Lecture Management information systems: Solving business problems with information technology – Chapter 5

Chapter 5 introduce the networks and telecommunications. After completing this chapter, you will be able to understand: How do you protect your information resources? What are the primary threats to an information system? What primary options are used to provide computer security? What non-computer-based tools can be used to provide additional security?,...

Copyright © 1998-2002 by Jerry Post

Introduction to MIS

Chapter 5 Operations and Transactions

Central Computer

Sales Reports

POS Terminals/

Registers Customers

EDI

Supplier Bank

Additional

Stores

Process Control

Transactions

 The Role of Accounting

 HRM and Transaction Processing

 Cases: Retail Sales

 Appendix: Accounting Business Operations

Tactical Management

Strategic Mgt.

EISES

Proc

ess

Control

Cash Registers Customers

EDI

Supplier Bank

Process Control

Additional

Stores Strategy

Tactics Operations

Warehouse Inventory Management

CEO Information

Data Capture: Sales

Collecting transaction data at the point of sale ensures accurate data,

speeds transactions, and provides up-to-the-minute data to managers

Control settingsand commands

Electronic Data Interchange

 $30 to $40 for each purchase order

 $24 to $28 for suppliers to handle

OrderDatabase

& Accounts

Co nv ert da ta

Firms must support multiple data

formats and sometimes different

computers for each contact

EDI: Standards

Supplier

Customer 1

ProductionDatabase

& Accounts

OrderDatabase

ard

RouteMessages

Messagesto/fromany customer

Conv

ert toStand

ard

Conv

ert toStand

ard

EDI Standards

Message Segment

EDI On The Internet

 Questionable reliability.

 Security is challenging

Date & Time Value

Item Buyer Seller

Item_Id Description Location

Buyer_Id Address Phone

Seller_Id Address Phone

4 Government not invalidate sale.

E-Commerce Risk Mitigation

entity.

Encrypt(Database)

Consumer is protected by credit card company

Vendor is not protected by

credit card and has only weak methods to verify customer identity

Shopping on the Internet

 Advantages

 Search and compare

 More tailored information

 Wider selection

 More competition

 Speed: especially if you can

download the product

 Comparison databases:

What did others buy?

 Drawbacks

 Availability: requires a computer and an ISP

 Slow speed limits graphics and video

 Limited portability

 Trust: vendors and consumers

 Taxation

 Copyrights and piracy.

 World intellectual property rights organization (WIPO)

 U.S 1998 law making it a crime to circumvent

protection schemes

 Open distribution and publishing reduces control of existing publishers.

E-Commerce and Taxes

 Governor’s association.

 Led by Leavitt from Utah

 Currently over 30,000 tax

 If a firm has a “presence” in the state, it must collect the tax

Security and Trust

 Vendor is motivated to secure the server.

 Commercial software exists

to provide secure sites.

 Trust

 Is the vendor legitimate?

 Consider: Internet gambling.

 What if offshore vendor refuses to pay off a bet?

 As long as Internet gambling is illegal (in the U.S.) consumer has no recourse.

 Otherwise, use credit cards and rely on banks.

 Secure certificates.

 Is the customer legitimate?

 Rely on credit card data.

 Some vendors will ship only

to billing address.

 Certificate authority.

Internet International Issues

 Collection and payment for sales

 Currently rely on credit cards

 Many people do not use credit cards

 Does not protect vendor

 Coordinate and stop fraud.

 Control harassment, spamming, and denial of service attacks.

 U.S classifies as munitions.

 France does not allow citizens to use encryption at all.

content.

B2B Auction Markets

Buyers and sellers connected through a Web site.

Payment Mechanisms

 High transaction costs.

 Not feasible for small payments.

 Do not protect the merchant.

Digital Cash Payment

Vendor

Trusted Party

Conversion to real money.

