The document discusses the integration of various functional information systems within organizations, particularly the role of transaction processing systems (TPS) in managing routine business activities. It highlights the benefits of system integration, such as cost reduction, increased productivity, and improved information sharing. Additionally, it outlines the characteristics and objectives of TPS, the technologies used, and the impact of innovative IT applications in operational, marketing, and finance functions.

1. Overview
Background
Integration of Systems
Transaction Processing Systems
Innovative Functional Information Systems

2. Background
Functions in Porter’s Value Chain
Typical functional areas mapped on
the value chain of a manufacturing company
Firm Infrastructure
(Accounting, Finance, General Management)
Human Resource Management
(Human Resources)
Technology Development
(Engineering)
Procurement
(Material Management-Operations)
Support
Activities
Service
(Service or
Marketing)
Inbound
Logistics
(Material
Managaement-
Operations)
Operations
(Operations)
Outbound
Logistics
(Material
Managemnet-
Operations)
Marketing
and Sales
(Marketing)
Primary
Activities

3. Background
Historical Functional Systems
TPS
Finance
info. systems
TPS
Accounting
info. systems
TPS
Manufacturing
info. systems
“Hey, could you
generate a report for me
detailing how much this part
typically costs?”
3 weeks later …
“Okay, here it is! All 500
pages on crisp white
paper!”

4. Integration of Systems

5. Integration of Systems
Modern Integrated Functional Systems
TPS
Operations
TPS
ERP
Executive
IS
HR
TPS
Accounting TPS
Finance
TPS
Marketing
CRM
SCM
To
Suppliers
To
Customer
Touchpoints
data
data

6. Integration of Systems
Reasons for Integration
Helps to reduce cost
Helps to increase employees’ productivity
Helps to facilitate faster information
sharing
Helps to facilitate collaboration between
functional areas

7. Integration of Systems
Integration Approaches
 Various Integration Approaches
 Buy (or build) a fully integrated set of software
components
 Link together two applications via software that sends
data between the two
 EDI
 TCP/IP
 Application “Connectors” that connect specific applications
(e.g. Oracle to Peoplesoft)
 Middleware
 Web Services (XML+SOAP)

8. Transaction Processing Systems

9. Computerization of
Routine Transaction Processes
 Transaction Processing System (TPS)
 supports transaction processes
 monitors, collects, stores, processes, and disseminates
information for all routine core business transactions
 includes accounting and finance transactions and some
sales, personnel, and production activities

10. Transaction Processing Systems
Objectives of TPS
 Primary Objectives
 To quickly store data
 To quickly retrieve data
 To provide the necessary data for tactical and strategic
systems such as DSS applications
 To assure accuracy and integrity of data and information

11. Transaction Processing Systems
Typical Tasks
POS
Terminal
Terminal
File
Product
Processing
System
Inventory
Files
Department
Sales Files
Customer
Makes a
Purchase
Master
Files

12. Transaction Processing Systems
Objectives of TPS
 Organizational Objectives Fulfilled by TPS
 To provide all the information needed by law and/or by
organizational policies to keep the business running
properly and efficiently
 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 safeguard assets and security of information

13. Transaction Processing Systems
Major Characteristics of TPS
 Large amount of data are processed
 The sources of data are mostly internal, and the output is intended mainly
for an internal audience
 The TPS processes information on a regular basis
 Large storage (database) capacity is required
 High processing speed is needed due to the high volume
 TPS basically monitors and collects past data
 Input and output data are structured
 High level of detail is usually observed
 Low computation complexity
 High level of accuracy, data integrity, and security is needed
 High reliability is required
 Inquiry processing is a must

14. Transaction Processing Systems
Various TPS Technologies
 Some TPS Technologies
 Online Transaction Processing (OLTP)
 Allows managers to run client-server transactions to obtain
some information of interest
 Web-based Transaction Processing
 Similar to OLTP
 Allows managers to run transactions via the web
 Object-Oriented Transaction Monitors (OTM)
 Objects that monitor transactions in web-based applications
 When an activity happens within a web site, the object sends a
query to the data warehouse to record information about what
happened (e.g., customer checked out)

15. Transaction Processing Systems
Benefits of Internet-based OLTP
 Flexibility to accommodate unpredictable growth in
processing demands
 Cost effectiveness even for small dollar amounts
 Interactive, automatic billing, enabling companies to offer
services to anyone, not just subscribers
 Timely search and analysis of large databases
 Multimedia data such as pictures and sound are handled
effectively and efficiently
 High data throughput to support inquiries requiring massive
file size
 Fast response time
 Effective storage of huge graphics and video databases

16. Transaction Processing Systems
TPS Hardware
Traditional TPSs were centralized and run
on a mainframe
Today …
mainframes
client/server systems
clusters of servers, each server running multiple
processors

17. Management Decision Making
How to Choose a TPS?
 Transaction Processing Performance Council (tpc.org)
 Industry forum for fighting over who is fastest
 Provides benchmarking results for different TPS computer
systems, based on bundle of …
 Hardware
 Operating system
 Database
 Several performance metrics
 TPC-C … OLTP performance
 TPC-H … decision support for ad hoc queries performance
 TPC-R … decision support for business reporting performance
 TPC-W … web based transaction performance

18. Management Decision Making
How to Choose a TPS?
 ECperf (ecperf.theserverside.com)
 Industry benchmark for fighting over who has the fastest
Java-based TPSs
 Provides benchmarking results for different TPS computer
systems, based on bundle of …
 Hardware + J2EE Server + DBMS
 ECperf takes into account several transaction processing
scenarios
 Customer
 Manufacturing
 Supplier
 Corporate

