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Information Systems - MGCR 331 002 > CH10 - Information within the organization > Flashcards

CH10 - Information within the organization Flashcards

1
Q

What is Transaction Processing System (TPS)?

A

A system that supports the monitoring, collection, storage, and processing of data from the organization’s basic business transactions, each of which generates data (data is collected continuously and often in real time).

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2
Q

What is a transaction?

A
  • Any business event that generates data worthy of being captured and stored in a database. (ex. Product manufactured, service sold, a person hired, payroll cheque)
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3
Q

TPSs are used as inputs for functional area in IS, business intelligence and business operations. Which ones?

A
  • customer relationship management (CRM)
  • knowledge management
  • e-commerce
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4
Q

TPSs have to …

A
  1. Efficiently handle high volumes of data
  2. Efficiently handle variations in those volumes (ex. During periods of peak processing)
  3. Avoid errors and downtime
  4. Record results accurately and securely
  5. Maintain privacy and security
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5
Q

How does TPS manage data?

A

Business event(Transaction) → Transaction processing systems → Detailed report → Organization’s databases

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6
Q

Considerations (4) in Transaction processing system context

A
  • Protect database from errors resulting from overlapping updates
  • Protect against inconsistencies arising from a failure of any component at any time.
  • System must be able to reverse or make corrections or adjustments to transactions
  • All transactions plus corrections, reversals or adjustments need to have an audit trail.
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7
Q

What are the 2 ways to process data?

A
  1. Batch processing
  2. Online transaction processing (OLTP)
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8
Q

What is Batch Processing?

A

Collection of data from a firm transactions as they occur, placing them in groups or batches. The system then prepares and processes the batches periodically (say, every night).

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9
Q

What’s Online Transaction Processing (OLTP)?

A

Business transactions are processed online as soon as they occur.

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10
Q

What ‘s Functional Area Information Systems (FAIS)?

A

Functional Area Information Systems (FAIS) provide support for the various functional areas in an organization by increasing each area’s internal efficiency and effectiveness. FAISs often convey information in a variety of reports

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11
Q

What are the IS Functional Areas?

A
  1. Accounting
  2. Finance
  3. Human resources
  4. Production/Operations
  5. Marketing
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12
Q

What are the 3 Levels of IS Functional Areas?

A
  1. Operational
  2. Tactical
  3. Strategic
  4. ***Very Important to look at the table***
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13
Q

IS use for Accounting and Finance

A
  • Financial Planning and Budgeting (Budgeting and Forecasting)
  • Managing Financial Transactions
  • Investment Management
  • Control and Auditing
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14
Q

What’s Financial and economic forecasting?

A

Knowledge about the availability and cost of money is a key ingredient for successful financial planning. = cash flow projections. (Funds can come from shareholder’s investment, bond sales, bank loans, sales of product and services, income from investments)

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15
Q

What’s Budgeting?

A

An essential component of the accounting and finance function is the annual budget, which allocates the organization’s financial resources among participants and activities.

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16
Q

Definition of Managing Financial Transactions?

A

Companies involved in electronic commerce need to access customers’ financial data (e.g., credit line), inventory levels, and manufacturing databases (to determine available capacity and place orders)

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17
Q

What’s investment management?

A

Organizations invest large amounts of money in stocks, bonds, real estate, and other assets.

To monitor, interpret, and analyze the huge amounts of online financial data, financial analysts employ 2 major types of IT tools: Internet search engines and business intelligence and decision support software.

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18
Q

Control and Auditing - What are the forms of financial control?

A
  • Budgetary control
  • Internal auditing
  • Financial ratio analysis
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19
Q

What’s the use of IS for marketing?

A

Any successful organization must understand its customers’ needs and wants and then develop its marketing and advertising strategies around them. Information systems provide numerous types of support to the marketing function.

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20
Q

What’s the use of IS for Production/Operations Management?

A

The production/operations management (POM) function in an organization is responsible for the processes that transform inputs into useful outputs as well as for the overall operation of the business. The POM function is responsible for managing the organization’s supply chain.

