IS 630 : Accounting Information Systemshttp://www.csun.edu/~dn58412/IS630/IS630_F14.htmEnterprise Systems & e-Business SystemsLecture 2

IS 630 : Lecture 2

Enterprise SystemsOrganization value chain and value systemValue 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.IS 630 : Lecture 2*

IS 630 : Lecture 2

Enterprise Systems Value ChainThe 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.IS 630 : Lecture 2*

IS 630 : Lecture 2

IS 630 : Lecture 2*Porters Value ChainFIRM INFRASTRUCTURE

INBOUNDLOGISTICS

OPERATIONS

OUTBOUNDLOGISTIC

MARKETING& SALESLOGISTIC

SERVICE

HUMAN RESOURCE MANAGEMENT

TECHNOLOGY DEVELOPMENT

PROCUREMENT

VALUE

COST

MARGIN

IS 630 : Lecture 2

IS 630 : Lecture 2*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 increasedGoals of a business system: effective, efficient, competitive.

IS 630 : Lecture 2

Internal Focus: Value ChainIS 630 : Lecture 2*

IS 630 : Lecture 2

External Focus : Value SystemIS 630 : Lecture 2*

IS 630 : Lecture 2

The Value of Systems IntegrationCoordinate 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.

IS 630 : Lecture 2*

IS 630 : Lecture 2

Information Silos IS 630 : Lecture 2*

IS 630 : Lecture 2

Problems With Information SilosIS 630 : Lecture 2*

IS 630 : Lecture 2

Inefficient Customer ServiceIS 630 : Lecture 2*

IS 630 : Lecture 2

Solution to Inefficient Customer ServiceEnterprise system establishes ATP (available to promise) by checking warehouses and scheduled manufacturing.Enterprise systems uses the central database to automatically determine price and creditworthiness.IS 630 : Lecture 2*

IS 630 : Lecture 2

Data Maintenance: Create Customer RecordIS 630 : Lecture 2*

IS 630 : Lecture 2

Business Event Data Processing:Enter Customer OrderIS 630 : Lecture 2*

IS 630 : Lecture 2

Using Stored Data for Decision MakingIS 630 : Lecture 2*

IS 630 : Lecture 2

Enterprise Systems and ERPsEnterprise systems:Integrate business processes and information from all of an organizations 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.IS 630 : Lecture 2*

IS 630 : Lecture 2

Integrate Business Process FunctionalityWhen 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.

IS 630 : Lecture 2*

IS 630 : Lecture 2

*Enterprise Application : Enterprise Resource PlanningIS 630 : Lecture 2

IS 630 : Lecture 2

*Enterprise Application : Enterprise Application Integration (EAI)IS 630 : Lecture 2

IS 630 : Lecture 2

Selected ERP VendorsIS 630 : Lecture 2*

IS 630 : Lecture 2

SAP Business SuiteIS 630 : Lecture 2*

IS 630 : Lecture 2

SAP NetWeaverIS 630 : Lecture 2*

IS 630 : Lecture 2

Third-Party ModulesCustomer relationship management (CRM) software: builds and maintains customer-related database.Customer self-service (CSS) software: allows customers to complete tasks without aid of organizations employees.Sales force automation (SFA) software: automates sales tasks such as order processing and tracking.IS 630 : Lecture 2*

IS 630 : Lecture 2

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. IS 630 : Lecture 2*

IS 630 : Lecture 2

Connecting Third-Party ModulesThird-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.IS 630 : Lecture 2*

IS 630 : Lecture 2

Other Methods for Systems IntegrationEvent-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.

IS 630 : Lecture 2*

IS 630 : Lecture 2

IS 630 : Lecture 2

Major ERP ModulesSales and Distribution (SD)Record customer ordersShipping BillingConnections to:Materials management module (MM)Financial accounting module (FI)Controlling module (CO)IS 630 : Lecture 2*

IS 630 : Lecture 2

Major ERP Modules . . .Materials Management (MM)Acquisition and management of goods from vendorsPurchase order preparationReceivingRecording invoiceInteracts with Sales and distribution module (SD)Financial accounting module (FI)Controlling module (C0)IS 630 : Lecture 2*

IS 630 : Lecture 2

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. IS 630 : Lecture 2*

IS 630 : Lecture 2

Major ERP Modules . . .Controlling (CO)Often called Controlling and Profitability Analysis (CO/PA)Handles internal accounting including:Cost center accountingProfitability analysis for salesActivity-based accountingBudgetingIS 630 : Lecture 2*

IS 630 : Lecture 2

Major ERP Modules . . .Human Resources (HR) Recruiting, management and administration of personnelPayroll processingTraining and travelBenefitsReportsIS 630 : Lecture 2*

IS 630 : Lecture 2

Order-to-Cash ProcessIS 630 : Lecture 2*

IS 630 : Lecture 2

SD Menu Options in the SAP SystemIS 630 : Lecture 2*

IS 630 : Lecture 2

SD Audit Trail for Completion of Steps in the SAP Sales ProcessIS 630 : Lecture 2*