19. Functional Information Systems

20. Functional Information Systems
Major Characteristics
 A functional information system comprises several smaller
information systems that support specific activities
performed by each functional area
 The specific IS applications in any functional area can be
integrated to form a coherent functional system, or they can
be completely independent
 Functional information systems interface with each other to
form the organization-wide information system
 Some organizational information systems interface with the
business environment
 Information systems applications support the three levels of
an organization’s activities: operational, managerial, and
strategic

21. Innovative Functional
Applications of IT

22. Innovative IT in Operations

23. Innovative IT Applications
in Operations
Managing Production/Operations and
Logistics
transform inputs into useful outputs
very diversified, and so its supporting
information systems
related to finance and sales, engineering and
design, and purchasing and logistics

24. Operations
Typical TPS of a Manufacturer
Vendors
Customers
General
Ledger
Periodic
Statements
Manufac-
turing
Purchasing
Order
Receiving
Goods
Accounts
Payable
Shipping
Accounts
Receivable
Inventory
Customer
Order
Taxes
Payroll
Fixed
Assets

25. Operations
Supply-Chain Management
objective is to support the flow of goods
and materials from the original supplier
through multiple production and logistic
operations to the ultimate consumer
extensive integrated software is available
for managing portions of the supply chain
as well as the entire process

26. Operations
Supply-Chain Management
Suppliers Inbound Logistics Production
Transaction Delivery Customer
a) Supply Chain direct to customer
Suppliers Manufacturing Distribution Retail Outlet Customer
Transfer Transfer Transfer Transfer
Information Flow
Cash
Flow
b) Supply Chain including wholesalers and retailers
Supply Chain Organization

27. Operations
In-House Logistics and Material Management
Inventory Management
 Used to estimate inventory levels
 Now try to keep an accurate count through barcodes,
scanners, GPS systems to locate specific inventory
Quality Control
 Used to sample quality of items at fixed intervals
 Now, can examine quality of every single item

28. Operations
Planning Production/Operations
Material Requirements Planning (MRP)
Manufacturing Resource Planning (MRP II)
Just-in-Time Systems
Project Management
Short-Term Schedules

29. Operations
Automated Design and Manufacturing
Computer-aided Design (CAD)
Computer-aided Engineering (CAE)
Computer-aided Manufacturing (CAM)

30. Operations
Computer-Integrated Manufacturing (CIM)
 “Factory of the Future”
 Three basic goals:
 simplification
 automation
 integration and coordination
 The CIM model
 made up by general business management, product and
process definition, manufacturing planning and control,
factory automation, and information resource
management

31. Innovative IT in Marketing

32. Marketing
Channel Systems/Customer Touchpoints
The customer is king (queen)
Customer profiles and preference analysis
Prospective customer lists and marketing
databases
Mass customization
Targeted Advertisement on the Web
Customer inquiry systems and Automated Help
Desk (EC application)

33. Marketing
Channel Systems/Customer Touchpoints
 Telemarketing
 Capabilities
 personalized contact with the customers
 allows customers to buy at their convenience
 effective in informing customers about a company’s products and
services
 Limitations
 cost can be high
 difficult to find good telemarketers
 may be seen by many as a nuisance
 challenges in reaching people

34. Marketing
Distribution Channels
 Distribution channels management
 DSS models are frequently used to support the decision of
accomplishing by a company, or by a subcontractor
 Improving sales at retail stores
 using IT, it is possible to improve the situation by
reengineering the checkout process

35. Marketing
Marketing Management
Pricing of products or services
Salesperson productivity
Productivity software
Products and customers profitability analysis
Sales analysis and trends
New products, services, and market planning

36. Innovative IT in Finance &
Accounting

37. Accounting & Finance Systems
TACTICAL SYSTEMS
a. Budgeting Preparation and Control
b. Investment Management
c. Capital Budgeting d. Cost Analysis and Control
e. Tax Management f. Auditing
g. Financial Planning
INTERNAL
ENVIRONMENT
Top Management
Operation/
Production
Marketing
HRM
Engineering
EXTERNAL
ENVIRONMENT
IRS
SEC
Vendors
Clients
CPA Companies
Suppliers
Customers
Business Partners
STRATEGIC SYSTEMS
a. Strategic Planning b. Ratios and Financial Health
c. Merger and Acquisition Analysis
OPERATIONAL AND
TRANSACTION PROCESSING
SYSTEMS
a. The General Ledger b. Sales Order Processing
c. Accounts Payable and Receivable
d. Receiving and Shipping
e. Payroll f. Inventory Management
g. Periodical Reports & Statements

38. Managing the Accounting and
Finance Systems
Strategic Systems
Tactical Systems
Operational and
Transaction
Processing System
Internal
Environment
External
Environment

39. Accounting & Finance
Financial Planning and Budgeting
Financial and economic forecasting
Planning for incoming funds
Budgeting preparation and operation
Capital budgeting decision

40. Accounting & Finance
Investment Management
Access to financial and economical reports
Internet meta-search engines for finding financial
data
Internet directories and yellow pages
Software for monitoring, interpreting, analyzing
financial data, and alerting management
Financial analysis
Treasury risk management systems (TRMS)

41. Accounting & Finance
Control and Auditing
Budgetary control
Auditing
Financial health analysis
Profitability analysis and cost control
Product pricing

42. Innovative IT in HR

43. Human Resources
Recruitment
Position inventory
Employee selection
Using the Internet

44. Human Resources
Maintenance and Development
Performance evaluation
Training and human resources development
Turnover, tardiness, and absenteeism analyses

45. Human Resources
Planning and Management
Personnel planning
Succession planning
Labor-management negotiations
Benefits administration