Lead Black Slide
Chapter 10
Business Operations
© 2001 Business & Information Systems 2/e
2
Our Agenda





Increasing Business Operations
Efficiency
Transaction Processing Systems
Basic Business Information Systems
Other Business Information Systems
Enterprise Resource Planning Systems
© 2001 Business & Information Systems 2/e
3
Learning Objectives



Give an example of a computer
information system that increases the
efficiency of business operations.
Explain the purpose and structure of
transaction processing systems.
Describe the functions of transaction
processing systems.
© 2001 Business & Information Systems 2/e
4
Learning Objectives (cont’d.)



Describe several ways of controlling
transaction processing systems.
Explain the difference between batch
processing and on-line transaction
processing.
Summarize the characteristics of basic
business information systems.
© 2001 Business & Information Systems 2/e
5
Learning Objectives (cont’d)


List several examples of accounting,
financial, marketing, manufacturing,
and human resource information
systems.
Explain what an enterprise resource
planning system is.
© 2001 Business & Information Systems 2/e
6
Increasing Business
Operations Efficiency
Business Operations
© 2001 Business & Information Systems 2/e
7
Increasing Business
Operations Efficiency


Efficiency has to do with how much a
system produces relative to the
resources, such as people and money,
used by the system.
To be competitive today, most
businesses require some form of
computer information system for their
basic operations.
© 2001 Business & Information Systems 2/e
8
Transaction Processing
Systems
Business Operations
© 2001 Business & Information Systems 2/e
9
Transaction Processing
Systems

The main type of information system
used for operational support in a
business is the transaction processing
system (TPS).
© 2001 Business & Information Systems 2/e
10
Transaction Processing System
Structure

Three elements of a transaction
processing system:
1. Keep records about the state of the
organization.
2. Process transactions that affect these
records.
3. Produce outputs that report on transactions
that have occurred, that report on the state
of the organization, and that cause other
transactions to occur.
© 2001 Business & Information Systems 2/e
11
Transaction Processing System
Functions

Transaction processing systems
consist of four main functions to
accomplish their purposes. They are:
1.
2.
3.
4.
Input function
Storage function
Processing function
Output function
© 2001 Business & Information Systems 2/e
12
Input Function



Before transaction data can be brought
into a transaction processing system, it
must be acquired from its source – a
step called data capture.
Data is often captured from a source
document.
Data once captured, it is put into the
system – a step called data entry.
© 2001 Business & Information Systems 2/e
13
Input Function (cont’d.)

As data is entered into the system, a
program must check it for errors, a step
called data validation.
© 2001 Business & Information Systems 2/e
14
Storage Function


Data in a transaction processing
system is stored in data files and
databases.
Two types of data commonly found in
transaction processing systems:
1. Master data – is the main data used by
the system.
2. Transaction data – is data about the
transactions that have occurred.
© 2001 Business & Information Systems 2/e
15
Processing Function


Processing involves manipulating data
within the system.
Two operations in the processing
function:


Computation – doing calculations with data.
Decision making – checking a condition that
causes processing to continue in different
ways depending on the result of the
decision.
© 2001 Business & Information Systems 2/e
16
Output Function


Output from a transaction processing
system can be displayed on a screen or
printed on paper.
Three types of reports
1. Detail report – lists detailed information
2. Summary report – contains summarized
information
3. Exception report – lists exceptions to norm
© 2001 Business & Information Systems 2/e
17
Controlling Transaction
Processing Systems

Procedures to ensure the completeness
of the data processing and to minimize
the chance of error are called controls.
They include:




Control Totals
Audit Trails
Backup and Recovery Procedures
Processing Data in Transaction Processing
Systems
© 2001 Business & Information Systems 2/e
18
Control Totals


A control total is a number that is
computed when data enters a system
and then computed again after the
system has processed the data.
Sometimes several control totals are
calculated and checked in the system to
be sure all data has been processed
accurately.
© 2001 Business & Information Systems 2/e
19
Audit Trails


An audit trail is a way of tracing the
effect of data through a system.
A good audit trail is one in which
someone can start with the output and
go back through the system to the
source document, or vice versa.
© 2001 Business & Information Systems 2/e
20
Backup and Recovery
Procedures



Backing up means that the data is
copied periodically to another storage
media.
Recovery means that the backup copy
of the data can be used to re-create the
original data stored on the system.
Without adequate backup and recovery
procedures, there is a great risk of
losing data permanently.
© 2001 Business & Information Systems 2/e
21
Processing Data in Transaction
Processing Systems

Two basic approaches to processing
data in a transaction processing
system:
1. Batch processing – transactions to be
processed are prepared in a form
understandable by the computer before
actual processing begins.
2. On-Line Transaction Processing (OLTP) –
permits a person to use a keyboard and
screen at the time the processing is done.
© 2001 Business & Information Systems 2/e
22
Basic Business Information
Systems
Business Operations
© 2001 Business & Information Systems 2/e
23
Basic Business Information
Systems

Eight basic information processing activities:
1.
2.
3.
4.
5.
6.
7.
8.
Entering customer orders
Billing customers
Collecting customer payments
Keeping track of inventory
Purchasing stock and materials
Paying bills
Paying employees
Reporting financial information
© 2001 Business & Information Systems 2/e
24
Entering Customer Orders

An order entry system permits entry of
customer orders for goods and services
and prepares the orders in a form that
can be used by the business.
© 2001 Business & Information Systems 2/e
25
Entering Customer Orders
(cont’d.)

