For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
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.
▪ 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.
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Learning Objectives
▪ Identify the basic activities and business objectives common
to all transaction processing systems.
▪ Define e- and m-commerce and describe various forms of e-
commerce.
▪ Discuss the advantages and disadvantages associated with
the implementation of an enterprise resource planning
system.
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Operational systems
▪ Operational systems are systems that support the day-to-day
running of a firm. Operational systems, such as transaction
processing systems (TPS), allow firms to buy and sell.
▪ Organizations today are moving from a collection of non-integrated
transaction processing systems to highly integrated enterprise
resource planning (ERP) systems to perform routine business
processes and maintain records about them
▪ They include systems that sell products and services to customers
(transaction processing systems), systems that buy materials from
suppliers (supply chain management systems), and systems that
help manage the after-sales service (customer relationship
management systems).
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
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 systems evolved from systems (called materials
requirements planning or MRP systems)
• MRP allowed companies to plan out how much raw material
they would need at a certain time in the future, plan their
production, control their inventory, and manage their
purchasing process.
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Advantages of ERP
• 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
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Disadvantages of ERP
• Expense and time in implementation
• Difficulty implementing change
• Difficulty integrating with other systems
• Risks in using one vendor
• Risk of implementation failure
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Transaction processing systems
▪ Transaction processing systems (TPSs)
– Process detailed data necessary to update records
about fundamental business operations.
– Include order processing, inventory control,
payroll, accounts payable, accounts receivable,
general ledger, etc.
– TPS collects data which is input to other essential
information systems – MIS, DSS and other special-
purpose information systems. A transaction
processing system serves as the foundation for
these other systems.
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Transaction processing systems
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Transaction processing systems
Traditional Transaction Processing Methods
and Objectives
▪ Batch processing systems, business transactions are
accumulated over a period and prepared for processing as a
single unit or batch. In batch processing, there is some delay
between an event and the eventual processing of the related
transaction to update the organization’s records.
▪ Online transaction processing (OLTP), Computerized
processing in which each transaction is processed
immediately . The data in an online system reflects the
current status.
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Transaction Processing Cycle
Transaction Processing cycle
• Data collection
• Data editing
• Data correction
• Data manipulation
• Data storage
• Document production
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Transaction Processing Cycle
• Data Collection:
• Capturing and gathering all data necessary to complete the
processing of transactions.
• Data collection can be:
• Manual
• Automated via special input devices (such as scanners, point-of-sale
devices, and terminals)
• Data Editing:
• Checking data for validity and completeness to detect
any problems
• Examples
• Quantity and cost data must be numeric
• Names must be alphabetic
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Transaction Processing Cycle
• Data Correction:
• Re-entering data that was not typed or scanned properly
• If invalid data is detected, system should provide error messages.
• Data Manipulation:
• Performing calculations and other data transformations
related to business transactions.
• Data Storage:
• Updating one or more databases with new transactions.
• After being updated, this data can be further processed and
manipulated by other systems
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Transaction Processing Cycle
• Document Production and reports:
• Generating output records, documents, and reports
• Hard-copy paper reports
• Displays on computer screens
• Results from one TPS can be inputs to another system
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Purchasing Systems
» Example of TPS that support the purchasing business function
include inventory control, purchase order processing, receiving
and accounts payable (see Figure 7.5).
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Purchasing Systems
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Purchasing Systems
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Electronic Business and Electronic
commerce
▪ E-Business: An e-business is an organization that uses
information technologies or systems to support nearly
every part of its business.
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Electronic Government (E-
Government)
▪ E-Government: The use of information and communication technology to
simplify sharing of information, speed up formal paper-based processes and
improve relation between government and citizens.
➢ Types:
– Government to Consumer (G2C):
• Government and citizens, For example, citizens can use G2C applications
to submit their tax returns online.
– Government to Business (G2B):
• G2B applications support the purchase of materials and services from
private industry by government procurement offices
– Government to Government (G2G):
• G2G applications are designed to improve communications between the
various levels of government.
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Production and Supply Chain
Management
• Production and supply chain management systems follow a
systematic process:
– Sales forecasting: estimates future customer demand.
– Sales and operations plan: takes demand and current
inventory levels to determine production for future demands.
– Materials requirement planning: determines amount and
timing of raw material orders with suppliers.
– Production: plans details of running and staffing production
operation
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Summary
• Enterprise system: ensures information can be shared
across all business functions and all levels of
management to support the running and managing of a
business
• Transaction processing systems (TPSs): process detailed
data necessary to update records about fundamental
business operations
• Batch processing system: accumulate transactions over a
period of time and then process them
• Online transaction processing (OLTP): process each
transaction immediately
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Summary (cont.)
• Transaction processing cycle: data collection,
data editing, data correction, data manipulation,
data storage, and document production
• Many types of transaction processing systems
support order processing, purchasing, and
accounting business functions
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
Summary (cont.)
• Enterprise resource planning (ERP): set of
integrated programs that manage a company’s
vital business operations for an entire multisite,
global organization
• Customer relationship management (CRM)
system: helps a company manage all aspects of
customer encounters
• Enterprise system of a multinational company
must meet many challenges
For use with Principles of Business Information Systems, 4e
by Stair, Reynolds & Chesney
© 2021 Cengage Learning
