Chapter 2 Enterprise System (7 hrs) Sub Topics : • 2.1. Role of enterprise system in organization • 2.2. Execute the process • 2.3. Capture and store process data • 2.4. Stand-alone mainframe systems • 2.5. Client server architecture • 2.6. Service Oriented Architecture • 2.7. Types of Enterprise system • 2.8. Types of Data in enterprise system (transaction data, master data, organizational data) • 2.9. SAP Overview • 2.10. SAP software Enterprise System • Enterprise systems are software applications that have crossorganizational capabilities as opposed to department or groupspecific programs. They allow for collaboration and communication across the organization through collection of data that is accessible and usable by multiple departments. 2.1. Role of enterprise system in organization Enterprise systems are a critical component of the process view of organizations. They facilitate communication and coordination among different functions, and they allow easy exchange of, and access to, data across the process. More specifically, ES play a vital role in the following three areas: • Execute the process • Capture and store process data • Monitor process performance 2.2. Execute the process • Enterprise systems help organizations execute processes efficiently and effectively • Enterprise systems help execute processes by informing people when it is time to complete a task, by providing the data necessary to complete the task, and in some cases by providing the means to complete the task. • Fulfilment process, for example, the system will inform people in the warehouse that orders are ready for shipment and provide them with a listing of what materials must be included in the order and where to find the materials in the warehouse. • Procurement process, the system generates the purchase requisitions and then informs the purchasing department that they need to act on these requisitions • Since organizations rely so heavily on ES, they must make certain that these systems are functioning all the time so that the work is not interrupted. Amazon.com • Rather than manufacture its own products, Amazon.com purchases and stores finished goods and then resells them to its customers • The company receives most of their orders via their Web site • This Web site is connected to an enterprise system that supports the fulfilment process. • When an order is received, the system communicates this information to the warehouse, where the order is packed and shipped. • If the online store stops working, then Amazon.com can’t take any orders, and their entire warehouse will come to a stop • 2.3. Capture and store process data • Processes create data such as dates, times, product numbers, quantities, prices, and addresses, as well as who did what, when, and where. • Enterprise systems capture and store these data, commonly referred to as process data or transaction data. • Some of these data are generated and automatically captured by the system whereas, other data are generated outside the system and must be entered into it. • In the fulfillment process, for example, when a customer order is received (by mail or over the phone), the person taking the order must enter data such as the name of the customer, what they ordered, and how much they ordered. • When the order is shipped, the warehouse will provide data about what products were shipped and how many, whereas the system will automatically include data related to who, when, and where. • An important advantage of using an ES compared to a manual system or multiple functional systems is that the data need to be entered into the system only once. Once they are entered, they are easily accessible to other people in the process. • The data captured by an ES, along with data already in the system, provide immediate feedback. Amazon.com • When a customer purchases something on Amazon.com, the system provides a confirmation number that can be used to track the progress of the order. • In addition, the data in the current order are combined with historical sales data to recommend additional products that may be of interest to the customer—resulting in higher sales. Evolution of ES Stand-alone mainframe systems • Components of an ES include hardware, software, and a database. • hardware typically consisted of large, expensive mainframe computers. • Software includes specialized operating system software needed to execute operations from the applications on the hardware and custom applications that provide capabilities needed to complete specific tasks • Databases are used to store the data associated with the ES • Only very large companies could afford to acquire and implement an ES • the way users interacted with the ES was very primitive. They had to use a terminal that was physically connected to the mainframe to input commands to the system using punch cards. • 1960s, 1970s, and 1980s, IBM was the only company that could provide the mainframes, operating systems, and databases for the early ES. • major drawbacks of the mainframe architecture was its limited scalability. • Another limitation of the early ES was that they were custom designed, meaning they were designed to address the specific needs of individual firms. Client-Server Architecture Client-Server Architecture • Three layers of application : • presentation layer : how you interact with the application (using menus, typing selecting), • application layer : what the application allows you to do (create formulae or charts, compose an essay), • data layer : where the application stores your work (on your hard drive or flash drive). • The three-tier client-server architecture separates these layers into three separate components. • Example : three-tier architecture is instant messaging (IM). 1. software we install in our computer is the presentation layer. 2. messaging system provides the application layer or the functionality (i.e., the ability to exchange messages with others) 3. data layer stores your login information, your contacts, and so on. • Advantages : 1. achieve much greater scalability and flexibility because the different layers can run simultaneously on different computers rather than exclusively on a single mainframe. 