Chapter 2

Table

(or file) a collection of related records (sometimes called entity/event instances)

Describe the six steps in the order-to-cash process

(or revenue) 1. Presale Activities 2. Sales Order Processing 3. Pick & Pack 4.Shipping 5. Billing 6. Payment

Record

(row in a table) a collection of related data fields (attributes) that belong the a particular entity

Field

(single cell in a table) a collection of related characters that comprise an attribute

Describe the six steps in the purchase-to-pay process

1) Requirements Determination 2) Purchase Order processing 3) Good Receipt 4) Invoice verification 5) Payment Processing

Describe the 3 ways that an enterprise system supports the functioning of an organization's processes

1- Centralizing data permits the organization to have accurate and reliable data and to operate its business processes in a consistent manner throughout the organization 2- Communicating across functions is enhanced where data related to the inventory is readily available during entry of the customer order, and a request for shipment is sent directly to the warehouse 3- The purchasing function is informed immediately that merchandise has been sold and many need to be replenished

Describe the activities performed by five modules of the SAP system

1. Sales and Distribution (SD) module 2. Materials Management 3. Financial Accounting 4. Controlling 5. Human Capital Management

Explain why it is important to capture the who, what, where, and when in describing business events

After the details of the four Ws (the event data) are collected and recorded, the data can be aggregated and summarized in any manner that a given user chooses. Aggregation and summarization are temporary and for the user's application or report only, but the four Ws (event data) remain available to other users in their original form

Describe the key features/characteristics of an enterprise system

An enterprise system is a software package that helps a business perform and oversee certain processes, gathers data about these processes for analytics and maintains clear transparent records of these transactions. ... A key feature of an enterprise system is that its modules are designed for each department's processes. The ERP (Enterprise resource planning) system might be one of many software solutions that comprise the enterprise system.

Why might firm decide to implement only certain modules in an an ERP system rather than a complete implementation?

Because ERP systems are complex and take a lot of time to be implemented. An organization that decides to install only the modules that are necessary to solve its problem might run into integration problems, and add new modules later on. For example, a small restaurant that specializes in seafood might not need controls for meat, but if it decided to add beef to its menu, it can add new modules to its ERP system and avoid integration problems

After the core of an ERP system has been implemented, any of the modules may then be implemented separately. What is the implication of being able to implement an ERP system on a piece-by-piece basis?

Being able to implement modules to an ERP system separately is convenient for the organization because its management can choose the modules they think are most efficient, and best suited for their business. Also, when the parts of a system are implemented at a time, it is quicker for employees to learn the new software. In addition, it is easier and more economical to install individual modules, and then wait until the organization has the time and money to install new ones. DOWNSIDE: if the modules are dependent on one another for full functionality, the ERP might not be as efficient with few modules as it would be if the whole package was installed

Describe the add-on modules that may be used to complement the core functionality of an ERP system

CRM (customer relationship management) software CSS (customer self serve) software SFA (sales force automation) software SCM (supply chain management) software PLM (product life-cycle management) software SRM (supplier relationship management) software

Describe the key features/characteristics of an Enterprise Resource Planning (ERP) system

ERP - software packages that can be used for the core systems necessary to support enterprise systems 1. Consists of modules 2. Automation or computerization of business processes 3. Integration of the major business processes

describe a situation in which information would be shared between two of the "silo". What data would be shared? why would that data be shared Figure 2.2 page 43

For production to let information technology know when changes in its inventory have occurred so that IT can make the necessary updates and prevent errors that might happen due to inaccurate information

Invoice verification

Includes receiving vendor invoices; three way matching of the purchase order, receipt, and vendor invoice. Then recording the accounts payable in the general ledger. The enterprise will combine the data from all 3 and if the items do not match, the system will notify the appropriate personnel to ensure proper reconciliation

Describe the problems caused by lack of information systems integrations.

Lack of integration creates information silos that make it hard to get a complete picture of how your business is performing. It creates inefficiencies that slow down decision-making and increase redundancies across the business slow response times. credit checks. price changes. item out of stock. enterprise system provides integration as additional value. true and complete of error

Purchase Order processing

Prepares and records purchase orders. The system will then assist the buyer in choosing which vendor to use for manufacture and delivery An enterprise system assists the buyer in identifying sources of supply for the requested item, preparing RFQs to be sent to vendors, analyzing vendor quotation, and selecting vendors by comparing vendor prices, terms, and past performance.

