Transaction Processing & Enterprise

Resource Planning Systems

Chapter 9

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Principles and Learning Objectives

The concept of transaction processing system.
The stage of processing a transaction.
Identify the basic activities and business
objectives common to all transaction processing
systems.
Describe the inputs, processing, and outputs for
the transaction processing systems associated
with order, purchasing, and accounting business
processes.
Define the term enterprise resource planning
system and discuss the advantages and
disadvantages associated with the implementation
of such a system.
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An Overview of Transaction
Processing Systems

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TPS, MIS/DSS, and Special

Information Systems

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Traditional Transaction Processing

Methods & Objectives

Batch processing systems

On-line transaction processing (OLTP)
On-line entry with delayed processing
Process data generated by and about transactions
Process data generated for and about transactions
Maintain a high degree of accuracy and integrity
Produce timely documents & reports

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Traditional Transaction Processing

Methods & Objectives

Increase labor efficiency

Help provide improved service
Help build and maintain customer loyalty
Achieve competitive advantage

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Batch versus On-Line Transaction Processing

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Integration of a Firms TPSs

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Examples of Transaction Processing

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Transaction Processing Systems

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Steps of Processing a Transaction

1. Data entry
Data from a source document (documents
generated at the point where a transaction
occurs) are entered to the system via input
devices.
2. Data validation
This step includes checking the accuracy of
Data by comparing actual data with
Predetermined standards. It also includes
error correction.
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3. Processing and revalidation

Processing of data may include organizing,
calculating, classification or summing of
data.
There are two approaches to process a
transaction: A- Batch processing
According to this approach, transactions are
accumulated over a certain period of time
and processed periodically (daily, weekly,
And monthly).
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In Batch processing, the outputs or

information is not up to date and that can
Be risky specially in banking sector.

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 B- Online processing
According to this approach, data are processed as
they are created. There is no time lag between data
creation and data processing.
Example:
ATM system
The information that are provided or asked at
any time will be up to date information.
After processing, the outputs should be revalidated
and this includes checking the information in term
of its accuracy, face validity and content validity.
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4. Data storage for future use

To increase the value of TPS and to make it

useful for other system, processed data should
be stored. This enables maximization of
Benefits by using the information more than
once. It also can be a management tool to
ensure effective control.

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5. Output reporting to the decision

makers
Output reporting can be made using
documents or reports or using forms and
models.
Document -Record of one transaction.
Report - A summary of two or more
transaction

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6. Query support
To allow users to access data and information
when needed. This can increase the value of
TPS.

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Document Production and Reports

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Control & Management Issues

Business resumption planning
Disaster recovery
Backups

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Transaction Processing Audit

Does the system meet its business
requirements?
Are there procedures and controls?
Are the procedures & controls properly used?

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Order Processing Systems

Order entry
Sales configuration
Shipment planning
Shipment execution
Invoicing
Customer relationship management (CRM)
Routing and scheduling
Scheduling systems
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Document Production Reports

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Traditional Transaction
Processing Applications

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Order Processing Systems

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Order Processing Systems

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Order Entry System

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Shipment Planning

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Inventory Status Report

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Invoicing

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Customer Relationship Management

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The 15 Top-Rated CRM

Software Packages

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Purchasing Systems

Inventory control
Purchase order processing
Receiving
Accounts payable

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Purchasing Systems

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Accounts Payable

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Accounts Payable

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Accounting Systems

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Accounts Receivable

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Accounts Receivable Aging Report

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Typical Paycheck Stub

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Payroll Journal

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General Ledger

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General Ledger

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Enterprise Resource
Planning

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Enterprise Resource Planning

(ERP)
ERP is an organizational-wide information
system that serves as a common,
integrated information infrastructure for
basic business processes. ERP systems
integrate the business processes in all
departments and functions across an
organization into a single computer system
that can serve all departments specific
needs.
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ERP Model
Productive
Dep.

Human
Resource
Dep.
Branch
A

Management

Finance
Dep.

ERP

Branch
B

Training &
Research

Branch
C

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Enterprise Resource Planning

Real-time monitoring of business functions
Supports human resources, sales, and
distribution
Accommodates the different ways each
company runs business

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Advantages of ERP

Eliminates costly, inflexible legacy systems

Improved technology infrastructure
Improved work processes
Increased data access for decision making

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Disadvantages of ERP

Expense & time

Radical change
Integrating with other systems
One vendor risks

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ERP System

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ERP Software Vendors

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International Issues

Different languages and cultures

Disparities in information systems infrastructure
Varying laws and custom rules
Multiple currencies

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Summary
Transaction Processing Systems - consist of all
components of a CBIS, including databases,
telecommunications, and people
Transaction Processing Systems Methods - batch,
on-line, and on-line with delayed processing
Enterprise resource planning (ERP) software - a set
of integrated programs that manage a companys vital
business operations for an entire multisite, global
organization
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