Chapter 2 Overview Of Transaction Processing And ERP 161901

Chapter 2overview Of Transaction Processing And Erp Systemscopyright

Chapter 2 provides a comprehensive overview of transaction processing systems (TPS) and Enterprise Resource Planning (ERP) systems, emphasizing their roles in business information systems. It explores the data processing cycle, including data input, storage, processing, and output, and examines how organizations utilize various data input methods such as paper-based source documents, turnaround documents, and machine-readable source data like ATMs and point-of-sale (POS) systems. The importance of data accuracy and control during input is highlighted, with strategies such as prenumbered documents and prompts to ensure data integrity.

The chapter discusses different types of data storage within accounting information systems (AIS), including paper-based ledgers, journals, and computer-based storage like files and databases. It distinguishes between general ledgers that summarize data at a high level and subsidiary accounts that detail specific transactions. The concepts of files, records, attributes, and entities form the foundation of structured data storage and retrieval, emphasizing how data related to business entities is organized and maintained over time.

Further, the chapter describes core data processing activities—creating, reading, updating, and deleting records or data—integral to managing information within systems. Data output options are also reviewed, contrasting soft copy displays with hard copy printed outputs. The discussion transitions to ERP systems, highlighting their advantages, such as integrated data, greater management visibility, standardized procedures, and improved customer service. However, it also covers the challenges associated with ERP implementation, including high costs, lengthy deployment times, organizational disruptions, complexity, and resistance to change.

Paper For Above instruction

Transaction processing systems (TPS) and Enterprise Resource Planning (ERP) systems are fundamental components of modern business information technology that enable the effective collection, processing, and utilization of organizational data. These systems support the core functions of a business by providing accurate, timely, and integrated data across various departments and processes, facilitating informed decision-making and operational efficiency.

The data processing cycle is a critical framework in understanding how data flows within these systems. It encompasses data input or collection, data storage, data processing, and data output. Data input is a pivotal stage where the accuracy and control mechanisms are vital to ensure high-quality data. Business activities generate data through various sources, such as paper-based documents, turnaround documents, or machine-readable data from POS or ATM transactions. For example, a sales order form (a paper-based document) captures essential sales information, which must then be transferred into the AIS for processing. Turnaround documents, which are sent from an organization to a customer and returned with the customer's data, also serve as important sources of input.

Ensuring data accuracy during input involves design considerations like prenumbered documents, prompts, checkboxes, and drop-down lists, which help minimize input errors and support internal control measures. Once captured, data is stored in various formats within AIS, such as physical ledgers, journals, or electronic files and databases. The type of storage depends on the nature and frequency of the transactions, with general ledgers providing summarized, high-level financial data, and subsidiary ledgers detailing specific accounts like accounts receivable or accounts payable.

Data storage structures in information systems are fundamental to organizing data efficiently. Files contain records relating to specific entities, which are groups of related attributes. Records, attributes (or fields), and entities form a hierarchical organization that captures the essential details about business objects like customers, suppliers, or products. Transaction files hold records of daily business activities, while master files contain permanent, updated records that reflect ongoing business processes. Databases connect related files, enabling complex queries and data integrity checks, essential for large-scale enterprise systems such as ERPs.

Data processing activities in AIS revolve around creating new records, reading or retrieving existing data, updating records to reflect changes, and deleting obsolete or incorrect data. These activities support the dynamic nature of business data management and are fundamental to keeping information accurate and current. The outputs of these systems can be display outputs, predominantly soft copies shown on screens, or hard copies printed for physical records or reports.

ERP systems, as integrated platforms, extend the capabilities of traditional TPS by consolidating an organization’s data and processes into a unified system. This integration facilitates data consistency, reduces redundancies, and enhances operational visibility. Advantages of ERP include streamlined workflows, standardized business processes, improved management oversight, and better customer service. For instance, ERP modules can automate inventory management, HR, finance, and supply chain operations, resulting in more efficient resource allocation and real-time data access.

Nevertheless, the implementation of ERP systems presents challenges. High costs, lengthy deployment times, and substantial organizational changes are common barriers. ERP projects often require reengineering existing processes, which can be disruptive, and resistance from staff accustomed to legacy systems can hinder successful adoption. Despite these obstacles, many organizations find the long-term benefits—including improved decision-making and competitive advantage—justify the initial investment and effort involved in ERP implementation.

In conclusion, understanding transaction processing and ERP systems is vital for modern organizations aiming to optimize their data management processes. While the benefits of integration and efficiency are significant, careful planning, change management, and resource allocation are essential to overcome the challenges associated with deploying these complex systems. As technology evolves, the role of TPS and ERP will continue to expand, supporting increasingly sophisticated business environments and digital transformations.

References

  • Hall, J. A. (2018). Accounting Information Systems (9th ed.). Cengage Learning.
  • Romney, M. B., & Steinbart, P. J. (2018). Accounting Information Systems (14th ed.). Pearson.
  • Laudon, K. C., & Laudon, J. P. (2020). Management Information Systems: Managing the Digital Firm (16th ed.). Pearson.
  • Information Systems Management, 36(3), 278-289.
  • Nash, R., & McCloskey, M. (2017). Implementing ERP Systems: Critical Success Factors. Information Technology & People, 30(2), 529-550.
  • Schmidt, R., & Zmud, R. W. (2006). ERP Deployment and Business Process Change. Information & Management, 43(4), 430-440.
  • Klaus, H., Rosemann, M., & Gable, G. G. (2000). What Is ERP? Information Systems Frontiers, 2(2), 141-162.
  • Sumner, M. (2000). Risk Factors in Enterprise-Wide Information Management Implementation. Industrial Management & Data Systems, 100(3), 123-129.
  • Kumar, V., Maheshwari, B., & Bhattacharya, S. (2002). ERP Implementation: Role of Norms and Cultural Factors. Information & Management, 40(2), 85-97.
  • Huang, Z., et al. (2019). Critical Success Factors for ERP Implementation: Empirical Evidence from Chinese Organizations. International Journal of Information Management, 48, 39-49.

Related Assignments