• An organization’s TPS must support the routine, day-to-

day activities that occur in the normal course of business

and help a company add value to its products and
services

Principles of Information Systems, Seventh Edition 2

• TPSs help multinational corporations form business links
with their business partners, customers, and subsidiaries
• Walmart’s suppliers

• Identify the challenges that multinational corporations must

face in planning, building, and operating their TPSs

Principles of Information Systems, Seventh Edition 3

• Implementation of an enterprise resource planning system
enables a company to achieve numerous business benefits
through the creation of a highly integrated set of systems

Principles of Information Systems, Seventh Edition 4

An Overview of Transaction Processing
Systems

• A transaction processing system (TPS) provides data for

other business processes

• Management information system/decision support system

(MIS/DSS)

• Special-purpose information systems

Principles of Information Systems, Seventh Edition 5

Figure 9.1: TPS, MIS/DSS, and Special
Information Systems in Perspective

Principles of Information Systems, Seventh Edition 6

An Overview of Transaction Processing
Systems (continued)
• TPSs

• Process the detailed data necessary to update records about

the fundamental business operations

• Include order entry, inventory control, payroll, accounts

payable, accounts receivable, the general ledger, and more

Principles of Information Systems, Seventh Edition 7

 Traditional Transaction Processing
Methods and Objectives

• Batch processing system: method of computerized

processing in which business transactions are
accumulated over a period of time and prepared for
processing as a single unit or batch

• Online transaction processing (OLTP): computerized

processing in which each transaction is processed
immediately, without the delay of accumulating
transactions into a batch

Principles of Information Systems, Seventh Edition 8

 Figure 9.2: Batch Versus Online
Transaction Processing

Principles of Information Systems, Seventh Edition 9

 Traditional Transaction Processing
Methods and Objectives (continued)
• Online entry with delayed processing: transactions are
entered into the computer system when they occur, but
they are not processed immediately

• Organizations expect their TPSs to:

• Process data generated for and about transactions

• Maintain a high degree of accuracy and integrity

• Produce timely documents and reports

Principles of Information Systems, Seventh Edition 10

 Traditional Transaction Processing
Methods and Objectives (continued)
• Organizations expect their TPSs to (continued):

• Increase labor efficiency

• Help provide increased service

• Help build and maintain customer loyalty

• Achieve competitive advantage

Principles of Information Systems, Seventh Edition 11

 Transaction Processing Activities
• TPSs
• Capture and process data that describes fundamental
business transactions
• Update databases
• Produce a variety of reports
• Transaction processing cycle: the process of data
collection, data editing, data correction, data
manipulation, data storage, and document production

Principles of Information Systems, Seventh Edition 13

 Figure 9.4: A Simplified Overview of a
Transaction Processing System

Principles of Information Systems, Seventh Edition 14

 Control and Management Issues
• Business continuity planning: identification of the
business processes that must be restored first in the event
of a disaster and specification of what actions should be
taken and who should take them to restore operations

• Disaster recovery: actions that must be taken to restore

computer operations and services in event of disaster

Principles of Information Systems, Seventh Edition 18

 Transaction Processing System Audit
• Does the system meet the business need for which it was
implemented?

• What procedures and controls have been established?

• Are these procedures and controls being used properly?

• Are the information systems and procedures producing

accurate and honest reports?

Principles of Information Systems, Seventh Edition 19

 Accounting Systems
• Budget

• Accounts receivable

• Payroll

• Asset management

• General ledger

Principles of Information Systems, Seventh Edition 34

 Figure 9.16: Financial Systems

Principles of Information Systems, Seventh Edition 35

 Accounting Systems (continued)
• Budget transaction processing system: automates many
of the tasks required to amass budget data, distribute it to
users, and consolidate the prepared budgets

• Accounts receivable system: manages the cash flow of

the company by keeping track of the money owed the
company on charges for goods sold and services
performed

Principles of Information Systems, Seventh Edition 36

 Accounting Systems (continued)
• Payroll system prepares:

• Payroll check and stub

• Payroll register

• W-2 statements

• Asset management transaction processing system:

controls investments in capital equipment and manages
depreciation for maximum tax benefits

Principles of Information Systems, Seventh Edition 38

 Accounting Systems (continued)
• General ledger system: designed to automate financial
reporting and data entry

Principles of Information Systems, Seventh Edition 39

 International Issues
• Issues that multinational corporations face in planning,
building, and operating their TPSs

• Different languages and cultures

• Disparities in information system infrastructure

• Varying laws and customs rules

• Multiple currencies

Principles of Information Systems, Seventh Edition 40

 Enterprise Resource Planning: An
Overview
• Enterprise resource planning (ERP) systems are used in
large, midsized, and small companies

• Real-time monitoring of business functions

• Timely analysis of key issues such as quality, availability,

customer satisfaction, performance, and profitability

Principles of Information Systems, Seventh Edition 41

 An Overview of Enterprise Resource
Planning (continued)

• Steps in running a manufacturing organization using an

ERP system

• Develop demand forecast

• Deduct demand forecast from inventory

• Determine what is needed for production

• Check inventory for needed raw materials

Principles of Information Systems, Seventh Edition 42

 An Overview of Enterprise Resource
Planning (continued)

• Steps in running a manufacturing organization using an

ERP system (continued)

• Schedule production

• Assess need for additional production resources

• Financial forecasting

Principles of Information Systems, Seventh Edition 43

Advantages and Disadvantages of ERP
• Elimination of costly, inflexible legacy systems

• Improvement of work processes

• Increase in access to data for operational decision making

• Upgrade of technology infrastructure

• Expense and time in implementation

Principles of Information Systems, Seventh Edition 44

Advantages and Disadvantages of ERP
(continued)

• Difficulty implementing change

• Difficulty integrating with other systems

• Risks in using one vendor

• Risk of implementation failure

Principles of Information Systems, Seventh Edition 45