Chapter 8 – Transaction Processing, Electronic Commerce, and ...
Transcript of Chapter 8 – Transaction Processing, Electronic Commerce, and ...
ITEC 1010 Information and Organizations
Chapter 8
Transaction Processing, Electronic Commerce, and Enterprise Resource Planning Systems
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TPS, MIS, DSS, and AI/ES
Hierarchy:
AI/ES
DSS
MIS
TPS
Information
Data
Less More Less More
More MoreLess Less
RoutineDecisionsupport
Input &output
Sophistication& complexity of
processing & analysis
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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
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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
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Batch Schematic
Data entryof accumulated
transactions
Input(batched) Output
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On-line Schematic
Output
Terminal
Terminal
TerminalTerminal
Terminal
Terminal
Immediateprocessingof eachtransaction
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Integration of TPSs
Applicationssoftware
People
Schematic
[ ]x n =
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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
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Simplified Overview of aTransaction Processing System
Schematic
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Data entry & input
ProcessingDocuments& reports
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
Documents:
• pick list
• cheques to vendors
• receiving notices
• paycheques
Operational reports:
• finished product inventory status
• raw materials; packing materials; spare parts; inventory status
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Data Processing Activities Common to TPSs
A transaction processing cycle• Data collection• Data editing• Data correction• Data manipulation• Data storage• Document production
Schematic
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Datacollection
Dataedit
Datamanipulation
Datastorage
Documentproduction
Datacorrection
Original data
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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
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Point-of-Sale Transaction Processing System
Customer’sreceipt
Inventorydatabase
Managementinformation
system
Exceptionreport
Purchasesdatabase
Scanner
Point-of-saletransactionprocessing
system
Itemdatabase
UPC andquantity
Item, quantity,date, time, price
UPC Price
UPC
Quantity,Date,time
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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?
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Traditional TPS – Order Processing
Order processing Processing an order from entry to delivery,
including traditional accounting transactions
Schematic
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Customer
Order entry/sales configuration
Shipmentplanning Routing
Scheduling
Shipmentexecution
Invoicing
Finishedproduct
inventory
Customer order in person or viamail, phone, EDI, internet
OrdersPlannedshipments
Plannedshipments& routes
Pick list
Shipped orders
Inventory status
Products
Invoice
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Data Flow Diagram of an Order Entry System
Schematic
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D1 Products/prices D2 Customer payment history
D3 New orders
D4 Back orders
D5 Rejected orders
3. Authorizecredit
2. Verify product numbers & stock on hand
1. Collect order info
4. Notify customer
Customer
BackordersBack orders
Customer notification
Orders
Product numbers,inventory levels
D6 Inventory
Products, priceinformation
Orders
Credit status
Openorders
Rejected,partly filledorders
Rejectedorders
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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
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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)
LOC LINK ITEM NUMBER DESCRIPTION ORDERED SHIPPED BO
8 105 10 L1L1602820 S827630 S827940
FASENTING TOOLSTAPLE ¾ INCHSTAPLE 1 INCHSHIPPING CHARGE
31515
EACHCASECASE
31512 3
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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
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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
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Order Processing Support Systems - Invoicing
Invoicing • Generates customer invoices based on records
received from the shipment execution TPS• E.g., see Figure 8.11
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Order Processing Support Systems - Customer Interaction System
Customer interaction• A system that monitors and tracks each customer
interaction with the company
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Requestfor
proposalSale
Problem, idea,request forinformation
Othercontacts
Marketresearch
Sales
Marketing
Qualitycontrol
Productdevelopment
Customerinteraction
system
Customer
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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
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Purchasing System
Schematic
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Raw materialsPacking materialsSpare partsInventory control
Purchase orderprocessing
Receiving
Accountspayable
Employees
Supplier
Inventory controlstatus report
Purchaseorder
Material
Cheque
InvoiceReceivingnotice
Purchaseorder
Purchaseorderrequest
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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
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P.O. Example
(Click to view)
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Accounting System
Accounting systems Consist of…
• Budget• Accounts receivable• Accounts payable• Payroll• Asset management• General ledger
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Accounts Payable Example
(Click to view)
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Financial Systems
Schematic
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Customer
Accountsreceivable
Assetmanagement
Accountspayable
Payroll
BudgetCustomer
Generalledger
Timecards
Paycheques
Labour costs
Expense transactions
Asset depreciation
Amounts owed by companyAmounts paid by company
Cost of assetsPayments
Amounts owed by customersAmounts paid by customers
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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
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‘Statement of Account’ Example
(Click to view)
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Financial Systems – Accounts Receivable
Accounts receivable aging report• Tells managers what bills are overdue, either
customer by customer or in a summary format
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‘Aging Report’ Example
(Click to view)
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Financial Systems - Payroll
Payroll…• Generates payroll checks and stubs, as well as W-2
statements at the end of the year for tax purposes
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Financial Systems - Payroll
Payroll journal• Helps managers monitor total payroll costs for an
organization and the impact of those costs on cash flow
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Financial Systems - Asset Management
Asset management transaction processing system
• A system that controls investments in capital equipment and manages depreciation for maximum tax benefits
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Financial Systems - General Ledger
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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
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Five Stage Model of E-Commerce
The stages consumers experience in the sales life cycle
Schematic
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Buyer
1. Search and Identify5. After
sales service
4. Product & service delivery
2. Selection & negotiation
3. Purchasing
Traditionaldelivery
Electronicdistribution
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Buying Over the Internet
Prepare list of items needed
Log on to internet
Access supplier’s
home page
Browse supplier’s
catalog
Pick items
Fill out request
for quotation
form
Review response to request for quotation
Place order
Input sent to supplier’s
order entry system
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Forecasted Volume of E-Commerce
Mode 1997 2000
Consumer $0.5 billion $7 billion
Business $8.0 billion $66 billion
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Purchasing Products and Services Electronically
Establish credit with suppliers Secure E-commerce transactions
Secure financial transaction (SFT) SET = “secure electronic transaction” CyberCash
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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
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SET ‘Discussion’ (2)
the merchant being able to see the number.
The first applications based on SET are expected appeared in 1998.
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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
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ERP Examples
Software Vendor Name of ProductAvalon Software Avalon CIMqad.inc MRG/PROOracle Oracle ManufacturingSAP America SAP R/3Baan TritonPeopleSoft PeopleSoftJ.D. Edwards World
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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
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SAP Three-Tier Client/Server Architecture
Clientdesktopcomputers
Applicationservers
Databaseserver
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Business Application Programming Interface (BAPI)
Businessprocesses
BAPI(public interface)
SAPsoftware
Standardresults
Results consistent with currentversion of SAP software
Standard requestfor data or processing
Request for data or processing consistentwith current version of SAP software
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End of Chapter 8
Chapter 9