1. Enterprise Systems & e-Business Systems
IS 530 : Accounting Information Systems
Enterprise Systems & e-Business Systems
Lecture 2

2. Enterprise 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.
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3. Enterprise Systems Value Chain
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.
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4. Porter’s Value Chain IS 530 : Lecture 2 VALUE FIRM INFRASTRUCTURE
Porter’s Value Chain
VALUE
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND
LOGISTICS
OPERATIONS
OUTBOUND
LOGISTIC
MARKETING
& SALES
LOGISTIC
SERVICE
COST
MARGIN
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5. Value-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.
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6. Internal Focus: Value Chain
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7. External Focus : Value System
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8. The Value of Systems Integration
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.
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9. Information Silos IS 530 : Lecture 2
Enterprise Resource Planning (ERP) systems integrate the planning, management and
use of all resources of the organization. That is, ERP systems are designed to break down
the information silos of an organization.
Many information systems were developed for specific functional areas and did not communicate
with systems in other functional areas. Therefore, these systems are referred to as information silos.
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10. Problems With Information Silos
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11. Inefficient Customer Service
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12. Solution to Inefficient Customer 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.
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13. Data Maintenance: Create Customer Record
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14. Business Event Data Processing: Enter Customer Order
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15. Using Stored Data for Decision Making
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16. Enterprise Systems and ERPs
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.
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17. Integrate Business Process Functionality
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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18. Enterprise Application : Enterprise Resource Planning
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19. Enterprise Application : Enterprise Application Integration (EAI)
No additional notes.
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20. Selected ERP Vendors
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21. SAP Business Suite
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22. SAP NetWeaver
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23. Third-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.
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24. 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.
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25. Connecting Third-Party Modules
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.
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26. Other Methods for Systems Integration
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.
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27. ERP System Components Core ERP Modules Suppliers Customers
Manufacturing
& Production
Module
Accounting and Financial Module
Business
Intelligence
Supply Chain Management Module
E-Business Module
Customer Relationship Management Module
Human Resources Module
Core ERP Modules
Extended ERP Modules
Suppliers
Customers
ERP Platform & Database
See Figure 8.3.
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28. Major ERP Modules Sales and Distribution (SD) Record customer orders
Shipping
Billing
Connections to:
Materials management module (MM)
Financial accounting module (FI)
Controlling module (CO)
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29. 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)
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30. Major ERP Modules . . . 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.
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31. Major ERP Modules . . . Cost center accounting
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
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32. Major ERP Modules . . . Human Resources (HR)
Recruiting, management and administration of personnel
Payroll processing
Training and travel
Benefits
Reports
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33. Order-to-Cash Process
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34. SD Menu Options in the SAP System
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35. SD Audit Trail for Completion of Steps in the SAP Sales Process
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36. Purchase-to-Pay Process
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37. MM Menu Options in the SAP System
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38. Audit Trail for Completion of Steps in the SAP Purchase Process
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39. Pros of Enterprise Systems
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40. Pros of ERP Packages
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41. Cons of Enterprise Systems and ERP Packages
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42. E-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.
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43. Electronic Business (e-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
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44. Journalizing, Posting, and Summarizing in a Manual Accounting System
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45. Automated Accounting System
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46. Batch Processing and Periodic 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
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47. Online Transaction Entry (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.
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48. 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.
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49. Methods of Conducting E-business
– 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
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50. Electronic Data Interchange (EDI)
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51. Virtual Private Network ( VPN )
Tunneling
A technology that encapsulates, encrypts, and transmits data over the Internet
A secure “tunnel” is created over the VPN connecting the two intranets
Authentication
Confirms the identity of the remote user who is attempting to access information.
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52. EDI 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.
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53. EDI Components 1 and 7
Originating application prepares electronic business document, such as a purchase order (PO).
At the destination organization, an application processes the business data.
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54. EDI Components 2 and 6
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.
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55. Electronic Data Interchange Transaction Set
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56. EDI Components 3 and 5
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.
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57. EDI Component 4
Rather than connecting to each trading partner, an organization can use a VAN.
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58. Web Services Implementation of an SOA Application
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59. Typical Electronic Communications Connection for Internet Commerce
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60. Typical Electronic Communications 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
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61. E-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.
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62. Communication Networks in e-Business
Client/server technology
Local area networks (LANs)
Wide area networks (WANs)
Internet
Web browsers
Intranet
Extranet
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63. Intranet System Architecture
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64. Extranet System Architecture
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65. B2B Sell-side Marketplace
In the sell-side marketplace, organizations sell their products or services to other organizations
Electronically from their own Web site and/or from a third-party Web site.
This model is similar to the B2C model in which the buyer comes to the seller’s site, views
catalogs, and places an order. In the B2B sell-side marketplace, the buyers are organizations.
Key mechanisms: electronic catalogs and forward auctions (sell to highest bid price)
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66. B2B Buy-side Marketplace
The buy-side marketplace is a model in which organizations buy needed products and
services from other organizations electronically.
Key mechanisms: electronic catalogs (RFQ) and reverse auctions (buy from lowest bid price)
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67. Electronic Exchanges IS 530 : Lecture 2
Exchanges have many buyers and many sellers.
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68. Current 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.
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