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21
Q

What’s Logistic Management?

A

It deals with ordering, purchasing, inbound logistics (receiving), and outbound logistics (shipping) activities. Related activities include inventory management and quality control.

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22
Q

What’s Inventory Management?

A

Operations personnel make two basic decisions: when to order and how much to order. Inventory models, such as the economic order quantity (EOQ) model, support these decisions. A lot of software permit the inventory management to be automated.

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23
Q

Problems of Inventory Management?

A
  • Overstocking = storage cost
  • Insufficient inventory = Lost sales
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24
Q

Solutions for Inventory Management? (Technological and Economic)

A

Technological

  • “Vendor-managed inventory” strategy
  • Supported by functional area IS (real-time inventory management)
  • AI powered IS helps forecasting quantity needed and when

Economic

  • Economic order quantity (EOQ)
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25
Q

Whats Vendor-managed inventory (VMI)?

A

It’s when companies allow their suppliers to monitor their inventory levels and ship products as they are needed.

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26
Q

What’s economic order quantity? (EOC)

A

an EOQ approach are designed for items for which demand is completely independent—for example, the number of identical personal computers a computer manufacturer will sell.

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27
Q

What’s quality control?

A

provide information about the quality of incoming material and parts, as well as the quality of in-process semi-finished and finished products. These systems record the results of all inspections and then compare these results with established metrics. Also generate periodic reports.

28
Q

What’s Computer Integrated Manufacturing? (CIM)

A

approach that integrates various automated factory systems.

29
Q

What are the 3 main goals of Computer Integrated Manufacturing? (CIM)

A

(1) to simplify all manufacturing technologies and techniques
(2) to automate as many of the manufacturing processes as possible
(3) to integrate and coordinate all aspects of design, manufacturing, and related functions through computer systems.

30
Q

What’s Product life cycle management?

A

a business strategy that enables manufacturers to share product-related data that support product design and development and supply chain operations. PLM applies web-based collaborative technologies to product development.

31
Q

What are IS uses for Human Resources Management?

A
  • Recruitment (LinkedIn)
  • HR Development (Training, Evaluated)
  • HR Planning and Management (Payroll and employees’ records, Benefits administration, Employee relationship management)
32
Q

Technological Solution for Human Resources IS?

A
  • Using FAIS to automate routines (Payroll preparation, E-Transfer to employees’ account)
33
Q

The 3 types of reports for FAIS

A
  • routine
  • ad hoc (on-demand)
  • exception.
34
Q

What’s a routine report?

A

Routine reports are produced at scheduled intervals. They range from hourly quality control reports to daily reports on absenteeism rates.

35
Q

What are the 3 types of Ad Hoc report?

A
  • Drill-down reports
  • Key indicator reports
  • Comparative reports
36
Q

What is a Drill-down report report?

A

It displays a greater level of detail. For example, a manager might examine sales by region and decide to “drill down” by focusing specifically on sales by store and then by salesperson.

37
Q

What is a Key Indicator report?

A

it summarize the performance of critical activities. For example, a chief financial officer might want to monitor cash flow and cash on hand.

38
Q

What is a Comparative report?

A

it compares, for example, the performances of different business units or of a single unit during different times.

39
Q

What is an Exception report?

A

document that states those instances in which actual performance deviated significantly from expectations, usually in a negative direction.

40
Q

What are Enterprise Resources Planning Systems (ERP)?

A

They are designed to correct a lack of communication among the functional area IS, by tightly integrating the functional area IS through a common database.

→ ERP is an evolution of the FAIS

41
Q

What are ERP objectives?

A
  • to tightly integrate the functional areas of the organization
  • to enable information to flow seamlessly across FAIS
  • ERP systems have much the same functionality as FAIS, and they produce the same reports, they simply integrate the functions of the individual FAIS.
42
Q

What’s tight integration?

A
  • means that changes in one functional area are immediately reflected in all other pertinent functional areas.
43
Q

ERP system flaws?

