Strategic Information Systems for Business and Enterprise

This report discusses the strengths of a manually operated sales transaction system in Rainbow Illusion Company and the advantages of a distributed computer system over a centralized one. It also highlights the risks involved in the sales transaction process and the problems avoided by the company through its system. The report provides insights into the role of cashiers, salesperson, and the central processing system in controlling sales transactions. It also discusses the situational pressures that increase the likelihood of fraud in the company.

Running head: STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE
Strategic Information Systems for Business and Enterprise
Name of the Student
Name of the University
Author’s note

1STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE
Executive Summary
The sole objective of the report is to highlight the strengths of a manually operated sales
transaction system taking a particular company as a reference. In the light of Rainbow
Illusion Company, the different strengths that can be found out in the sales transaction system
operated manually are noted down. The report structures in the following way. The notable
strengths of the company are found out on the basis of sales transaction system followed by
the risks involved in each segment of the operation. The drawbacks in the system which
compelled the company to adopt such a manual process are also pointed out. Finally, the
report concludes by bringing on a general discussion about the advantages possessed by the
distributed computer system over a centralised computer system.

2STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Six strengths in Rainbow Illusion’s system for controlling sales transactions..........................2
Problems avoided by Rainbow Illusion through incorporation of the strength in the system of
controlling sales transaction.......................................................................................................4
Two situational pressures in the company that would increase the likelihood of fraud............6
Advantages of a distributed computer system over a centralised one.......................................8
Conclusion..................................................................................................................................9
References................................................................................................................................10

3STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE
Introduction
The objective of the report is to provide an overview as well as an evaluation of the
transaction process that is carried in Rainbow Illusion Company. Along with the evaluation,
the different kinds of risks that are faced by the company with respect to sales transactions
are also stated. These are followed by the different kinds of internal controls that are
undertaken by the company for the purpose of mitigating these risks. The report structures in
the following manner. The six key strengths of Rainbow Illusion are highlighted focussing on
the procedure undertaken by the company for controlling its sales transactions. The problems
that are being avoided by the company are emphasised and the emergence of each strength is
clearly stated. At the last section the two situational pressures prevalent in retail companies
are described. At the last section a clear reason is stated about the preference of the retail
companies for installing a distributed computer system over a centralised computer system.
Discussion
Six strengths in Rainbow Illusion’s system for controlling sales transactions
Rainbow Illusion is an eminent name in the retail chain business of New South Wales.
The company has brought a about a typical procedure in the transaction of sales by hiring
sales personnel who are young and work part-time (Ingram et al. 2015). These sales
personnel are pain on an hourly basis and they even get commission for meeting and
overshooting their sales targets. By some means, this leads to a reduction in the cost of the
company.
Each transaction of the company is completely recorder through the maintenance of
cash registers that are unsophisticated. The cash register maintains a four-part sales invoice.
The sales invoices are not distinguished based on the methods of payment and are used

4STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE
irrespective of cash, cheque of bankcard. This can be another strength reflected in the sales
transaction of the company.
Considering the recording process of the sales floor, it is done manually with the help
of a salesperson. The salesperson is responsible for manually recording the sales transaction
and also the identification number of each employee. The complete sales procedure, starting
from the calculation of the total sales invoice to the calculation of the applied discount on the
products are done manually through the salesperson (vom Lehn 2014). The elements which
are recorded by the salesperson while in transaction are clothes, class, description of the
products, quantity as well as unit price of the products. The salesperson is also responsible for
taking into account the amount of tax imposed on sales (vom Lehn 2014). Taking note of all
these factors, the grand total is prepared by the salesperson at the end of his allotted job and
then he is supposed to show the invoice to the cashier while retaining one of the copies of the
sales book with himself.
Another strength that is significant in Rainbow Illusion Company is the role of the
cashier in handling the procedure of sales. The cashier has the function of reviewing the
invoice and provide a suitable input to the sale (Kumar 2018). The cash register that is
maintained by the cashier has the function of mechanically validating the invoice and through
this system, each transaction process is given a unique transaction number consecutively.
Another job of the cashier is to get a credit approval on the sales which are charged (Kumar
2018). He even approves the sales where the payment is made through cheque. After the
execution of the proper review of the invoices, the cashier is then responsible for handling
one copy of the invoice to the customer and keeping two copies with himself. One of the
copies would be required in the store while the other one would be kept as a bankcard for the
purpose of making deposits.

5STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE
Another strength in the procedure of the reviewing of invoice and giving input to the
sale, is the process of handling returns (Halonen 2014). The returns are handed over to the
customers following a similar procedure. However, the return process has only one
difference, that is, issue of return slip by the cashier, which is an additional function in the
process of return.
The primary role in the process of sales transaction is solely played by the cashier.
The cashier is responsible for placing all the orders for the sales invoices in a sequential
manner and also checks the total of different modes of payments such as cash, bankcard,
cheque sales, cash and the returns on the credit card (Fu 2014). All these figures are then
reconciled by the assistant manager and are recorded in the cash register. At the end of the
process, all the elements of the process such as the tapes for maintaining the cash register,
sales invoices and the slips issued for return are forwarded to the central processing
department where they are processed everyday after the end of the sales transaction process
(Fu 2014). The central processing system is located at the corporate headquarter of the
company where the information is processed in the data processing department. The data
processing department review the sales on a weekly basis and prepares the report of the sales
figure and the commission activity for returning over to the manager for the purpose of
analysis and review. The final bank deposit is prepared on a daily basis by the manager and
he also prepares the reconciliation report regularly.
Problems avoided by Rainbow Illusion through incorporation of the strength in the
system of controlling sales transaction
The first identified strength of Rainbow Illusion Company is the part-time working
option of the cashiers and the sales personnel (Widmer 2016). In the company the maximum
duties are allotted to the cashier. Therefore it has been realised by the company that the

6STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE
cashiers had to be paid more wages for a full-time position. This has led to the reduction of
the cost of the company.
Another significant strength that is highlighted by the company is the manual
recordkeeping process as undertaken by the salesperson (Fordham and Hamilton 2017). For
the companies who wish to record this process through accounting software, are advised to
seek help from any accountant or financial adviser for the purpose of purchasing software
required for keeping records (Fordham and Hamilton 2017). This can be a hectic and time-
taking process which is completely eliminated by Rainbow Illusion company through the
manual process of keeping records of sales by the salesperson.
Another important function of the salesperson which can be considered as the key
strength of the company is the calculation of the amount of imposed tax on the sales figure. If
the company had been unable to file taxes manually, it had to choose an accounting software
that is in compliance with the Australian Taxation regulations (Okello 2014). For putting
such an accounting software into function, the company needs to check the official website of
the Australian taxation and get the license for the software which is a hectic and time
consuming process (Okello 2014). Another constraint for this process would be requirement
of additional costs for the installation of the accounting software.
The issuing as well as reviewing of the sales invoices are done through the
salesperson and the cashier respectively. This is a convenient way of handling invoices as the
invoices can be issued anytime without any additional training of the employees (Kobelsky
2014). This makes it even easier for the staff to bill customers directly without a middleman.
If this system had not been improvised the sales staff had to wait for the accounting office to
send the bills to the customer at a later date (Kobelsky 2014). Another advantage of this
manual invoicing can be lowering of the security risks. The electronic invoicing system is

7STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE
prone to hacking and data theft by the cyber criminals as the data is easily accessible to the
common public. Keeping manual invoices would help in the reduction of the amount of
information that is prone to risk. Due to electronic invoicing system, the identification and
detection of the error in the information is difficult and it takes more time to rectify it (Veselá
and Radiměřský 2014). In the manual process, the information can be easily changed without
any hassle. The staff only needs to throw the old invoice and prepare a new one.
The next important element in the sales transaction of Rainbow Illusion Company is
the function of the data processing system that is located as a central unit at the headquarters
of the company (Womack and Jones 2015). This central unit helps in bringing greater
efficiency to the system. Due to the absence of this centralisation, the company has faced
many departmental problems due to lack of integration between the departments (Womack
and Jones 2015). Another risk could be error in mismanagement of one department that might
lead errors in the numerical figures. The centralised processing system reviews all the
financial elements and detects the errors for further improvements. Another risk of not having
the centralised processing system is the increase in the regulatory costs of the company which
is reduced to a greater extent by the centralised processing system.
Two situational pressures in the company that would increase the likelihood of fraud
The entire system of sales transaction is done in a manual way in Rainbow Illusion
company. Due to the involvement of people in the system, the likelihood of fraud increases as
compared to an electronic system of sales transaction (Gee 2014). The two important
departments where there are maximum chances of fraudulent activities taking place are the
departments of the salesperson and the department of the cashier as they have the maximum
job functions.

8STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE
One of the most onerous routine tasks of the managers as highlighted by the company
is the reconciliation of transactional data. The process might invite errors while handling a
large number of data at the same time by the managers (Llanos, Sánchez and Maronna 2017).
Due to such errors in data, the companies have very little or limited time to rectify such
errors. Therefore, it ultimately becomes the job of the analysts to identify these errors and
rectify them through suitable adjustments.
Fraudulent activities can occur at each and every stage of the manual transaction
process when the salesperson or the cashier manipulates any vital information that is related
to the transaction process (West and Bhattacharya 2016). The salesperson calculates the total
sales invoice as well as the total discount applied on the products. He might manipulate such
information and record false information in those places which would invite fraudulent
activities in the process.
Another error might occur in the process of reviewing and matching the data with the
desired information and also in the reconciliation process. A manual matching process of data
increases the risk of a false match (Bradlow et al. 2017). There is presence of one-to-many
and many-to-many relationships between the sources of data as they are coming from
different departments. Due to such a voluminous data coupled with a limited time, the
respective personnel makes assumptions in rare cases which increases the chances of
anomalies in data.
Another risk that is prevalent in the manual system of sales transaction is the presence
of inaccurate results in the system (Groomer and Murthy 2018). Due to an automatic process,
the results are calculated properly with accuracy as the electronic system is based on a user-
defined logic. Manual process brings errors in the system and the accuracy level drops down

9STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE
in the further activities (Groomer and Murthy 2018). There might be unexpected losses and
thefts in the process by the employees which would be very difficult to detect.
Risk of a centralised processing system is also remarkable in the situation of Rainbow
Illusion Company. There is remote control of the review system and the entire decision of
passing the bills is taken by the data processing unit that is centrally located (Groomer and
Murthy 2018). This might sometimes lead to delay of work and the employees might
sometimes be demotivated due to their lack of participation in the review process.
Advantages of a distributed computer system over a centralised one
The distributed computer system is mostly preferred by the companies over the
centralized computer system due to the following reasons.
1) The distributed computer system provides incremental growth to the business
through the addition of small increments supplied by the power of the computers
(Wu 2017).
2) The distributed computer systems are more reliable than a centralised one as the
system does not stop or malfunction due to the crashing of any one of its
components or machines.
3) The speed of the distributed computer system is always greater than a mainframe
system (Bhattacharyya et al. 2018). Even the computing power of the distributed
computer system is more than a centralised computer system.
4) Another important advantage of the distributed computer system is that it is
regarded as an open system. This is considered to be the most important and
characteristic point of the distributed computer system (Abadi et al. 2016). Due to
its openness, the system can integrate with other systems and can conveniently
communicate with them. For a closed system such as a centralised system, it

10STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE
becomes very difficult to communicate with the other systems in such an easy
way.
5) Another very significant advantage of the distributed system over the centralised
system is that it is designed in such a way that many users can work together in a
parallel way. The companies implementing a distributive system aim to achieve
their goals through the maximum speed-up of their processes. A centralised
process on the other hand takes much longer time to carry on its operations.
6) For companies having distribution in the retail chains, the tracking of inventory is
helpful while carrying out in a distributed system. At each retail store or outlet, a
system can be introduced that would track the inventory of that specific store
(Rushton, Croucher and Baker 2014). Even all the sales transaction processes are
useful if done in a distributed manner rather than implementing a centralised sales
processing system. Due to presence of distributed computers, the queries related
to each retail chain are solved in a proper way and even the updates are
transmitted to the respective local retail chains in an effective manner.
7) A distributed system is often called a computer-supported cooperative work where
there is a collaborative work carried out by the group of people who are located
far from each other (Vlachos 2014). A joint report is hence produced in this case.
This is always useful as it consumers less time as compared to a centrally located
computer system.
Conclusion
From the above report it can be concluded that the company, that is, Rainbow Illusion
has been efficiently handling its process of the sales transaction system through its major
strengths. The major strengths that have been reflected by the company with respect to its
internal control the handling of its transaction system are explained elaborately in the paper.

11STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE
Analysing the strengths, it has been found out that the company is engaged in performing its
sales transaction system primary on a manual basis where the cashier as well as the
salesperson plays a major role. The further sections of the report talks about the risks faced
by the company in its past days that had led to the introduction of such a system of operation.
The end sections discusses about the disadvantages of the current system of operation which
might lead to the enhancement of the fraudulent activities. At the last part, the different
advantages of a distributed computer system over a centralised computer system are stated
briefly.
References
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