615260 Enterprise Systems SAP Stream Wednesdays

1
615-260 Enterprise Systems SAP Stream
(Wednesdays)
L14 Procurement and SOA NetWeaver
2
Goal for this lecture

• To provide a description and explanation of the
  SAP R/3 Procurement process (Module 4) similar to
  that required in Project 2 for the R/3 Sales
  Process (Module 6).
• Provide feedback on the Essay Services-oriented
  IT Architecture and SAP NetWeaver

3
Lecture Outline

• Process functionality in R/3 Procurement
• Database structure in R/3 Procurement
• Service-Oriented IT Architecture SAP NetWeaver
• (Ill go a little beyond what was expected from
  you.)
• 4. Summary

4
Project 2, Question 3 (5 marks)

• (3) Sales Process Functionality (5 marks)
• The process you have just completed initially
  seems very complex. Presumably SAP has designed
  it the way it is because their customers have
  requested it to be this way.
• Why would SAPs customers have wanted such a
  complex process? What is the point of having all
  the document types shown above? (You might
  construct a table showing the purpose, and value
  to the organization, of each document type.)
• Is this process best practice? Explain your
  answer.

5
Project 2, Question 4 (5 marks)

• (4) R/3 Sales Database (5 marks)
• The relational database is at the heart of
  systems like SAP R/3.
• Within the constraints of this 1,500-word
  assignment, describe the tables (define key
  columns and types of information stored) used to
  store your Sales Order.
• In what ways, if at all, does the content of
  these tables change as each step in the process
  is executed?

6
1. Process Functionality, Procurement Process,
(similar to Project 2, Q.3, 5 marks)

• The process you have just completed initially
  seems very complex. Presumably SAP has designed
  it the way it is because their customers have
  requested it to be this way.
• Why would SAPs customers have wanted such a
  complex process? What is the point of having all
  the document types shown above? in this process.
• (You might construct a table showing the purpose,
  and value to the organization, of each document
  type.)
• Is this process best practice? Explain your
  answer.

7
Figure 4.1, page 4.2
8
P/AP/CP Organization Information flows
Gelinas and Sutton, p.405
Warehouse shown in DFD

Requis-itions
9
GS p.408
1.0 Order goods services
2.0 Receive goods services
3.0 Establish Payable
4.0 Make Payment
10
GS p.408
1
1.0 Order goods services
2
4
3
5
2.0 Receive goods services
1
3.0 Establish Payable
1
6
7
4.0 Make Payment
8
2
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Purchasing Documents (1)

• Purchase Requisition
• Document requesting Purchasing Department to
  purchase goods.
• E.g., a Purchase Requisition for 10 cartons of
  Floppy Disks.
• Can be prepared by any department (division)
  requiring goods or services.

13
Purchasing Documents (2)

• Request for Quotation
• Document sent to potential vendors inviting them
  to tender for goods.
• R/3 can perform vendor analysis and generate
  letters for successful/unsuccessful vendors.
• Once Vendor is chosen, the purchase requisition
  is converted to a purchase order.
• Usually prepared by Purchasing Department.

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Purchasing Documents (3)

• Purchase Order
• Formal request to vendor to supply certain goods.
• Can be created with or without reference to an
  RFQ or a purchase requisition.
• Usually prepared by Purchasing Department.

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Notes page 4-28
17
Purchasing Documents (4)

• Goods Receipt
• Document confirming that the goods have been
  received and the correct amount of each type has
  been delivered.
• Usually prepared by Receiving/Shipping
  Department.

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Purchasing Documents (5)

• Vendor Invoice
• Vendor sends invoice for payment of
  goods/services
• In R/3, the procurement process is concluded by
  verification of the vendor invoice.
• Usually entered by Accounts Payable Department.

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Module 4 Procurement

• In M4.1 you created a material master record
  A- Headlamp Extra Bright.
• In M4.2 you purchased 10 units of inventory item
  A- (i.e. executed part of the stock material
  process), recorded receipt of goods, and accepted
  the vendors invoice.
• In M4.3, you executed another version of the
  procurement process, similar to M4.2, except that
  the goods purchased were accounted for
  differently (not as assets).

