IS560 ERP Session Number: 2

1
IS560 ERP - Session Number 2

• Session Date January 13, 2003
• Session Objectives
• Introductions Administrative Items
• Assignments
• Session Topics
• ERP Overview (continued)
• ERP System Technology Background

2
Anatomy of an ERP System

• Application Repository
• Core of the ERP system providing essential
  information on the structure and design of the
  whole application to all other modules or systems
• Graphical User Interface
• Presentation manager
• Menu Management
• Define choices available to a particular user
  depending on level of access
• Help Management
• Specific or contextual help at every field or
  processing step
• Database Management
• Usually one of the standard RDMSs like Oracle,
  DB2, etc
• 4GL / OO Development Environment
• Standard tools set for development, testing,
  debugging and documentation
• Query Management
• Query screens, specify tables and fields to be
  displayed, record selection

3
Anatomy of an ERP System (contd)

• Report Management
• Permits queried information to be printed for
  reference
• Application Administration and Management
• Installation, upgrades, system maintenance,
  printer/spool mgmt.
• Software Distribution Management
• Upgrade client-based software from a centralized
  place
• Configuration Management
• Permits ERP to be configured to the specific
  organizational structure and processes of a
  company
• Change Management
• Register, release and control all changes
  introduced into system
• Version Management
• Keep track of the current versions of the various
  modules
• Security and Authorization Management
• User profiles, Usage and access logs, etc

4
Anatomy of an ERP System (contd)

• Audit Management
• Monitoring for system processing and updates,
  error logs, etc.
• Disaster Recovery Management
• Define alternate disaster recovery servers and
  systems, triggering or initial response
  procedures, database recoveries, etc.
• Archival Management
• Archive system and application data for future
  reference
• Communications Management
• Distributed processing, distributed databases,
  security, etc.
• Application Programming Interface (API)
• Standardized interface of the ERP to upload or
  download data from legacy systems, other
  application systems like SCM, CRM, EDI, etc
• Online Documentation
• System documentation available during usage and
  in the context of the particular functionality
  being used

5
Anatomy of an ERP System (contd)

• Print Documentation
• Printing the full technical details for offline
  reference
• Online Tutorial, Training and Demonstration
  Management
• Office Automation
• Functionality of word-processors, document
  formatters, etc.
• Groupware and Workflow
• Interface between ERP and mail system for alerts
  on pre-defined events
• Data Warehouse and Data Analysis
• Mapping and populating operational data from ERP
  tables into multi-dimensional tables of the data
  warehouse for manipulation and analysis
• Implementation Project Management
• Monitoring and managing the progress during the
  implementation of the ERP

6
ERP Models, Artifacts, and Processes (MAPs)

• Models
• Representations of the real-world, as captured in
  the software
• e.g. Organizational structures model
• Artifacts
• Interface between inner / outer environment
  and an object
• e.g. Chart of accounts, vendor lists, product
  lists, invoices
• Processes
• Activity and information flows necessary to
  accomplish a particular task or set of tasks
• e.g. Order management process

7
Example SAP R/3 Organizational Structures
Model
001
0002
0001
Corporate group Company code Valuation
level Purchasing organization Sales
organization Plant Warehouse Storage bin
0003
0002
0001
2000
1000
3000
4000
0005
0004
0003
0002
0001
0003
0001
0002
100-4
100-3
100-2
100-1
8
Example SAP Order Management Process
Proposal
Delivery
Billing
Credit Check
Configur- ation
Collection
Commit- ment
PROCESS SAP MODULE
Sales Distribution
Sales Distribution
Sales Distribution
Materials management
Production Planning
Financials
Financials
9
ERP Data Input

• Gathering Data Once
• Gathering More Data
• Gathering Data Straight into a Computer-Based
  Environment
• Gathering Data where it is generated
• Gathering Data with a Process (rather than a
  Function) focus
• ERP System Design Issues for Data Input
• Importance of user interface
• Focus on the database
• Relationship between processes and data inputs
• Ease of use

