Chapter%207%20Transaction%20Processing,%20Functional%20Applications,%20CRM,%20and%20Integration

1
Chapter 7Transaction Processing, Functional
Applications, CRM, and Integration
2
Functional Areas in a Business
3
Functional Information Systems

• Traditionally, ISs were designed within each
  functional area to increase their internal
  effectiveness efficiency.
• This may not suit some organizations, because
  certain processes may involve activities that are
  performed in several functional areas.
• Solution 1 Reengineer the organization.
• Ex. the company can create cross-functional
  teams, each responsible for performing a complete
  business process
• Solution 2 The integrated approach
• Keeps the functional departments but creates a
  supportive information system to help
  communication, coordination, and control.
• gt Cross functional boundaries

4
Functional Areas Supply Chain Perspective
The supply chain is a business process that links
all the procurement from suppliers, the
transformation activities inside a firm (the
value chain) and the distribution of goods or
services to customers via wholesalers and
retailers.
5
Major Characteristics of Functional ISs

• Composed of smaller systems
• A functional IS consists of several smaller
  information systems that support specific
  activities performed in the functional area
• Integrated / independent systems
• The specific IS applications in any functional
  area can be integrated to form a coherent
  departmental functional system, they can be
  integrated across departmental lines to match a
  business process or be completely independent.
• Interfacing
• Functional information systems may interface
  internally with each other to form the
  organization-wide information system or
  externally systems outside the organization
• Supportive of different levels
• Information systems applications support the
  three levels of an organizations activities
  operational, managerial, and strategic

6
A model of IS in the production/operations
functional area
7
Functional Information Systems
Data Analysis and statistical forecasting.
Datamining ops that support management
Dynamic and what-if features.
Integrated
Clerical documents, schedules, mail, manuals, etc.
Back office administrative tasks and ops.
Business transactions, events and processes.
Support of the business and customers.
Operation Level of the company is normally highly
structured and predefined.
Run The Company
8
Transaction Processing System (TPS)

• Overview
• the backbone of an organizations information
  systems
• 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
• These data are input data to functional
  information systems applications, DSS, and CRM
• Computerization of routine transaction processes

9
Objectives of TPS

• Primary goal of TPS
• to provide all the information needed by law
  and/or by organizational policies to keep the
  business running properly and efficiently.
• Specific objectives of a TPS
• to allow for efficient effective operation of
  the organization
• to provide timely documents and reports
• to increase the competitive advantage of the
  corporation
• to provide the necessary data for tactical
  strategic systems, such as Web-based applications
• to ensure accuracy integrity of data
  information
• to safeguard assets security of information

10
Major characteristics of TPS

• Large amounts of data are processed.
• The sources of data are mostly internal.
• TPS processes information on a regular basis.
• Large Storage capacity is required.
• High processing speed is needed due to the high
  volume.
• TPS basically monitors and collects past data.
• I/O data are structured.
• High level of detail is usually observable.
• Low computation complexity.
• A high level of accuracy, data integrity, and
  security is needed.
• High reliability is required.
• Inquiry processing is a must.

11
Activities of TPS

• First, data are collected entered into the
  computer via any input device.
• 3 ways that the system processes data
• Batch processing
• the firm collects data from transactions as they
  occur, placing them in groups or batches. The
  system then processes the batches periodically
• Online processing
• data are processed as soon as a transaction
  occurs.
• Hybrid system (a combination of batch online
  processing) collects data as they occur but
  process them at specified intervals.

