Information Systems Within
the Organization
10

Explain the purpose of transaction processing systems.
Explain the types of support information systems can provide for each functional area of the organization.
Identify advantages and drawbacks to businesses implementing an enterprise resource planning system.
Describe the three main business processes supported by ERP systems.
Discuss the three major types of reports generated by the functional area information systems and enterprise resource planning systems, providing examples of each type.

Transaction Processing Systems
Functional Area Information Systems
Enterprise Resource Planning (ERP) Systems
ERP Support for Business Processes
Reports
[ Opening Case IT Transformation at Ford Motor Company ]
The Problem
The Solution
The Results
What We Learned from This Case

Henthorn Mower & Engine Service and ADP
10.1

Transaction Processing Systems (TPS)
10.1
Transaction
Transaction Processing System (TPS)
Online Transaction Processing (OLTP)

Transaction Processing Systems (TPS)
Transaction Processing System (TPS)
Continuous òreal-time’ data collection
Efficiently handle high volumes of data and large variations in those volumes
Avoid errors and downtime
Record results accurately and securely
Maintain privacy and security
Source data automation
Batch processing

Functional Area Information Systems
10.2
Information Systems for Accounting and Finance
Information Systems for Marketing
Information Systems for Production/Operations Management
Information Systems for Human Resource Management

Information Systems for Accounting and Finance
Financial Planning and Budgeting
Managing Financial Transactions
Investment Management
Control and Auditing

Financial Planning and Budgeting
Financial Planning and Budgeting
Financial and economic forecasting
Budgeting

Managing Financial Transactions
Managing Financial Transactions
Global stock exchanges
Managing multiple currencies
Virtual close
Expense management automation (EMA)

Control and Auditing
Control and Auditing
Budgetary control
Auditing
Two basic purposes of Audits
Monitor how the organization’ s monies are being spent
Access the organization’ s financial health
Financial ratio analysis

Information Systems for Production/ Operations Management
In-House Logistics and Materials Management
Inventory Management
Quality Control
Planning Production and Operations
Computer-Integrated Manufacturing
Product Life Cycle Management

Information Systems for Human Resource Management
Recruitment
Human Resources Development
Human Resources Planning and Management
Payroll and employees’ records
Benefits administration
Employee relationship management

Enterprise Resource Planning (ERP) Systems
10.3
ERP II Systems
Benefits and Limitation of ERP Systems
Implementing ERP Systems
Software-as-a-Service ERP Implementation
Enterprise Application Integration
Enterprise Application Integration (EAI)

Benefits and Limitations of ERP Systems
Major Benefits of ERP Systems
Major limitations of ERP implementations
Major causes of ERP implementation failure

Major Benefits of ERP Systems
Organizational flexibility and agility
Decision support
Quality and efficiency

Major Limitations of ERP Implementations
Since ERP’ s are based on best practices companies may need to change their methods of achieving business objectives
ERP systems can be complex, expensive, and time-consuming to implement.

Major Causes of ERP Implementation Failure
Failure to involve affected employees in the planning and development phases and in change management processes
Trying to do too much too fast in the conversion process
Insufficient training in the new work tasks required by the ERP system
The failure to perform proper data conversion and testing for the new system

Implementing ERP Systems
On-Premise ERP Implementation
Vanilla approach
Custom approach
Best of breed approach

Software-as-a-Service ERP Implementation
Three major advantages of using a cloud-based ERP system are:
Three major disadvantages of using cloud-based ERP systems

Three major advantages of using a cloud-based ERP system are:
The system can be used from any location that provides Internet access
Companies using cloud-based ERP avoid the initial hardware and software expenses that are typical of on-premise implementations
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.

Three major disadvantages of using cloud-based ERP systems are:
It is not clear whether cloud-based ERP systems are more secure than on-premise systems
Companies that adopt cloud-based ERP systems sacrifice their control over a strategic IT resource
Lack of control over IT resources when the ERP system experiences problems

European Railway Successfully Converts to SAP
10.2

ERP Support for Business Processes
10.4
The Procurement, Fulfillment, and Production Processes
The Procurement Process
The Fulfillment Process
The Production Process
Interorganizational Processes: ERP with SCM and CRM
SCM and CRM
ERP SCM
ERP CRM

ERP Support for Business Processes
The Procurement, Fulfillment, and Production Processes
Interorganizational Processes: ERP with SCM and CRM

The Procurement, Fulfillment, and Production Processes
The Procurement Process
The Fulfillment Process
The Production Process

Interorganizational Processes: ERP with SCM and CRM
SCM and CRM
ERP SCM
ERP CRM

Reports
10.5
Routine Reports
Ad-hoc (on-demand) Reports
Drill-down reports
Key-indicator reports
Comparative reports
Exception Reports
[ Closing Case Truck Manufacturer Incorporates IS’ s in Trucks ]
The Problem
The IT Solution
The Results

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