I S 5 3 0 : A c c o u nti ng I n f orm at ion S y s t em s
h t t p : / / w w w. c s u n . e d u / ~ d n 5 8 4 1 2 / I S 5 3 0 / I S 5 3 0 _ F 1 5 . h t m
Enterprise Systems &
e-Business Systems
Lecture 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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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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Porter’s Value Chain
VALUE
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND
LOGISTICS
OPERATIONS
OUTBOUND
LOGISTIC
MARKETING
& SALES
LOGISTIC
COST
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SERVICE
MARGIN
4
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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Internal Focus: Value Chain
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External Focus : Value System
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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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Information Silos
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Problems With Information Silos
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Inefficient Customer Service
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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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Data Maintenance: Create Customer Record
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Business Event Data Processing:
Enter Customer Order
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Using Stored Data for Decision Making
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Enterprise Systems and ERPs
 Enterprise systems:
• 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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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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Enterprise Application :
Enterprise Resource Planning
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Enterprise Application :
Enterprise Application Integration (EAI)
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Selected ERP Vendors
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SAP Business Suite
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SAP NetWeaver
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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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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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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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Other Methods for Systems Integration



Event-driven architecture (EDA), business events
trigger messages sent by middleware between
independent software modules.
Enterprise systems bus (ESB), communicationsbroker 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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Core ERP Modules
ERP System
Components
Manufacturing
Accounting
and
Financial
Module
& Production
Module
Human
Resources
Module
Suppliers
Customers
Supply
Chain
Manageme
nt Module
ERP
Platform &
Database
Business
Intelligence
Module
Customer
Relationship
Manageme
nt Module
E-Business
Module
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Lecture
2
Extended
Modules
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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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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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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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Major ERP Modules . . .
 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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Major ERP Modules . . .
 Human Resources (HR)
•
•
•
•
•
Recruiting, management and administration of personnel
Payroll processing
Training and travel
Benefits
Reports
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Order-to-Cash Process
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SD Menu Options in the SAP System
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SD Audit Trail for Completion of Steps in the SAP
Sales Process
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Purchase-to-Pay Process
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MM Menu Options in the SAP System
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Audit Trail for Completion of Steps in the SAP
Purchase Process
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Pros of Enterprise Systems
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Pros of ERP Packages
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Cons of Enterprise Systems and ERP Packages
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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 ebusiness.
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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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Journalizing, Posting, and Summarizing in a
Manual Accounting System
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Automated Accounting System
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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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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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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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Methods of Conducting E-business
 E-mail – non-standardized messages
 Electronic Document Management – capture, storage,
management, and control of document images.
 Electronic Data Interchange (EDI)- computer-tocomputer 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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Electronic Data Interchange (EDI)
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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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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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EDI Components 1 and 7
1. Originating
application
prepares electronic
business document,
such as a purchase
order (PO).
7. At the destination
organization, an
application
processes the
business data.
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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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Electronic Data Interchange Transaction Set
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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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EDI Component 4
4. Rather than
connecting to each
trading partner, an
organization can use
a VAN.
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Web Services Implementation of an SOA
Application
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Typical Electronic Communications Connection
for Internet Commerce
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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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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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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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Intranet System Architecture
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Extranet System Architecture
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B2B Sell-side Marketplace
Key mechanisms: electronic catalogs and forward
auctions (sell to highest bid price)
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B2B Buy-side Marketplace
Key mechanisms: electronic catalogs (RFQ) and
reverse auctions (buy from lowest bid price)
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Electronic Exchanges
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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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