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Chapter 2Overview of Transaction Processing and ERP Systems

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Learning Objectives

! Describe the four major steps in the data processing cycle.! Describe the major activities in each cycle.

! Describe documents and procedures used to collectedand process data.

! Describe the ways information is stored in computer-basedinformation systems.

! Discuss the types of information that an AIS can provide.

! Discuss how organizations use ERP systems to processtransactions and provide information.

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Data Processing Cycle

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The Data Processing CycleDetermines

! What data is stored?

! Who has access to the data?

! How is the data organized?

! How can unanticipated information needs be met?

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Data Input—Capture

! As a business activity occurs data is collected about:1. Each activity of interest2. The resources affected3. The people who are participating

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Paper-Based Source Documents

! Data are collected onsource documents! E.g., a sales-order form! The data from paper-

based will eventually

need to be transferred tothe AIS

! Turnaround! Usually paper-based! Are sent from

organization to customer! Same document is

returned by customer toorganization

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Turnaround Document

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Source Data Automaton

! Source data is captured! In machine-readable form! At the time of the business activity

! E.g., ATM’

s; POS

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Data Input—Accuracy and Control

! Well-designed source documents can ensure that datacaptured is! Accurate

! Provide instructions and prompts!

Check boxes! Drop-down boxes! Complete

! Internal control support! Prenumbered documents

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Data Storage

! Types of AIS storage:! Paper-based

! Ledgers! Journals

! Computer-based

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Ledgers

! General! Summary level data for each:

! Asset, liability, equity,

revenue, and expense! Subsidiary

! Detailed data for a GeneralLedger (Control) Accountthat has individual sub-accounts! Accounts Receivable! Accounts Payable

• Joe Smith$250

• Patti Jones

$750

• ACME Inc.

$150• Jones, Inc$350

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Journals

! General! Infrequent or specialized transactions

! Specialized! Repetitive transactions

! E.g., sales transactions

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Coding Techniques

! Sequence! Items numbered consecutively

! Block! Specific range of numbers are

associated with a category

! 10000–199999 = Electric Range

! Group! Positioning of digits in code provide

meaning

! Mnemonic! Letters and numbers! Easy to memorize! Code derived from description of item

! Chart of accounts! Type of block coding

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Digit Position Meaning

1–2 Product Line, size,and so on

3 Color

4–5 Year ofManufacture

6–7 Optional Features

1241000 12 = Dishwasher4 = White10 = 201000 = No Options

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Computer Based Storage

! Entity! Person, place, or thing (Noun)! Something an organization wishes to store data about! Attributes

! Facts about the entity! Fields

! Where attributes are stored! Records

! Group of related attributes about an entity! File

! Group of related Records

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File Types

! Transaction! Contains records of a

business from a specificperiod of time

! Master! Permanent records! Updated by transaction

with the transaction file

! Database! Set of interrelated files

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Data Processing

! Four Main Activities1. Create new records2. Read existing records3. Update existing records

4.

Delete records or data from records

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Data Output Types

! Soft copy! Displayed on a screen

! Hard copy! Printed on paper

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ERP Systems

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Enterprise Resource Planning (ERP)

! Integrate an organization ’ s information into one overallAIS

! ERP modules:! Financial! Human resources and payroll! Order to cash! Purchase to pay! Manufacturing! Project management! Customer relationship management! System tools

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ERP Disadvantages

! Cost

! Time-consuming to implement

! Changes to an organization’

s existing business processes

can be disruptive! Complex

! Resistance to change

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