2. ES can be run on considerably cheaper computers. • Note : to maintain data integrity, each application server has to store its records in a single database that resides on a separate server used solely for the database Service Oriented Architecture • Service-Oriented Architecture (SOA) is a style of software design where services are provided to the other components by application components, through a communication protocol over a network. • In SOA, a number of services communicate with each other, in one of two ways: through passing data or through two or more services coordinating an activity. • SOA is accessed through Web Service. • By using Web services, companies could now integrate several clientserver applications and create an enterprise mashup, or composite applications. • Example : if your company wants to see the map locations of every customer in San Francisco, you could create a composite application or mashup between the ES that contains your customer data and Google Maps • Web services provide a standardized and reliable way for multiple systems to communicate in a very fast and scalable way to bring added value and efficiency to a business process. • By using SOA to integrate and expose the business processes and data inside an ES, companies can now create new composite applications quickly and inexpensively • By using SOA to integrate and expose the business processes and data inside an ES, companies can now create new composite applications quickly and inexpensively TYPES OF DATA IN ES TRANSACTION DATA MASTER DATA ORGANIZATIONAL DATA Transaction Data • When an organization completes a specific process activity or task, the data that it generates are transaction data • Transaction data reflect the day-to-day activities of the organization which are constantly changing. • typically include general data such as who did what, when, and where, as well as specialized data that relate to the specific task. • Example: when a company sends a purchase order to a vendor, the following transaction data are generated: dates, quantities, name of the person requesting the material, name of the person approving the material, prices, where the shipment is to be delivered, and the shipment method. Master Data • Master data describe the key entities associated with an organization. • Typical entities are vendors, products, and employees. • These data change, but only occasionally. • Eg : For products, master data include product number, description, physical characteristics such as weight and colour, handling requirements (e.g., fragile), and typical storage location. For Employee master data include name, address, position data, payroll data, tax-related data, and benefits data. • Master data are not connected to a specific process or process step. However, process steps require master data to be completed. Organizational Data • Organizational data describe central characteristics of organizations, their internal structures and processes as well as their behavior. • They rarely change over time. • For example, Production regions of certain company may includes multiple factories and each factories may have storage areas, shipping points, and receiving points. • All these data are organizational data and are included in the ES as part of the configuration process. • Configuration is the process of setting up the ES so it can support the work of the business, that is, the business processes. Customer Relationship Management (CRM) Types of Enterprise system Enterprise Resource Planning (ERP) Supply Chain Management Systems (SCM) Enterprise Resource Planning (ERP) • ERP integrates software applications, such as purchasing, finance, human resources and inventory management. • Within an ERP system, the integrated software modules, such as sales, quality management and accounts receivable, communicate and share data. • Each of these modules consists of multiple applications that execute end-to-end business processes. • For example, the sales module includes the applications necessary to create and manage sales contracts, sales orders, sales invoices and sales order pricing. • ERP may also be customized to support a number of different industries, including oil and gas, retail and banking. • Leaders in the ERP software industry include Oracle NetSuite, Microsoft Dynamics 365, SAP Business One. Customer Relationship Management (CRM) • CRM were developed to address the need to raise a sales department’s productivity and provide an effective way to increase sales. • With CRM functions, such as sales opportunity management, a company learns more about its customers’ needs and buying behavior and combines this information with market information to enhance the quality of the company’s marketing plans and sales forecasts. • CRM supports mass e-mail communications and automates the sales process workflow to improve employee productivity. • Leaders in the CRM software industry include Salesforce, Zoho and HubSpot. Supply Chain Management Systems (SCM) • A supply chain is the collection of people, tasks, equipment, data and other resources required to produce and move products from a vendor to a customer. • Supply chain management refers to the management of supply chain activities in an effective and efficient way to provide a company with a strategic advantage. • These activities may include product development, material sourcing, production and logistics as well as the information systems that coordinate these activities. • Information flows allow supply chain partners to coordinate their strategic and operational plans as well as the day-to-day flow of goods and materials through the supply chain. • The physical flows include the manufacture, transport and storage of goods or materials. • Leaders in the SCM software industry include SoftwareHut, E2open, IBM Watson, Oracle E-Business Suite, and SAP. SAP • SAP stands for Systems Applications & Products in DATA Processing • In 1972 5 Former Employees of IBM Programmers formed the company called SAP AG in Germany and released the first version of SAP • 1979 SAP R/2 introduced for Mainframe computers • 1992 SAP R/3 Released as Client/Server Application • 1996 SAP R/3 Became Partially internet Enabled • 1997 Developed and Launched the new Dimension Products • 1999 SAP Announced mySAP.com, the next generation of its Enterprise Application System • 2000-2005 SAP Introduced mySAP Business Suite, Netweaver and XApplications SAP Modules • Financial Accounting and Controlling (FICO) • Human Capital Management (HCM) • Material Management (MM) • Plant Maintenance (PM) • Production Planning (PP) • Quality Management (QM) • Sales Distribution (SD) Finance and Controlling (FICO) • SAP FICO is a combination of two ERP modules, i.e., Finance Accounting (FI) and Controlling (CO). Under Finance in SAP and at an enterprise level, the following modules take part − • FI − Finance • CO − Controlling • IM − Investment Management • TR − Treasury • EC − Enterprise Controlling Sales Distribution (SD) • SAP SD is used by organizations to support sales and distribution activities of products and services, starting from enquiry to order and then ending with delivery. • It controls customer master data, sales, sales organization and sales conditions Human Capital Management (HCM) • HCM module handles all human resource activities such as resource hiring, salary, employee benefits etc.
