COMM 205 Unit 3

Question 1

Definition: Transaction

Answer 1

A transaction is any business event that generates data worth being captured and stored in a database.
 Student registration, sales order processing, flight
booking, funds transfer, etc.

Question 2

Definition: Transaction processing system (TPS)

Answer 2

Transaction processing system (TPS) supports the monitoring, collection, storage and processing of DATA generated by each of the organization’s basic business transactions. The data is input to the organization’s DATABASE.
TPS must handle high volumes of data, avoid errors and provide a highly secure and stable environment.

Question 3

How does TPS manage data?

Answer 3

 The database has to be protected from errors resulting from overlapping or CONCURRENT updates.
The database has to be protected against INCONSISTENCIES arising from system failure.
A transaction must be REVERSIBLE.
An AUDIT TRAIL OR LOG of transaction flow must be
available.

Question 4

Major features of TPS

Answer 4

1. Performance
2. Availability
3. Data Integrity
4. Ease of Use
5. Modular Growth

Question 5

1. Performance

Answer 5

System RESPONSE TIME is critical in TPS. It’s the amount of time it takes for an information system to respond to a request or input from a user.
System performance is also measured by the NUMBER OF TRANSACTIONS the system can process in a given period of time, e.g. 100 transactions per second.

Question 6

2. Availability

Answer 6

The system must be available whenever it is needed.

 System availability is the PERCENTAGE OF TIME that a given system is active and working.

Question 7

3. Data Integrity

Answer 7

Data integrity refers to the overall completeness, accuracy and consistency of data. It aims to prevent unintentional changes to information.

Question 8

4. Ease of Use

Answer 8

The system should be simple for users to understand, protect them from data-entry errors as much as possible, and allow them to easily correct their errors.

Question 9

5. Modular Growth

Answer 9

The system should be capable of growth at incremental costs, rather than requiring a complete replacement.
It should be possible to add, replace or update hardware and software components without shutting down the system.

Question 10

What Problems Does an ERP System Solve?

Answer 10

An information silo is isolated data stored in separated information systems.
 Data redundancy.
 Difficulties in consolidating meaningful and accurate
reporting. Time consuming, labor intensive, incomplete
and often inaccurate.
 Time-lag of performance data that impedes effective
planning and proactive decision-making.
Outdated, manual and paper-intensive processes  Data entry redundancies and errors.
 Inefficient use of employee resources.
 Order-to-delivery and production delay.
Global expansion complicated due to software integration issues
 Difficulties in gathering data to track performance of
each new location and its impact on the company as a
whole.
 Difficulties in managing costs a complex supply chain
 Language, currency and cultural barriers
 Inefficiencies in managing complex international
customer and vendor relationships.

Question 11

Definition: Enterprise Planning System (ERP)

Answer 11

Often called “enterprise system”.
 Adopts a BUSINESS PROCESS VIEW of the overall organization.
Integrates all departments and functions throughout an organization into a single INFORMATION SYSTEM so that employees can make enterprise-wide decisions by viewing ENTERPRISE-WIDE INFORMATION on all business operations.

Question 12

How does ERP work?

Answer 12

ERP allows INTEGRATION among different systems (modules)
 DATA SHARING among different modules
 JOINT EXECUTION among different modules
o Inputting data in one module TRIGGERS the execution
not only of that module but also all related modules.
 CONSOLIDATE operational, sales and financial information across multiple departments, sites and international locations
o Provide real-time visibility into business performance
spanning the entire organization.

Question 13

At the heart of all ERP systems is:

Answer 13

At the heart of all ERP systems is a DATABASE; when a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system.

Question 14

An ERP system takes data from across the enterprise:

Answer 14

An ERP system takes data from across the enterprise, consolidates and correlates the data, and generates enterprise-wide organizational reports.

Question 15

Benefits of ERP Systems

Answer 15

1. Data sharing occurs in real time.
2. Implements integrated processes based on
   industry best practices.
3. Managers see more data, leading to better insight.
4. Information silo problem resolved.
5. Better integration with supply chain partners.

Question 16

Challenges of Implementing ERP Systems

Answer 16

 GAP ANALYSIS – Identify differences between the business requirements and the capabilities of chosen ERP system – 80/20 RULE.
 CUSTOMIZATION – ERP systems are theoretically based on industry best practices, and the vendors intend that organizations deploy them as is. As a result, users may need to change their existing business processes to fit the predefined business processes of the software.
 DATA DEFINITION and OWNERSHIP issues.
 DATA MIGRATION – The process of MOVING, COPYING, AND RESTRUCTURING data from an existing system to the ERP system. Often, data migration is incomplete because some of the data in the existing system is either incompatible or not needed in the new system.
 CHANGE MANAGEMENT – Implementing ERP typically requires changes in existing business processes. Underestimating the complexity of the transition or CUTOVER AND TRAINING REQUIRED to implement a new ERP system is typically one of the main reasons for project failure.

Question 17

Costs of ERP Systems

Answer 17

The cost of an ERP system:
1. depends on the size and complexity of the software
package, which is a function of the size of the firm
2. includes new hardware required to run the system
3. includes consultant and business analyst fees
4. includes the time required for implementation (disruption of business)
5. includes training costs (cost to develop and deploy training plus employees time away from their job)

Question 18

Cloud ERP vs. On-Premise ERP

Answer 18

Cloud ERP
Advantages
    Cheaper up front Stable and easy to use
    More customizable
    Offer greater control over data
Disadvantages
     Less customizable in general
     Data security is in the hands of the vendor

On-Premise ERP
Advantages
More customizable
Offer greater control over data
Has more control over the implementation process
Disadvantages
Upfront investment can be seen as riskier
Implementation process can take significantly longer

Question 19

Conclusion

Answer 19

TRANSACTION PROCESSING SYSTEMS (TPS) monitor, store, collect, and process data generated from all business transactions. They were typically developed independently to support a particular functional area within an organization, resulting in “information silos”.
ENTERPRISE RESOURCE PLANNING (ERP) systems help companies operate more efficiently and effectively by combining all of an organization’s operational data into one central core information system.