12
The flow of information in transaction processing
13
Web-based Online TPS

• OLTP (online transaction processing) - Client /
  server systems
• OLTP and Web technologies, suppliers can look at
  the firms inventory level or production schedule
  in real time
• responsibility for inventory management and
  ordering
• Interactive Internet TPS
• expands OLTP to provide enhanced real time
  transaction processing over the Internet or
  intranets
• Internet transaction processing
• Flexibility to accommodate unpredictable growth
• Cost effectiveness
• Interactive automatic billing
• Timely search
• Multimedia data
• High data throughput to support queries requiring
  massive file size
• Fast response time
• Effective storage

14
Typical Tasks in TPS

• Order processing
• The ledger
• Accounts payable and receivable
• Receiving and shipping
• Fixed assets management

• Payroll
• Personnel files and skills inventory
• Government reports
• Periodic reports and statements

15
Innovative IT Applications in the Functional
Areas

• Managing production/operations and logistics
• POM - The production and operations management
• transform inputs into useful outputs
• very diversified, and so its supporting IS(s)
• related to finance and sales, engineering and
  design, and purchasing and logistics
• Managing marketing and sales
• Managing the accounting and finance systems
• Managing human resource systems

16
POM functions
17
In-house logistics material management

• Logistics Management
• deals with ordering, purchasing, inbound
  logistics (receiving), and outbound logistics
  (shipping) activities.
• All of these activities can be supported by ISs
• E-procurement
• Inventory management
• determines how much inventory to keep
• when to order reorder point
• how much to order
• Three costs play important roles in inventory
  decisions
• cost of maintaining inventories
• cost of ordering (a fixed cost per order)
• cost of not having inventory when needed (the
  shortage or opportunity cost)
• Vendor-managed inventory (VMI)
• Quality control

18
Planning Procedures/ Operations

• Material Requirements Planning (MRP)
• SW that facilitates the plan for acquiring parts,
  subassemblies, or materials
• Manufacturing Resource Planning (MRP II)
• connects the regular MRP to other functional
  areas
• MRP determines the costs of parts and the cash
  flow needed to pay for parts
• Just-in-time (JIT)
• an approach that attempts to minimize waste of
  all kinds and continuously improve processes and
  systems

19
Planning Procedures/Operations (cont.)

• Project management
• The characteristics
• Most projects are unique undertakings, and
  participants have little prior experience in the
  area.
• Uncertainty exists due to the long completion
  times.
• There can be significant participation of
  outsiders, which is difficult to control.
• Extensive interaction may occur among
  participants.
• Projects often carry high risk but also high
  profit potential.
• The tools
• PERT (Program evaluation and review technique)
• Critical path method (CPM)
• Work Management Systems (WMS)
• automatically manage the prioritization and
  distribution of work
• deal with resource allocation and reallocation

20
CIM-Computer-integrated manufacturing

• Definition - a philosophy about the
  implementation of various integrated computer
  systems in factory automation
• 3 basic goals
• Simplification of all manufacturing technologies
  techniques.
• Automation of as many of the manufacturing
  processes as possible by the integration of many
  IT.
• Integration and coordination of all aspects of
  design, manufacturing related functions via
  computer HW and SW.
• Typical integrated technologies
• FMS (Flexible-manufacturing systems), JIT, MRP
• CAD (Computer Aided Design)
• a system that enables industrial drawings to be
  constructed on a computer screen stored,
  manipulated updated electronically.
• CAE (Computer Aided Engineering)
• enables designers to analyze the design and
  determine whether it will work the way the
  designer thought it would.
• GT - Group technology

21
The CIM model
22
Product Lifecycle Management (PLM)

• PLM
• is a business strategy that enables
  manufacturers to control and share
  product-related data as part of a products design
  and development efforts.
• Web-based supply chains and other technologies
  are employed to automate this collaborative
  effort.
• This electronic-based collaboration can
• reduce product cost
• travel expenses
• reduce costs associated with product-change
  management
• reduce the time it takes to get a product to
  market

