Chapter 10

• transaction: any business event that generates data worthy of being captured and stored in a database
• transaction processing system: supports the monitoring, collection, storage, and processing of data from the organization's basic business transactions, each of which generates data
• batch processing: the firm collects data from transactions as they occur, placing them in groups
• online transaction processing: business transactions are processd online as soon as they occur
• functional area information system: support a particular functional area in the organization by increasing area's internal efficiency and effectiveness
• common forms of financial control:

  • budgetary control
  • internal auditing
  • financial ratio analysis
• production/operations management: responsible for the process that transform inputs into useful outputs as well as for the overall operation of the business
• production/operations management functions:

  • in-house logistics and materials management
  • planning production and operation
  • computer-integrated manufacturing
  • product life cycle management
• computer-integrated manufacturing: an approach that integrates various automated factory systems.
• computer-integrated manufacturing goals:

  • simplify all manufacturing technologies and techniques
  • automate as many of the manufacturing processes as possible
  • integrate and coordinate all aspects of design, manufacturing, and related functions through computer systems
• product life cycle management: a business strategy that enables manufacturers to share product-related data that support product design and development and supply chain operations
• human resource information system: deal primarily with transaction processing systems such as managing benefits and keeping records of vacation days
• IT support in human resource planning and management:

  • payroll and employees' records
  • benefits administration
  • employee relationship management
• routine reports: reports produced as scheduled intervals
• ad hoc (on-demand) reports: reports that are created on demand by users
• drill-down reports: reports that show a greater level of details than is included in routine reports
• key indicator reports: summarize the performance of critical activities
• comparative reports: compare the performances of different business units or of a single unit during different times
• exception reports: include only information that falls outside certain threshold standards
• enterprise resource planning systems: 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
• ERP II systems: inter-organizational ERP systems that provide web-enabled links among a company's key business systems and its customers, suppliers, distributors, and other relevant parties
• benefits of ERP systems:

  • organizational flexibility and agility
  • decision support
  • quality and efficiency
• ERP limitations:

  • companies need to change their current business processes to fit the predefined business processes incorporated into ERP
  • complex
  • expensive
  • time consuming
• major causes of ERP implementation failure:

  • 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 system
  • failure to perform proper data conversion and testing for the new system
• approaches to implementing an on-premise ERP system:

  • vanilla approach
  • custom approach
  • best-of-breed approach
• vanilla approach:

  • implements standard ERP package
  • enable the company to perform the implementation more quickly
  • extent to which the software is adapted is limited
• custom approach:

  • develop new ERP functions specifically for that firm
  • organization must carefully analyze business processes
  • expensive and risky
  • difficult to use if not perfectly matched to organization's needs
• best-of-breed approach:

  • 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
• benefits of cloud-based ERP system:

  • can be used from anywhere with internet access
  • avoid initial hardware and software expenses of on-premise implementation
  • scalable, can extend ERP to support new business processes by purchasing new ERP modules
• disadvantages of cloud-based ERP:

  • less secure
  • sacrifice control over a strategic IT resource
  • if the system experiences problems it can take longer to fix
• enterprise application integration system: integrates existing systems by providing software that connects multiple applications
• cross-departmental process:

  • originates in one department and ends in a different department
  • originates and ends in the same department but involves other departments
• cross-departmental processes:

  • procurement process
  • fulfillment process
  • production process
• procurement process: originates when a company needs to acquire goods or services from external sources, and it concludes when the company receives and pays for them.
• order fulfillment process: a cross-functional business process that originates when the company receives a custom order, and it concludes when it receives payment
• purpose of transaction processing systems: to monitor, store, collect, and process data generated from all business transactions