A
  • did not extend to other functional areas, such as sales and marketing.
  • did not include any customer relationship management (CRM) capabilities that enable organizations to capture customer-specific information
  • did not provide web-enabled customer service or order fulfillment
44
Q

What’s ERP System II? (2.0)

A

are interorganizational ERP systems that provide web-enabled links among a company’s key business systems—such as inventory and production—and its customers, suppliers, distributors, and other relevant parties.

45
Q

ERP II systems include a variety of modules that are divided into?

A
  • Core ERP modules
  • Extended ERP modules
46
Q

What are the ERP core modules?

A
  • financial management
  • operations management
  • human resource management
47
Q

What are the Extended ERP modules?

A
  • customer relationship management
  • supply chain management
  • business intelligence
  • e-business.
48
Q

What are ERP system benefits?

A
  1. Organizational flexibility and agility: As you have seen, ERP systems break down many former departmental and functional silos of business processes, information systems, and information resources. In this way, they make organizations more flexible, agile, and adaptive. The organizations can therefore respond quickly to changing business conditions and capitalize on new business opportunities
  2. Decision support: ERP systems provide essential information on business performance across functional areas. This information significantly improves managers’ ability to make better, more timely decisions
  3. Quality and efficiency: ERP systems integrate and improve an organization’s business processes, generating significant improvements in the quality of production, distribution, and customer service.
49
Q

What are ERP system limitations?

A
  • Since ERP’s are based on best practices companies may need to change their methods of achieving business objectives by changing their business processes
  • Such practices are not the “best” for every company and may result in loss of competitive advantage
  • ERP systems can be complex, expensive, and time-consuming to implement
50
Q

Causes of ERP Implementation failure?

A
  • Failure to involve affected employees in the planning and development phases and in change management processes
  • Trying to accomplish too much too fast in the conversion process
  • Insufficient training in the new work tasks required by the ERP system
  • Failure to perform proper data conversion and testing for the new system
51
Q

2 methods for implementing ERP systems

A

Method 1: On-Premise ERP Implementation

Method 2: Software-as-a-Service (SaaS) ERP Implementation

52
Q

What are the 3 approaches for On-Premise ERP Implementation?

A
  • The vanilla approach
  • The custom approach
  • The best-of-breed approach
53
Q

What’s the vanilla approach?

A

The company implements a standard ERP package, using the package’s built-in configuration options, which will deviate only minimally from the package’s standardized settings.

  1. enable the company to perform the implementation more quickly
  2. extent to which the software is adapted to the organization’s specific processes is limited.
54
Q

What’s the custom approach?

A

The company implements a more customized ERP system by developing new ERP functions designed specifically for that firm.

  1. Degree of customization is individual to each firm.
  2. Organization must carefully analyze its existing business processes to develop a system that conforms to the organization’s particular characteristics and processes.
  3. Customization is also expensive and risky because computer code must be written and updated every time a new version of the ERP software is released.
55
Q

What’s the best-of-breed approach?

A

approach combines the benefits of the vanilla and customized systems while avoiding the extensive costs and risks associated with complete customization.

  1. mix and match core ERP modules as well as other extended ERP modules from different software providers to best fit their unique internal processes and value chains.
  2. choose several core ERP modules from an established vendor to take advantage of industry best practices, ex.financial management and human resource management
  3. may also choose specialized software to support its unique business processes—for example, for manufacturing, warehousing, and distribution.
  4. Can be the solution found when one of the 2 first approaches don’t work
56
Q

What’s the Software-as-a-Service ERP Implementation method?

A

Companies can acquire ERP systems without having to buy a complete software solution. For instance, using software-as-a-service to acquire cloud-based ERP systems.

The company rents the software from an ERP vendor that offers its products over the Internet using the SaaS model. The ERP cloud vendor manages software updates and is responsible for the system’s security and availability

57
Q

Three major advantages of using a cloud-based ERP system?

