CHAPTER 1 ERP: “Enterprise Resource Planning” : industry term for the broad set of activities that managers use to run the important parts of an organization such as purchasing,human resources, accounting, production,and sales using an integrated suite of information technology applications. ERP is cross functional(meaning people from different areas of an organization work together as a team) ERP is cross centered: the application is built around business processes. An ERP system is an integrated (compatible, systems works together) suite of information technology applications that support the operations of an enterprise from a process perspective. Built upon relational database systems Sold in modules: groups of related programs ERP has historically been seen as back office software Core ERP includes Financials, HR and Operations. Vendors also offer “bolt ons” such as CRM or SCM ERP Market: One of the fastest growing markets in software industry 34.5% of companies with revenues over $1 billion plan to purchase or upgrade Types of business processes: plan the business market and sell provide customer support manage human resources manage finance and accounting ERP Cost: between $50,000 and $100,000,000+ Variety of business justifications: Replace legacy systems Reduce cycle times Lower operating costs Enables better management decisions Real-time: Readily available to all users in the departments once information is entered into the systems On-line Variety of business justifications: Replace legacy systems Reduce cycle times Lower operating costs Enables better management decisions Overall Business Benefits Information o Maximizes information throughput o Provides timely information o Integrates information throughout supply chain Minimizes response time Pushes decision making down to lowest levels Reduces costs Cuts inventory Improves operating performance Department Benefits Sales -Increased efficiency -Lower quotes, reduced lead time, improved responsiveness Manufacturing -Concurrent engineering -Faster design and production Data Service -Accurate customer service history and warranty information Accounts Payable -Suppliers paid accurately ERP modules supported by vendors: - SAP: sales, material management, financial accounting, human resources - ORACLE: marketing sales, human resources, manufacturing, - PEOPLESOFT: supply chain management, financial management systems Design Alternatives: Vanilla” implementation Complete vendor package Benefits Total integration across all functional areas Re-engineering of all business processes Deficits Expensive Time-consuming Selected ERP modules Benefits Less costly and time-consuming Deficits Lacks total integration of data Limited applicability and use Build in-house Benefits: Can create system based on its needs Competitors will not have access to similar system Deficits: Time- and resource-consuming Expensive Risky May not provide competitive advantage Maintain concurrent legacy systems Benefits: Familiarity Deficits May be a competitive disadvantage The value of ERP is the opportunity to integrate an entire organization by having a single point of entry and sharing of data across the enterprise. Creates less need to reconcile data and rekey. Inefficient business processes that were disjointed become much more efficient. Legacy system layout: each dept, business unit might have their own systems (end user computing etc), leads to inefficiencies and delays Best Practices: certain techniques or processes and methodologies that have generally recognized as more effected, efficient in an industry as it matures. ERP tiers: erp vendors (one that sells erp systems) classify companies based on various criteria to determine a fit. Tier 1: software for companies with 1000+ , BIGGEST TIER for companies like the bank,gov,etc that use (#1 VENDOR ..SAP “Systems application and products, or Oracle Tier 2(Sme “Small to Med”): medium sized companies 100-999 use a lower cost erp system Tier 3(SME): family run business, less than 100 that use Microsoft, Peachtree, Quickbook. Tier4: VERY small companies, uses Peachtree, accpac and quickbook Maintaining Competitive Advantages: Implement ERP system better than competitors Migrate to new versions faster Use “vanilla” ERP for core systems and build customized modules for others Increase availability of operational data Better use of data for analysis CHALLENGES: Realization of benefits On-time, on-budget implementations Applying multi-stage approach Markus Three phases: project, shakedown, and onward and upward phases Business results not achieved until last phase Parr and Shanks Four phases: planning, re-engineering, design, and configuration and testing phases Benefits not achieved until last two phases Holland and Light Benefits occur after implementation of advanced modules CHAPTER 2 Two tier architecture/ Client server architecture: evolved to meet the demands of a greater number of users accessing shared data over the LAN LAN: Local area networks that linked computers to close proximity to share files among computers Client: it accesses data stored on another computer GUI: graphical user interface which is a highly interactive user interface with a windowing metaphor that present info using text and images on the computer display Database server: running on a dedicated computer which provides a standardized way to store and retrieve data. Responsible for finding the right data, formatting it, returning its results to the right user 3tier architecture: one or more applications are placed between the client and the database server. Application server: responsible for executing all of the business logic and interacting with the client applications. Fat clients: running applications directly on users pc’s offer the richest interfaces interface is the point of interaction[vague] with software, or computer hardware, or with peripheral devices such as a computer monitor or a keyboard. Thin clients: offer a simpler interface and do not require any additional software to be installed on the client ( use web browsers because they are widely available and work identically on many diff computers) EARLY SYSTEMS 1990’s client server, three-tier Client – fat client/thin client Application (business logic) Database Intranet: private network within the company With ERP software, the GUI can take the form of a dashboard customized to suit the needs and preferences of a set of users or a specific user. Can include: Business process activity based on production or logistics information. Tasks, reminders and other notifications. Calendaring and scheduling resources. Messaging including email, instant messaging and telephone traffic. Official communications from designated sources. Bolt ons: 3rd party software bolted on to ERP Back-office software (Core ERP) –HR, Financials, and Operations Front-office software integrates with customers and suppliers – supply chain management and customer