Management Information Systems - Enterprise Systems

Transcription

1 Management Information Systems - Enterprise Systems

2 Cross Functional Systems What is EDI? Why ERP? What is ERP? Evolution of ERP Benefits of ERP SAP Overview What is CRM? Learning Objectives Refer (Unit 4.2, 4.3 & 4.4)

3 Cross-Functional Enterprise Systems Many organizations are using information technology to develop integrated cross-functional enterprise systems that cross the boundaries of traditional business functions in order to reengineer and improve vital business processes all across the enterprise. EDI ERP CRM SCM EAI OLTPS

4 The Enterprise Application Architecture

5 ELECTRONIC DATA INTERCHANGE (EDI) COMPUTER - TO - COMPUTER EXCHANGE BETWEEN TWO ORGANIZATIONS SELLER OF STANDARD BUSINESS TRANSACTION DOCUMENTS * ORDERS, PAYMENTS CUSTOMER COMPUTER SHIPPING NOTICES, PRICE UPDATES, INVOICES COMPUTER

6 What is EDI? EDI is defined as the direct transfer of business information between computer systems in different organisations using widely agreed standards to structure the transaction data. Data is between external organisations and entered once and verified at source The exchange of transaction is between computer to computer with very little or no human interventions Eliminate paper handling and postal delays Transaction Message & data definitions are standard Every Electronic Communication is Not EDI?

7 BUSINESS PROCESS PURCHASER PREPARES A REQUISITION OBTAINS APPROVAL ENTERS REQUISITION DATA INTO SYSTEM PRINTS PURCHASE ORDER ** MAIL PURCHASE ORDER TO SUPPLIER ** SUPPLIER RECEIVES PURCHASE ORDER ** ENTERS PURCHASE ORDER ** PRINTS PACKING SLIP & SHIP PRODUCTS PRODUCE AN INVOICE THAT CREATES AN ACCOUNTS RECEIVABLE ENTRY ** MAILS INVOICE TO PURCHASER ** PURCHASER AFTER RECEIPT OF PRODUCTS ENTERS THE RECIPT OF THE PRODUCT INTO INVENTORY SYSTEM RECEIVES THE INVOICE ** ENTERS INVOICE INTO ACCOUNT PAYABLE SYSTEM ** PRINT THE CHEQUE ## MAIL THE CHEQUE TO THE SUPPLIER ## SUPPLIER RECEIVES THE CHEQUE ## ACKNOWLEDGE RECEIPT OF PAYMENTS ## ENTER CHEQUE INTO ACCOUNTS RECEIVABLE SYSTEM ##

8 Why ERP? Increasing the efficiency of information systems can result in more efficient business processes, making a company more competitive Integrating information systems across functional areas is a relatively recent phenomenon Lack of integration can lead to costly inefficiencies Errors from keying in the same data more than once Lack of timely data due to periodic updating between systems Problems with data being defined differently in different systems

9 Business Processes A business process is a collection of activities that takes one or more inputs and creates an output that is of value to the customer The customer may be the traditional external customer who buys the product or service, or an internal customer (a colleague in another department) The business process view is the customer s perspective. The customer does not care that different functions are involved in processing their order, and will not tolerate mistakes and delays caused by poor coordination of business functions

10 Sales Function Accounting Function Purchasing Function Production Function Logistics Function Process View of Business Customer Order Process Material Order Process A process view of business

11 Why ERP? ERP systems can integrate a company s operations by providing a company-wide computing environment that: Includes a single database shared by all functions Can deliver consistent data to all business functions in real-time ERP systems can dramatically reduce costs and increase operational efficiency With ERP, IBM Storage Systems division Re-prices inventory in 5 minutes instead of 5 days Ships a replacement part in 3 days instead of 22 Checks customer credit in 3 seconds instead of 20 minutes

12 What is ERP? Software tools Manages business systems Supply chain, receiving, inventory, customer orders, production planning, shipping, accounting, HR Allows automation and integration of business processes Enables data and information sharing Enterprise-wide system Introduces best practices

13 Evolution of ERP 1960s: software packages with inventory control 1970s: MRP systems Production schedule with materials management 1980s: MRPII systems Adds financial accounting system 1990s: MRPII Integrated systems for manufacturing execution Late 1990s: ERP Integrated manufacturing with supply chain 2000s: ERP II

14 Integrated Systems Approach Common set of applications Usually requires re-engineering business processes Better alignment Limited customization Easier upgrades Overcomes inefficiencies of independent systems Integrated data supports multiple business functions

15 Enterprise Resource Planning... synchronization of Company functions... Purchase Manufacturing Finance Sales 15

16 Enterprise Resource Planning and extended to the complete value chain... Tier I Component Manufacturer Vehicle OEM Tier II Component Supplier 16