IS 630 : Lecture 2

Purchase-to-Pay ProcessIS 630 : Lecture 2*

IS 630 : Lecture 2

MM Menu Options in the SAP SystemIS 630 : Lecture 2*

IS 630 : Lecture 2

Audit Trail for Completion of Steps in the SAP Purchase ProcessIS 630 : Lecture 2*

IS 630 : Lecture 2

Pros of Enterprise SystemsIS 630 : Lecture 2*

IS 630 : Lecture 2

Pros of ERP PackagesIS 630 : Lecture 2*

IS 630 : Lecture 2

Cons of Enterprise Systems and ERP PackagesIS 630 : Lecture 2*

IS 630 : Lecture 2

E-Business SystemsChanges 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.

IS 630 : Lecture 2*

IS 630 : Lecture 2

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

IS 630 : Lecture 2*

IS 630 : Lecture 2

Journalizing, Posting, and Summarizing in a Manual Accounting SystemIS 630 : Lecture 2*

IS 630 : Lecture 2

Automated Accounting SystemIS 630 : Lecture 2*

IS 630 : Lecture 2

Batch Processing andPeriodic ModeBatch 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 occursRecord business event dataUpdate master dataGenerate outputsIS 630 : Lecture 2*

IS 630 : Lecture 2

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.IS 630 : Lecture 2*

IS 630 : Lecture 2

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.IS 630 : Lecture 2*

IS 630 : Lecture 2

Methods of Conducting E-businessE-mail non-standardized messagesElectronic 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

IS 630 : Lecture 2*

IS 630 : Lecture 2

Electronic Data Interchange (EDI)IS 630 : Lecture 2*

IS 630 : Lecture 2

TunnelingA technology that encapsulates, encrypts, and transmits data over the InternetA secure tunnel is created over the VPN connecting the two intranetsAuthenticationConfirms the identity of the remote user who is attempting to access information.Virtual Private Network ( VPN )IS 630 : Lecture 2*

IS 630 : Lecture 2

EDI Components1. 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.IS 630 : Lecture 2*

IS 630 : Lecture 2

EDI Components 1 and 7Originating application prepares electronic business document, such as a purchase order (PO). At the destination organization, an application processes the business data.IS 630 : Lecture 2*

IS 630 : Lecture 2

EDI Components 2 and 62. and 6. An applications electronic business document must be translated from standard message format to the structured EDI format that will be recognized by the receiving computer.IS 630 : Lecture 2*

IS 630 : Lecture 2

Electronic Data Interchange Transaction SetIS 630 : Lecture 2*

IS 630 : Lecture 2

EDI Components 3 and 53. 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. IS 630 : Lecture 2*

IS 630 : Lecture 2

EDI Component 4Rather than connecting to each trading partner, an organization can use a VAN. IS 630 : Lecture 2*

IS 630 : Lecture 2

Web Services Implementation of an SOA ApplicationIS 630 : Lecture 2*

IS 630 : Lecture 2

Typical Electronic Communications Connection for Internet CommerceIS 630 : Lecture 2*

IS 630 : Lecture 2

Typical Electronic Communications Connection for Internet Commerce . . .Circles 1 and 7: Customer connects to vendor in an extended form of client/server applicationCircles 2 and 5: Connection to Internet through direct connection or network providerCircles 4 and 6: Assurance services provide limited assurance that Web site is reliable and secureCircle 3: Internet connectionIS 630 : Lecture 2*

IS 630 : Lecture 2

E-Business ModelsElectronic 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.

IS 630 : Lecture 2*

IS 630 : Lecture 2

Communication Networks in e-BusinessClient/server technologyLocal area networks (LANs)Wide area networks (WANs)InternetWeb browsersIntranetExtranetIS 630 : Lecture 2*

IS 630 : Lecture 2

Intranet System ArchitectureIS 630 : Lecture 2*

IS 630 : Lecture 2

Extranet System ArchitectureIS 630 : Lecture 2*

IS 630 : Lecture 2

B2B Sell-side MarketplaceKey mechanisms: electronic catalogs and forward auctions (sell to highest bid price)IS 630 : Lecture 2*

IS 630 : Lecture 2

B2B Buy-side MarketplaceKey mechanisms: electronic catalogs (RFQ) and reverse auctions (buy from lowest bid price)IS 630 : Lecture 2*

IS 630 : Lecture 2

Electronic ExchangesIS 630 : Lecture 2*

IS 630 : Lecture 2

Current E-Business ConceptsInternet Assurance: service provided for a fee to vendors to provide limited assurance to users of the vendors 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.IS 630 : Lecture 2*

IS 630 : 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.

***No additional notes.See Figure 8.3.***In the sell-side marketplace, organizations sell their products or services to other organizationsElectronically 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 sellers site, views catalogs, and places an order. In the B2B sell-side marketplace, the buyers are organizations.*The buy-side marketplace is a model in which organizations buy needed products andservices from other organizations electronically.*Exchanges have many buyers and many sellers.

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