10
ERP Output capabilities

• ERP reports
• Standard reports for standard decision-making
  concerns
• Database queries
• Either from ERP query or database query
  capabilities
• Customized reports
• Advantages and disadvantages
• Intranets
• Improve accessibility of standard reports
• Data warehouses
• Decision-making information
• Clearing-house for upstream and downstream
  applications
• ERP portals
• Custom desktop access for ERP users

11
Technology Architecture
Data Logic
Terminal
Centralized
Logic GUI
Data
2-tier
Data
GUI
Logic
3-tier
12
ERP Integration

• ERP vendors always claim that their system
  is integrated with third-party products.
• What integrated may actually mean
• They resell the third-party product.
• The ERP system has open application programming
  interfaces (APIs).
• The ERP system and the third-party product are
  tied together at the database level.
• The applications share data via data extraction.
• The applications share the same user interface
  (UI).
• The applications share data in real-time.

13
ERP Systems integrated with Third-party software
Data Structure A
Data Structure B
Open API layer
Loose integration
UI A
UI B
Data is translated and sent in batches
Open API layer
Data Structure A
Data Structure B
UI A
UI A
Data Structure A
Data Structure A
UI A
UI A
Data is exchanged In real-time via event-driven
messaging
Tight integration
14
Enterprise Application Integration (EAI)

• Integration in a box
• EAI market is very new and ill-defined
• Buying integration software from an EAI vendor
• Constellar Corp. (Constellar Hub)
• Cross Worlds Software (CrossWorlds Customer
  Interaction)
• Inprise Corp. (Entera)
• Active Software (ActiveWorks)
• BEA Systems (BEA Tuxedo)
• Some vendors sell components, some sell
  frameworks, others offer both

15
Component-based ERP
Software Components
Sales application
Order entry application
Customer service application
16
A Component-based Application Architecture
Components
Application Logic
Application Data
17
Distributed Component-based Architecture with a
Centralized Database
Application logic
Application logic
Application logic
Components
Database
18
Component-based Architecture with Distributed
Databases
Application logic
Application logic
Application logic
Components
Database
Database
Database
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Benefits of ERP Component Approach
Vendor Benefits
User Benefits

• System demands less of computers and the network
  less code in the product reduces the potential
  for software bugs
• New features and upgrades are available more
  frequently
• In-house integration work is reduced

• ERP system can operate using less programming
  code, simplifying and accelerating development
  and problem solving
• Developers can more quickly add new features to
  existing applications or create entirely new
  applications
• Developers can make their product communicate
  with third-party software and customers legacy
  systems with less difficulty

20
Different Vendors use Different Approaches

• Wrapping existing code
• Creates pseudo objects by encapsulating
  traditional line-based code with APIs.
• Partitioning applications
• Separates the software into presentation,
  application and data layers
• Partitioning modules
• Divides an application into large pieces and
  allowing them to communicate through APIs
• Building task-oriented business objects
• Develops sets of task-specific components that
  can be assembled to create an application
  supporting a particular business process

21
ERP Evolution the next wave of integration
Information (Supplier-centric)
MANUFACTURING
I N T E G R A T I O N
SUPPLY CHAIN PLANNING
SUPPLY CHAIN EXECUTION
FINANCIALS
HR / PAYROLL
DEMAND-CHAIN MANAGEMENT
Information (Customer-centric)
Industrial-Age based
INTERNAL FOCUS
EXTERNAL FOCUS
Integration of Core functions
Integration of Revenue growth functions
22
ERP Enabling Technology Techniques

• Object-oriented Development Tools
• Programming Languages
• DBMS Data Warehousing
• Workflow Automation
• The Web
• XML
• Reengineering

23
Notes on Object Models

• COM / DCOM
• Microsofts component technology
• (Distributed) Component Object Model
• Distributed Network Applications (DNA)
• CORBA
• Common Object Request Broker Architecture
• Developed by Object Management Group (OMG)
• Enterprise Java Beans
• Developed by Sun
• Restricted to Java and other programming
  languages or compilers that can create Java byte
  code

