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Chapter 8

ADMS 2511 Chapter Notes - Chapter 8: Expense Management, Economic Order Quantity, Enterprise Resource Planning


Department
Administrative Studies
Course Code
ADMS 2511
Professor
Anita Patel
Chapter
8

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CHAPTER 8. ORGANIZATIONAL INFORMATION SYSTEMS
TRANSACTION PROCESSING SYSTEMS
Transaction – any business event that generates data worthy of being captured and stored in a
database.
Transaction processing systems (TPSs) monitor, collect, store, and process data generated from
all business transactions.
Inputs to functional area information systems, decision support systems, customer
relationship management, knowledge management, and e-commerce.
Handle high volume and large variations in volume efficiently
Avoid errors and downtime,
Record results accurately and securely
Main privacy and security
Standard process of TPS-
Data are collected by people/sensors, entered into the computer via an input device. Use
source data automation for TPS data entry of large volume
System processes data in one of the two ways-
1. Batch processing-firm collects data from transactions as they occur, placing them in
groups or batches. The system then prepares and processes the batches
periodically
2. On-line processing/real-time transaction processing-business transactions are
processed on-line as soon as they occur.
FUNCTIONAL AREA INFORMATION SYSTEMS (FAISs)
Provide information primarily to lower and middle level managers in the various functional areas,
to help plan, organize, and control operations, through reports.
Purpose-increasing internal efficiencies and effectiveness.
Information systems for accounting and finance
Primary mission: manage money flows into, within, and out of organizations.
Financial planning and budgeting : purpose: planning, budgeting, acquisition and
allocation.
I. Financial and economic forecasting: knowledge about the availability and cost of
money –used for successful financial planning. Cash flow projections are particularly
important, because they tell organizations what funds they need and when, and
how they will acquire them.

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Decision about funding-ongoing operations and for capital investment supported by
Decision support systems, business intelligence applications, expert systems
II. Budgeting: annual budget allocates organization’s financial resources among
participants and activities, in the best way supporting organization’s missions and
goals.
Managing financial transactions : Peachtree by sage- sales ledger, purchase ledger, cash
book, sales order processing, invoicing, inventory control, fixed assets register, eg.
Canadian payroll software.
E-commerce financial transactions-accessing customer’s financial data, inventory levels,
manufacturing databases. Others-
1. Global stock exchanges-use of internet to buy and sell stocks and broadcast real-time
stock prices.
2. Managing multiple currencies-global trades involves financial transactions-multiple
currencies- conversion ratio changes. Financial/accounting system, collects data, convert,
report within seconds, in multiple languages.
3. Virtual close-organizations close their books quarterly as per regulations. Modern
organization-close anytime on short notice. Ability to close quickly-virtual close.
4. Expense management automation (EMA) - systems that automate data entry and
processing of travel and entertainment expenses, quickly and consistently collect expense
information, enforce company policies and contracts, reduce unplanned purchase or travel
expenses, and reimburse employee expenses quickly.
Investment Management: problem:
1. Thousands of investment alternatives and dispersed.
2. Subject to complex regulations and tax laws
3. Manager need to evaluate financial and economic reports provided by diverse
institutions
To monitor, interpret, analyze huge online financial data- two major IT tools-
1. Internet search engines
2. Business intelligence and decision support software
Control and Auditing: survival depends on-ability to forecast and secure sufficient cash
flow
Need for effective control, several forms of control:
1. Budgetary control: annual budget divided into monthly allocations. Managers
monitor departmental expenditures with planned budget and operational progress
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