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Chapter 9
Transaction Processing, Functional Applications and Integration
Information Technology for Management Improving Performance in the Digital Economy
7th edition
John Wiley & Sons, Inc.
Slides contributed by Dr. Sandra Reid Chair, Graduate School of Business & Professor, Technology
Dallas Baptist University Turb
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9-1 Copyright 2010 John Wiley & Sons, Inc.
Transaction Processing, Functional Applications and Integration
1. Functional Information Systems and Transaction Processing Systems
2. Production/Operations and Logistics
3. Managing Marketing and Sales Systems
4. Managing Accounting and Finance Systems
5. Managing Human Resources Systems
6. Integrating Functional Information Systems
7. Managerial Issues
9-2 Copyright 2010 John Wiley & Sons, Inc.
How Long, Value Chain Perspective
Copyright 2010 John Wiley & Sons, Inc. 9-3
Figure IT7eU
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9.1 Functional Information Systems & Transaction Processing Systems
Chapter 7 5
Value Chain Model
The value chain model views activities in
organizations as:
• Primary (reflecting the flow of goods and
services) or
• Secondary (supporting the primary
activities).
The organizational structure of firms is
intended to support both of these types of
activities.
Chapter 7 6
Functional Areas in a Business
Chapter 7 7
Transaction Processing Information
Systems
Computerization of Routine Transaction Processes
Objectives – handle high volume, avoid errors, handling of large variations, avoid down time, privacy and security.
XTP
Chapter 7 8
Transaction Processing Information Systems
Transaction Processing Information Systems
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TPS monitors, collects, stores, processes, & disseminates information for all routine core business transactions.
Rapid Processing Processes transactions virtually instantly
Reliability Ensures transactions never slip past the net, & systems themselves are operational permanently
Standardization Acquires identical data for each transaction.
Controlled Access Access is restricted to only those employees who require their use.
Characteristics of Transaction Processing Systems:
TPS – In-flight Card Payments
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Many airlines now accepting plastic for in-flight purchases
Many airlines go cashless for in-flight purchases
TPS – Traffic Control at Airports
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Functional Information Systems & Transaction Processing Systems
Major Characteristics of Functional Information Systems
• Composed of smaller systems
• Integrated or independent
• Interfacing
• Supportive of different levels
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Functional Information Systems & Transaction Processing Systems
Transaction Processing Information Systems
Objectives and Examples of TPSs
– Payroll preparation
– Traffic control airports
– Registration at Facebook
• Activities and Methods of TPS
– Batch Processing
– Online Processing
Copyright 2010 John Wiley & Sons, Inc. 7-13
Batch vs. Online Processing
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Allows sharing of computer resources among many users and programs,
Data are processed as soon as transaction occurs.
Shifts the time of job processing to when the computing resources are less busy.
Allows sharing of computer resources among many users.
Avoids idling the computing resources with minute-by-minute human interaction and supervision.
Shifts the time of job processing to when the computing resources are less busy.
Better amortizes the cost of a computer, especially an expensive one.
Avoids idling the computing resources without minute-by-minute human interaction and supervision.
Atomic unit of processing.
Benefits of Batch: Benefits of Online:
Functional Information Systems & Transaction Processing Systems
Web-based and Online Transaction Processing Systems
Typical Tasks in Transaction Processing
– Order Processing
– Web Analytics
– Other TPS Activities
What If a TPS Fails?
Transaction Processing Software
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Table 9.1
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The flow of information in transaction processing.
DMT – Digital Monetary Trust 9-17
Modernizing TPS Saved Time & Money
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Behind Microsoft's Tellme Acquisition: Pizza To Go
Blaze Advisor drives modernization of legacy systems at the California DMV
Copy Services no longer need employees to complete your purchase…
Taxis in Singapore
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ORBITAL AWARDED $13 MILLION TRANSIT FLEET MANAGEMENT SYSTEMS CONTRACT IN SINGAPORE Contract Represents Major International Win for Orbital's Transportation Management Systems Division, Already the U.S. Market Leader
Web Analytics Tools
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Web analytics is the measurement, collection, analysis and reporting of internet data for purposes of understanding and optimizing web site usage.[1] There are two categories of web analytics; off-site and on-site web analytics.
5 Great (Free) Analytics Tools You Might Not Know About Yet
Table 9.2
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Copyright 2010 John Wiley & Sons, Inc. 9-22
9.2 Managing Production/Operations & Logistics
Chapter 7 23
TPS – Managing Production/Operations &
Logistics
A few of the IT supported POM production and
operations management areas are:
In-house logistics and materials management
Planning production/operations
Computer-integrated manufacturing (CIM)
Product lifecycle management (PLM)
Automating design work and manufacturing
Chapter 7 24
TPS – Computer-Integrated Manufacturing
CIM Computer-Integrated Manufacturing is a
concept that promotes the integration of various
computerized factory systems. It has three basic
goals:
1. The simplification of all manufacturing
technologies and techniques,
2. Automation of as many of the manufacturing
processes as possible, and
3. Integration and coordination of all aspects of
design, manufacturing, and related functions via
computer hardware and software.
