Chapter 2

Overview of Transaction Processing and ERP Systems

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Learning Objectives
Describe the four major steps in the data processing cycle. Describe the major activities in each cycle. Describe documents and procedures used to collect and process data. Describe the ways information is stored in computer-based information systems. Discuss the types of information that an AIS can provide. Discuss how organizations use ERP systems to process transactions and provide information.

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Data Processing Cycle

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The Data Processing Cycle Determines

What data is stored?
Who has access to the data? How is the data organized?

How can unanticipated information needs be met?

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Data InputCapture
As a business activity occurs data is collected about:
1. 2. 3. Each activity of interest The resources affected The people who are participating

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Paper-Based Source Documents

Data are collected on source documents E.g., a sales-order form The data from paperbased will eventually need to be transferred to the AIS Turnaround Usually paper-based Are sent from organization to customer Same document is returned by customer to organization

Turnaround Document

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Source Data Automaton

Source data is captured
In machine-readable form At the time of the business activity E.g., ATMs; POS

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Data InputAccuracy and Control

Well-designed source documents can ensure that data captured is
Accurate Provide instructions and prompts

Check boxes
Drop-down boxes Complete Internal control support Prenumbered documents

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Data Storage
Types of AIS storage:
Paper-based Ledgers Journals

Computer-based

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Ledgers
Joe Smith $250 Patti Jones $750

General Summary level data for each: Asset, liability, equity, revenue, and expense Subsidiary Detailed data for a General Ledger (Control) Account that has individual subaccounts Accounts Receivable Accounts Payable

ACME Inc.$150 Jones, Inc $350

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Journals
General
Infrequent or specialized transactions

Specialized
Repetitive transactions E.g., sales transactions

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Coding Techniques
Sequence Items numbered consecutively Block Specific range of numbers are associated with a category 10000199999 = Electric Range Group Positioning of digits in code provide meaning Mnemonic Letters and numbers Easy to memorize Code derived from description of item Chart of accounts Type of block coding
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Digit Position 12 3 45 67 1241000

Meaning Product Line, size, and so on Color Year of Manufacture Optional Features 12 = Dishwasher 4 = White 10 = 2010 00 = No Options

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Computer Based Storage

Entity Person, place, or thing (Noun) Something an organization wishes to store data about Attributes Facts about the entity Fields Where attributes are stored Records Group of related attributes about an entity File Group of related Records

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File Types
Transaction Contains records of a business from a specific period of time Master Permanent records Updated by transaction with the transaction file Database Set of interrelated files

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Data Processing
Four Main Activities
1. 2. 3. Create new records Read existing records Update existing records

4.

Delete records or data from records

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Data Output Types

Soft copy
Displayed on a screen

Hard copy
Printed on paper

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ERP Systems

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Enterprise Resource Planning (ERP)

Integrate an organizations information into one overall AIS
ERP modules:
Financial Human resources and payroll Order to cash Purchase to pay Manufacturing

Project management
Customer relationship management System tools

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ERP Advantages
Integration of an organizations data and financial information
Data is captured once Greater management visibility, increased monitoring Better access controls Standardizes business operating procedures

Improved customer service

More efficient manufacturing

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ERP Disadvantages
Cost
Time-consuming to implement Changes to an organizations existing business processes can be disruptive Complex Resistance to change

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