Chapter 2: Enterprise Systems Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

Learning objectives Describe the different types of enterprise systems (ES) and their roles in managing business processes Identify the different vendors that supply ES and analyze their market positions Explain the architecture of a typical ES Compare and contrast the different types of master data in an ES Portray the hypothetical company Super skateboard Builders (SSB) in terms of its history and growth, products, customers, suppliers, and the types of information systems it uses Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

Enterprise Systems Difficult to imagine today’s competitive global environment how large companies functioned without the aid of ES. Three stages of evolution Stage 1: Stand-alone Mainframe Systems Stage 2: Client-Server Architecture Stage 3: Service-Oriented Architecture (SOA) Beginning 1960’s ES began to play a critical role in automating and managing repetitive manual activities in large businesses These systems have evolved from stand-alone mainframe systems, to client-server architecture to the now service-oriented architecture Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

The New Stack – Process Is the Next Platform Client Mainframe Client Server SOA Application Data Management Composites OS and Database OS DB Custom Punch Card or Terminal (10’s of users) PC or Internet (1000’s of users) Request Form Any Device (Millions of users) Applications Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

3-tier Client Architecture Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

Types of Enterprise Systems The ES Application Suite Enterprise Resource Planning (ERP) Focus on internal operations and integrate functional and cross-functional business processes Supply Chain Management (SCM) Supports connection to companies that supply materials Helps companies plan production requirements Supplier Relationship Management (SRM) Manages the overall relationships with the materials suppliers. Quotations and contracts processes Product Lifecycle Management (PLM) Helps companies administer the processes of research, design and product management Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

The application suite Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

SAP ERP Solution Map Shared Service Delivery SAP NetWeaver End-User Service Delivery Analytics Financial Analytics Operations Analytics Workforce Analytics Financials Financial Supply Chain Management Treasury Financial Accounting Management Accounting Corporate Governance Human Capital Management Talent Management Workforce Process Management Workforce Deployment Procurement and Logistics Execution Procurement Inventory and Warehouse Management Inbound and Outbound Logistics Transportation Management Product Development and Manufacturing Production Planning Manufacturing Execution Product Development Life-Cycle Data Management Sales and Service Sales Order Management Aftermarket Sales and Service Professional-Service Delivery Corporate Services Real Estate Management Enterprise Asset Management Project and Portfolio Management Travel Management Environment, Health, and Safety Compliance Mgmt. Quality Management Global Trade Services Copyright SAP AG 2008 Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

SAP Supply Chain Management SAP NetWeaver Demand & Supply Planning Demand Planning & Forecasting Safety Stock Planning Supply Network Planning Distribution Planning Service Parts Planning Procurement Strategic Sourcing Purchase Order Processing Invoicing Manufacturing Production Planning & Detailed Scheduling Manufacturing Visibility & Execution & Collaboration MRP based Detailed Scheduling Warehousing Inbound Processing & Receipt Confirmation Outbound Processing Cross Docking Warehousing & Storage Physical Inventory Order Fulfillment Sales Order Processing Billing Service Parts Order Fulfillment Transportation Freight Management Planning & Dispatching Rating & Billing & Settlement Driver & Asset Management Network Collaboration Real World Awareness Supply Chain Event Management Auto ID / RFID and Sensor Integration Supply Chain Visibility Strategic Supply Chain Design Supply Chain Analytics Supply Chain Risk Management Sales & Operations Planning Supply Network Collaboration Supplier Collaboration Customer Collaboration Outsourced Manufacturing Supply Chain Management with Duet Demand Planning in MS Excel Copyright SAP AG 2008 Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

SAP Supplier Relationship Management SAP NetWeaver Purchasing Governance Global Spend Analysis Category Management Compliance Management Sourcing Central Sourcing Hub RFx / Auctioning Bid Evaluation & Awarding Contract Management Legal Contract Repository Contract Authoring Contract Negotiation Contract Execution Contract Monitoring Collaborative Procurement Self-Service Procurement Services Procurement Direct / Plan-Driven Procurement Catalog Content Management Supplier Collaboration Web-based Supplier Interaction Direct Document Exchange Supplier Network Supply Base Management Supplier Identification & Onboarding Supplier Development & Performance Management Supplier Portfolio Management Copyright SAP AG 2008 Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

SAP Product Lifecycle Management SAP NetWeaver Product Management Product Strategy and Planning Product Portfolio Management Innovation Management Requirements Management Market Launch Management Product Development and Collaboration Engineering, R&D Collaboration Supplier Collaboration Manufacturing Collaboration Service and Maintenance Collaboration Product Quality Management Product Change Management Product Data Management Product Master and Structure Management Specification and Recipe Management Service and Maintenance Structure Management Visualization and Publications Configuration Management PLM Foundation Product Compliance Product Intelligence Product Costing Tool and Workgroup Integration Project and Resource Management Document Management Copyright SAP AG 2008 Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

SAP Customer Relationship Management Web Channel Interaction Center Partner Channel Management Trade Promotion Management Business Communication Management Marketing Marketing Resource Management Segmentation & List Management Campaign Management Real-Time Offer Management Lead Management Sales Sales Planning & Forecasting Sales Performance Management Territory Management Accounts & Contacts Opportunity Management Quotation & Order Management Pricing & Contracts Incentive & Commission Management Time & Travel Service Service Order Management Service Contract Management Complaints & Returns In-House Repair Case Management Installed Base Management Warranty Management Resource Planning Copyright SAP AG 2008 Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

