lec630 2

IS 630 : Accounting Information IS 630 : Accounting Information SystemsSystems

http://www.csun.edu/~dn58412/IS630/IS630_F13.htm

Enterprise Systems & Enterprise Systems & e-Business Systemse-Business Systems

Lecture 2Lecture 2

Enterprise SystemsEnterprise Systems

Organization value chain and value system

Value of systems integration.Enterprise systems and enterprise

resources planning (ERP) systems.How an enterprise system supports major

business event processes.Pros and cons of implementing enterprise

systems.

IS 630 : Lecture 2 2

Enterprise Systems Value Enterprise Systems Value ChainChain

The value chain is the system of activities that transform inputs into outputs valued by the customer.

Enterprise systems facilitate value chain management.

The goal of an organization is to add the greatest value at the lowest cost thus increasing competitive advantage.



Porter’s Value ChainPorter’s Value Chain

FIRM INFRASTRUCTURE

INBOUNDLOGISTICS

OPERATIONS OUTBOUNDLOGISTIC

MARKETING& SALESLOGISTIC

SERVICE

HUMAN RESOURCE MANAGEMENT

TECHNOLOGY DEVELOPMENT

PROCUREMENT

VALUE

COST MARGIN


Value-Added ActivitiesValue-Added Activities

Customer-Value-Added Activity (maximize)• a business process that a customer is willing to pay for

Business-Value-Added Activity (minimize)• a business process that is essential to managing an

organization

Non-Value-Added Activity (eliminate)• customer will not pay for; business value will not be

increased

Goals of a business system: effective, efficient, competitive.

Internal Focus: Value ChainInternal Focus: Value Chain


External Focus : Value SystemExternal Focus : Value System


The Value of Systems The Value of Systems IntegrationIntegration

Coordinate activities in the value chain. Perform this coordination by sharing data across

business processes. The major objective of ERP systems: integrate

the functional areas of the organization by enabling seamless information flows across them.


Information SilosInformation Silos


Problems With Information SilosProblems With Information Silos


Inefficient Customer ServiceInefficient Customer Service


Solution to Inefficient Solution to Inefficient Customer ServiceCustomer Service

Enterprise system establishes ATP (available to promise) by checking warehouses and scheduled manufacturing.

Enterprise systems uses the central database to automatically determine price and creditworthiness.


Data Maintenance: Create Data Maintenance: Create Customer RecordCustomer Record


Business Event Data Processing:Business Event Data Processing:Enter Customer OrderEnter Customer Order


Using Stored Data for Decision Using Stored Data for Decision MakingMaking


Enterprise Systems and ERPsEnterprise Systems and ERPs

Enterprise systems:• Integrate business processes and information from all

of an organization’s functional areas.

• Helps coordinate the operation of business functions and provide a central information resource for the organization.

Enterprise Resource Planning (ERP) Systems:• Software packages that can be used for the core

systems necessary to support enterprise systems.


Integrate Business Process Integrate Business Process FunctionalityFunctionality

When purchasing office equipment an enterprise system might:

•Provide an electronic order form.

•Apply business rules.

•Route the order for approvals.

•Send the order to a buyer.

•Connect to the vendor.

•Use data to receive goods, project funding requirements, compare to budget, and analyze vendor performance.


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Enterprise Application : Enterprise Application : Enterprise Resource PlanningEnterprise Resource Planning

IS 630 : Lecture 2

19

Enterprise Application : Enterprise Application : Enterprise Application Integration (EAI)Enterprise Application Integration (EAI)

IS 630 : Lecture 2

Selected ERP VendorsSelected ERP Vendors


SAP Business SuiteSAP Business Suite


SAP NetWeaverSAP NetWeaver


Third-Party ModulesThird-Party Modules

Customer relationship management (CRM) software: builds and maintains customer-related database.

Customer self-service (CSS) software: allows customers to complete tasks without aid of organization’s employees.

Sales force automation (SFA) software: automates sales tasks such as order processing and tracking.


Third-Party Modules . . .Third-Party Modules . . .

Supply Chain Management (SCM) software: plans and executes demand planning, inventory acquisition, manufacturing, distributing and selling.

Product Lifecycle Management (PLM) software: manages product data from design through disposal of product.

