Introduction to Information Technology
Turban, Rainer and Potter
John Wiley & Sons, Inc.
Copyright 2005
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Transaction Processing,
Functional Application,
and Integration
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7.1 Functional Information Systems
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Functional Information Systems
cont…
Functional information Systems can be
divided into two general categories: functionspecific and function- general . The most
common type of function-general system, is
management information systems (MISs)
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Management Information System
(MIS)
A system that provides information to
managers in the functional areas, in order to
support managerial tasks of planning,
organizing, and controlling operations.
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An MIS produces routine, ad-hoc (ondemand) and exception report:
Ad-hoc ( on- demand) reports: Nonroutine reports.
Drill- down report: Reports that show a greater level
of detail than is included in routine reports.
Key- indicator reports. Reports that summarize the
performance of critical activities .
Comparative reports. Reports that compare
performance of different business units or time
periods.
Exception report. Report that include only
information that exceeds certain threshold standard
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Information systems can also be function-specific
Typical function- specific system are
accounting, finance, marketing, operations
(POM), and human resources management
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Major characteristic of functional
information systems
Frequently composed of smaller systems
Integrated or independent
Interfacing
Supportive of different organizational levels
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7.2 Transaction Processing
Information Systems (TPS)
Information system that supports routine, core
business transactions.
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Objectives of a TPS
To provide all the information needed by law, by
management and / or by organizational policies to
keep the business running properly and efficiently
to efficiently handle high volume of data,
to avoid errors due to concurrent operations
to handle large variations in volume
To avoid downtime, never lose results, and maintain
privacy and security
To interface with many IT applications, including epayment, e-procurement and e-marketing.
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Activities and Methods of TPSs
First, data are collected by people or sensors
and entered into the computer via any input
device. Next the system processes data in
one of two basic ways: batch or online
processing.
 Batch processing: processes data in batches
at fixed periodic intervals.
 Online processing: processes data as soon
as a transaction occurs.
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The Major Characteristics of a TPS
 Typically . Large amounts of data are processed.
 The source of data are mostly internal , and the outputs is intended mainly for an internal audience . This
characteristic is changing somewhat, since trading partners may contribute data and may be permitted to use
TPS output directly .
 The TPS processes information on a regular basis: daily, weekly, biweekly and so on.
 Large storage (database) capacitv is required.
 High processing speed is needed due to the high volume.
 The TPS monitors and collects past data
 Input and output data are structured. Since the processed data are fairly stable, they are formatted in a
standard fashion.
 A high level of detail (raw data, not summarized) is usually observable,
especially in input data but often in output as well.
 Low computation complexity (simple mathematical and statistical operations) is usuallv evident in a TPS.
 A high level of accuracy, data integrity, and security is needed. Sensitive issues such as privacy of personal
data are strongly related to TPSs.
 High reliability is required. The TPS can be viewed as the lifeblood of the organization . Interruption in the
flow of TPS data can be fatal to the organization .
 Inquiry processing is a must . The TPS enables users to query files and databases ( even online and in real
time)
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The flow of information in TPS
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Web–Based and Online TPS
In online transaction processing (OLTP)
business transaction are processed online as
soon as they occur.
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Typical TPS Activities
Activities
Description
The ledger
The entire financial accounts: all of the assets, liabilities, and
owner’s (stockholders') equity accounts
Accounts payable and receivable
Record of all account to be paid and those owed by customers.
Receiving and shipping records
Transaction records of all item send or received and returns
Inventory-on-hand records
Record of inventory levels. Use of barcodes improves ability to
count inventory periodically
Fixed-assets management
Record of the value of an organization’s fixed assets ( e.g.
buildings, cars, machine ), including depreciation rate and major
improvements made in assets, for taxation purposes
Payroll
All raw and summery payroll records.
Personnel files and skills
inventory
Files of employee’s history, evaluations, and record of training and
performance.
Reports to government
Report on compliance with government regulations , taxes , etc
Other periodic reports and
statements
Financial, tax, production, sales and routine reports
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7.3 Managing The Accounting and
Finance Systems
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Financial planning and budgeting
Financial and economic forecasting
Budgeting
Capital budgeting
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Managing financial transactions
E-commerce applications of financial
transactions (global stock exchange, multiple
currencies, E-bonds, etc.)
Virtual close . The ability of a company to
close its accounting records quickly and on
short notice
Expense Management Automation (EMA).
Systems that automate data entry and
processing of travel and entertainment
expenses.
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Investment Management
Access to financial and economic reports
Financial analysis
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Control and auditing
Budgetary control
Auditing
Financial ratio analysis.
Product pricing
Contract management
Profitability analysis and cost control
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7.4 Managing marketing and sales
systems
Channel systems. The systems involved in
the process of getting a product or services to
customers and dealing with all customers’
needs.
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Marketing Channel Systems
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Customer relations “The Customer is
King /Queen”
Customer profile and preference analysis
Prospective customer lists and marketing
Databases
Mass customization
Personalization
Advertising and promotions
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Distribution channels and
In-store innovations
New IT-support distribution channel
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Marketing Management
Pricing of products or services
Salesperson productivity (sales force
automation, sales productivity software)
Profitability analysis
Sales Analysis and trends
New products, services and marketing
planning
Web-based systems in marketing
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7.5 Managing production/
operations and logistics
In-house logistics and materials management
Inventory management
Quality control
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Planning production and operations
Material requirement planning: A planning process
that integrates production, purchasing and inventory
management of interdependent items.
Manufacturing resource planning: A planning process
that integrates an enterprise’s production, inventory
management, purchasing, financing and labor
activities.
Just- in- time systems: An inventory scheduling
system in which materials and parts arrive at a
workplace just when needed.
Other areas.
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Computer-integrated manufacturing
Computer-integrated manufacturing (CIM).
Manufacturing approach that integrates
several computerized systems such as CAD,
CAM, MRP and JIT into a whole, in a factory.
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The CIM model
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Product lifecycle management (PLM)
A business strategy that enables
manufacturers to collaborate on product
design and development efforts, using webbased strategies.
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How product life cycle management works?
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7.6 Managing Human Resources
Systems: Recruitment
Using he web for recruitment,
HRM portals and salary surveys.
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Human Resources Maintenance and
Development
Performance evaluation
Training and HR development
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Human Resources Planning and
Management
Payroll and employees’ records
Benefit administration
Employee relationship management
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7.7 Integrating Functional
Information Systems
Approaches to integration
Integrating front- office and back-office
operations
Process-centric integration: System
integrating solutions designed, developed
and managed from a business- process
perspective
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