A
  1. The system can be used from any location that has Internet access → users can work from any location using online shared and centralized resources (data and databases). Users access the ERP system through a secure virtual private network (VPN) connection with the provider.
  2. Companies using cloud-based ERP avoid the initial hardware and software expenses that are typical of on-premise implementations. For example, to run SAP on-premise, a company must purchase SAP software as well as a licence to use SAP. The magnitude of this investment can hinder small to medium-sized enterprises from adopting ERP.
  3. Cloud-based ERP solutions are scalable, meaning it is possible to extend ERP support to new business processes and new business partners (e.g., suppliers) by purchasing new ERP modules
58
Q

The major disadvantages of using a cloud-based ERP system?

A
  1. It is not clear whether cloud-based ERP systems are more secure than on-premise systems. In fact, a survey conducted by North Bridge Venture Partners indicated that security was the primary reason why organizations did not adopt cloud-based ERP.
  2. Companies that adopt cloud-based ERP systems sacrifice their control over a strategic IT resource.
  3. the lack of control over IT resources when the ERP system experiences problems, ex. some ERP functions are temporarily slow or are not available
    1. In such cases, having an internal IT department that can solve problems immediately rather than dealing with the cloud vendor’s system support can speed up the system recovery process. (particularly important for technology-intensive companies)
  4. Finally, slow or unavailable software from a cloud-based ERP vendor creates business continuity problems for the client. A sudden system problem or failure makes it impossible for the firm to operate.
    1. Companies lose money when they lose business continuity because customers cannot be serviced and employees cannot do their jobs.
    2. A loss of business continuity also damages the company’s reputation because customers lose trust in the firm
59
Q

What’s Enterprise Application Integration system (EAI)?

A

integrates existing systems by providing software, called middleware, that connects multiple applications.

  • allows existing applications to communicate and share data, thereby enabling organizations to use existing applications while eliminating many of the problems caused by isolated information systems.
  • also support implementation of best-of-breed ERP solutions by connecting software modules from different vendors.
60
Q

What’s Cross-departmental process?

A
  • One that (1) originates in one department and ends in a different department or (2) originates and ends in the same department but involves other departments.
61
Q

What are the Procurement, Fulfillment, and Production Processes

A
  1. Procurement process: Originates in the warehouse department (need to buy from an external source) and ends in the accounting department (sends payment)
  2. Fulfillment process: Originates in the sale department (customer requests to buy) and ends in the accounting department ( receives the payment)
  3. Production process: Originates and ends in the warehouse department (need to produce and reception of the finished goods) but involves the production department as well.
62
Q

What’s the Procurement process?

A

Originates when a company needs to acquire goods or services from external sources, and it concludes when the company receives and pays for them.Involves the Warehouse, Purchasing, and Accounting department.

63
Q

What’s the order fulfillment process?

A

Also known as order-to-cash process, the company sells goods to a customer. Starts when the company receives an order, and it concludes when the company receives the payment from the customer. Three main departments: Sales, Warehouse, and Accounting.

64
Q

What are the 2 strategies that The order fulfillment process can follow?

A
  • Sell-from-stock: Fulfilling customer orders directly using goods that are in the warehouse (stock, inventory on hand) (standard/not customized for the customer).
  • Configure-to-order: Customization of the product in response to a customer’s request.
65
Q

What’s the Production process?

A

Manufacturing companies produce their own goods and manage their interdepartmental production process across the Production and Warehouse departments. Does not occur in all companies because not all companies produce physical goods.

66
Q

What are the 2 strategies that the production process can follow?

A
  • Make-to-stock: The company produces goods to create or increase inventory (finished products that are stored in the warehouse and are available for sale
  • Make-to-order:Production is generated by a specific customer order.
67
Q

What is an interorganizational process?

A

ERP systems manage processes that originate in one company and conclude in another company and they typically involve supply chain management (SCM) and customer relationship management (CRM) systems.

→ More in the next chapter

Information Systems - MGCR 331 002 (13 decks)

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