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ENTERPRISE INFRASTRUCTURE AND INTEGRATION Chapter 7 ENTERPRISE INFRASTRUCTURE AND INTEGRATION Building the Dynamic Enterprise

STUDENT LEARNING OUTCOMES Define an enterprise system. Describe an enterprise resource planning (ERP) system. List and describe the seven “ilities.” McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

STUDENT LEARNING OUTCOMES List the key traits that an IT infrastructure should exhibit. Describe the differences among the four types of IT infrastructures. Explain the difference between backup and recovery. McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

STUDENT LEARNING OUTCOMES State the purpose of a disaster recovery plan. Explain the need for system integration. McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

One View for Del Monte Foods Del Monte needed to overhaul its IT infrastructure Migrate from multiple platforms Consolidate applications to a central single system McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

One View for Del Monte Foods Develop an ERP system Merge multiple systems Quick and cost effective McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

One View for Del Monte Foods Class poll… Why did Del Monte need to integrate its systems? Why does knowing the sales of Kibbles ‘n Bits and the sales of vegetables help the overall organization? Do you think Del Monte would like to know who is buying combinations of its products? Why? McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

INTRODUCTION Successful IT systems provide an integrated view of: Business Extend analytical capabilities to users Leverage a corporation's information and expertise McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

INTRODUCTION Enterprises need to encompass a range of intelligence systems and analytical applications that include: Data warehouses and data marts Online analytical processing (OLAP) Decision support systems (DSSs) Executive information systems (EISs) McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

ENTERPRISE SYSTEMS An enterprise system (ES) - large software application that companies use to manage their operations Key way by which large organizations distribute content of all kinds to their: Workforce Suppliers Customers McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

ENTERPRISE SYSTEMS McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

ENTERPRISE SYSTEMS Enterprise systems are suited for information transactions They are the underlying information “factory” Enterprise systems offer the first great opportunity to achieve true connectivity A state in which everyone knows what everyone else is doing in the business all over the world at the same time McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

ERP Systems Enterprise resource planning (ERP) systems are software systems for business management, supporting areas such as planning, manufacturing, sales, marketing, distribution, accounting, financial, human resource management, project management, inventory management, service and maintenance, transportation, and e-business McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

ERP Systems ERP systems allow companies to implement a single integrated system by replacing legacy information systems. Legacy information system (LIS) - represents a massive, long-term business investment; such systems are often brittle, slow, and nonextensible McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

ERP Systems McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

ERP Systems An ERP system is required to have the following characteristics: Modular design comprising many distinct business functions such as financial, manufacturing, distribution, and the like Centralized DBMS Integrated functions that provide seamless information flow among the functions Flexible, best business practices Functions that work in real-time Internet-enabled McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Core ERP Functions Accounting Financial Manufacturing Production Transportation Sales and distribution Human resource Supply chain Customer relationship E-business

ERP Systems VENDOR/WEB ADDRESS TARGET MARKET SAP (www.sap.com) Large businesses Oracle/PeopleSoft (www.oracle.com) SSA Global (Baan) (www.ssaglobal.com) Microsoft (Great Plains) (www.microsoft.com) Small-to-medium businesses McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

ERP Systems ERP systems are big business At the top of the IT spending list is the ERP market The United States federal government will spend $7.7 billion on ERP products and services in fiscal year 2009 Up 37 percent from 2004 spending of $5.6 billion McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

ERP Systems Advantages… Disadvantages Reliable information access Avoid redundant data and operations Cost reduction See more on page 322 Disadvantages Time-consuming Expensive Vendor dependence McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Evolution of ERP Systems The early stage of ERP was carried out in the 1970’s through a system called Materials Requirement Planning (MRP) Early 1980s MRP was reengineered under the name of Manufacturing Resources Planning or MRPII McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Evolution of ERP Systems The beginning of the 1990’s came enterprise resource planning (ERP) ERP systems have evolved into what is now commonly referred to as ERPII McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Evolution of ERP Systems McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

ERP Vendors & Market Trends The top dominating ERP software suppliers are: SAP Oracle/PeopleSoft SSA Global Microsoft Together they control more than 70 % of the multi­billion dollar global market McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

ERP Vendors & Market Trends Complete list is very long Invensys (www.invensys.com) Epicor (www.epicor.com) Mapics (www.mapics.com) Navison (www.navison.com) Deltek (www.deltek.com) Many more on page 325 McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

ERP Vendors & Market Trends The ERP market has been growing at a rate more than 30 % The growth of the ERP market has been boosted both by business reasons as well as by technical reasons The main cited reason is globalization McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

DEVELOPING AGILE IT SYSTEMS Business agility means being prepared for change at a moment’s notice Factors to consider whenever you are developing an IT system - these are commonly referred to as the “ilities”: Availability Accessibility Reliability Scalability Flexibility Performance Capacity planning McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Availability Availability is determining when an IT system will be available for employees to access Most companies have IT systems available 24 x 7 x 365 McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Accessibility Accessibility is determining who has the right to access different types of IT systems and information Accessibility also means who can access or manipulate the information, whether they can create, read, update, and/or delete information McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Reliability Reliability ensures your IT systems are functioning correctly and providing accurate information Inaccurate information exists for many reasons: The information being entered incorrectly The information becoming corrupt McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Scalability Scalability refers to how well a system can adapt to increased demands A number of factors can affect organizational growth including: The market The industry The economy McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Flexibility A single system can be designed in a number of different ways to perform exactly the same function When choosing which design to implement, think about the system’s “flexibility,” or the system’s ability to change quickly McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Performance Performance measures how quickly an IT system performs a certain process Benchmarks are baseline values a system seeks to attain Benchmarking is a process of continuously measuring system results, comparing those results to optimal system performance (benchmark values), and identifying steps and procedures to improve system performance McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Capacity Planning Capacity planning determines the future IT infrastructure requirements for new equipment and additional network capacity It’s cheaper for an organization to implement an IT infrastructure that considers capacity growth at the beginning of a system deployment McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

