Schematic of Standard Packaged Financial Systems and Reports

Commoditized standard packaged financial systems limit decision making support to transactions-based data.

Commoditized standard packaged financial systems are useful for transaction processing, fiduciary reporting, GAAP financials, routine operational monitoring, and regulatory and tax compliance only.

An example of the high-level structure of these commoditized package systems is shown below:

 

This structure is fed by data coming from a number of transaction processing systems.

A transaction processing system records internal and external transactions for a company and performs routine, repetitive tasks. It is a repository of data that is frequently accessed by other systems. Transactions can be recorded in batch or online mode. In batch mode the transactions are grouped together and processed as a unit in transactions files (journals) that are periodically posted to ledgers (master files). In online mode, each transaction is recorded in the general or subsidiary ledger as it occurs from which a transactions listing (journal) can be produced on demand.

A transaction is an event that generates of modifies data that is eventually stored in a general ledger. For example: Order entry systems, check processing systems, accounts receivable and payable systems, payroll systems, ticket reservation systems, etcetera. These systems help any company conduct operations and keep track of its activities.

An example of a scheme that integrates transaction processing sub-systems is shown below:

 

There are six steps in processing a transaction. They are: data entry, data validation, data processing and revalidation, storage, output generation and query support. Standard packaged financial management system operational monitoring reports are fed by data generated by these transaction processing sub-systems.

 

Typical standard packaged financial management system operational monitoring reports:

• Scheduled reports (produced periodically, or on a schedule, e.g., daily, weekly, monthly);
• Key indicator reports (summarizing critical activities, typically available on demand);
• Demand reports (furnishing tailored information at an internal user’s request);
• Exception reports, alarms (automatically produced when a situation is unusual or requires action).

In contrast, the types of analysis listed below can be based either on analysis of historical transactions data and/or on heuristics (that depend on non-transactions based data found outside of the general ledger) depending on the nature of problem space and the goals of the analysis:

• What if analysis (Incremental ad hoc changing of an input until a goal is reached);
• Sensitivity analysis (Quantification of uncertainties in relevant variables);
• Goal seeking analysis (Changing an input until a goal is reached on an automated systemic basis); 
• Optimization analysis (Finding an alternative with the most cost effective or highest achievable performance under given constraints, by maximizing desired factors and minimizing undesired ones).