24
Generations of Programming Languages

• 1st Generation
• Machine Language
• 2nd Generation
• Assembly Language
• 3rd Generation
• High Level Programming (COBOL, Fortran, Pascal,
  etc)
• 4th Generation
• 4GL Languages (FOCUS, Powerhouse, ABAP, etc)
• Current Generation
• Object-oriented (Uniface, Java, ABAP Objects,
  etc)

25
Database Management Systems

• Relational
• Emerged in the mid-1970s
• 2-dimensional tables (rows and columns)
• Oracle, DB2, SQL Server
• Universal Database
• Object Oriented
• Manage complex objects in database
• Poet, Versant, ObjectStore
• Multi-Dimensional
• OLAP, data mining, data warehousing
• Other Data Storage Models
• Hierarchical (IMS)
• ISAM and VSAM
• Network (HP Image)

26
Data Warehousing more than just a repository
Source Data
Load Scrub Facilities
Data Warehouse Metadata
End-User Applications
Both internal data (mostly transactional) and
external competitive data
Metadata is data about data which describes how
to load and scrub it (load-side) and how
to find and use it (client-side)
Middleware products to extract and transform data
from sources using load-side metadata
Tools or complete applications for getting at
and analyzing data
27
Data warehouse various levels of organization
requirements
EIS
Strategic
Executive
Key Summary Information
Decision Types
Organizational Levels
Decision support System (DSS)
Management
Tactical
Data Warehouse
Transaction-Based Operational Systems
Transaction-Based Financial Systems
Employee
Operational Transaction Data
Financial Transaction Data
Levels of Data
28
Workflow

• Provides flexible and responsive procedures for
  automating business processes
• Control of business processes across transaction
  boundaries
• Work list management
• Event management for flexible, adjustable
  reactions to events
• Deadline management
• Optimization of business processes
• Most workflow systems today are still oriented
  towards document management and administrative
  work

29
Web Enablement
Process Process Process
ERP Application
Data
API
Web Server
HTTP
Browser
30
XML the next EDI?

• Electronic Data Interchange (EDI)
• International standards like EDIFACT and ANSI X12
• Automated exchange of business data, independent
  of the hardware and software setup of the
  companies involved
• XML - subset of SGML
• Unlike HTML, XML provides context and meaning to
  data
• Originally developed as a mechanism to publish
  data through the web without the originator
  having to understand anything about the system
  sending the data
• Increasingly being used as a common text format
  to move information between enterprises,
  supporting supply chain integration efforts
• Vertical market XML vocabularies for a particular
  industry, such as automobile and health care
• Implications of Internet and the World-Wide Web

31
What is Reengineering?

• Process involves the redesign of business
  processes to achieve dramatic improvements in
  cost, quality, service or speed.
• Typically involves transaction processing
• Tries to find inefficient rules of thumb built
  into processes and break away from them
• Design business processes to exploit IT rather
  than replicate old manual processes

32
What are Primary Approaches to Reengineering?

• Two primary approaches
• Start from scratch, and
• Best Practices
• Start from scratch and redesign processes
• Most expensive
• But considers unique aspects of specific firm
  including
• processes,
• resources,
• people
• Using existing best practices generated by others
  (e.g., consultants and/or competitors)
• Processes that have been proved in other firms.

33
What is the role of reengineering in ERP?

• ERP vendors have built many best practices.
• e.g., SAP now has over 1000 available best
  practices from which to choose.
• Firms often use ERP as a vehicle for
  reengineering processes.

34
Best-of-breed vs. ERP/SCM Which way to go for
Supply Chain Collaboration

• Article Discussion Points
• Key Findings
• Salient Tools and Techniques
• Conclusions

35
Next Session Highlights

• Topics
• ERP System Technology (continued)
• Theory of Constraints ERP
• ERP Support for Business Processes.
• ERP at Indian Motorcycle Case Study Discussion.
• Reading Assignment covering first 2 sessions
• Complete reading Why ERP? by Jacobs Whybark
  (completion target of week 3).
• Begin reading chapters 3-6 of ERP Tools,
  Techniques, and Applications by Ptak and
  Schragenheim targeting completion by week 5.
• Read Indian Motorcycle Case accessible via class
  web site Articles Links page for next weeks
  discussion.