17 Enterprise Resource Planning... delivering administrative and decision support with... Decision support and analysis Processes monitoring & feedback Administrative registration 17

18 What is an ERP solution...? Integrated across the primary and support processes Distribution Manufacturing Marketing Materials Planning and Execution Finance Engineering Sales Human Resources 18

19 The ERP application An integrated suite of business applications, which.. Closely links, monitors, and controls primary enterprise resources like manpower, machine, material, methods, market and money. Enables corporates to readily change their processes to adapt to the ever changing business scenario. Provides expertise in industry specific business processes. Entails Parameterization / Configuration Designing & Customization Testing and Implementation Training 19

20 Why clients buy ERP? Corporate Initiatives Strategic initiatives A requisite capability in a competitive global business Operational initiative A foundation for performance and cost improvement via integration Organizational initiative To initiate a major organizational change within the company Technology IT is making the transition from a supporting operational entity to becoming a strategic competitive tool. Because others are buying it!!! 20

21 Business process benefits clients expect from an ERP project Global process/ Product management Integrated Supply Chain Management Leverage purchasing and vendor management Order cycle time/ customer service improvement Inventory reductions Reduced information systems costs on an ongoing basis Improved business management through worldwide integration and information Vendors Inbound Manufacturing Transportation Distribution Delivery Customer Consumer Logistics Logistics and Distribution Sales & Customer Service 21 12/6/2010

22 Overall Business Benefits Information Maximizes information throughput Provides timely information Integrates information throughout supply chain Minimizes response time Pushes decision making down to lowest levels Reduces costs Cuts inventory Improves operating performance

23 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

24 Systems Benefits Eliminating legacy systems Reduces incompatible data Can cause fragmentation Allows sharing and monitoring of information across organization Foundation of ebusiness Back-office functions Standardization Helps obtain and maintain competitive advantage Improved interactions with customers and suppliers

25 What results can be expected from an ERP culture? Reduced working capital requirements Improved customer service Improved direct labor productivity Reduced purchase costs Reduced obsolescence Reduced overtime Having the figures to make decisions Having accountability throughout the organization Improved quality of life ERP 25 12/6/2010

26 SAP Overview Systems Applications & Products 26 12/6/2010

27 SAP R/1, R/2 The R/1 system Developed for ICI Chemical Released 1972 Focused on Sales & Distribution and Materials Management Discontinued after release of R/2 R/2 Basis System The R/2 system Reorganized as leading mainframe software for large multinational corporations No sales effort planned reactive only 4,300 copies worldwide in 1993 Mainframe-based to replace user legacy software; co-existence and migration strategy underway for R/2 and R/ /6/2010

28 SAP R/3 : 3 Tier Architecture The Presentation Layer Those SAP R/3 software components that specialize in interacting with end-users form the Presentation Layer. The Application Layer Those SAP R/3 software components that specialize in processing business applications form the Application Layer. The Database Layer Those SAP R/3 software components that specialize in the management, storage and retrieval of data form the Database Layer 28 12/6/2010

29 SAP R/3 : 3 Tier Architecture Presentation Layer components Application Layer components Database Layer components reside in: reside in: reside in: Presentation servers: Systems capable of providing a graphical interface. Application servers: Specialized systems multiple CPUs and vast amounts of RAM. Database servers: Specialized systems with fast and large hard drives /6/2010

30 SAP R/3 : 3 Tier Architecture Presentation Layer components are installed across many PCs The Application Layer components are installed across one or more highend servers. The Database Layer components are installed on high-end database server /6/2010

31 SAP ECC 6 SAP for <Industry> SAP Packaged Solutions SAP for Aerospace & Defense SAP for Automotive Service Management for <Industry> Financial Insights for <Industry> mysap ERP is a solution located in mysap Business Suite SAP xapps SAP xapp Resource & Program Mgmt SAP xapp Product Definition SAP xapp Mergers & Acquisition... mysap SRM mysap Business Suite mysap PLM mysap ERP Analytics Financials Human Resources Corporate Services Operations mysap SCM mysap CRM SAP Smart Business Solutions mysap All-in-One SAP Business One SAP NetWeaver SAP Enterprise Portal SAP Master Data Mgmt SAP Business Intelligence SAP Exchange Infrastructure SAP Business One Server

32 mysap Business Suite Sales Order Internet Sales mysap Business Suite mysap PLM Life-Cycle-Data, Project-, Quality- and Asset Management mysap SRM Purchase Order Requisitioning mysap ERP Analytics Financials Human Resources Corporate Services Operations mysap CRM Inventory & Warehouse Mgmt. Manufacturing & Transportation mysap SCM SAP NetWeaver

33 What is mysap? The mysap e-business platform is a family of software and services that empowers customers, partners, and employees to collaborate successfully anywhere, anytime.

