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Systems in Organizations

Systems in Organizations. How are information systems integrated into organizations?. Information Systems Evolve Within Organizations. Information systems evolve and are developed in the context of existing organizations Sometimes they change organizational structures

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Systems in Organizations

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  1. Systems in Organizations • How are information systems integrated into organizations?

  2. Information SystemsEvolve Within Organizations • Information systems evolve and are developed in the context of existing organizations • Sometimes they change organizational structures • What do organizations usually look like?

  3. Organizational Structure • Complex organizations usually develop the “Traditional Organizational Structure” Executive Finance Marketing and Sales Human Resources Operations Information Systems

  4. Senior Managers Middle Managers Operational Managers Non-management employees Management Structure • The Traditional Organizational Structure is usually supported by a hierarchical or pyramid management structure • Manager’s role: planning, organizing, leading, controlling Strategic decisions Tactical decisions Operational decisions Do all the work

  5. Information in Organizations Should Be Accessible Accurate Complete Economical Relevant Reliable Secure Simple Timely Verifiable But To AvoidInformation Overload Route information to those who need it AND make it findable to those who want it Summarize information AND make details available Enable selectivity Eliminate unnecessary information

  6. Types of Systems • Transaction Processing Systems (TPS) • Accounting, payroll, inventory… • Management Information Systems (MIS) • Often summarize information from TPS • Give managers information, usually in reports • Decision Support Systems (DSS) • MIS systems that allow scenarios and simulations • Real-time analysis of results • Executive Information Systems • DSS for executives: includes Competitive Intelligence • Expert Systems • Use artificial intelligence techniques to help in decision making and planning • Computer Supported Cooperative Work (CSCW) • Groupware that supports collaboration and rich communication

  7. Transaction Processing Systems Chapter 9

  8. Topics • Overview of Transaction Processing systems • Methods for performing TP • Objectives of a TPS • TP activities • Traditional transaction processing applications • Order Processing • Purchasing • Accounting

  9. Transaction Processing Systems • What is a transaction? • Every business event that occurs during business operations • Business events (transactions) can trigger other business events • Each event (transaction) can be described by a number of data items • Transaction processing systems (TPS) are designed to record and store the data that describes every business event that occurs

  10. Transaction Processing Systems • Transaction processing systems collect data, edit data, correct data, manipulate and store data and produce documents. • Much of the data collected and maintained by transaction processing systems are used as inputs to other information systems in a company. • Order entry, inventory control and accounts payable systems are all examples of transaction processing systems.

  11. Customer makes a purchase POS system Inventory file Update files Transaction file Sales file Transaction Processing Systems (continued) • TPSs were the first to be automated – repetitive, consistent, high-volume tasks are ideal candidates for computerization • TPSs provide foundation for all other information systems • Many TPSs are outward-reaching and convey impressions to the customers about the quality of the business

  12. Transaction Processing System (continued) • Some characteristics of TPSs • Process large volume of data • Data sources mostly internal, and output intended mainly for internal audience • TPS operate regularly (on demand, daily, weekly, etc.) • Require large storage (database) capacity • Require high processing speed (due to the high volume) • Input and output data known and well-understood (highly structured) • Involves high level of detail but low computation complexity • Requires high level of accuracy, data integrity, and security • Requires high processing reliability; organizations cannot function for long without TPSs • Inquiry processing supported

  13. Traditional Transaction Processing Methods (1) • Batch Processing • all transactions for a period of time would be collected in a group (called a batch), input & processed as a unit. • The biggest problem with batch processing is that the master file is never current • okay for some applications, such as processing end of semester grades or payroll • unacceptable for others, such as financial transactions • batch processing is fast and cost effective for many applications.

  14. Batch Processing: simple, inexpensive Employee timecards Data entry of timecard data Payroll transactions Employee data: Pay rate Withholdings Etc. Employee paychecks Process payroll Cash on hand Payroll summary

  15. Traditional Transaction Processing Methods (2) • On-line Processing • Online transaction processing (OLTP) • each transaction is processed as it occurs (real time). • Files are always current when online processing is used. • the high costs associated with the necessary security & fault tolerance features. • On-line entry with delayed processing • data is input as the transaction occurs and is stored online, but files are not updated. Files are updated later in batch. For example, orders taken over the phone may be entered into the system, but not processed until a slow time, such as at night.

