. Update databases
3. Produce a variety of reports used within and outside the organisation
• The business data goes through a transaction processing cycle- the process of data collection, data editing,
data correction, data manipulation, data storage and document production.
Tran
Transac
sac
saction
tion pr
proc
oc
ocessin
essin
essing
g cyc
cycle
le
1. Data collection
- Capturing and gathering all data necessary to complete the processing of transactions.
2. Data editing
- The process of checking data for validity and completeness.
3. Data correction
- The process of re-entering data that was not typed or scanned properly.
4. Data manipulation
- The process of performing calculations and other data transformations related to business transactions.
5. Data storage
- The process of updating one or more databases with new transactions.
6. Document production
- The process of generating output records and reports.
TPS Applications
• Order Processing Systems include order entry,
sales configuration, shipment planning,
shipment execution, inventory control, and
accounts receivable
• Purchasing Systems include inventory control,
purchase order processing, receiving, and
accounts payable
• Accounting Systems include the budget,
accounts receivable, payroll, asset
management, and general ledger
Electronic and Mobile Commerce
E-commerce
• Electronic commerce- Conducting business
transactions (e.g. distribution, buying, selling and servicing) electronically over computer networks such as
the Internet, extranets and corporate networks.
Varia
Variations
tions
• Business-to-consumer (B2C) e-commerce- customers deal directly with an organization and avoid
intermediaries.
• B2Me e-commerce- A form of e-commerce where the business treats each customer as a separate market
segment. Typical B2Me features include customizing a website for each customer, perhaps based on their
previous purchases and personalized (electronic) marketing literature.
• Business-to-business (B2B) e-commerce- A subset of e-commerce where all the participants are
organizations.
• Consumer-to-consumer (C2C) e-commerce- A subset of e-commerce that involves consumers selling
directly to other consumers.
• E-government- The use of information and communications technology to simplify the sharing of
information, speed up formerly paper-based processes and improve the relationship between citizen and
government.
Mobile Commerce
• Relies on the use of wireless devices, such as personal digital assistants, mobile phones, and smartphones,
to transact
Production and Supply Chain Management
ERP production plan process
1. Sales forecasting: estimates future customer demand, using specialised software and techniques
2. Sales and operations plan: takes demand and current inventory levels to determine the specific product
items that need to be produced and when to meet the forecast future demand
3. Demand management: determining the amount of weekly or daily production needed to meet the demand
for individual products- develops master production schedule
4. Detailed scheduling: schedules production run for each product and from one product to the next
5. Materials requirement planning: determines amount and timing of raw material orders with suppliers,
based on the existing raw material inventory and the bill of materials or BOM, a sort of ‘recipe’ of
ingredients needed to make each product item
6. Purchasing: purchases raw materials and transmits to qualified suppliers
7. Production: plans details of running and staffing production operation
Customer Relationship Management
• Customer relationship management (CRM)- A system that helps a company manage all aspects of
customer encounters, including marketing and advertising, sales, customer service after the sale and
programmes to retain loyal customers.
• The goal of CRM is to understand and anticipate the needs of current and potential customers to increase
customer retention and loyalty while optimizing the way that products and services are sold.
Sales ordering
• Sales orderings- set of activities that must be performed to capture a customer sales order, including:
- Recording items to be purchased
- Setting sales price
- Recording order quantity
- Determining total cost of the order including delivery costs
- Confirming customer’s available credit
Challenges with Operational Systems for a multinational company
• Different languages and cultures
• Disparities in IS infrastructure- The lack of a robust or common information infrastructure
• Varying laws and customs rules- some countries have passed laws limiting the transborder flow of data
linked to individuals.
• Multiple currencies- a set of exchange rates must be defined, and the information systems apply these
rates to translate from one currency to another.
Summary
• Transaction processing systems (TPSs): process detailed data necessary to update records about
fundamental business operations
• Enterprise resource planning (ERP): set of integrated programs that manage a company’s vital business
operations for an entire multisite, global organization, for example: CRM, SCM, Sales Ordering, etc.
• Electronic commerce:is conducting a business transaction electronically over computer networks,
primarily the Internet but also extranets, and corporate networks. Types of transactions include B2B, B2C
and C2C.
• Mobile commerce (m-commerce) relies on the use of wireless devices, such as personal digital assistants,
mobile phones, and smartphones, to transact
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