relationship management Bolt-ons are used to integrate more functionality to Core ERP Tables are relations Tables and forms (visuals of tables) show up on screens in ERP menus. Database Tier: Relational database: database that is stored in two dimensional tables or RELATIONS Fields: columns Attributes: entries in the columns Records: rows Each table has a primary key (ex:student id)that is the unique. Usually the primary key is some sort of code. Can not be null or empty Entity integrity rule The primary key in one table becomes the foreign key in another table so the tables can connect and querying can take place. Referential integrity rule : ensures that relationships between tables remain valid and consistent. Must have corresponding, matched primary key denoting a record in the linked table. TABLE Relationships: - ERDs are a type of system diagramming that show relationships between tables. o Relationships are rules that show how tables relate to one another. - Types of relationships o One-to-one: the primary key of one table is associated with only one record in another table o One-to-many, many-to-one: the primary key of one table is associated with more than one record in another table o Many-to-many: the primary key in one table is associated with more than one record in a second table and the primary key in the second table is associated with more than one record in the first table Database query - SQL “ Structured query languae” : a declarative programming language, which means that applications specify what the database should do NOT how the database actually performs the request . Simple Query – returns a response without changing the database Update Query – changes records in a database - Data Manipulation – operations alter the database o Inserting new rows into tables o Updating existing rows o Deleting rows from tables - Configuration: involves “setting switches” during implementation that determine how the system will execute business processes. - Configuration Tables: include options that enable a company to tailor a particular aspect of the system to the way it chooses to do business. o Vanilla : acceptance of all the defaults with which the erp package is shipped,thereby eliminating all customization and configuration requirements, relying explicity on the ERP software vendors prescribed methodology. o Example of configuring: reporting relationships, options having to do with how business processes work, auditing mechanisms, organizational structure. - Customization is changing code. o This is expensive and time consuming. o Only do this if really needed and you believe it will lead to a competitive advantage. o Don’t customize because you feel your employees will resist a new way of work….that is the point of ERP! CHAPTER 3 Business Process Reengineering: Created by Michael Hammer Business Process Reengineering is the fundamental, radical, redesign in business processes to achieve dramatic improvements in key measures of performance such as cost, quality, speed, and service The focus of BPR is not on how a process is done, but WHY it is done • • • • • • • • Benefits vs. Challenges of BPR Benefits • Cost Reductions • Improved Customer Satisfaction • Improved Agility • Increased Profitability and Reputation RISKS Resistance from employees Cost Job losses Tradition and culture Time requirements Lack of management support Risks to managers Retraining Clean Slate Reengineering: Also referred to as “starting from scratch” Technology-Enabled Reengineering: A particular technology (or portfolio of technologies) is chosen as a tool to facilitate reengineering The technology drives the reengineering Advantages: Not constrained by a particular tool Not constrained to a limited set of processes Evolution is not limited by a particular technology Can result in unique processes (which gives a competitive advantage) Encourages a free flow of ideas Disadvantages: DISADVANTAGES Costly Excess time and resources (makes it difficult for smaller companies in an industry to afford) Technology-Enabled Reengineering Advantages: ERP provides the tool and structure to facilitate change Roadmaps lead to less time ERP bounds the design which eliminates difficult decisions Design is feasible and we know it works (it’s been proven) Less risk Designs likely can be implemented in a timely manner because they are focused on specific processes Fewer overhead costs Disadvantages Constrained by a technology, evolution limited by that technology, limited by certain best practices in that technology Not unique – no competitive value perhaps (which incidentally is why orgs may customize); other companies have access to the design A core competency is a company’s process that transforms generic inputs into uniquely developed products or services that provide it with a competitive advantage Key Performance Indicators - allow the company to compare its performance to industry best practices High Volume, Low Margin Activities High Defect, High Reward Activities Quality Controls – reduce error rate, but can be costly High Skill, Time Intensive Activities High Complexity, Specialized Resource Activities “KISS” or “keep it simple stupid” Process Built around Obsolete or Changing Technology REENGINEERING CHALLENGES Resistance from employees Cost Job losses Tradition and culture Time requirements Lack of management support Risks to managers Retraining CHAPTER 4 Systems documentation: Basic Purposes for Systems Documentation 1. Describing business processes 2. Assessing internal control procedures 3. Evaluating, designing, or changing information systems Systems Diagram – a graphical representation of systems 1. Flowcharts 2. ER Diagrams 3. Other techniques A process map, also known as a cross-functional flowchart, is used by many organizations seeking to document, analyze, streamline, and redesign business activities Benefits: Defining the “as is” business process and clarifying the changes necessary to transform the present process into the “to be” process Determining whether “as is” measures are appropriate Promoting awareness of employees’ responsibilities Showing the impact a certain role’s performance has on upstream and downstream activities in the process Highlighting workflow inefficiencies Identifying opportunities to streamline and improve processes Pinpointing internal controls that need to be tested during an audit MAP SYMBOLS: ACTIVITIES: SQUARE BOX: series of steps or activities that transform inputs and outputs Decision points (TRIANGLE LOOKING): yes/no (positive/negative) outcome that depicts the alternatives Process flow lines: connect symbols and are labeled with the type of information flowing into or out of the activities Data stores(OVALISH DENTED SQUARE): support the process Termination(OVAL CIRCLE): points at which the process ends On-page connector:(SMALL CIRCLE) reduce clutter on a page Off-page connector (PENTAGRAM): when processes span multiple pages