Enterprise Processes and Systems MIS 2000 Instructor: Bob Travica Updated 2014

Outline Concept of Enterprise System (ES) / Enterprise Resource Planning System ES Design Databases for ES Purposes of ES Example of ES effects on CRM* DSS capability of ES Enterprise system vendors ERP System Benefits and Costs Summary 2

Enterprise System Enterprise System (ES)* is an information system that supports business processes spanning over several departments or an entire organization. Data belonging to business processes are completely supported by IS, that is, all data are in electronic form. 3 Human Resources Process Sales & Delivery Process Marketing Process Production Process Supply Process Management Process (operational, strategic) Accounting & Finance Process IS Development & Maintenance Process Organization Enterprise System Electronic Links to buyers Electronic Links to suppliers 3

Departments covered by ES: purchasing, inventory, production planning and scheduling, accounting, finance, HR, sales… almost any.* ES typically performs functions of TPS and MIS. With additional modules, ES works as data-driven DSS. ES are developed differently than other IS. Software is sold in packages, then configured to meet a company’s needs. ** 4 Enterprise System (TPS,MIS | DSS) Management Process Sales & Delivery Departments Marketing Dept.Production Dept. Accounting Dept. Info. Systems Dept. Purchsing Department HR Dept.

5 Enterprise System Design The core is modules called ES Engine and Broker. Business processes are mapped in there. Centralized DBs used by ES supply data to business processes defined by ERP modules (accounting, finance, HR...) ES can use various database brands (e.g., SAP ES often uses Oracle databases) Corporate centralized databases ES Engine & Broker User interfaces in organizational departments

Databases for Enterprise System 6 Databases that support ES may have tens of thousands of tables. High complexity. Benefit from centralized databases is that an entity is defined just once and so used across company departments. This improves data quality (next slide).

7 Purposes of ES (ERPS): 1.The main purpose is to provide an integrated view of a company’s operations. This is possible owing to centralization in corporate data management. Primary beneficiary is executive managers. 2. The integrated view allows for more informed decision making because data are: -more consistent * -more complete – reports from ES reflect a whole company -more accurate** -more timely*** Purposes of Enterprise System Accounting & Finance Human Resources Department-specific and Corporate-wide reporting

Customer Relationship Management - Sales & Marketing Processes 8 Community of Interest Marketing Sales Customer Order Management Billing Complaints/ Support Customer: Customer ID, Customer Type*, Name, Address, City*, Postal Code, Phone, Customer Order: Customer Order Number, Order Date, Quantity Product: Product ID, Product Type*, Description, Distribution Channel, List Price Sales Record: Sale Number, Sale Date, Salesperson*, Price Billing Record: CustomerBillingID, Date, Amount, Payment Method Customer Support: Customer ID, Complaint, Customer, Date Market management entities: Segment, Promotion, Campaign, Channel Entity (italics) Attributes Customer: Customer ID, Date, Comment, Contribution

System Support to Sales & Marketing Processes – Traditional vs. ES Model 9 Community of Interest Marketing Sales Customer Order Management Billing Complaints/ Support Mkt campaign TPS Mkt segmentation DSS Brand mgt MIS/DSS Customer Master TPS Sales TPS/MIS Customer Order Mgt TPS/MIS Billing TPS/MIS Support Desk TPS/MIS Communication sys, Group Support IS Old IS solution – separate system for each process New IS solution – a single system – Enterprise System* Marketing Sales Customer Order Management Billing Complaints/ Support ES Customer communities are not integrated into ES.

DSS Capability of ES 10 Corporate centralized Databases ES Engine & Broker User interfaces in organizational departments Data Warehouse Data Warehouse (DW) is a large repository of data extracted from corporate databases. This software is purchased separately from standard ES software. DW is not relational databases, but has its own tables, keys, and data models. DW is used for building data cubes.* The capability of data cubing makes ES a data-driven DSS. Data cubes

Enterprise System Vendors SAP (Systems, Analysis and Products, Germany). Oracle, PeopleSoft, J. D. Edwards (U.S.) Microsoft Dynamics, aimed at smaller companies SAP Business One is competing product SAP BusinessByDesign On-demand SaaS (Software as a Service – a method of renting Enterprise System services that are offered by an external party). Instead of buying and owning software and hardware and operating ES on their own, a company rents the ES services. This is a new method of managing information systems in general. 11

12 SAP SAP is a software package for enterprise systems. It captures largest global market share. Company was formed in Germany in SAP’s goal was to develop a standard business software that could be configured to meet the needs of a particular company. SAP’s founders wanted to: Make data available in real time (without delay) Enable users to work on a computer screen, not paper In 1972, these were big goals We will use SAP in the lab. It is a complex system and requires attention to details and – patience!

Why Is Knowledge of SAP Useful? 13 SAP used much in Manitoba Provincial government Manitoba regional health care Manitoba Hydro Blue Cross Deloitte (a global accounting & consulting company) You can increase chance to be hired if you have some exposure to SAP.

14 Enterprise System Costs Initial tangible costs of an Enterprise System: Software and Hardware purchasing price Configuration cost (costs of setting up ES) Training cost (users need to be trained to use ES and new processes) ES (like SAP) may require big changes in business processes. This may stir up employees’ reluctance or rejection of ES  intangible costs. A large company, with over 1,000 employees, can spend from $50 million to $500 million on an ES. ES is a “Cadillac” of information systems – it may cost a lot! Management should have a clear picture of total cost of ownership though whole life of system* before deciding to invest in ES.

15 ERP System Benefits Better coordination between organizational functions, as data flow smoothly throughout the whole enterprise. Reduced complexity created by different departmental IS (data must be reformatted to be shared across different departmental systems). Improved control. (Management value; a business document or even a single piece of data can be tracked down)* Better decision-making based on better data (see before) - readily available and integrated data; reports covering entire company. (Management value). Increased speed of processes. (Value shared by the entire organization).

Summary Enterprise System (ES) (or Enterprise Resource Planning System – ERPS) is an IS that supports business processes which run across departments and may cover an entire organization. Data management is standardized to provide an integrated view of business – ES is a TPS/MIS for whole enterprise. With additions, ES can be used as a data-driven DSS. Databases for ES can be very complex and made by different vendors than is the ES software. ES costs can be large and should be accounted for the entire system life. Intangible costs include organizational change and employee resistance to it. ES improves process performance due to better coordination across the enterprise, elimination of complexity associated with separate departmental IS, time savings, more effective management control, and decision making using integrated view of enterprise. 16