23
Managing Marketing and Sales

• Channel systems - the TPS involved in the process
  of getting a product or service to customers and
  dealing with their needs
• The customer is king (queen) - customer relations
• Telemarketing
• Telemarketing has been moving to cell phones,
  using Short message service (SMS), which consists
  of messages you can receive on your cell phone.
• A telemarketing process can be divided into five
  major activities, all of which are supported by
  IT can be done on the Web, even in a wireless
  environment.
• Advertisement and reaching customers
• Order processing
• Customer service
• Sales support
• Account management
• Distribution channels in-store innovations
• Distribution channels management
• Improving sales at retail stores
• Marketing management

24
Channel systems
25
Customer Relations

• CRM
• Customer Profiles and Preference Analysis
• Sophisticated ISs are being developed to collect
  data on existing and potential customers, their
  demographics (age, gender, income level), and
  preferences.
• Prospective Customer Lists and Marketing
  Databases
• All firms need to know and track who their
  existing and potential customers are.
• These prospective-customer lists can be analyzed
  and sorted by classification for direct mailing,
  e-mailing, or telemarketing.
• Mass Customization
• Todays customers prefer customized products.
• Through mass customization, the practice of
  maintaining WIP inventory, manufacturers can
  offer different product configurations at
  reasonable prices.
• Personalization
• Special product offers are made, based on where
  the customer spent their time and on what they
  may have purchased.
• Advertising and Promotions
• Special promotions, coupons are presented to the
  customer via mails, email, wireless and pervasive
  computing applications.

26
Distribution Channels In-Store Innovations

• New IT-Supported Distribution Channels
• Internet
• Location Based Mapping
• Self-service convenience stores
• Improving Shopping and Checkout at Retail Stores
• Hand-held wireless devices that scan the bar code
  UPC
• Smart card or credit card
• Information kiosk enable customers to view
  catalogs in stores
• Self-checkout machines
• Check-writers attached to cash registers
• Computerization of various activities in retail
  stores
• Video-based systems count and track shoppers in a
  physical store
• Distribution Channels Management

27
Marketing Management

• Many marketing management decision applications
  are supported by CBIS.
• Some examples
• Pricing of Products or Services
• Sales volumes are largely determined by the
  prices of products or services as is profit.
• Salesperson Productivity
• Sales-force automation - increases salesperson
  productivity by providing them with mobile
  devices, access to information
• Productivity SW
• Profitability Analysis
• profit contribution of certain products and
  services can be derived from cost-accounting
  systems
• Sales Analysis And Trends
• Marketing TPS collect sales figures that can be
  searched for trends and relationships
• New Products, Services, and Market Planning
• Requires careful analysis, planning, forecasting
  and Market research.
• Web-Based Systems - support marketing and sales
  through data capture

28
Marketing decision support
29
An accounting / finance system
30
Managing Accounting Finance Systems

• An accounting/finance IS is responsible for
• Gather raw data necessary for the
  accounting/finance TPS
• Ttransforming the data into information
• Making the information available to users
• Many packages exist to execute routine accounting
  transaction processing activities.
• Some software packages are integrated, e.g. MAS
  90 and MAS 200
• The accounting/finance TPS also provides a
  complete, reliable audit trail of all
  transactions transmitted through the network.

31
Accounting Finance Systems

• Financial planning budgeting
• Financial economic forecasting
• Knowledge about the availability and cost of
  money is a key ingredient for successful
  financial planning.
• Planning for incoming funds
• Funds for organizations come from several
  sources.
• Using the information generated by financial and
  economic forecasts, the organization can build a
  decision support model for planning incoming
  funds.
• Budgeting
• Capital budgeting
• Managing financial transactions
• Financial and Economic Forecasting
• Planning for Incoming Funds
• Budgeting
• Capital Budgeting

32
Accounting Finance Systems (cont.)

• EC Applications of Financial Transactions
• Global stock exchanges multiple currencies
• E-Bonds
• Factoring online
• Electronic re-presentment of checks
• E-bill presentment and payments
• Virtual Close
• Expense Management Automation
• Investment management
• Access to financial and economic reports
• Financial analysis
• Financial value chain management (FVCM)
• Control and auditing
• Budgetary control Auditing
• Financial health analysis - Financial Ratio
  Analysis
• Profitability analysis and cost control
• Product pricing