Supplier Relationship Management (SRM) software: manages the interactions with organizations that supply the goods and services to an enterprise; includes procurement and contract management.


Connecting Third-Party Connecting Third-Party ModulesModules

Third-party modules are connected to ERP systems using middleware (software for connecting applications or modules):• Application programming interface (API), provided

by the application developer.• Enterprise application integration (EAI), processes,

software, standards, and hardware to link systems, allowing them to act as one.


Other Methods for Systems Other Methods for Systems IntegrationIntegration

Event-driven architecture (EDA), business events trigger messages sent by middleware between independent software modules.

Enterprise systems bus (ESB), communications-broker software that uses standardized protocols to let EDA applications communicate.

Business process management, comprehensive method for integrating manual and automated processes, applications, and systems.


Manufacturing& ProductionModule

Accounting and Financial Module

BusinessIntelligenceModule

Supply Chain Management Module

E-Business Module

Customer Relationship Management Module

Human Resources Module

Core ERP Modules

Extended ERP Modules

Suppliers CustomersERP Platform & Database

ERP ERP SystemSystemComponeComponentsnts

Major ERP ModulesMajor ERP Modules

Sales and Distribution (SD)• Record customer orders

• Shipping

• Billing

• Connections to:•Materials management module (MM)

•Financial accounting module (FI)

•Controlling module (CO)


Major ERP Modules . . .Major ERP Modules . . .

Materials Management (MM)• Acquisition and management of goods from vendors

•Purchase order preparation

•Receiving

•Recording invoice

• Interacts with

•Sales and distribution module (SD)

•Financial accounting module (FI)

•Controlling module (C0)



Financial Accounting (FI)• Plays a central role in the SAP system.• Incorporates data from other modules into general ledger

accounts and financial statements.• Business events from other modules are incorporated

into the general ledger accounts and included in the external financial statements.

• The FI module also includes accounts receivable and accounts payable functions to record and manage that data directly and to complete events begun in the SD and MM modules.



Controlling (CO)• Often called Controlling and Profitability Analysis (CO/PA)• Handles internal accounting including:

•Cost center accounting

•Profitability analysis for sales

•Activity-based accounting

•Budgeting



Human Resources (HR) • Recruiting, management and administration of personnel• Payroll processing• Training and travel• Benefits• Reports


Order-to-Cash ProcessOrder-to-Cash Process


SD Menu Options in the SAP SD Menu Options in the SAP SystemSystem


SD Audit Trail for Completion of SD Audit Trail for Completion of Steps in the SAP Sales ProcessSteps in the SAP Sales Process


Purchase-to-Pay ProcessPurchase-to-Pay Process


MM Menu Options in the SAP MM Menu Options in the SAP SystemSystem


Audit Trail for Completion of Steps Audit Trail for Completion of Steps in the SAP Purchase Processin the SAP Purchase Process


Pros of Enterprise SystemsPros of Enterprise Systems


Pros of ERP PackagesPros of ERP Packages


Cons of Enterprise Systems and Cons of Enterprise Systems and ERP PackagesERP Packages


E-Business SystemsE-Business Systems

Changes to organizational processes that occur when e-business is introduced.

Major approaches used to transfer electronic data during business events processing.

Complexities surrounding (EDI) when linking two different organizations’ computer systems for joint business event data processing.

Challenges when organizations pursue direct business links with customers via the Internet or other networks.

Business advantages through effective use of e-business.


Electronic Business (e-Electronic Business (e-Business)Business)

Electronic business (e-Business): application of electronic networks (including the Internet) to exchange information and link business processes among organizations and individuals.

Processes include interaction between back-office (i.e., internal) processes, such as distribution, manufacturing, and accounting, and front-office (i.e., external) processes, such as those that connect an organization to its customers and suppliers


Journalizing, Posting, and Journalizing, Posting, and Summarizing in a Manual Summarizing in a Manual

AccountingAccounting System System


Automated Accounting SystemAutomated Accounting System


Batch Processing andBatch Processing andPeriodic ModePeriodic Mode

Batch processing: the aggregation of several business events over some period of time with the subsequent processing of these data as a group by the information system.

