Chapter 10: Information Systems within the Organization Flashcards
Define TPS (transaction processing system)
Transaction processing system (TPS): supports the monitoring, collection, storage, and processing of data from the organization’s basic business transactions, each of which generates data.
- The TPS collects data continuously, typically in real time—that is, as soon as the data are generated—and it provides the input data for the corporate databases
List the key functions of a TPS.
- Data Entry: Capture and input of transaction data into the system.
- Transaction Processing: processes transactions in real time
- Validation and Editing: Check the accuracy and completeness of data during data entry.
Define OnLine transaction processing (OLTP) and define batch costing
OnLine transaction processing (OLTP): business transactions are processed online as soon as they occur.
Batch processing, the firm collects data from transactions as they occur, placing them in groups/batches. The system then prepares and processes the batches periodically (say, every night).
Define a functional area information system and list its major characteristics.
Functional Area Information Systems: Each department or functional area within an organization has its own collection of application programs, or information systems
- Ex. FAISs are accounting IS, finance IS, production/operations management (POM) IS, marketing IS, and human resources IS
Characteristics:
* Department specific
* Specialized Functionality
How do information systems benefit the finance and accounting functional area?
Financial Planning and Budgeting
- Financial and economic forecasting: Knowledge about the availability and cost of money is a key ingredient for successful financial planning. Cash flow projections are particularly important because they inform organizations what funds they need, when they need them, and how they will acquire them.
- Budgeting: An essential component of the accounting and finance function is the annual budget, which allocates the organization’s financial resources among participants and activities
Managing Financial Transactions
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)
Explain how POM personnel use information systems to perform their jobs more effectively and efficiently.
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
- responsible for managing the organization’s supply chain
Helps with:
Inventory management determines how much inventory an organization should maintain.
Quality control systems used by manufacturing units provide information about the quality of incoming material and parts, as well as the quality of in-process semi-finished and finished product
Just-in-time systems: production and inventory control in which materials and parts arrive precisely when and where needed for production
Computer-integrated manufacturing: is an approach that integrates various automated factory systems.
Product Life cycle management: is a business strategy that enables manufacturers to share product-related data that support product design and development and supply chain operations.
What are the most important Information Systems for Human Resource Management (HRIS) applications?
Information Systems for Human Resource Management
Initial human resource information system (HRIS) applications dealt primarily with transaction processing systems such as managing benefits and keeping records of vacation days
Applications:
Recruitment
Human Resources Development: After employees are recruited, they become part of the corporate human resources pool, which means they must be evaluated and developed
Compare and contrast the three basic types of reports.
Routine reports, Ad hoc (or on-demand) reports, and Exception reports
Routine reports are produced at scheduled intervals. They range from hourly quality control reports to daily reports on absenteeism rates.
- Ex. Hourly sales reports
Ad hoc (on-demand) reports: unplanned,out-of-the routine reports
- boss suddenly asks for a report on the sales performance of a specific product in the last quarter.
Exception reports: are like alert reports that highlight unusual or unexpected data
- Ex. if the Marketing department’s spending is 20% above the allocated budget, the exception report would flag this as an odd
Ad hoc (or on-demand) reports: define Drill-down reports, Key indicator reports, Comparative reports
Drill-down reports display 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.
Key indicator reports summarize the performance of critical activities. For example, a chief financial officer might want to monitor cash flow and cash on hand.
Comparative reports compare, for example, the performances of different business units or of a single unit during different times
Define Enterprise resource planning (ERP) and describe its functions.
Enterprise resource planning (ERP) systems: are designed to correct a lack of communication among the functional area IS. ERP systems resolve this problem by tightly integrating the functional area IS through a common database
- Ex. Oracle
What are ERP II systems?
ERP II systems are interorganizational ERP systems that provide links among a company’s key business systems—such as inventory and production—and its customers, suppliers, distributors, and other relevant parties.
Differentiate between core ERP modules and extended ERP modules.
Core ERP:
Financial management, operations management, and human resource management
- Encompasses fundamental internal processes.
Extended ERP:
Customer relationship management, supply chain management, business intelligence, and e-business
- Expands beyond internal processes to cover external interactions and strategic aspects.
List some drawbacks of ERP software.
- companies may need to change their existing business processes to fit the predefined business processes incorporated into the ERP software
- ERP systems can be extremely complex, expensive, and time consuming to implement
- In many cases, orders and shipments were lost, inventory changes were not recorded correctly, and unreliable inventory levels caused major stock outs.
Highlight the differences between ERP Vanilla, Custom, and Best-Of-Breed implementation strategies.
For On-Premise ERP Implementation
On-Premise ERP Implementation
- The Vanilla Approach:
- standard ERP package with minimal deviation
- enabling a quicker implementation
- Not perfectly align with the organization’s specific processes
- The Custom Approach:
- customized ERP system is developed to match the organization’s unique processes.
- Is expensive and risky
- requires ongoing code updates
- The Best-of-Breed Approach:
- combines elements of both vanilla and custom systems
- No high costs and risks.
- It allows companies to mix core ERP modules from established vendors with specialized software to best suit their unique processes and value chains.
What are the three main intraorganizational processes that are typically supported by ERP systems?
- The procurement process, which originates in the warehouse department (need to buy) and ends in the accounting department (send payment)
- The fulfillment process, which originates in the sales department (customer request to buy) and ends in the accounting department (receive payment)
- The production process, which originates and ends in the warehouse department (need to produce and reception of finished goods) but involves the production department as well
