mis es lecture 1 processes in erp
DESCRIPTION
MIS ES Lecture 1 Processes in ERPTRANSCRIPT
Management Information Systems / Enterprise Systems
Processes in ERP
Dr Oliver Müller
3
Agenda
– Introduction to MIS/ES
– Foundations of ERP
– SAP ERP
> Key concepts and terms
> Guided tour
INTRODUCTION TO MIS/ES
5
What is an Information System?
«Interrelated components working together to collect, process, store, and disseminate information to support decision making, coordination, control, and analysis in an organization»
Source: Laudon & Laudon, 2014
6
Information Systems as Socio-Technical Systems (STS)
Source: Bostrom & Heinen, 1977
7
Example: Disney Operational Command Center
FOUNDATIONS OF ERP
9
Enterprise Architecture
Source: Laudon & Laudon, 2014
…also known as Enterprise Systems (ES)
…also known as Business Intelligence (BI)
10
Enterprise Systems
Enterprise applications (or systems) are designed to integrate computer systems that run all phases of an enterprise’s operations to facilitate cooperation and coordination of work across the enterprise. The intent is to integrate core business processes (e.g., sales, accounting, finance, human resources, inventory and manufacturing). The ideal enterprise system could control all major business processes in real time via a single software architecture on a client/server platform. Enterprise software is expanding its scope to link the enterprise with suppliers, business partners and customers.
Source: http://www.gartner.com/it-glossary/enterprise-applications
ERP
CRM
SRM
SCM
BI
ECM
11
Enterprise Resource Planning (ERP) Systems
Enterprise resource planning (ERP) systems share a common process and data model, covering broad and deep operational end-to-end processes, such as those found in finance, HR, distribution, manufacturing, service and the supply chain.
Source: http://www.gartner.com/it-glossary/enterprise-resource-planning-erp/
12
Common Processes in ERP: Order Fulfillment Process
Source: Laudon & Laudon, 2014
13
Common Data in ERP: Order Fulfillment Process
Source: Laudon & Laudon, 2014
14
History of ERP
1960s: Inventory Control Packages
1970s: Material Requirements Planning (MRP)
1980s: Manufacturing Resources Planning (MRP II)
1990s: Enterprise Resource Planning (ERP)
2000s: Extended ERP
15
Transaction Processing vs. Analytical Processing
Source: Laudon & Laudon, 2014
Document
Business Intelligence System
ERP System
Table
Analytical Systems (OLAP)
Transactional Systems (OLTP)
16
What is Business Intelligence?
– Business Intelligence (BI) is an umbrella term introduced by Howard Dresner of the Gartner Group in 1989 to describe a set of concepts and methods to improve business decision making by using fact-based support systems.
– Business Intelligence (BI) unites data, technology, analytics, and human knowledge to optimize business decisions and ultimately drive an enterprise’s success. BI programs usually combine an enterprise data warehouse and other BI tools to transform data into usable, actionable business information. (Source: TDWI)
17
Data Warehouse
– “A data warehouse is a collection of subject-oriented, integrated, non-volatile, time-variant information in support of management’s decision making process.” (Inmon 2005)
> Subject-oriented » Data is structured according to multiple, aggregated
management views (e.g., regions, product groups) > Integrated
» Consolidates data from other sources (e.g., ERP, CRM)
» Harmonizes data structures and meta-data > Time-variant
» Time series of business facts (e.g., sales data from the last 10 years)
> Non-volatile » Read-only data access
18
Evolution of BI
BI 1.0 • Relational Databases • Structured Data • OLAP, Dashboards,
Data Mining
BI 2.0 • Web • Unstructured Data • Text Mining,
Sentiment Analysis, Social Network Analytics
BI 3.0 • Mobile Devices • Sensor Networks • Location-/Person-
/Context-aware Analytics
Source: Chen et al. (2013)
19
20
Summit Electric Lights Up with a New ERP System
– Questions 1. What problems did Summit have with its old
systems? 2. How did Summit’s new ERP system improve
operational efficiency and decision making? 3. How do Summit’s customers benefit from the
new ERP system?