34 Example of How SAP Work Step 1 : Brazilian retailer orders, via the Internet, 1,000 shoes from International Shoe Co. A sales rep takes the order, routes it to SAP s ordering module, SAP checks the retailer credit, price, etc. The order is approved. Step 2 : Simultaneously SAP s inventory module checks the stocks and notifies the rep that half the order can be filled immediately from stock. The other half will be manufactured and delivered in 5 days directly from the factory in Taiwan.

35 Example of How SAP Work Step 3 : SAP s manufacturing module schedules the production in Taiwan and instructs the warehouse (in China) to ship the shoes to Brazil and print up an invoice (in Portuguese). Step 4 : SAP s human resources module calculates labor requirements. Due to a shortage, the personnel manager in Taiwan is instructed to get temporary workers. Step 5 : SAP s material planning module notifies the purchasing manager about a shortage of purple dye. A purchase order is automatically issued.

36 Example of How SAP Work Step 6 : The customer logs on via the extranet to the company s sneakers division. He can see that 500 shoes were shipped from the regional warehouse. This is done with SAP tracing capabilities. Step 7 : Based on data from SAP s forecasting and financial modules, the CEO can determine both demand and profitability per product. The financial module also converts all foreign money to $U.S., whenever needed

37 Definition - CRM to enable organizations to better manage their customers through the introduction of reliable processes and procedures for interacting with those customers - Wikipedia customers are so well understood that customer life cycle (engage/transact/fulfill/ service) treatments can be differentiated based on the customer s strategic value to the organization - Meta Group CRM entails all aspects of interaction a company has with its customer, whether it be sales or service related. - Creotec An approach to provide seamless integration of every business area that touches the customer e.g. marketing, sales, customer service through integration of people, process and technology. - Pan and Lee

38 In Nutshell CRM is the process of getting and keeping customers and maximizing their profitability, behavior and satisfaction Paradigm shift from what (product) to who (customer)

39 Value ( $ ) Customer Relationship Management Definition Duration of Customer Relationship Targeting Acquisition Retention Expansion Who Do we target What segments are most profitable What segments match our Value Proposition What is the best segmentation strategy for us / our industry What is the best channel for each segment What is the acquisition cost for a channel / segment Do certain channels deliver certain types of customers Cost effective acquisition How can we improve retention What is our average customer relationship length How can we hold customer for as long as possible What is the most cost effective method of retention How many products does our average customer buy How can we induce our current base to buy more products Who are the prime targets for expansion What is the cost of expansion Customer Relationship Management can be simply defined as everything involved with managing the customer relationship.

40 Islands of Automation Need To Be Bridged Over time, channels & operational systems are added to cater to changing customer demands. The result several functional groups are interacting with customers independently. Sales Force Customer Service Direct Mail Web $ Branches

41 Customer Relationship Management (CRM) It costs six times more to sell to a new customer than to sell to an existing one. A typical dissatisfied customer will tell eight to ten people about his or her experience. A company can boost its profits 85 percent by increasing its annual customer retention by only 5 percent. Seventy percent of complaining customers will do business with the company again if it quickly takes care of a service problem. More than 90 percent of existing companies don t have the necessary sales and service integration to support E-commerce.

42 Examples of business benefits CRM allows a business to identify and target their best customers; those who are the most profitable to the business, so they can be retained as lifelong customers for greater and more profitable services. CRM enables real-time customization and personalization of products and services based on customer wants, needs, buying habits, and life cycles. CRM can keep track of when a customer contacts the company, regardless of the contact point. CRM enables a company to provide a consistent customer experience and superior service and support across all the contact points a customer chooses.

43 Enterprise Application Integration (EAI) Many companies have moved from functional mainframe legacy systems to integrated cross-functional enterprise applications. This typically has involved installing: Enterprise resource planning (ERP) software Supply chain management (SCM) software Customer relationship management (CRM) software These cross-functional enterprise software applications focus on supporting integrated clusters of business processes

44 EAI software Enables users to model the business processes involved in the interactions that should occur between business applications. Provides middleware that performs data conversion and coordination, application communication and messaging services, and access to the application interfaces involved. Integrate a variety of enterprise application clusters by letting them exchange data according to rules derived from the business process models developed by users. Integrate the front-office and back-office applications of an E- business, so they work together in a seamless, integrated way.

45 Customers Cross-Functional Integrated Systems Enterprise Application Cluster Front Office Applications CRM Application Customer Service Field Service Sales Order Product Config Enterprise Application Integration Enterprise Application Cluster Back Office Applications ERP Application Distribution Manufacturing Scheduling Finance Suppliers

46 OLTP Transaction processing systems capture and process data describing business transactions. Then they update organizational files and databases, and produce a variety of information products for internal and external use. A transaction processing cycle consists of: Data entry activities Transaction processing activities Database maintenance activities Document and report generation Inquiry processing activities.

47 The Enterprise Architecture