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Chapter 8. Transaction Processing, Electronic Commerce, and Enterprise Resource Planning Systems. TPS, MIS, DSS, and AI/ES. Hierarchy:. Information. AI/ES. Less. More. Less. More. DSS. Sophistication & complexity of processing & analysis. Decision support. Input & output. Routine.

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Chapter 8


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chapter 8

Chapter 8

Transaction Processing, Electronic Commerce, and Enterprise Resource Planning Systems

tps mis dss and ai es
TPS, MIS, DSS, and AI/ES
  • Hierarchy:

Information

AI/ES

Less

More

Less

More

DSS

Sophistication& complexity ofprocessing & analysis

Decisionsupport

Input &

output

Routine

MIS

TPS

Data

More

Less

More

Less

transactions
Transactions
  • Transactions…
      • Basic business operations such as customer orders, purchase orders, receipts, time cards, invoices, and payroll checks in an organization
  • Transaction processing systems (TPS)
      • Perform routine operations and serve as a foundation for other systems
batch vs on line transaction processing
Batch vs. On-Line Transaction Processing
  • Two types of TPS:
    • Batch processing
      • A system whereby business transactions are accumulated over a period of time and prepared for processing as a single unit or batch
    • On-line transaction processing (OLTP)
      • A system whereby each transaction is processed immediately, without the delay of accumulating transactions into a batch
batch schematic
Batch Schematic

Input

(batched)

Data entryof accumulatedtransactions

Output

on line schematic
On-line Schematic

Terminal

Terminal

Terminal

Output

Immediateprocessingof eachtransaction

Terminal

Terminal

Terminal

integration of tpss

[ ]x n =

Applicationssoftware

People

Schematic

Integration of TPSs
objectives of tps
Objectives of TPS
  • Process data generated by and about transactions
  • Maintain a high degree of accuracy
  • Ensure data and information integrity and accuracy
  • Produce timely documents and reports
  • Increase labour efficiency
  • Help provide increased and enhanced service
  • Help build and maintain customer loyalty
  • Achieve competitive advantage
slide11

Data entry & input

Processing

Documents& reports

  • Documents:
  • pick list
  • cheques to vendors
  • receiving notices
  • paycheques
  • Operational reports:
  • finished product inventory status
  • raw materials; packing materials; spare parts; inventory status

Database

  • Internally generatedtransactions:
  • shipped orders
  • purchase orders
  • employee time cards
  • Externally generated transactions:
  • customer orders
  • vendor invoices
  • customer payments
  • Database update:
  • customer orders
  • inventory
  • purchase orders
  • customers
  • suppliers
data processing activities common to tpss
Data Processing Activities Common to TPSs
  • A transaction processing cycle
      • Data collection
      • Data editing
      • Data correction
      • Data manipulation
      • Data storage
      • Document production

Schematic

slide13

Original data

Datacollection

Dataedit

Datamanipulation

Datacorrection

Datastorage

Documentproduction

source data automation
Source Data Automation
  • Source data automation
      • The process of capturing data at its source with minimal manual effort
      • Data are entered directly into the computer
point of sale transaction processing system
Point-of-Sale Transaction Processing System

Customer’sreceipt

Inventorydatabase

Exceptionreport

Managementinformationsystem

UPC andquantity

Point-of-saletransactionprocessingsystem

UPC

Scanner

Quantity,

Date,

time

Item, quantity,

date, time, price

Purchasesdatabase

UPC

Price

Itemdatabase

control and management issues
Control and Management Issues
  • Business resumption planning
      • The process of anticipating and providing for disasters.
  • Disaster recovery
      • The implementation of the business resumption plan.
  • Transaction processing system audit
      • An examination of the TPS in an attempt to answer three basic questions
        • Does the system meet the business need?
        • What procedures and controls have been established?
        • Are the procedures and controls being properly used?
traditional tps order processing
Traditional TPS – Order Processing
  • Order processing
    • Processing an order from entry to delivery, including traditional accounting transactions

Schematic

slide18

Customer

Invoice

Products

Customer order in person or viamail, phone, EDI, internet

Order entry/

sales configuration

Inventory status

Orders

Plannedshipments

Finishedproductinventory

Shipmentplanning

Routing

Pick list

Plannedshipments

& routes

Shipmentexecution

Scheduling

Shipped orders

Invoicing

slide20

D5

Rejected orders

D6

Inventory

D1

Products/prices

D2

Customer payment history

Product numbers,inventory levels

Products, priceinformation

Credit status

2. Verify product numbers & stock on hand

Openorders

3. Authorizecredit

1. Collect order info

Orders

Orders

D3

New orders

Rejected,partly filled

orders

Backorders

Back orders

4. Notify customer

D4

Back orders

Customer

Customer notification

Rejectedorders

order processing support systems sales configuration
Order Processing Support Systems - Sales Configuration
  • Sales configuration
      • Ensures that products and services ordered are sufficient to accomplish customer’s objectives and will work well together
order processing support systems shipment planning
Order Processing Support Systems - Shipment Planning
  • Shipment planning
      • A system that determines which open orders will be filled and from which location they will be shipped
      • E.g., (from Figure 8.9)
order processing support systems shipment execution
Order Processing Support Systems - Shipment Execution
  • Shipment execution
      • A system that coordinates the outflow of all products and goods from the organization, with the objective of delivering quality products on time to customers
order processing support systems inventory control
Order Processing Support Systems - Inventory Control
  • Inventory control
      • A system that updates the computerized inventory records to reflect the exact quantity on hand of each stock keeping unit
      • Status reports
        • Summarize all inventory items in stock, or shipped over a specified period of time
      • E.g., see Figure 8.10
order processing support systems invoicing
Order Processing Support Systems - Invoicing
  • Invoicing
      • Generates customer invoices based on records received from the shipment execution TPS
      • E.g., see Figure 8.11
order processing support systems customer interaction system
Order Processing Support Systems - Customer Interaction System
  • Customer interaction
      • A system that monitors and tracks each customer interaction with the company
slide27

