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Chapter 8

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Administrative Studies
ADMS 2511
Cristobal Sanchez- Rodriguez

Chapter 8 Notes Transaction Processing Systems - A transaction: is any business event that generates data worthy of being captured and stored in a database - Transaction Processing System (TPSs): monitor, collect, store and process data generated from all business transactions. - these pieces of data are inputs to the organizations database, they are also inputs to the functional information systems, decision support systems, customer relationship management, knowledge management and e commerce. - TPS handle high vole and large variation in volume, efficiently and avoid errors, record results accurately and securely, and maintain privacy and security. - common pattern, first data is collected by people or sensors, and entered into the computer via an input device - next, the system processes data in one of two basic ways: batch processing or online processing - in batch processing, the firm collects data from transactions as they occur, placing it in groups or batches, the system then prepares and processes the batches periodically - in real time transaction processing, business transactions are processed online as soon as they occur - for example, when pay for an item at a store, the system records the sale by reducing the inventory on hand by a unit, increasing the store’s cash position by the amount paid and increasing sales figures for the item by one unit, by means of online technologies and real time. Produces Detailed Report ^ Scan item  Business Event or Transaction  Transaction Processing System  Organizations Data base which include Functional Area Information System (FAIS), DSS (Decision Support System), BI (Business Intelligence), ES (expert system) Functional Area Information System - FAIS provides information mainly to lower and middle level managers in the functional areas - managers use this information to help plan, organize and control operations - information provided in a variety of reports - FAIS access data from the organizations databases, however to create management reports the FAISs also uses data form external databases. Functional Area Systems Reports - generates reports in its functional area - the FAIS also sends information to corporate database or data warehouse where it can be used for decision support - 3 types of reports: routine, ad hoc (on demand), and exception - Routine Reports: are produced at scheduled intervals, they range from hourly quality control reports to daily reports on absenteeism rates - although routine reports are extremely valuable to an organization, managers frequently need special information that is not included in these reports - out of routine reports are called ad hoc (on demand) reports for ex when they need the report today, or for the last three days or not for one week) - Ad hoc reports also can include requests for the following types of information: - Drill Down Reports: show a greater level of detail. Example, manager might examine sales by region and decide to drill down to more detail to look at sales by store and then sales by salesperson - Key – Indicator Reports: summarize the performance of critical activities. Example, a chief financial officer might want to monitor cash flow and cash on hand. - Comparative Reports: compare for example, performances of different business units or time periods. - Exception Reports: include only information that falls outside of certain threshold standards. - to implement management by exception, management first creates performance standards - the company then sets up systems to monitor performance, compare actual performance to the standards and identify predefined exceptions. - therefore would identify if sales fall within a specific region, and the ones that fall outside, could be a problem which they can focus on. Information Systems For Specific Functional Areas - typical function specific systems are accounting, finance, marketing, production/operations (POM) and human resources management - on page 242, table of activities support by each functional area information systems - developing a new product for example involves all functional areas therefore to solve this problem, companies developed enterprise resource planning system - on page 243, there are examples of information systems supporting the functional areas Enterprise Resource Planning Systems: - Enterprise resource planning (ERP) systems integrate the planning, management, and use of all of an organizations resources - major objectives of ERP systems are to tightly integrate the functional areas of the organization and to enable information to flow seamlessly across the functional areas - ERP system provides the information necessary to control the business procedures of the organization - A business process: is a set of related steps or procedures designed to produce a specific outcome - ERP software includes a set of interdependent software modules, linked to a common database that provides support for the internal business processes in the following functional areas: finance and accounting – ex. Forecasting, sales and marketing – ex. Order processing, Manufacturing and production – ex. Inventory management, and human resources- ex. Payroll. - the modules are built around predefined business processes and users access them through a single interface - the business processes in ERP software are often predefined by the best practices that the ERP vendor has developed - Best Practices: the most successful solutions or problem solving methods for achieving a business objective - leading ERP vendors are: SAP, Oracle, Peoplesoft - DRAWBACKS FOR ERP SYSTEMS: - extremely complex, expensive and time consuming to implement - companies may need to change existing business processes to fit the predefined business processes of the software since companies with well established procedures, this requirement can be a problem - companies must purchase the entire software package even if they require only a few of the modules. Customer Relationship Management Systems: - customer relationship management (CRM) is an enterprise wide effort to acquire and retain customers - CRM recognizes that customers are the core of a business and that a company’s success depends on effectively managing its relationships with them - CRM focuses on building long term and sustainable customer relationships that add value both for the customer and the company - CRM includes one to one relationship between customer and seller - in essence, CRM is based on a simple idea: Treat different customers differently - acquiring a new customer can cost many times more than retaining an existing customer. Therefore CRM helps organizations to keep profitable customers, and to maximize lifetime revenue from them - smart companies encourage customers to participate in the development of products, services and solution, in order to building enduring one to one relationships in CRM initiative, a company must continuously interact with customers individually - high customer loyalty which will increase the firms profits Customer Relationship Management Applications: -CRM systems integrate customer data from various organizational sources, analyze it, and then provide the results to both employees and customer touch points - A customer touch point: is a method of interaction with a customer, such as telephone, email, a customer service or help desk, conventional mail, a website or a store - CRM systems provide applications in three major areas: sales, marketing, and customer service Sales: - Sales force Automation (SFA) functions in CRM systems to make salespeople more productive by helping them focus on the most profitable customers - SFA functions provide data such as sales prospect and contact information, product information, product configurations and sales quotas - SFA software can integrate all the information about a particular customer so the sales person can put together a personalized presentation for that customer Marketing: - CRM systems support marketing campaigns by providing prospect and customer data, product and service information, qualified sales leads, and tools for analyzing marketing and customer data - they enhance opportunities for cross selling, up selling and bundling - Cross selling refers to the marketing of complementary products to customers - Up – selling: marketing of higher value products or services to new or existing customers - Bundling – is a type of cross selling in which a vendor sells a combination of products together at a lower price than the combined costs of the individual products Customer Service: - customer service functions in CRM systems provide information and tools to make call centers, help desks and cusomter support staff more efficient - these function often include web based self service capabilities - CRM systems can personalize interactive experiences to induce a consumer to commit to a purchase or to remain loyal to a company - the ability to download manuals and solutions to common problems at any time is another innovation of web based customer service - customized information such as product and warranty information can be efficiently delivered when the customer logs on to the vendor’s website - dell computer revolutionized the purchasing of computers by letting customer configure their own systems. - customers can view their account balances or check the shipping status of their orders at any time from their computers or cell phones - many companies allow customers to create their own individual web pages where there pages can be used to record purchases, preferences as well as problems and requests - email has become the most popular tool of customer service, where it is inexpensive, fast, and is used to answer inquiries from customers. Also can firms can send out mass emails to provide further information and promotional tactics. - one of the most important tools of customer service is the call center. Call centers are typically the ‘face’ of the organization to its customers, they handle incoming product support and customer inquiries. Supply Chain Management Systems: - Supply chain: is the flow of materials, information, money and services from raw material suppliers, through factories and warehouses, to the end customers - a supply chain also includes the organizations and processes that create and deliver products, information and services to end customers - the function of Supply Chain Management (SCM): is to plan, organize, and optimize the supply chains activities - SCM utilizes information systems - goal of SCM systems is to reduce friction along the supply chain - friction can involve increased time, costs and inventories as well as decreased customer satisfaction - SCM systems then r
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