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Integration with Accounting

• Invoice Receipt (Document type RE)
• Debit 191100 Goods received/Invoice received
  (specified during configuration?)
• Credit 160001 Trade Payables Domestic (Specify
  Accounts Payable control account in the Vendor
  Master record)
• Goods receipt (Document type WE)
• Debit 300000 Raw Materials (specify through
  Valuation class Raw Materials 1 (3000) in
  Materials Master, p.4.22, or at the time of entry
  of Purchase requisition, see Step 11, p.4.31,
  account 476100 Computer supplies)
• Credit 191100 Goods received/Invoice received

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1. Process Functionality, Procurement Process,
Summary

• The process you have just completed initially
  seems very complex. Presumably SAP has designed
  it the way it is because their customers have
  requested it to be this way.
• Why would SAPs customers have wanted such a
  complex process? What is the point of having all
  the document types shown above? in this process.
• (You might construct a table showing the
  purpose, and value to the organization, of each
  document type.)
• Is this process best practice? Explain your
  answer.

27
Why is the MM module of R/3 structured this way?

• MM Processes
• Flexibility to ensure system supports various
  different procurement processes within the one
  entity and across entities for a wide range of
  organizations around the world.
• Integration to enhance supply chain management
• Reduce stock-order lead times
• Simplify time-consuming tasks
• Increase accuracy
• Improve communication between departments
• Save

28
2. R/3 Database, Procurement Process, (similar to
Project 2, Q.4, 5 marks)

• The relational database is at the heart of
  systems like SAP R/3.
• Within the constraints of this 1,500-word
  assignment, describe the tables (define key
  columns and types of information stored) used to
  store your Sales Order.
• In what ways, if at all, does the content of
  these tables change as each step in the process
  is executed?

29
GS p.408
1
1.0 Order goods services
2
4
3
5
2.0 Receive goods services
1
3.0 Establish Payable
1
6
7
4.0 Make Payment
8
2
30
The SAP R/3 Procurement Process is structured
around four types of stored data
31
MM Organizational Elements
1

• Plant
• A plant is a manufacturing facility or branch
  within a company. Examples Central delivery
  warehouse, regional sales office, manufacturing
  facility.
• Storage Location
• A storage location is an organizational unit that
  allows the differentiation of material stocks
  within a plant. Inventory control (stock count)
  is carried out at the storage location level in
  the plant.
• Warehouse
• Another storage location within a plant

32
Example MM Organizational Elements in Company
Code 3000 (Notes, Fig. 4.5)
33
All Inventory is held in storage locations MMO2
34
MM Organizational Elements (2)

• Purchasing Organization
• A purchasing organization is an organizational
  level that negotiates conditions of purchase with
  vendors for one or more plants.
• It is legally responsible for completing
  purchasing contracts.
• Purchasing organizations can be assigned to
  company codes and plants depending on whether
  purchasing is organized centrally or in a
  distributed fashion.
• A Purchasing Group is a buyer or group of buyers
  responsible for certain purchasing activities.

35
Organizational Elements in R/3
36
Material Master Records (1)
2

• Material master records are used by all
  components of the R/3 Logistics system.
• Each user department has their own view of the
  data (see Figure 4.6)
• Purchasing, Accounting, Goods receiving, Sales
  and Distribution, etc.
• You created a MM master record in M4.1.

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Figure 4.6
39
Material Master Records (2)

• To enhance consistency and reduce data
  redundancy, Material master records are divided
  into levels (Figure 4.7) probably stored in
  different tables in the database
• Client level data can be used by various company
  codes, e.g., 3000 and 4000. For example, the
  client level data of material A-XXX is also
  available in co-code 4000.
• Plant level data can be used by all plants in a
  given company code, e.g., see Fig 4.5.
• Storage location level data, e.g., the five
  storage locations in plant 3000 can share this
  level data (see Fig 4.5)
• Material types define what sort of processing is
  relevant to different materials.

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Notes, Figure 4.7
41
Vendor Master Records
3

• Like material master data, Vendor master data is
  also divided into levels (pages 4.11-12)
• Level 1 General level data (data that is valid
  for the entire client)
• Level 2 Purchasing level (data that is valid
  for the entire purchasing organization)
• Level 3 Accounting data (data that is valid for
  a particular company code)
• Why this structure? To ensure data consistency
  and to minimize data redundancy

42
2. R/3 Database, Procurement Process, Summary

• The relational database is at the heart of
  systems like SAP R/3.
• Within the constraints of this 1,500-word
  assignment, describe the tables (define key
  columns and types of information stored) used to
  store your Sales Order.
• In what ways, if at all, does the content of
  these tables change as each step in the process
  is executed?

