ON-LINE TRANSACTION PROCESSING
In most firms, enterprisewide on-line transaction processing (OLTP)* systems collect and process mission-critical accounting and operational applications. Rather than revise their outdated and unintegrated legacy COBOL OLTP systems,** a number of larger firms are moving such systems off mainframes to client/server networks. These firms are implementing integrated OLTP enterprise resource planning (ERP) systems, such as SAP R/3,*** which overcome most of the limitations of the legacy applications, allowing managers to make more informed and timely decisions. R/3 is comprised of a set of integrated software modules that are distributed across enterprise network servers. A transaction only has to be entered into the R/3 system once, and all enterprise integrated data-base files affecting it are updated in real time. The R/3 modules automate finance and accounting, human resources, distribution, and manufacturing applications. Before these modules are implemented, firms must modify their business processes to conform to the ERP software, thus forcing them to perform business process reengineering.
However, OLTP ERP systems, as well as legacy systems, rarely generate reports containing the multidimensional aspects of operational systems information.**** To remedy this shortcoming, firms can develop two types of on-line analytical processing (OLAP) systems that supplement ERP or legacy systems. First, a firm can model the relevant aspects of business events contained within the business processes. This approach allows lower level and middle managers, as well as professionals, such as accountants, to use the query language commands of a relational data-base management software package. End users can manipulate or aggregate the relevant portions of business events into a variety of reports. Data modeling and data bases are examined in Chapter 6.
DATA MARTS AND DATA WAREHOUSES
Second, a firm can create a data mart or a data warehouse to generate predefined reports for executives and other managers. Both data marts and data warehouses, which operate within LAN-based client/server platforms, organize and store copies of "informational" or decision support data. A data mart stores copies of decision
*On-line transaction processing systems input each transaction into the computer system as it occurs, immediately edits it, and immediately updates all data-base files affected by the transaction. Reports can. also be generated immediately. Thus OLTP takes place in real time.
**Firms rarely reengineer their business processes from scratch and rewrite their mainframe legacy COBOL programs because such an undertaking is unusually complex, requires years of in-house systems development, and is prohibitively expensive.
***Software R/3 was developed by Systems, Applications, and Products (SAP), a German firm, and the leading global provider of client/server enterprise resource planning (ERP) software. R/3, released in 1992, is now being used by more than 22,000 larger companies worldwide. SAP is currently developing a version of R/3 for moderate-size companies. Other firms that market ERP software include PeopleSoft, Oracle, and Baan.
****Recall in Chapter 2 that we defined operational systems as a collection of business processes or ac-
tivities through which resources are transformed into the products and/or services that a firm provides. These systems enable firms to complete day-to-day routine tasks, such as filling orders, storing inventory, shipping merchandise, handling customer complaints, distributing mail, and scheduling production.