Source: Laudon & Laudon, 2014
SAP ERP
KEY CONCEPTS AND TERMS
SAP ERP
Page 1-23 © SAP AG
SAP
“Systeme, Anwendungen und Produkte in der Datenverarbeitung” (English: “Systems, Applications, and Products in Data Processing”)
Global group with many companies - SAP AG - SAP America - SAP UK etc.
SAP Business Suite - SAP Enterprise Resource Planning (SAP ERP) - SAP Supplier Relationship Management (SAP SRM) - SAP Customer Relationship Planning (SAP CRM) - SAP Supply Chain Management (SAP SCM) - SAP Product Lifecycle Management (SAP PLM) etc.
SAP Business ByDesign
SAP NetWeaver
SAP ERP
Page 1-24 © SAP AG
Integrated Business Solution Vendors
SAP - SAP Business Suite, SAP Business ByDesign, …
Oracle Applications - Oracle, JD Edwards, PeopleSoft, Siebel, Retek
Microsoft Business Solutions - Dynamics: Great Plains, Navision, Axapta, Soloman
The Sage Group - Sage Software – Accpac ERP, PeachTree
SSA Global Technologies - BAAN
SAP Customers 74% of the world’s transaction revenue touches an SAP system
SAP Customers courier more than 50% of the world’s packages
SAP Customers Brew more than 77% of the worldwide beer production
SAP Customers Produce more than 86% of all running shoes
29
The Value Chain
Source: Laudon & Laudon, 2014
30
SAP Business Suite
31
SAP ERP (formerly known as R/3)
– Core Applications (logically related modules): > Logistics > Finance > Human Capital Management > …
– Modules (logically related transactions):
> MM (“Buy”) > PP (“Make”) > SD (“Sell”) > FI & CO (“Track”) > HR (“People”) > …
SD
MM
PP
QM
PM
HR IS WF
AM
CO
FI
PS
SAP R/3 Client/Server
ABAP Basis
32
End-to-End Process Integration: Order-to-Cash Process
33
End-to-End Process Integration: Procure-to-Cash Process
34
Organizational Structures
35
Master Data: Material Master
– Master data represents long-term business objects which are agreed on and shared across business processes.
36
Transactions
– Transactions are programs that execute steps of business processes in the SAP ERP system.
– Transactions reference to master data records and organizational units. – When a transaction is executed and saved, one or more documents are created.
This document, a data record of the transaction, contains all of the relevant predefined data from the master data records and organizational units.
GUIDED TOUR
SAP ERP
Page 1-39 © SAP AG
Course Overview
Introduction to SAP
Navigation
Introduction to GBI
Sales & Distribution
Materials Management
Production Planning
Financial Accounting
Controlling
Human Capital Management
Warehouse Management
Project System
© SAP AG
Navigation
Abstract
This material explains how to navigate in SAP systems. It is aimed at
students at universities, universities of applied sciences and other
educational institutions with no previous experience of SAP software. It
can be used in the classroom or for self-study.
On completion of the course, students will be able to navigate through the
user interface to deal with business processes and case studies.
SAP University Alliances
Version 2.11
Author Stefan Weidner
Product SAP Business Suite 7.0
Level
Beginner
Focus SAP ERP 6.0 EhP4
SAP ERP
Page 1-41 © SAP AG
Log on to an SAP system
SAP ERP
Page 1-42 © SAP AG
SAP Easy Access Menu
SAP ERP
Page 1-43 © SAP AG
SAP Easy Access Menu (cont.)
SAP ERP
Page 1-44 © SAP AG
Screen Design
Header data
Position overview
Position details
SAP ERP
Page 1-45 © SAP AG
Help Functions
F1: Description of input fields
F4: Value list
SAP ERP
Page 1-46 © SAP AG
SAP Help Portal
http://help.sap.com
SAP ERP
Page 1-47 © SAP AG
Favorites
SAP ERP
Page 1-48 © SAP AG
Transaction Codes
SAP ERP
Page 1-49 © SAP AG
Transaction SEARCH_SAP_MENU
SAP ERP
Page 1-50 © SAP AG
SAP Navigation Exercise
SAP ERP
Page 8-51 © SAP AG
Course Overview
Introduction to SAP
Navigation
Introduction to GBI
Sales & Distribution
Materials Management
Production Planning
Financial Accounting
Controlling
Human Capital Management
Warehouse Management
Project System
© SAP AG
Controlling (CO) SAP University Alliances
Version 2.11
Authors Bret Wagner Stefan Weidner
Product SAP ERP 6.0 EhP4 Global Bike Inc. Level Beginner Focus Cross-functional integration Controlling
SAP ERP
Page 8-53 © SAP AG
Unit Overview
CO Organizational Structure
CO Master Data
CO Processes
SAP ERP
Page 8-54 © SAP AG
Goal of Controlling (CO)
Managerial Accounting – also termed Controlling – is designed to collect transactional data that provides a foundation for preparing internal reports that support decision-making within the enterprise.