43
The SAP R/3 Procurement Process is structured
around four types of stored data
44
Why? (1)

• Organizational elements
• Support monitoring and reporting of materials and
  material consumption at the company, plant,
  storage location and warehouse levels
• Allows for centralised or decentralised
  purchasing management and performance reporting
• Vendor records track liabilities and quality of
  vendor service

1
45
Why? (2)

• Material Master Records
• User only gets to see their view of the data
  (improves security, more efficient, saves time)
• Level data can be shared Client, Plant, Storage
  Location (enhances consistency and reduce data
  redundancy)

2
46
Why? (3)
4

• Purchasing documents
• Different documents record processing at various
  stages of the procurement process e.g. Purchase
  Requisition gt RFQ gt Purchase Order gt Goods
  receipt gt Vendors invoice
• Each document can be customized to suit the
  organizations requirements.
• Each document has its own type, number range and
  control mechanisms

47
Lecture Outline

• Process functionality in R/3 Procurement
• Database structure in R/3 Procurement
• Services-Oriented IT Architecture SAP NetWeaver
  
• (Ill go a little beyond what was expected from
  you.)
• 4. Summary

Good reference SAP NetWeaver for Dummies
48
Web Services and the Gartner Hyperbole (Hype)
Cycle, May 2003
In your career in IT you need to learn to fight
your way through hype!
49
Q.1 What is a Services-oriented IT Architecture?
(2 marks)

• Description of SOA (1 mark)
• Explanation of how Web Services is the primary
  enabling technology HTTP, XML, SOAP, WSDL, and
  UDDI (definitions of which are readily found on
  the web). (1 mark)
• Poor 0.25, OK 0.5, Good 0.75, Very good
  1.0
• Most students are expected to be Good to Very
  good on Q.1.

50
Definition of Services-oriented (IT) Architecture

• A services-oriented architecture (SOA) is a
  framework for constructing and interlinking an
  organization's back-end systems with the goal of
  lowering cost and adding flexibility.
• the central technological change giving new
  life to SOAs is the adoption of Web services, a
  set of XML protocols that dramatically simplifies
  the process of exchanging data between disparate
  systems.
• Like existing middleware systems, Web
  services-based server software provides the
  technical underpinnings, such as security and
  reliable communications, for corporate systems.
• http//www.zdnet.com.au/insight/software/0,390237
  69,39143923,00.htm

51
Definition of Services-oriented (IT) Architecture

• A services-oriented architecture (SOA) is a
  framework for constructing and interlinking an
  organization's back-end systems with the goal of
  lowering cost and adding flexibility.

XML messages
Application A, e.g., on Computer A
Web services facade
Application B, e.g., on Computer B
Web services facade
Web services technology
52
Q.2 Why is it frequently argued today that many
firms will adopt a services-oriented IT
architecture in future? (2 marks)

• By enabling applications to communicate more
  easily, A services-oriented architecture, or
  SOA, offers a promising design approach for
  making computing systems more flexible and
  cost-effective.
• Gartner projects that the adoption of Web
  services and SOAs will greatly reduce the cost of
  releasing and customising applications. (to
  half)
• 2 marks for overall answer
• Most students are expected to be OK to good on Q.2

53
The Heterogeneity Problem (within one company) ?
Expensive to integrate applications.
54
Enterprise Application Integration (EAI)
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Q.3What is SAP NetWeaver? (4 marks)

• Reasonable description of the four main parts of
  the NetWeaver refrigerator (2 marks)
• Explanation of the three types of integration (i)
  at the portal, (ii) via a data warehouse, and
  (iii) real-time transaction processing (via
  business process modeling) (1 mark)
• Explanation that NetWeaver is the underlying
  technological platform on which SAP plans to
  build its entire future set of applications. It
  will allow customers unparalleled integration at
  the business-process level, point (iii) above. (1
  mark)
• Most students are expected to be good to very
  good on Q.3

57
Slide from L02 What is SAP R/3?
SAP NetWeaver replaces the old blue diamond. It
is the infrastructure on which applications like
ERP and CRM will run in future.
This is the old picture
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Access through any device