Bank

(A) Consumer purchases a cash value that can be used only once

(B) Customer choose product, sends ID or digital cash number

(C) Cash amount is verified and added to vendor account

 Changes by two people at

same time gives bad data

 Too much detail

 Hard to get detail

Concurrency and Data Integrity

Customer Accounts Sanchez 500

7) add purchase 8) store new result (850) Sanchez 850

Multitasking and Concurrency

Accounting

 Keep past data books open

 Post to prior years

 Allocate department expenses

 Accounts Receivable

 Automatic early discounts

 Interest on late payments

 Multiple shipping addresses

 Sales tax

 Automatic reminder notices

 Automatic monthly fees

 Keep monthly details

 Accounts payable

 Check reconciliation

 Automatic recurring entries

 Monitor payment discounts

 Select bills from screen

 Pay by item, not just total bill

Produce Management Accounting Reports

Produce Shareholder Reports

Sales & Receivables Inventory Changes

Management Reports

Product Inventory

Orders &

Accounts Payable

Inventory Management,

& Fixed Asset

& Cost Acct.

Payroll &

Employee Benefits

Cash Management, Investments, Foreign Exchange

Supply &

In-process Inventory

Governments

Tax Filing &

Planning

Strategic

& Tactical Planning

Inventory Changes Payables

Capital Acct

Sales Tax

Tax Filings Tax data

Receivables Inventory &

Assets Payroll

Planning Reports

Planning Data

The Role of Accounting

Management Managers

Employees

Customers

Government

Process Payroll Benefits Vacation

Compile Merit Evaluations

& Salary Changes

Job Applicants

Produce Management Employee Reports

Screen Jobs &

Applications

Produce Government Reports

Employee Data  Files

Applicant Data

Employee Summaries

Job &

Applicant Data

EEO Data

Government Reports Management

Reports

Cases: Retail Sales

Cases: Home Depot

Toys R Us Walgreens

What is the company’s current status?

What is the Internet strategy?

How does the company use information technology?

What are the prospects for the industry?

www.homedepot.com

www.toysrus.com

www.walgreens.com

Appendix: Balance Sheet

Assets

Current AssetsPlant and Equipment

Liabilities and Owner’s Equity

Current liabilitiesLong-term liabilitiesOwner’s equity

Total liabilities and owner’s equity

Albertson’s, 2000Numbers in thousands

Assets

Current Assets

Cash and equivalent $57

Accounts and notes receivable, net 547

Inventories 3,364

Prepaid expenses 155

Property held for sale 71

Refundable income taxes 36

Deferred income taxes 70

Total Current Assets 4,300

Land, Buildings, and Equipment, net 9,622

Goodwill and Intangibles, net 1,705

Current portion of lease obligations 20

Current maturities of long-term debt 62

Deferred income taxes 116

Other long-term liabilities 715

Total long-term liabilities 6,989

Appendix: Earnings

SalesCost of merch soldGross profit

Operating and admin exp.Operating profit

Interest incomeInterest expenseEarnings before taxesFederal and state taxesNet earnings

SharesEarnings per share

Appendix: Cash Flow

Net earningsCash flow from operations Depreciation and amortization (Gain) or loss on asset sales(Increase) decrease in current assets Receivables

InventoriesIncrease (decrease) in cur liabilities Accounts payable

Accrued payroll and benefits Income taxes payable

Change from investing Property, plant, equipment Proceeds from sales of assets Cash used in investing

Change from financing Proceeds from long-term borrowing Payments of long-term borrowing

Cash flows from operations

Net gain on asset sales (4)

Net deferred income taxes 11

Other decrease (increase) (14)

Net cash provided by operations 1,780

Cash flows from investments

Capital expenditures (1,771)

Disposal of land, buildings, equipment 189

Decrease (increase) in other assets 33

Net cash used in investing (1,549)

Cash flows from financing

Proceeds from long-term borrowing 1,232

Payments on long-term borrowing (417)

Commercial paper and bank loans (475)

Proceeds from stock options exercised 7

Cash dividends paid (315)

Stock purchases and retirements (451)

Net case (used) provided by financing (419)

Net (decrease) increase in cash (188)

Appendix: Equity

Beginning balanceNet earnings/retained earningsNew stock

DividendsStock repurchaseEnding balance