Customer

Requestforproposal

Sale

Problem, idea,

request for

information

Othercontacts

Customerinteractionsystem

Marketresearch

Productdevelopment

Sales

Qualitycontrol

Marketing

order processing support systems routing and scheduling
Order Processing Support Systems - Routing and Scheduling
  • Routing
      • A system that determines the best way to get goods and products from one location to another
  • Scheduling
      • A system that determines the best time to deliver goods and services
slide30

Raw materialsPacking materialsSpare partsInventory control

Inventory controlstatus report

Purchaseorder

request

Employees

Purchase orderprocessing

Purchaseorder

Purchaseorder

Receiving

Supplier

Material

Invoice

Receivingnotice

Accountspayable

Cheque

purchasing system31
Purchasing System
  • Inventory control
      • Maintains stock of items such as raw materials, packing materials, spare parts, and supplies
  • Purchase order (P.O.) processing
      • A system that helps purchasing department complete transactions quickly and efficiently
  • Receiving
      • A system that creates a record of expected and actual receipts
      • Reconciles purchase orders with what is actually received
  • Accounts payable
      • A system that increases an organization’s control over purchasing, improves cash flow
      • increases profitability, and provides more effective management of current liabilities
p o example
P.O. Example
  • (Click to view)
accounting system
Accounting System
  • Accounting systems
    • Consist of…
      • Budget
      • Accounts receivable
      • Accounts payable
      • Payroll
      • Asset management
      • General ledger
slide38

Customer

Assetmanagement

Cost of assets

Payments

Accountspayable

Accountsreceivable

Amounts owed by companyAmounts paid by company

Amounts owed by customersAmounts paid by customers

Payroll

Generalledger

Labour costs

Asset depreciation

Paycheques

Expense transactions

Timecards

Customer

Budget

financial systems accounts receivable
Financial Systems - Accounts Receivable
  • Accounts receivable
      • A system that manages the cash flow of the company by keeping track of the money owed the company on charges for goods sold and services performed
financial systems accounts receivable42
Financial Systems – Accounts Receivable
  • Accounts receivable aging report
      • Tells managers what bills are overdue, either customer by customer or in a summary format
financial systems payroll
Financial Systems - Payroll
  • Payroll…
      • Generates payroll checks and stubs, as well as W-2 statements at the end of the year for tax purposes
financial systems payroll46
Financial Systems - Payroll
  • Payroll journal
      • Helps managers monitor total payroll costs for an organization and the impact of those costs on cash flow
financial systems asset management
Financial Systems - Asset Management
  • Asset management transaction processing system
      • A system that controls investments in capital equipment and manages depreciation for maximum tax benefits
electronic commerce e commerce
Electronic Commerce (E-commerce)
  • Business-to-business problems
    • Inadequate models
    • Integrating with existing systems
    • Improving relationships with suppliers, customers, distributors.
  • Consumer problems
    • Wait for images to download
    • Security of credit information
    • Figuring out the ordering process
  • Currently a small part of all commerce
five stage model of e commerce
Five Stage Model of E-Commerce
  • The stages consumers experience in the sales life cycle

Schematic

slide51

Buyer

Electronicdistribution

Traditionaldelivery

1. Search and Identify

5. After sales service

2. Selection & negotiation

4. Product & service delivery

3. Purchasing

buying over the internet
Buying Over the Internet

Prepare list of items needed

Log on to internet

Access supplier’s home page

Browse supplier’s catalog

Input sent to supplier’s order entry system

Place order

Review response to request for quotation

Fill out request for quotation form

Pick items

purchasing products and services electronically
Purchasing Products and Services Electronically
  • Establish credit with suppliers
  • Secure E-commerce transactions
    • Secure financial transaction (SFT)
    • SET = “secure electronic transaction”
    • CyberCash
set discussion 1
SET ‘Discussion’ (1)

Short for Secure Electronic Transaction, a new standard that will

enable secure credit card transactions on the Internet. SET has

been endorsed by virtually all the major players in the electronic

commerce arena, including Microsoft, Netscape, Visa, and

Mastercard.

By employing digital signatures, SET will enable merchants to verify

that buyers are who they claim to be. And it will protect buyers by

providing a mechanism for their credit card number to be transferred

directly to the credit card issuer for verification and billing without

set discussion 2
SET ‘Discussion’ (2)

the merchant being able to see the number.

The first applications based on SET are expected appeared in 1998.

enterprise resource planning erp
Enterprise Resource Planning (ERP)
  • ERP
      • Real-time monitoring of business functions
  • Advantages
      • Eliminate costly, inflexible legacy systems
      • Provide improved work processes
      • Provide access to data for operational decision making
      • Upgrading technology infrastrucutre
  • Disadvantages
      • Time consuming, difficult, expensive to implement
      • Make radical changes in how a company operates
      • Lack of vendor responsiveness in light of high demand
example of an erp system sap r3
Example of an ERP System - SAP/R3
  • Clients in the SAP system
  • Application servers in the SAP system
  • Business application programming interfaces (BAPIs)
  • Database server in the SAP systems
  • Objects in the SAP system
  • Repository
  • Tables
sap three tier client server architecture
SAP Three-Tier Client/Server Architecture

Databaseserver

Applicationservers

Clientdesktopcomputers

business application programming interface bapi
Business Application Programming Interface (BAPI)

Businessprocesses

Standard requestfor data or processing

Standard

results

BAPI(public interface)

Request for data or processing consistentwith current version of SAP software

Results consistent with currentversion of SAP software

SAP

software