  16. Transaction history file Customer makes a purchase POS system Inventory file Sales file Online Processing: complex, expensive

  17. Whenever employees arrive / leave work Badge reader collects employee work data Payroll transactions Employee data: Pay rate Withholdings Etc. Employee paychecks Process payroll Cash on hand Payroll summary Normal payroll schedule: weekly, monthly, etc. Hybrid Processing: simple, inexpensive, more accurate

  18. TPS Today • Traditionally, TPS were implemented on mainframe systems using batch processing • Online Transaction Processing (OLTP) • can be built on a client/server architecture • can save money • Internet (Intranet) Transaction Processing • allows multimedia data transfer • fast response time • storage of large databases of graphics and videos • real time • low cost

  19. Objectives of a Transaction Processing System • Process data generated for and about transactions. • Maintain a high degree of accuracy and integrity. • Produce timely documents & reports • Increase labor efficiency • Help provide improved service • Help build and maintain customer loyalty • Achieve competitive advantage

  20. Transaction Processing Activities • Data collection: • capturing and gathering all data necessary to complete transactions • Data editing • checking data for validity and completeness • Data correction • Reentering miskeyed or misscanned data that was found during data editing • Data manipulation • Performing calculations and other data transformations related to business transactions • Data storage • Updating one or more databases with new transactions • Document production and reports • Generating output records and reports

  21. POS transaction processing system

  22. Transaction Processing System

  23. Processing and manipulating transaction data

  24. Control & Management Issues • Business resumption planning • analogous to disaster preparedness • Disaster recovery • Backups • Hot sites • In an emergency, a hot site, third party vendors, provides the facility, along with hardware, software and communications facilities identical to the firm’s own, so that a company merely moves in and starts working. • Cold sites • Backups • at least 2 current backup copies of all data – one stored onsite and the other stored elsewhere

  25. Transaction Processing Audit • Transaction processing systems are audited to determine whether they fulfill the requirements for which they were implemented and are correctly used and controlled. • Traditionally in audits, audit trails are used to trace outputs back to their source to ensure correctness, security, and validity of processing. • Internal audit, where an internal auditor examines the system and its documentation. • External audits are done by independent auditors

  26. Traditional Transaction Processing Applications

  27. Typical TPS Tasks • Order processing • General ledger • Accounts payable and receivable • Inventory management, shipping, and receiving • Payroll • Periodic reports and statements

  28. Order Processing Systems • System Components: • Order entry: captures the data needed to process a customer order. • Sales configuration: used to ensure that the order includes all necessary components. • Shipment planning: determines which orders will be filled, the locations they can be filled from, and from which locations they will be shipped. • A picking list • Inventory control (finished product): shipping documents and shipped goods information • Invoicing and billing • Customer interaction: capture data whenever a customer contacts the company. Product inquiries, sales, problems, suggestions and other information are entered into • Routing and scheduling

  29. Purchasing Systems • Takes care of the transaction processing activities associated with acquiring material for manufacturing and the execution of business activities • Components • Inventory Control • Purchase Order Processing • Receiving • Accounts Payable • Purchase journal: summarize expenditures for a given time period and are useful in cashflow analysis and budgeting

  30. Accounting Systems • Take care of the transaction processing activities associated with the financial details regarding business activities. • Subsystems • Budget • Accounts Receivable • An accounts receivable aging report: sorts outstanding debts by date. • Payroll • The pay check and stub for employees, the payroll register summarizing all payroll transactions, and W-2 statements. • Asset management • General Ledger: automates data entry and financial reporting.

  31. Integrated Information Systems • Reasons for Integration • Existing, functionally oriented information systems are deficient: • cannot give employees all the information they need • do not let different departments communicate effectively • crucial sales, inventory, and production data often entered manually into separate computer systems

  32. Integrated Information Systems • How to Integrate Information Systems • Connectexisting systems • maximize the use of existing systems and allows the addition of new applications • Using supply chain management software • Overcomes the isolation of traditional departmental structure by integrating processing across several functional areas • Use Enterprise Resource Planning software • control all major business processes with a single software architecture in real time • increased efficiency to improve quality, productivity, and profitability

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