33
Managing Human Resource Systems

• Recruitment
• Using the Web for recruitment
• Position inventory
• Employee selection
• HRM Portals and Salary Surveys
• Human resource maintenance and development
• Performance evaluation
• Training and human resource development
• Human Resource Planning and Management
• Personnel planning
• Labor - management negotiations
• Payroll and Employees Records
• Benefits administration
• Employee Relationship Management (ERM)

34
Responsible for the workforce
35
Customer Relationship Management (CRM)

• CRM
• an approach that recognizes that customers are
  the core of the business and that the companys
  success depends on effectively managing
  relationships with them
• focuses on building long-term and sustainable
  customer relationships that add value both for
  the customer and the company
• Types of CRM
• Operational CRM
• related to typical business functions involving
  customer services, order management,
  invoice/billing, etc
• Analytical CRM
• involves capture and analysis of customer data
• Collaborative CRM
• deals with all the communication, coordination,
  and collaboration between vendors and customers

36
eCRM (electronic CRM)

• eCRM (electronic CRM)
• started in the mid-1990s
• when customers began using Web browsers, the
  Internet, and other electronic touch points
• The use of these technologies made customer
  services much more effective and efficient than
  before.
• Through these technologies, data generated about
  customers can be easily supplied to marketing,
  sales, and customer service applications and
  analysis.
• Scope of eCRM
• Foundational services (ex. order fulfillment)
• Customer-centered services (ex. order tracking)
• Value-added services (ex. online information)

37
CRM
38
CRM in Action

• 5 steps in building IT-supported CRM (Seybold and
  Marshak, 1998)
• Make it easy for customers to do business with
  you.
• Focus on the end customer for your products and
  services.
• Redesign your customer-facing business processes
  from the end customers point of view
• Wire your company for profit design a
  comprehensive, evolving electronic business
  architecture.
• Foster customer loyalty. In e-Commerce,
  especially, this is the key to profitability.
• CRM failures
• Failure to identify and focus on specific
  business problems
• Lack of active senior management (non-IT)
  sponsorship
• Poor user acceptance, which can occur for a
  variety of reasons such as unclear benefits and
  usability issues
• Trying to automate a poorly defined process

39
CRM Activities and IT Support
40
CRM Activities and IT Support (cont.)
41
Information Technology in CRM
42
Customer Service

• Customer Service on the Web
• Providing Search and Comparison Capabilities
• Providing Free Products and Services
• Providing Technical and Other Information and
  Service
• Allowing Customers to Order Customized Products
  and Services Online
• Letting Customers Track Accounts or Order Status
• Tools for Customer Service
• Personalized web pages, FAQs, Tracking tools,
  Chat rooms, E-mail automated response, Help
  desks Call centers, Troubleshooting tools
• Justifying CRM programs
• Metrics - to determine how much customer service
  to provide is to compare your company against a
  set of standards
• Metrics to evaluate Web-related customer service
• Response time, Site availability, Download time,
  Timeliness
• Security and privacy, Fulfillment, Return policy,
  Navigability

43
Partner Relationship Management

• Partnership Relationship Management (PRM) refers
  to all of the efforts made to apply CRM to all
  types of business partners.
• Specific functions of PRM applications
• Partner profiles ?Centralized forecasting
• Partner communications ? Group planning
• Lead management ? E-mail/ Web-based alerts
• Targeted information distribution ? Messaging
• Connecting the extended enterprise ? Price lists
• Partner planning ? Community bulletin boards

44
Integrating Functional Systems

• Reasons for integration
• Helps to reduce cost
• Helps to increase employees productivity
• Helps to facilitate information sharing and
  collaboration which are necessary for improving
  customer service
• IT helps CRM
• Enterprise Resource Planning (ERP) and SAP
  software

45
Integrated IS