CHAPTER 11 1. Transaction Processing Systems 2. Functional Area Information Systems 3. Enterprise Resource Planning (ERP) Systems 4. ERP Support for Business Processes 1. Explain the purpose of transaction processing systems. 2. Explain the types of support that information systems can provide for each functional area of the organization. 3. Identify advantages and drawbacks to businesses implementing an enterprise resource planning system. 4. Describe the three main business processes supported by ERP systems. Opening Case • The Lion King Continues Its Box Office Dominance 1. Why are yield management systems so important to the producers of Broadway shows? (Hint: What is the value of an unsold seat once the curtain goes up?) 2. Describe potential disadvantages of Disney’s yield management system. 11.1 Transaction Processing Systems • Transaction • Transaction Processing System (TPS) • Batch Processing • Online Transaction Processing (OLTP) Figure 11.1: How TPS Manage Data 11.2 Functional Area Information Systems • IS for Accounting and Finance • IS for Marketing • IS for Production/Operations Management • IS for Human Resource Management • Reports IS for Accounting and Finance • • • • Financial Planning and Budgeting Managing Financial Transactions Investment Management Control and Auditing Financial Planning and Budgeting • Financial and economic forecasting • Budgeting Managing Financial Transactions • • • • Global stock exchanges Managing multiple currencies Virtual close Expense management automation (EMA) Control and Auditing • Budgetary control • Auditing • Financial ratio analysis IS for Production/Operations Management (POM) • In-House Logistics and Materials Management • Inventory Management • Quality Control • Planning Production and Operations Management • Computer-Integrated Manufacturing • Product Lifecycle Management IS for Human Resource Management • Recruitment • Human Resources Development • Human Resources Planning and Management Three Areas of IT support in HR Planning and Management 1. Payroll and employees’ records 2. Benefits administration 3. Employee relationship management Figure 11.2: Systems supporting functional Areas Reports • Routine Reports • Ad-hoc (On-Demand) Reports – Drill-down reports – Key indicator reports – Comparative reports – Exception reports Monthly Sales Report 11.3 Enterprise Resource Planning (ERP) Systems • ERP II Systems • Benefits and Limitations of ERP Systems • Implementing ERP Systems • Enterprise Application Integration ABOUT BUSINESS 11.1 • The Army Transitions from Legacy Systems to Enterprise Resource Planning Tools 1. Why do you think the U.S. Army’s legacy systems were not as useful today as they were when they were developed? 2. How does this military example parallel large businesses like Sears and Walmart that have had to maintain their own legacy systems? Core ERP Modules ERP II SYSTEM Manufacturing Accounting and Financial Module & Production Module Human Resources Module Suppliers Customers Supply Chain Management Module ERP Customer Relationship Management Module Platform & Database Business Intelligence Module E-Business Module Extended ERP Modules ERP Systems: Benefits • Organizational Flexibility and Agility • Decision Support • Quality and Efficiency ERP Systems: Limitations • Business Processes Predefined by Best Practices • Difficult to Implement • Potential for Failure Major Causes of ERP Implementation Failure • Failure to involve affected employees in planning and development • Attempting too much too fast • Insufficient training • Failure to perform proper data conversion and testing Implementing ERP Systems • On-Premise ERP Implementation • Software-as-a-Service (SaaS) ERP Implementation On-Premise ERP Implementation • Vanilla Approach • Custom Approach • Best of Breed Approach 11.4 ERP Support for Business Processes • The Procurement, Fulfillment, and Production Processes • Interorganizational Processes: ERP with SCM and CRM The Procurement, Fulfillment, and Production Processes • Procurement Process • Order Fulfillment Process • Production Process Figure 11.4: Departments & Documents Flow in Procurement Figure 11.5: Departments & Documents Flow in Fulfillment Figure 11.6: Departments & Documents Flow in Production Figure 11.7: Integrated Processes with ERP Systems Interorganizational Processes: ERP with SCM and CRM • Enterprise Resource Planning (ERP) Supply Chain Management (SCM) Systems • Enterprise Resource Planning (ERP) Customer Relationship Management (CRM) Systems
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