Overview of Transaction

Processing and Enterprise

Resource Planning System
Learning Outcomes

• 1. Describe the information age and the differences

among data, information, business intelligence, and
knowledge.
• 2. Explain systems thinking and how management
information systems enable business communications.
Information age

• Today, by simply pushing a button, people can find out

anything, from anywhere, at any time.
• We live in the information age, when infinite quantities
of facts are widely available to anyone who can use a
computer.
 Data
Data are raw facts that describe the
characteristics of an event or object.
• Structured Data – has a defined length, type, and format that
include numbers, dates, or strings
• Machine-generated structured data is created by a machine
without human intervention. Ex. sensor data, web log data
• Human-generated structured data is data that humans, in
interaction with computers, generate. Ex. input data, gaming data
• Unstructured data is not defined and does not follow a specified
format and is typically free-form text such as emails, Twitter
tweets, and text messages.
• Machine-generated unstructured data includes satellite images,
scientific atmosphere data, and radar data.
• Human-generated unstructured data, including text messages,
social media data, and emails.
• Big data is a collection of large, complex data sets,
including structured and unstructured data, which cannot
be analyzed using traditional database methods and tools.
• A snapshot is a view of data at a particular moment in
time.
 Information
Information is data converted into a
meaningful and useful context.
• A report is a document containing data organized in a table,
matrix, or graphical format allowing users to easily
comprehend and understand information.
• A static report is created once based on data that does not
change.
• A dynamic report changes automatically during creation.
• A variable is a data characteristic that stands for a value that
changes or varies over time.
 Business Intelligence

• BI is collected from multiple sources such as suppliers,

customers, competitors, partners, and industries that
analyzes patterns, trends, and relationships for strategic
decision making.
• Analytics is the science of fact-based decision making.
• Business analytics is the scientific process of
transforming data into insight for making better
decisions.
Descriptive analytics use techniques
that describe past performance and
history.

Predictive analytics use techniques that

extract information from data and use it
to predict future trends and identify
behavioral patterns.
Prescriptive analytics use techniques
that create models indicating the best
decision to make or course of action to
take.
 Knowledge

• Knowledge includes the skills, experience, and

expertise, coupled with information and
intelligence, that create a person’s intellectual
resources.
• Knowledge workers are individuals valued for their ability to
interpret and analyze information.
• Knowledge assets, also called intellectual capital, are the human,
structural, and recorded resources available to the organization.
• Knowledge facilitators help harness the wealth of knowledge in
the organization.
 The ACCOUNTING FINANCE HUMAN
RESOURCES
Challenge of
Departmental
Companies

MARKETING OPERATIONS SALES

MANAGEMENT
• A system is a collection of parts that link to achieve a common
purpose.
• Goods are material items or products that customers will buy to
satisfy a want or need.
• Services are tasks people perform that customers will buy to
satisfy a want or need.
• Production is the process where a business takes raw materials and
processes them or converts them into a finished product for its goods or
services.
• Productivity is the rate at which goods and services are produced based on
total output given total inputs.
Systems Thinking
• Systems thinking is a way of monitoring the entire system by viewing
multiple inputs being processed or transformed to produce outputs while
continuously gathering feedback on each part.
• Feedback is information that returns to its original transmitter (input,
transform, or output) and modifies the transmitter’s actions.
Management Information Systems
• MIS is a business function, like accounting and human resources, which
moves information about people, products, and processes across the
company to facilitate decision making and problem solving.
• Often called information technology (IT) or information systems (IS).
Learning Objectives
• Describe the four major steps in the data processing cycle.
• Describe documents and procedures used to collected 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.
Data Processing Cycle
Data Processing Cycle
• The data processing cycle is the set of operations used to
transform data into useful information. The intent of this
processing is to create actionable information that can be used to
enhance a business.
• A series of steps carried out to extract information from raw data
• Input is the task where verified data is coded or converted into machine
readable form so that it can be processed through a computer.
• Processing is when the data is subjected to various means and methods of
manipulation, the point where a computer program is being executed.
• Output is the stage where processed information is now transmitted to the
user.
• Storage is the last stage in the data processing cycle, where data, instruction
and information are held for future use.
Paper-based Source Documents
• Data are collected on source documents.
• The data from paper-based will eventually be transferred to AIS.
• Turnaround documents
• Sent from organization to customer
• Same document is returned by customer to organization
Data Storage
• Data storage refers to the use of recording media to retain data using
computers or other devices.
• Types of AIS storage:
• Paper-based
• Journals
• Ledgers
• Computer-based
 Journals

General
 Infrequent or specialized transactions

Specialized
 Repetitive transactions
 E.g., Sales transactions, Purchase transactions

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 Ledgers

 General • Joe Smith

 Summary level data for each: $250
 Asset, liability, equity, • Patti Jones
revenue, and expense $750
 Subsidiary
 Detailed data for a General
Ledger (Control) Account
that has individual sub- • ACME
accounts Inc.$150
 Accounts Receivable • Jones, Inc
 Accounts Payable $350

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 Coding Techniques

 Sequence Digit Position Meaning

 Items numbered consecutively
1–2 Product Line, size,
 Block and so on
 Specific range of numbers are
associated with a category 3 Color
 10000–199999 = Electric Range
4–5 Year of
 Group Manufacture
 Positioning of digits in code
provide meaning 6–7 Optional Features

 Mnemonic
1241000 12 = Dishwasher
 Letters and numbers 4 = White
 Easy to memorize 10 = 2010
 Code derived from description of 00 = No Options
item

 Chart of accounts
 Type of block coding

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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. Create new records
2. Read existing records
3. 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 organization’s 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 organization’s 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 organization’s existing business processes can be disruptive

 Complex

 Resistance to change

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