Periodic mode: processing mode with delay between the various data processing steps.• Business event occurs• Record business event data• Update master data• Generate outputs


Online Transaction Entry Online Transaction Entry (OLTE)(OLTE)

Enter business events directly, using computer input device or PC, into the information system at the time and place the event occurs.

Merges the traditional subprocesses of business event occurrence (usually eliminating a source document) and record business event data.

Considered online because the data entry device is connected to the computer.


Online Real-Time (OLRT) Online Real-Time (OLRT)

Gather and record business event data at time of occurrence.

Update master data instantaneously.Provide results in real time.Also known as immediate mode in which little

or no delay occurs between any two data processing steps.


Methods of Conducting E-Methods of Conducting E-businessbusiness

E-mail – non-standardized messages

Electronic Document Management – capture, storage, management, and control of document images.

Electronic Data Interchange (EDI)- computer-to-computer exchange of business data in structured formats that allow direct processing of those electronic documents by the receiving computer system.

Internet Commerce - computer-to-computer exchange of business event data in structured or semi-structured formats via Internet communication that allows the initiation and consummation of business events


Electronic Data Interchange (EDI)Electronic Data Interchange (EDI)


TunnelingA technology that encapsulates, encrypts, and transmits data over the InternetA secure “tunnel” is created over the VPN connecting the two intranetsAuthenticationConfirms the identity of the remote user who is attempting to access information.

Virtual Private Network Virtual Private Network ( VPN )( VPN )


EDI ComponentsEDI Components

1. An originating application prepares an electronic business document, such as a purchase order (PO).

7. At the destination organization, an application processes the business data.


EDI Components 1 and 7EDI Components 1 and 7

1. Originating application prepares electronic business document, such as a purchase order (PO).

7. At the destination organization, an application processes the business data.



2. and 6. An application’s electronic business document must be translated from standard message format to the structured EDI format that will be recognized by the receiving computer.


Electronic Data Interchange Electronic Data Interchange Transaction SetTransaction Set



3. and 5. Establish a method to communicate electronic message. EDI service bureaus or the Internet may be used, saving time and money over other methods.


EDI Component 4EDI Component 4

4. Rather than connecting to each trading partner, an organization can use a VAN.


Web Services Implementation of Web Services Implementation of an SOA Applicationan SOA Application


Typical Electronic Communications Typical Electronic Communications Connection for Internet CommerceConnection for Internet Commerce


Typical Electronic Communications Typical Electronic Communications Connection for Internet Commerce Connection for Internet Commerce

. . .. . .Circles 1 and 7: Customer connects to

vendor in an extended form of client/server application

Circles 2 and 5: Connection to Internet through direct connection or network provider

Circles 4 and 6: Assurance services provide limited assurance that Web site is reliable and secure

Circle 3: Internet connection


E-Business ModelsE-Business Models

Electronic storefronts: Internet-located resources for displaying goods and services for sale and for conducting related sales events.

Internet auction markets: Internet base for companies to put products up for bid or for buyers to put proposed purchases up for bid.

Internet market exchanges: bring together a variety of suppliers in a given industry with one or more buyers in the same industry to provide Internet commerce through organized markets.


CommunicationCommunication Networks in Networks in e-Businesse-Business

Client/server technologyLocal area networks (LANs)Wide area networks (WANs)InternetWeb browsersIntranetExtranet


Intranet System ArchitectureIntranet System Architecture


Extranet System ArchitectureExtranet System Architecture


B2B Sell-side MarketplaceB2B Sell-side Marketplace

Key mechanisms: electronic catalogs and forward auctions (sell to highest bid price)


B2B Buy-side MarketplaceB2B Buy-side Marketplace

Key mechanisms: electronic catalogs (RFQ) and reverse auctions (buy from lowest bid price)


Electronic ExchangesElectronic Exchanges


Current E-Business ConceptsCurrent E-Business Concepts

Internet Assurance: service provided for a fee to vendors to provide limited assurance to users of the vendor’s Web site that the site is in fact reliable and event data security is reasonable. Examples include CPA WebTrust.

Cloud Computing: the use of the Internet to provide scalable services, such as software, and resources, such as data storage, to users. Examples include Gmail.


lec630 2

Business

business value

erps enterprise systems

activities customervalue

value chain management

enterprise resources

greatest value

erpsenterprise systems

business processes