Chapter 7 25
TPS – Computer-Integrated Manufacturing
Typical integrated technologies are:
FMS - Flexible-manufacturing systems
JIT – Just-in-Time
MRP – Materials Requirements Planning
CAD – Computer Aided Design
CAE – Computer Aided Engineering
GT - Group technology
Chapter 7 26
TPS – Computer-Integrated Manufacturing Managing Production/Operations & Logistics
Chapter 7 27
TPS – Product Lifecycle Management
PLM is a business strategy that enables
manufacturers to control and share product-related
data as part of a products design and development
effort. Web-based supply chains and other
technologies are employed to automate this
collaborative effort.
Chapter 7 28
TPS – Product Lifecycle Management
This electronic-based collaboration can reduce
Product cost
Travel expenses
Costs associated with product-change
management
Time it takes to get a product to market
Figure 9.3
Copyright 2010 John Wiley & Sons, Inc. 9-29
The production/operations management functions transform inputs into useful outputs. (Source: J.R. Meredith and S. M. Shafer, Operations Management. New York: Wiley, 2002. Reprinted by permission of John Wiley & Sons, Inc.)
In-House Logistics & Materials Management
• Deals with ordering, purchasing, inbound logistics (receiving), & outbound logistics (shipping) activities.
• Purchasing results in incoming materials & parts.
• Parts inspected for quality then stored.
• Activities supported by information systems.
Copyright 2010 John Wiley & Sons, Inc. 9-30
e-Procurement
Copyright 2010 John Wiley & Sons, Inc. 9-31
E-procurement (electronic procurement, sometimes also known as supplier exchange) is the business-to-business or business-to-consumer or Business-to-government purchase and sale of supplies.
Information systems that support logistics & materials management:
Radio-frequency identification (RFID) is the use of an object (typically referred to as an RFID tag) applied to or incorporated into a product, animal, or person for the purpose of identification and tracking using radio waves. Some tags can be read from several meters away and beyond the line of sight of the reader.
Robots perform distribution & materials handling.
Quality Control Systems
• Can be standalone systems.
• May be part of enterprise-wide total quality management (TQM) effort.
• Provide information about quality of incoming materials & parts; quality of in-process semi-finished & finished products.
• May compare results to metrics such as Six Sigma.
• Per wikipedia.org, Six Sigma is a business management strategy, originally developed by Motorola, that today enjoys widespread application in many sectors of industry.
Copyright 2010 John Wiley & Sons, Inc. 9-32
Planning Production / Operations
• Just-in-time – inventory strategy minimizes inventories & continuously improves processes.
• Project management is enhanced by tools such as PERT (program evaluation & review technique) & CPM (critical path method).
• Computer-integrated manufacturing promotes integration of various computerized factory systems & has 3 basic goals: simplification, automation, & integration and coordination.
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Copyright 2010 John Wiley & Sons, Inc. 9-34
9.3 Managing Marketing & Sales Systems
Chapter 7 35
TPS – Marketing and Sales Systems
Channel systems are the TPS involved in
the process of getting a product or service to
customers and dealing with their needs.
These systems link and transform marketing,
sales, procurement, logistics, and delivery activities
with other corporate functional areas.
Chapter 7 36
TPS – Marketing and Sales Systems
Some of the channel-system activities are:
Customer relations
Distribution channels and in-store innovations
Marketing management
Telemarketing
Figure 9.4
9-37 Marketing channel systems.
Improving Shopping & Checkout at Retail Stores
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Macy's expands consumer electronics kiosks program
Electronic check scans win retailers' acceptance (WalMart)
……..Embedded with an RFID device……..
Home Depot Employs Self Checkout
Chapter 7 39
TPS – Customer Relations
Customer Profiles and Preference Analysis
Prospective Customer Lists and Marketing
Databases.
Mass Customization.
Personalization.
Advertising and Promotions.
Chapter 7 40
TPS – Distribution Channels & In-Store
Innovations
IT-Supported Distribution Channels
Internet
Location Based Mapping
Self-service convenience stores
Chapter 7 41
TPS – Distribution Channels & In-Store
Innovations
Improving Shopping and Checkout at Retail Stores
Hand-held wireless devices that scan the bar code
UPC
Smart card or credit card
Information kiosk enable customers to view catalogs
in stores
Self-checkout machines
Check-writers attached to cash registers
Computerization of various activities in retail stores
Video-based systems count and track shoppers in a
physical store
Chapter 7 42
TPS – Marketing Management
Pricing of Products or Services.
Salesperson Productivity.
Profitability Analysis
Sales Analysis And Trends.
New Products, Services, and Market Planning.