INFORMATION SYSTEMS INFRASTRUCTURE An IT architecture is the blueprint for translating a business strategy into a plan An infrastructure is a relative term meaning “the structure beneath a structure” This definition implies different layers of structure, which provide support or services McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

INFORMATION SYSTEMS INFRASTRUCTURE McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Why Architecture Matters The IT architecture identifies what information must be standardized corporate-wide and what will be standardized at a regional level An IT architecture specifies where and how information will be located and accessed McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Why Infrastructure Matters Global markets are creating enormous demands for increased information sharing A powerful, flexible IT infrastructure has become a prerequisite for doing business McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Why Infrastructure Matters IT infrastructure should exhibit several key traits, such as: Efficiency Effectiveness Agility McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Why Infrastructure Matters Translating the architecture into an infrastructure entails creating details about certain technologies: Hardware Software Network Information McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

INFORMATION TECHNOLOGY INFRASTRUCTURE There are four types of information technology infrastructures: Decentralized infrastructure Centralized infrastructure Distributed infrastructure Client/server infrastructure McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

INFORMATION TECHNOLOGY INFRASTRUCTURE Characteristics Decentralized Centralized Distributed Client/Server Cost efficiency Moderate Excellent Very reasonable Data location Management Ease Simple Easy Difficult Network performance Constrained Varies Processing location Shared User control Full Very limited McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Decentralized Infrastructure A decentralized infrastructure involves little or no sharing of information systems Gives users the liberty to develop applications that meet their needs and maintain control over the applications they develop McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Decentralized Infrastructure McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Centralized Infrastructure A centralized infrastructure involves sharing of information systems in one central area or one central mainframe Mainframes were originally the only computers available for business McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Centralized Infrastructure McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Distributed Infrastructure A distributed infrastructure involves distributing the information and processing power of IT systems via a network By connecting all the information systems via a distributed infrastructure, all locations can share information and applications McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Distributed Infrastructure McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Client/Server Infrastructure A client/server infrastructure (or client/server network) has one or more computers that are servers which provide services to other computers, called clients The client/server infrastructure is a form of distributed infrastructure McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Client/Server Infrastructure McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Other Types of Infrastructure In a tiered infrastructure (sometimes referred to as a layer infrastructure), the IT system is partitioned into tiers (or layers) where each tier (or layer) performs a specific type of functionality McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Other Types of Infrastructure A 1-tier infrastructure is the most basic setup because it involves a single tier on a single machine A 2-tier infrastructure is the basic client/server relationship McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Other Types of Infrastructure A 3-tier infrastructure is the most common approach used for Web applications today An n-tier infrastructure balances the work of the network over several different servers McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Other Types of Infrastructure McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

The Infrastructure Investment IT investments are one of the most important decisions made within an organization IT infrastructure investments are large, long term, and have no (real) value on their own An infrastructure's value lies in its ability to quickly and economically enable the implementation of new applications McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Supporting an IT Infrastructure Backup is the process of making a copy of the information stored on a computer Recovery is the process of reinstalling the backup information in the event the information was lost Storage area networks (SAN) is an infrastructure for building special, dedicated networks that allow rapid and reliable access to storage devices by multiple servers McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Disaster Recovery Plan A disaster recovery plan is a detailed process for recovering information or an IT system in the event of a catastrophic disaster such as a fire or flood A collocation facility is a company that rents space and telecommunications equipment from another company A disaster recovery cost curve charts (1) the cost of the unavailability of information and technology and (2) the cost of recovering from a disaster over time McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Disaster Recovery Plan McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

INTEGRATING THE ENTERPRISE Integration allows separate applications to communicate directly with each other by automatically exporting data files from one application and importing them into another Building integrations between applications helps an organization maintain better control of its information McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Why Integration Is Necessary Business process reengineering (BPR) is the analysis and redesign of workflow within and between enterprises Workflow defines all the steps or business rules, from beginning to end, required for a business process McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Motives for Integration An organization may choose to integrate because of its concerns about its operations, both with internal processes and external relationships Enterprise integration is viewed as a possible solution to a number of problems with internal organizational processes McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Motives for Integration OPERATIONAL MOTIVES TECHNICAL MOTIVES Poor performance Disparate systems High cost structure Poor quality of information Responsiveness to customers Systems not integrated Complex processes Obsolete systems Globalization Limited growth potential McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Benefits of Integration Many of the benefits can be easily measured in financial terms Cost reduction Reduction of inventory costs Reduction of personnel costs McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Benefits of Integration RANK TANGIBLE INTANGIBLE 1 Inventory reduction Information visibility 2 Personnel reduction New/improved process 3 Productivity improvements Customer responsiveness 4 Order processing improvements Integration 5 IT cost reduction Standardization 6 Procurement reduction Flexibility 7 Revenue/profit increase Globalization 8 Transportation logistics Business performance McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Integration Obstacles People Process Technology McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

CAN YOU… Define an enterprise system. Describe an enterprise resource planning (ERP) system. List and describe the seven “ilities.” McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

CAN YOU… List the key traits that an IT infrastructure should exhibit. Describe the differences among the four types of IT infrastructures. Explain the difference between backup and recovery. McGraw-Hill © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

CAN YOU… State the purpose of a disaster recovery plan. Explain the need for system integration.