These reports are exclusively for use within the enterprise and include:
- Cost center performance - Profit center performance - Budgets analyses - Profitability analyses
Target audience - Executives - Senior Management - Department Managers - Controllers - Cost Accountants
SAP ERP
Page 8-55 © SAP AG
CO Organizational Structure
Represents the legal and/or organizational views of an enterprise
Permits the accurate and organized collection of business information
Supports the development and presentation of relevant information in order to enable and support business decisions
SAP ERP
Page 8-56 © SAP AG
CO Organizational Structure
Client - An independent environment in the system
Company Code - Represents an independent legal accounting unit - Balanced set of books, as required by law, are prepared at this level. - A client may have more than one company code
• United States • Germany • United Kingdom • Australia • …
Liabilities & Owners Equity Assets
SAP ERP
Page 8-57 © SAP AG
CO Organizational Structure
Controlling Area - A self-contained, organizational unit for which the management of revenues
and expenses can be performed - May include one or more company codes; therefore, an enterprise can perform
management accounting analyses and reports across several companies - A way to identify and track where revenues and costs are incurred for
evaluation purposes
Operating Concern - Represents a part of an organization for which the sales market is structured in
a uniform manner - A operating profit for the individual market segments can be calculated. - Multiple controlling areas can be assigned to one operating concern.
SAP ERP
Page 8-58 © SAP AG
GBI 2.0 Structure for Controlling
Global Bike Client
Company Code
Global Concern Operating Concern
Global Bike Inc. Global Bike Germany GmbH
Controlling North America
Controlling Europe
Controlling Area
SAP ERP
Page 8-59 © SAP AG
GBI 2.0 Enterprise Structure in SAP ERP (Accounting)
Controlling Area
Client GBI Operating Concern (global) GL00
CA Europe EU00 CA North Am. NA00 CA Asia AS00
Credit Control Area (global) GL00
Chart of Accounts (global) GL00
CC US00 CC DE00
Business Area – Bikes BI00
Company Code
Credit Control Area
(see FI unit)
Business Area (see FI unit)
SAP ERP
Page 8-60 © SAP AG
CO Master Data
Profit Center - Responsible for revenue generation and cost containment - Evaluated on profit or return on investment - Enterprises are commonly divided into profit centers based on
• Region • Function • Product
Cost Center - Responsible for cost containment, not responsible for revenue generation
• One or more value-added activities are performed within each cost center. • Unit that is distinguished, for example, by area of responsibility, location, or type of activity
– Copy center – Security department – Maintenance department
Internal Order - Temporary cost center responsible for cost containment, not responsible for revenue
generation - It is used to plan, collect, and monitor the costs associated with a distinct short-term
event, activity, or project • Company picnic • Trade show/Fair • Recruiting campaign
SAP ERP
Page 8-61 © SAP AG
CO Master Data
Revenue Element - A one-to-one linkage (mapping) between General Ledger revenue accounts
and CO revenue elements is established to permit the transfer of FI revenue information to CO.
- Posting in FI that impact revenue accounts lead to a posting in CO to a revenue element.
- In other words, revenue account = revenue element – just different words depending on whether FI object or CO object.
Cost Element - A one-to-one linkage (mapping) between General Ledger expense accounts
and CO cost elements is established to permit the transfer of FI expense information to CO.
- Postings in FI that impact cost accounts lead to a posting in CO to a cost element.
- In other words, expense account = cost element – just different words depending on whether FI object or CO object.
