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Chapter 2

Overview of Transaction Processing and ERP Systems

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Learning Objectives

Describe the four major steps in the data processing cycle. Describe the major activities in each cycle.

Describe documents and procedures used to collected

and process data. Describe the ways information is stored in computer-based

information systems.

Discuss the types of information that an AIS can provide.

Discuss how organizations use ERP systems to processtransactions and provide information.

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Data Processing Cycle

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The Data Processing CycleDetermines

What data is stored?

Who has access to the data?

How is the data organized?

How can unanticipated information needs be met?

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Data InputCapture

As a business activity occurs data is collected about:

1. Each activity of interest

2. The resources affected

3. The people who are participating

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Paper-Based Source Documents

Data are collected onsource documents

E.g., a sales-order form

The data from paper-based will eventually

need to be transferred tothe AIS

Turnaround

Usually paper-based

Are sent fromorganization to customer

Same document isreturned by customer toorganization

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Turnaround Document

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Source Data Automaton

Source data is captured

In machine-readable form

At the time of the business activity

E.g., ATMs; POS

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Data InputAccuracy and Control

Well-designed source documents can ensure that datacaptured is

Accurate

Provide instructions and prompts

Check boxes Drop-down boxes

Complete

Internal control support

Prenumbered documents

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Data Storage

Types of AIS storage:

Paper-based

Ledgers

Journals

Computer-based

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Ledgers

General

Summary level data for each:

Asset, liability, equity,

revenue, and expense

Subsidiary

Detailed data for a GeneralLedger (Control) Accountthat has individual sub-

accounts Accounts Receivable

Accounts Payable

Joe Smith$250

Patti Jones

$750

ACME

Inc.$150 Jones, Inc

$350

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Journals

General

Infrequent or specialized transactions

Specialized

Repetitive transactions E.g., sales transactions

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Coding Techniques

Sequence

Items numbered consecutively

Block

Specific range of numbers areassociated with a category

10000199999 = Electric Range

Group

Positioning of digits in code providemeaning

Mnemonic

Letters and numbers

Easy to memorize

Code derived from description of item

Chart of accounts

Type of block coding

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Digit Position Meaning

12 Product Line, size,and so on

3 Color

45 Year ofManufacture

67 Optional Features

1241000 12 = Dishwasher 4 = White

10 = 201000 = No Options

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Computer Based Storage

Entity

Person, place, or thing (Noun)

Something an organization wishes to store data about

Attributes

Facts about the entity

Fields

Where attributes are stored

Records

Group of related attributes about an entity

File

Group of related Records

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File Types

Transaction

Contains records of abusiness from a specificperiod of time

Master

Permanent records

Updated by transactionwith the transaction file

Database Set of interrelated files

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Data Processing

Four Main Activities

1. Create new records

2. Read existing records

3. Update existing records

4. Delete records or data from records

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Data Output Types

Soft copy

Displayed on a screen

Hard copy

Printed on paper

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ERP Systems

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Enterprise Resource Planning (ERP)

Integrate an organizations information into one overallAIS

ERP modules:

Financial

Human resources and payroll

Order to cash

Purchase to pay

Manufacturing

Project management

Customer relationship management

System tools

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ERP Advantages

Integration of an organizations data and financialinformation

Data is captured once

Greater management visibility, increased monitoring

Better access controls

Standardizes business operating procedures

Improved customer service

More efficient manufacturing

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ERP Disadvantages

Cost

Time-consuming to implement

Changes to an organizations existing business processes

can be disruptive

Complex

Resistance to change

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