Summary Chapter 7 Operational systems

Chapter 7: Operational Systems
Principles

 An organization must have information systems that support the routine, day-to-day activities
that occur in the normal course of business and help a company add value to its products and
services.
 Traditional transaction processing systems support the various business functions of
organizations that have not yet implemented enterprise resource planning systems.
 Electronic and mobile commerce allow transactions to be made by the customer, with less need
for sales staff, and open up new opportunities for conducting business.
 A company that implements an enterprise resource planning system is creating a highly
integrated set of systems, which can lead to many business benefits.

Decision Making Levels




Enterprise Resource Planning
 Enterprise resource planning (ERP) is a set of integrated programs that manage a company’s
vital business operations for an entire multisite, global organization




 ERP Overview

, o 1970s: ERP systems evolved from materials requirement planning (MRP) systems
 MRPs tied together production planning, inventory control, and purchasing
business functions for manufacturing organizations
o Late 1980s-early 1990s: recognition that legacy transaction processing systems lacked
necessary integration for information sharing
 Y2K provided impetus to upgrade systems
 Advantage and Disadvantages of ERP
o Advantages
 Improved access to data for operational decision making
 Elimination of costly, inflexible legacy systems
 Improvement of work processes based on best practices
 Upgrade of technology infrastructure
o Disadvantages
 Expense and time in implementation
 Difficulty implementing change
 Difficulty integrating with other systems
 Risks in using one vendor
 Risk of implementation failure
 ERP for Small- and Medium – Sized Enterprise (SMEs)
o Many SMEs elect to implement open-source ERP systems. With open source software
anyone can see and modify the source code to customize it to meet their needs.


Transaction Processing Systems

 Transaction processing systems (TPSs)
o Process detailed data necessary to update records about fundamental business
operations
o Include order entry, inventory control, payroll, accounts payable, accounts receivable,
general ledger, etc.
o Provide data for other business processes
 Management information system/decision support system (MIS/DSS)
 Special-purpose information systems
 Traditional Transaction Processing methods
o Batch processing system –
 Computerized processing in which business transactions are accumulated over a
period of time and prepared for processing as a single unit or batch
o Online transaction processing (OLTP)
 Computerized processing in which each transaction is processed immediately
 Traditional Transaction Processing Objectives
o Organizations expect their TPS to:
 Process data generated by and about transactions
 Maintain a high degree of accuracy and integrity
 Avoid processing fraudulent transactions
 Produce timely user responses and reports