• SAP Mobile Infrastructure
• Enables mobile apps to run disconnected or
  connected
• Built for handheld devices (Pocket PC, EPOC,
  Linux)
• Browser or native front-end
• Multiple-backend connections.
• Various mobile business applications available

SAP NetWeaver
PEOPLE INTEGRATION
Multi channel access
Portal
Collaboration
INFORMATION INTEGRATION
Bus. Intelligence
Knowledge Mgmt
Master Data Mgmt
Composite Application Framework
Life Cycle Mgmt
PROCESS INTEGRATION
Integration Broker
BusinessProcess Mgmt
APPLICATION PLATFORM
J2EE
ABAP
DB and OS Abstraction
59
Portal (competes with best of breed vendors,
e.g., Plumtree)
SAP NetWeaver

• SAP Enterprise Portal
• Platform independence
• Any source/audience,role-based
• Team collaboration (both real-time
  asynchronous)
• Authoring, Versioning, Indexing, Searching, for
  unstructured information
• 1700 installations in 2003

PEOPLE INTEGRATION
Multi channel access
Portal
Collaboration
INFORMATION INTEGRATION
Bus. Intelligence
Knowledge Mgmt
Master Data Mgmt
Composite Application Framework
Life Cycle Mgmt
PROCESS INTEGRATION
Integration Broker
BusinessProcess Mgmt
APPLICATION PLATFORM
J2EE
ABAP
DB and OS Abstraction
60
Data Warehouse

• SAP Business Intelligence
• End-to-end solution forenterprise-wide BI
• Business content for rapiddeployment
• Fully integrated with portal
• Open architecture (Crystal, Ascential)
• 6000 installations in 2003
• 95 extract non-SAP data

SAP NetWeaver
PEOPLE INTEGRATION
Multi channel access
Portal
Collaboration
INFORMATION INTEGRATION
Bus. Intelligence
Knowledge Mgmt
Master Data Mgmt
Composite Application Framework
Life Cycle Mgmt
PROCESS INTEGRATION
Integration Broker
BusinessProcess Mgmt
APPLICATION PLATFORM
J2EE
ABAP
DB and OS Abstraction
61
Business Process Integration. (XI is the part
that provides the SOA!!)

• SAP Exchange Infrastructure (XI)
• For both internal and external process
  integration(with SAP and non-SAP)
• Prepackaged collaboration knowledge
• Ecosystem of non-SAP collaboration content
• 45 installations in 2003

SAP NetWeaver
PEOPLE INTEGRATION
Multi channel access
Portal
Collaboration
INFORMATION INTEGRATION
Bus. Intelligence
Knowledge Mgmt
Master Data Mgmt
Composite Application Framework
Life Cycle Mgmt
PROCESS INTEGRATION
Integration Broker
BusinessProcess Mgmt
APPLICATION PLATFORM
J2EE
ABAP
DB and OS Abstraction
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Visual programming
64
ABAP and Java programming
SAP NetWeaver

• SAP Web Application Server
• J2EE compliant Java and ABAP side by side
• Zero footprint UI (Browser)
• Model-driven UI, patterns
• Highly scalable and reliable, advanced caching
• OS and DB independent
• Native Web services
• 1500 install. in 2003

PEOPLE INTEGRATION
Multi channel access
Portal
Collaboration
INFORMATION INTEGRATION
Bus. Intelligence
Knowledge Mgmt
Master Data Mgmt
Composite Application Framework
Life Cycle Mgmt
PROCESS INTEGRATION
Integration Broker
BusinessProcess Mgmt
APPLICATION PLATFORM
J2EE
ABAP
DB and OS Abstraction
65
Q.4 To what extent does SAP Netweaver meet the
goals for a services-oriented IT architecture? (2
marks)

• It is pretty good. In NetWeaver, SAP has
  embraced open standards (e.g., J2EE, XML, web
  services) as much as possible (whilst also
  attempting to preserve the value of their
  customers existing SAP-related investments
  (including knowledge).
• From a competitive perspective they are probably
  a year or two in front of their main competitors
  (Oracle, PeopleSoft) in the applications arena.
• 2 marks for overall answer
• Most students are expected to be OK to good on
  Q.4

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Summary

• Have provided a description and explanation of
  the SAP R/3 Procurement process (Module 4)
  similar to that required in Project 2 for the R/3
  Sales Process (Module 6).
• Have provided feedback on Project 1
  Services-oriented IT Architecture and SAP
  NetWeaver