Once orders are entered, the following
questions must be answered:


Does the business have sufficient inventory
to fill the order?
Should the business extend credit to this
customer or require that the customer pay
in advance?
© 2001 Business & Information Systems 2/e
26
Billing Customers


The purpose of a billing system is to
prepare the customer’s bill or invoice.
To prepare the invoice from the sales
order data, two types of master data
are required:
1. Customer master data
2. Inventory master data
© 2001 Business & Information Systems 2/e
27
Collecting Customer Payments


The accounts receivable system is used to
keep track of money owed to the business
by its customers and to record customer
payments for invoices.
To produce the outputs, two types of stored
data are used:
1. Accounts receivable data
2. Customer master data
© 2001 Business & Information Systems 2/e
28
Keeping Track of Inventory


The inventory control system is used to
keep track of the business’s inventory,
to indicate when inventory should be
reordered, and to compute the value of
the inventory.
The stored data needed in this system
is the inventory master data.
© 2001 Business & Information Systems 2/e
29
Purchasing Stock and
Materials

The purchasing system is used to


Determine the best suppliers (also called
vendors) from which to purchase items.
Prepare documents, called purchase
orders, which indicate to the supplier
what items are wanted.
© 2001 Business & Information Systems 2/e
30
Purchasing Stock and
Materials (cont’d.)

To prepare the purchase order, two
types of information are required:
1. Inventory master data
2. Supplier master data
© 2001 Business & Information Systems 2/e
31
Paying Bills

The accounts payable system is used to
keep track of money owed by the
business for purchases, to pay suppliers
for items purchased, and to provide
reports of accounts payable to other
functions of the business.
© 2001 Business & Information Systems 2/e
32
Paying Bills (cont’d.)

To produce the outputs, two types of
stored data are used:
1. Accounts payable data
2. Supplier master data
© 2001 Business & Information Systems 2/e
33
Paying Employees


The payroll system is used to prepare
paychecks for employees and to
provide reports of payroll.
To produce the outputs two types of
data are required:
1. Employee work data
2. Employee master data
© 2001 Business & Information Systems 2/e
34
Reporting Financial
Information


The general ledger system is used to
maintain the business’s financial
accounts and to prepare financial
statements.
To produce the financial statements, the
general ledger system uses stored
general ledger data.
© 2001 Business & Information Systems 2/e
35
Other Business Information
Systems
Business Operations
© 2001 Business & Information Systems 2/e
36
Accounting Information
Systems

Accounting Information Systems (AIS)
support the accounting function.
Several commonly used AIS systems
are:



Fixed asset accounting
Budgeting
Tax accounting
© 2001 Business & Information Systems 2/e
37
Financial Information Systems

Financial information systems provide
necessary support for the finance
function. Some common financial
information systems include:





Cash management
Capital expenditure analysis
Financial forecasting
Portfolio management
Credit analysis
© 2001 Business & Information Systems 2/e
38
Marketing Information
Systems

Marketing information systems assist in
the marketing function. Common
marketing information systems include:






Sales analysis
Sales forecasting
Marketing research
Direct mail advertising
Electronic commerce
Sales force automation
© 2001 Business & Information Systems 2/e
39
Manufacturing Information
Systems

Manufacturing information systems
provide services to support the
manufacturing function. Some common
manufacturing information systems
include:



Production scheduling
Materials Requirements Planning (MRP)
Manufacturing Resource Planning (MRPII)
© 2001 Business & Information Systems 2/e
40
Manufacturing Information
Systems (cont’d.)






Just-In-Time (JIT)
Computer-Aided Design (CAD)
Computer-Aided Manufacturing (CAM)
Robotics
Computer-Integrated Manufacturing (CIM)
Supply-chain management
© 2001 Business & Information Systems 2/e
41
Human Resource Information
Systems

Human Resource Information Systems
(HRIS) support the human resource
function. Common HRIS include:




Performance appraisal
Skills inventory
Benefits administration
Job applicant tracking
© 2001 Business & Information Systems 2/e
42
Enterprise Resource Planning
Systems
Business Operations
© 2001 Business & Information Systems 2/e
43
Enterprise Resource Planning


An information system that supports
several areas of a business by combining a
number of applications with a single
database that stores all the data used by
the applications.
ERP systems are designed for applications
that encompass a large portion of a
business.
© 2001 Business & Information Systems 2/e
44
Business Operations
Key Terms
© 2001 Business & Information Systems 2/e
45
Key Terms






Accessing
Accounting Information
System
Accounts Payable
System
Accounts Receivable
System
Audit Trail
Backup Procedure
© 2001 Business & Information Systems 2/e








Batch Processing
Billing System
Control
Control Total
Data Validation
Detail Report
Enterprise Resource
Planning (ERP)
Exception Report
46
Key Terms (cont’d.)





Financial Information
System
General Ledger System
Human Resource
Information System
(HRIS)
Interactive Processing
Inventory Control
System
© 2001 Business & Information Systems 2/e

Manufacturing
Information System
47
Summary





Increasing Business Operations
Efficiency
Transaction Processing Systems
Basic Business Information Systems
Other Business Information Systems
Enterprise Resource Planning Systems
© 2001 Business & Information Systems 2/e
48
Final Black Slide