Web-Based Systems
Managing Marketing & Sales Systems
The Customer is King/Queen
• Customer Profiles and Preference Analysis
• Prospective Customer Lists and Marketing Databases
• Mass Customization
• Personalization
• Advertising and Promotions
Copyright 2010 John Wiley & Sons, Inc. 9-43
Managing Marketing & Sales Systems
Distribution Channels and In-Store Innovations • Improving Shopping and Checkout at Retail Stores Marketing Management • Pricing of Products or Services • Salespersons Productivity • Productivity Software • Profitability Analysis • New Products, Services, and Market Planning • Web-Based Systems in marketing
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Copyright 2010 John Wiley & Sons, Inc. 9-46
9.4 Managing Accounting & Finance Systems
Managing Accounting & Finance Systems
Financial Planning and Budgeting
• Financial and Economic Forecasting and Budgeting
• Budgeting
– Software Support
• Capital Budgeting
Copyright 2010 John Wiley & Sons, Inc. 9-33
Major Benefits of Using Budgeting Software
• Reduces time & effort in the budget process.
• Possible to easily explore & analyze implications of organizational & environmental changes.
• Can facilitate integration of corporate strategic objectives with operational plans.
• May make planning an ongoing, continuous process.
• Automatically monitor exceptions for patterns & trends.
Copyright 2010 John Wiley & Sons, Inc. 9-33
Figure 9.5
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Integrated accounting business software.
ASP : Active Server Pages SFA : Sales Force Automation
Managing Accounting & Finance Systems
Managing Financial Transactions
• XBRL: Extensible Business Reporting Language
Investment Management
• Access to Financial and Economic Reports
• Financial Analysis
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Managing Accounting & Finance Systems
Control and Auditing
• Risk Analysis
• Budgetary Control
• Auditing
• Financial Ratio Analysis
• Profitability Analysis and Cost Control
• Expense Management Automation
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Integrated Accounting Software
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See Top 7 Accounting, Financial & Inventory Software
XBRL is a standards-based way to communicate business and financial information. These communications are defined by metadata set out in taxonomies. Taxonomies capture the definition of individual reporting concepts as well as the relationships between concepts and other semantic meaning.
Source: wikipedia.org
Figure 9.6
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How XBRL works.
Copyright 2010 John Wiley & Sons, Inc. 9-54
9.5 Managing Human Resources Systems
Chapter 7 55
TPS – Human Resources Systems
Recruitment is finding employees, testing them,
and deciding which ones to hire. The Web has
enhanced the recruitment process.
Position Inventory
HRM Portals and Salary Surveys
Employee Selection
Human Resources Maintenance and
Development
Performance Evaluation
Training and Human Resources Development
Chapter 7 56
TPS – Human Resources Systems (Continued)
Human Resources Planning and Management
Personnel Planning
Labor –Management Negotiations
Payroll and Employees’ Records
Benefits Administration
Employee Relationship Management
HRIS Applications
Recruitment • Using the Web for Recruitment • Using Social Networks and Intelligent Software • HRM Portals and Salary Surveys • Employee Selection Human Resources Maintenance and Development • Performance Evaluation • Training and Human Resources Development Human Resources Planning and Management • Personnel Planning and HR Strategies • Benefits Administration • Employee Relationship Management
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HRIS Applications
• Payroll
• Work Time
• Benefits Administration
• Recruiting
• Training
• Performance Records
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Figure 9.7
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HRM activities.
Recruitment
• Search engines on the Web can help with attracting & repelling appropriate candidates.
• Internet makes advertising much simpler process, although large numbers may result.
• Embedded intelligence to help manage entire recruitment process.
• Social networking sites such as Jobster & LinkedIn have gained widespread popularity.
Copyright 2010 John Wiley & Sons, Inc. 9-60
HR Maintenance & Development
• Performance evaluation – supervisor, peer, &/or subordinate. Wage reviews are also related to performance evaluations.
• Training & HR development – planning classes & tailoring specific training programs to meet needs of organization & employees. May include career development plan for each employee.
• IT supports planning, monitoring & control of these activities.
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Training Devices
• Web-based video clips.
• Mobile devices.
• Virtual reality.
• Interactive simulations.
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9.6 Integrating Functional Information Systems
Integrating Functional Information Systems
• Reasons for Integration
• Integration of Front-Office with Back-Office Operations
• Using Enterprise 2.0 and Virtual Worlds
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Copyright 2010 John Wiley & Sons, Inc. 9-65
9.7 Managerial Issues
Managerial Issues
• Integration of functional information systems
• Priority of transaction processing
• Finding innovative applications
• Using the Web
• Systems integration
• Ethical issues
Copyright 2010 John Wiley & Sons, Inc. 9-66
Extreme Transaction Processing
• In Computer Science, Extreme Transaction Processing (XTP) is an exceptionally demanding form of transaction processing. Transactions of most high-end (more than 10,000 concurrent accesses or 500 transaction per second).
• Ultra-high-end (more than 100,000 concurrent accesses or 5,000 transaction per second) requirements or more would require this form of processing.
Copyright 2010 John Wiley & Sons, Inc. 67
Time for Deprivation to Have Serious Extreme Effect
Deprivation of human needs
Information deprivation
Element Time for serious adverse effect
Element Activities affected
Time for serious adverse effect
Oxygen Few minutes Transaction documents
Operations Hours to days
Water Few days Daily or weekly operations reports
Operational control
Days to weeks
Food Few weeks Planning and control reports
Management control
Weeks to months
Emotional support
Few months or years
Long term trend reports
Strategic planning
Months to years 68