ACCA PM Syllabus A. Management Information Systems and Data Analytics - Main Characteristics - Notes ^{6 / 7}

A transaction processing system is a computerized system that performs and records the daily, routine transactions necessary to conduct the business. It collect, stores, modifies and retrieves the transactions of an organization.

TPS are built to handle regular, high volume, data processing needs, e.g. invoicing, order processing. They tend to be inflexible (every transaction processed in the same way) and they are often developed with strong emphasis on efficiency and reliability to save time and money. TPS are mainly used by the operational managers to make day-to-day decisions.

Two Types of Transaction Processing Systems

1. Batch transaction processing collects transaction data as a group, with the actual updating of the database later when it is scheduled or there is enough data. 

   E.g. the way that credit card companies process billing. The customer does not receive a bill for each separate credit card purchase but one monthly bill for all of that month’s purchases. 

   The bill is created through batch processing, where all of the data is collected and held until the bill is processed as a batch at the end of the billing cycle. 

   Another example is the clearing of presented cheques.

2. Real time transaction processing is the immediate processing of data.  A number of users can perform transactions at the same time.  Access to a central online database is required. Examples include reservation systems for flights, point of sale terminal and library loans.

Management Information Systems (MIS)

A management information system provides managers with information on the basis of which they can make better, more informed decisions and exercise oversight and control of the parts of the organisations they are responsible for. 

It collates information from the TPS and provides periodic reports to middle managers to control the business.

For example:

1. Data on goods sold is collected by the data processing system, using a barcode scanner and an EPOS system, and stored on a computer file;

2. An operational information system then reads this data and produces a list of items that need reordering;

3. A management information system may analyse the sales data to highlight sales trends and use this information to plan a new marketing campaign, adjust price levels or plan an increase or reduction in production facilities.

Decision support systems offer enhanced ability to manipulate the data, model it, and allow a user (decision maker) to explore alternative scenarios. This Information system helps the decision maker to make his own informed decisions and exercise his own judgement.

Examples of DSS in accounting include:

• Cost accounting system

• Capital budgeting system

• Budget variance analysis system

• General decision support system

An executive information system provides information to senior managers and executives who need a broad mix of internal and external information to support strategic decisions. It draws data from the MIS and also includes data from external sources, for e.g. competition.

EIS are designed to help senior managers get information quickly and effectively.  They include data analysis (e.g. interactive graphical displays) and modeling tools, e.g. what-if-analysis.

Enterprise resource planning system (ERP system)

Enterprise resource planning systems integrate internal and external management information across an entire organization, e.g. finance/accounting, manufacturing, sales and service, purchasing and human resources are integrated into one single system using an integrated software application. 

The purpose of ERP system is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.

Where an ERP system is implemented, this has had a significant impact on the work of management accountants.

1. Less time spent on data collection

2. Less time spent on data analysis and routine report generation

3. More involvement in business decision-making

4. More focus on internal reporting, e.g. performance measures and control issues

5. More focus on the external environment, e.g. benchmarking

6. Focus on forward looking rather than historical analysis

7. Need for improved communication skills