Other classifications of ERP systems Best of Breed - isolated to one process or part of a process. Typical company ES landscape will have one or two core ERP suite ES plus several best-of-breed applications. Niche – Independent software vendors who offer useful process capabilities that sit on top of the ES. e.g. a pricing management tool from Vendavo to assist retailers in maximizing profit on retail sales. Software as a Service – ES solutions that are delivered entirely from the web. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

Types of Data in ES Organizational Data Master Data Transaction Data Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

Organizational Data Defines the organizational structure of the enterprise Includes definitions of: Companies (subsidiaries, etc.) Divisions based on, product or geographical hierarchy Sales organizations Purchasing organizations Physical facilities: plants, warehouses, distribution centers HR organization Functional areas, reporting relationships Data rarely changes Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

Master Data Define key entities in an organization Customers Basic information: name, address, contact information Financial information: payment terms, methods Sales information: delivery terms Vendors / suppliers Similar information as customer Products Basic data: description, weight, color Purchasing data Sales data Manufacturing data Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

Master Data Employees Data changes occasionally Basic data Personal data: dependents Payroll data Tax data Data changes occasionally Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

Transaction Data Data that is the consequence of day-to-day transaction Who, what, when, where, how, how much Sales Customer, products, quantities, dates and times, location (shipping, delivery), sales person Purchase Vendor, products, quantities, dates and times, location (delivery), sales person, requester Production Materials, quantities, facilities, resources (machine, people), dates and times, locations (storage, production) Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

Super Skateboard Builders, Inc. History Product Line Customers Vendors Plant Layout Employees Information Systems SSB was founded in 1997 by John Boeve “Z-boy” Johns grandmother motivated john to go to college and to continue to pursue his skateboarding passion. John used the money from the trust to buy the necessary shop and office equipment(storage bins, an assembly table, desks etc) and lease a small building that would house a skateboard assembly operation. Also invested in computer to store and track information. Over the next decade the company thrived mainly due to his vision, his management style and his perserverance. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

Standard Price (Manufacturing or Purchase Cost) SSB, Inc. - Product List Product Number Product Description Standard Price (Manufacturing or Purchase Cost) Wholesale Price MSRP DXSB1000 Deluxe Skateboard $58.00 $96.00 $160.00 STSB2000 Standard Skateboard $40.00 $66.00 $110.00 ENSB3000 Entry-Level Skateboard $34.00 $45.00 $75.00 HLMT5000 Helmet $20.00 $27.00 SHRT4000 T-Shirt $7.00 $10.00 $16.00 FAID6000 Skateboard First Aid Kit Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

SSB, Inc. - Customer List Customer Number Name Address City State Zip 1 World Wide Skateboard Distributors 1229 Main Street AnN arbor MI 48109 2 Extreme Skateboard Sports, Inc. 5000 Rensellear Ave Detroit 48202 3 "Waldo" Autry 3012 Haslett Road Lansing 48906 4 Sporting Goods, Inc. 6903 28th Street Grand rapids 49508 5 Flying Acrobats, Inc. 274 Adams Street Holland 49423 6 MI Sporting Company 3000 Alpine Ave 49544 7 Dawgs 4005 State Street SE saginaw 48710 SSB sells its products only to retailer who resell the products directly to consumers. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

SSB, Inc. - Vendor List Vendor Number Vendor Name City State Zip Materials Supplied 100000 Nutcase Supplies Grand Rapids MI 49525 Nuts, bolts 100001 Skatelubbers, Inc. First aid kit, t-shirt, helmet 100002 Grand Skateboard Supplies Trucks, riser pads, grip tape, decks, Entry level skateboard, First aid kit 100003 Black Widow Skateboards, Inc. Holland 49424 Entry level skateboard, First aid kit, t-shirt, helmet 100004 Spotted Owl Lumber Cascade 49546 Maple ply, Entry level skateboard 100005 Van Go Paint Supplies Kentwood 49508 sealers, paints 100006 The Dutch Monster 49504 Boxes, labels, glue 100007 Whitewater Development Company jonesboro AR 72401 Building space Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

SSB, Inc. - Plant Layout Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

SSB, Inc. - Organizational Chart John Z. Boeve (President) Catherine VanderBos (Plant Manager) Charles Skivers (Shop Floor) Mark McKendry (Shop Floor) Patrick Stevens (Sales Manager) Shana Smith (Accountant) David Bloomberg (Warehouse Manager) Tom Jones (Warehouse) Martha Seward (Purchasing Manager) Maria Rivera (Office Manager) When the company was small all the work was done by five people, John, Maria and three people in the plant. John and Maria handled all the purchasing and accounting tasks, while catherine supervised the warehouse. Most of the work was done informally, eg when a customer order came in, it was handled – but no one could explain exactly how. When a company needed material from its suppliers, catherine just figured out what they needed and called a supplier to order it. John hired additional people to handle sales and purchasing and to manage the warehouse activities. As the company expanded it became more and more difficult to keep up with the activities of all the employees as well as the ever-increasing volume of customer orders, purchases and so on. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

SSB, Inc – Information systems Three stand-alone (not networked) computers. Spreadsheets and some database structures to manage information. Employees had to run from computer to computer to swop information using disks. Excess inventory Depletion of cash resources Unnecessary line of credit (interest charges) Data was never in sync The expanded company needed a better way to control operations. Upgraded and installed SAP R/3 Magal and Word ! Essentials of Business Processes and Information Systems | © 2009

SAP Overview Copyright SAP AG 2008 Magal and Word ! Essentials of Business Processes and Information Systems | © 2009