SAP ERP
Page 8-62 © SAP AG
CO Master Data
Primary Cost Element - Originate in the General Ledger within FI and are automatically transferred to
CO when an FI transaction is recorded in the General Ledger
Secondary Cost Element - Used exclusively in CO for allocations and settlements between and amongst
cost centers
SAP ERP
Page 8-63 © SAP AG
Integration between FI and CO (Expenses-Costs)
Financial Accounting
(FI)
General Ledger Accounts
Revenue Accounts
Balance Sheet
Income Statement
Expense Accounts
Managerial Accounting
(CO)
Aggregated Cost Elements
Primary Cost Elements
Secondary Cost Elements
SAP ERP
Page 8-64 © SAP AG
CO Master Data
Statistical Key Figures - Provide the foundation for accurate and effective cost allocations between cost
objects - Utilized to support internal cost allocations involving allocations, assessments,
and distributions - Examples:
• number of employees • square footage • minutes of computer usage
Copy Center Activity
(20 Hours)
10 Hours
6 Hours
4 Hours
Executive Offices
Maintenance Department
IT Department
SAP ERP
Page 8-65 © SAP AG
CO Processes
SAP ERP
Page 8-66 © SAP AG
CO Processes
Primary Cost Element
Debit Credit
1,500
Cost Center A
Debit Credit
1,500
Supplies Expense Cash
Financial Accounting (FI)
Managerial Accounting (CO)
Posting Primary Cost Element
SAP ERP
Page 8-67 © SAP AG
CO Processes
(FI) Transaction Document
Amount G/L Account # Cost Center 1900012432
(CO) Transaction
Document Cost Center Cost Element
20000657
1,500 1,500
Cash Debit Credit
Supplies Expense Debit Credit
Cost Center
1,500
Financial Accounting (FI)
Managerial Accounting (CO)
Posting Primary Cost Element
SAP ERP
Page 8-68 © SAP AG
CO Processes
Posting Secondary Cost Element
Secondary Cost Element
CC 1 CC 2
Debit Credit
1,500
Cost Center A
Debit Credit
1,500
Supplies Expense Cash
Financial Accounting (FI)
Managerial Accounting (CO)
SAP ERP
Page 8-69 © SAP AG
CO Processes
Debit Credit
1,500
Rent Expense
Debit Credit
2,500
Supplies Expense
Debit Credit 2,000
Labor Expense
1,500
2,500
2,000
1,800
3,000
1,200
Sec. Cost Element
Copy Center
Executive Offices
Information Services
Maintenance Department
Posting Secondary Cost Element
SAP ERP
Page 8-70 © SAP AG
SAP Controlling Exercise
SAP ERP
Page 8-71 © SAP AG
CO Processes
SAP ERP
Page 8-72 © SAP AG
Aggregation in CO-PA
SAP ERP
Page 8-73 © SAP AG
Profitability Segments
SAP ERP
Page 8-74 © SAP AG
Multi-Dimensional Data Warehouse Cubes
Source: Surma (2011)
SAP ERP
Page 8-75 © SAP AG
Rotating
Source: Surma (2011)
SAP ERP
Page 8-76 © SAP AG
Drill-down
Source: Surma (2011)
SAP ERP
Page 8-77 © SAP AG
Slicing/Dicing
Source: Surma (2011)
SAP ERP
Page 8-78 © SAP AG
Snowflake Schema
A data model for data warehouse cubes
Consists of - One fact table - Multiple dimension tables
Fact table - Stores facts (i.e., measurements) about business events (e.g., sales) - Facts are always related to dimensions
Dimension tables - Represent the basic dimensions of the business (e.g., products, regions, time) - Dimensions can be structured in hierarchies
SAP ERP
Page 8-79 © SAP AG
Example: Sales Data
Source: http://upload.wikimedia.org/wikipedia/en/thumb/7/73/Snowflake-schema-example.png/300px-Snowflake-schema-example.png
?
81
References
– Laudon, K. and Laudon, J. (2014): Management Information Systems. Pearson. – Bostrom, R. P. & Heinen, J. S. (1977 September). MIS Problems and Failures: A
Socio-Technical Perspective. Part I: The Causes, MIS Quarterly, pp. 17-32. – Inmon, W. H. (2005): Building the Data Warehouse. John Wiley & Sons. – Surma, J. (2011): Business Intelligence: Making Decision Through Data Analytics.
Business Expert Press.