Notes for Chapter 9

Transaction Processing, Functional Applications, CRM and Integration

Transaction Processing Information Systems
The transaction processing system monitors, collects, stores, processes, and disseminates
information for all routine core business transactions. These data are input to functional
information systems applications, as well as to decision support systems (DSS), customer
relationship management (CRM), and knowledge management (KM). The TPS also provides
critical data to e-commerce, especially data on customers and their purchasing history.
Objectives of TPS
The primary goal of TPS is to provide all the information needed by law and/or by
organizational policies to keep the business running properly and efficiently. Specifically, a
TPS has to efficiently handle high volume, avoid errors due to concurrent operations, be able
to handle large variations in volume (e.g., during peak times), avoid downtime, never lose
results, and maintain privacy and security.
Specific objectives of a TPS may include one or more of the following: to allow for efficient
and effective operation of the organization, to provide timely documents and reports, to
increase the competitive advantage of the corporation, to provide the necessary data for
tactical and strategic systems such as Web based applications, to ensure accuracy and
integrity of data and information, and to safeguard assets and security of information. It also
is important to remember that TPSs must closely interface with many IT initiatives,
especially with e-payment, e-procurement, and e-marketing.
Managing Production / Operations & Logistics
The production and operations management (POM) function in an organization is responsible
for the processes that transform inputs into useful outputs.
In-House Logistics and Materials Management: Logistics management deals with ordering,
purchasing, inbound logistics (receiving), and outbound logistics (shipping) activities. Inhouse logistics activities are a good example of processes that cross several primary and
support activities in the value chain.
Inventory Management: Inventory management determines how much inventory to keep.
Overstocking can be expensive; so is keeping insufficient inventory. Three types of costs play
important roles in inventory decisions: the cost of maintaining inventories, the cost of
ordering (a fixed cost per order), and the cost of not having inventory when needed (the
shortage or opportunity cost). The objective is to minimize the total of these costs.
Many large companies (such as Wal-Mart) allow their suppliers to monitor the inventory
level and ship when needed, eliminating the need for sending purchasing orders. Such a
strategy, in which the supplier monitors inventory levels and replenishes when needed, is
called vendor-managed inventory (VMI).

Planning Production/ Operations: The software that facilitates the plan for acquiring (or
producing) parts, subassemblies, or materials in the case of interdependent items is called
material requirements planning (MRP).
A POM system called manufacturing resource planning (MRP II) adds functionalities to a
regular MRP. It also estimates costs of labor, tools, equipment repair, and energy. Finally, it
provides a detailed, computerized budget for the parts involved.
Just-in-time (JIT) is an approach that attempts to minimize waste of all kinds (of space, labor,
materials, energy, and so on) and to continuously improve processes and systems.
Project Management: A project is usually a one-time effort composed of many interrelated
activities, costing a substantial amount of money, and lasting for weeks or years. The
management of a project is complicated by the following characteristics.
Most projects are unique undertakings, and participants have little prior experience in
the area.
Uncertainty exists due to the generally long completion times.
There can be significant participation of outsiders, which is difficult to control.
Extensive interaction may occur among participants.
The many interrelated activities make changes in planning and scheduling difficult.
Projects often carry high risk but also high profit potential.
Work management systems (WMS) automatically manage the prioritization and distribution
of work.
Computer-integrated manufacturing (CIM) is a concept or philosophy that promotes the
integration of various computerized factory systems. CIM has three basic goals: (1) the
simplification of all manufacturing technologies and techniques, (2) automation of as many
of the manufacturing processes as possible, and (3) integration and coordination of all aspects
of design, manufacturing, and related functions via computer hardware and software.
Product Lifecycle Management is a business strategy that enables manufacturers to control
and share product-related data as part of product design and development efforts and in
support of supply chain operations.
Managing Marketing & Sales Systems
Channel systems are all the systems involved in the process of getting a product or service to
customers and dealing with all customers needs.
Customer Profiles & Preference Analysis: Consumer behaviour online can be tracked by
cookies (small data files placed on a users hard drive by a Web server). Then the consumers
online behaviour can be analysed and used for marketing purposes.
Prospective Customer Lists and Marketing Databases: It is possible today to purchase
computerized lists from several sources and then merge them electronically. These
prospective-customer lists then can be analyzed and sorted by any desired classification for
direct mailing, e-mailing, or telemarketing.

Mass Customization: Increasingly, todays customers want customized products. Some

manufacturers offer different product configurations, and in some products dozens of options
are available. The result is mass customization.
Advertising & Promotion: Online advertising, mainly via e-mail and banners, is growing
rapidly. Innovative methods such as viral marketing are possible only on the Internet.
Distribution Channels & In-store Innovations:
New
IT Supported Distribution Improving Shopping & Checkout at Retail
Channels
Stores
Distribution Channels Management
Marketing Management:
Pricing of goods
Sales personnel productivity
Profitability analysis

Sales Analysis & trends

New products, services & market planning
Web-based systems in marketing

Managing the Accounting & Finance Systems

Fig: Major activities of Accounting/ Finance

System
Managing Human Resources
System
Developments in Web-based
systems
increased
the
popularity of human resources
information systems (HRISs)
as of the late 1990s.
Recruitment
is
finding
employees, assessing them,
and deciding which ones to
hire. Companies are trying to
find appropriate candidates on
the Web, usually with the help
of specialized search engines.
Also, hundreds of thousands of
jobs are advertised on the Web.

Reference for further study:

http://en.wikipedia.org/wiki/Customer_relationship_management
http://www.umsl.edu/~joshik/msis480/chapt09.htm
http://en.wikipedia.org/wiki/Transaction_processing_system