List the advantages and disadvantages of an enterprise system

Pros: Having a Single database made up of multiple subsystems working in conjunction with one another. These allow for faster business process and access to record, store, and retrieve information at a moment's notice. Enterprise systems improve the financial disclosures and budget forecasting for the company by comparing previous and current records against competitors Cons: Decreases the creative thinking of management since the system must be "standardized". It also increases the cost relating to security maintenance, and the complexity of control and access to specific information. Also decreases the flexibility to alter certain processes to new business processes.

In what circumstances would a company choose a best-of-breed approach over a traditional ERP system?

The best-of-breed approach can be chosen when a company has specific needs that can not be met by the software currently used by most organizations. In order to implement this software, the company would need to set up a customer system that can the best-of-breed software can run on.

Requirement Determination

These requirements include a request for the purchase of goods from a vendor. This can be done in paper or by electronic means The enterprise system may automatically generate the purchase requisition on the basis of data such a quantity on hand, quantity on order, and expected demand.

Character

a basic unit of data, such as a letter, number, or special character

Enterprise application integration (EAI)

a chain of activities performed by the organization to transform inputs into outputs valued by the customer. Can be used to connect pieces of enterprise system to legacy systems or to add-on modules, also can be used to connect the enterprise systems of different companies (B2B integration)

Business process management (BPM)

a concept much larger than systems integration that provides a comprehensive method for integrating manual and automated internal processes, applications, and systems, as well as integration to external partners and services. Takes into account modeling, automating, managing, and optimizing business processes.

Customer Self-Service (CSS) software

allows customers to inquire, complete tasks, and troubleshoot problems without the help of company employees ex- check order status, review inventory count

Sales Force Automation (SFA) software

automates sales tasks such as order processing, contact management, inventory monitoring, order tracking, and employee performance evaluation (amazon)

Customer Relationship Management (CRM) software

builds and maintains customer-related database data is collected from multiple customer interactions (call center) amazon uses CRM to personalize items just for you

Sales order processing

capturing and recording customer orders. Enterprise system links together customer, inventory, purchasing, and vendor data to determine whether customer is in good standing and likely to pay bill, and where and when inventory will be available; then schedules the order for delivery and sends a picking request to the appropriate warehouse.

What is a value chain?

chain of activities performed by organization that transform inputs into outputs valued by customers

Best-of-breed approach

combines modules from various vendors to create an IS that better meets an organization's needs than a standard ERP system.

Materials Management (MM) module

contains the functions related to the acquisition of goods from vendors and management of the goods while they are in stock. Includes preparing and recording a purchase order, receiving the goods from the vendor, and recording the vendor's invoice. (purchase to pay/expenditure cycle)

Sales and Distribution (SD) module

contains the functions related to the sale of goods to customers. Includes recording customer order, shipping goods to the customer, and billing the customer. (order to cash process)

What is the relationship of the organizational value chain and an enterprise system?

cross-functional integration A firm's value chain transforms inputs into valued outputs. It moves raw materials such as cash, into a physical form of raw materials for production purposes. An enterprise system links a company software and hardware subsystem into a single system. Together, both of these entities transform multiples things into a single item or vice versa.

Controlling and Profitability Analysis (CO/PA) module

handles internal accounting including cost center accounting, profitability analysis for sales, activity-based accounting, and budgeting

Supply Chain Management (SCM) software

helps enable the steps in supply chain including demand planning, acquiring inventory, and manufacturing, distributing, and selling the product ex - Kinaxis Rapid Response

Payment

includes capturing and recording cash receipts and updating cash and A/R amounts in GL. Data in enterprise system used to manage customer credit and invest available cash

Good Receipt

includes comparing the on-order quantity and the quantity received. It will then create a record of the receipt and record the cost of the inventory purchases in the general ledger The enterprise system ensures this stage of the process that the goods will be available as requested by either altering the route or placing them on store shelves for immediate sale.

Order-to-Cash process

includes events surrounding sale of goods to a customer, recognition of revenue, and collection of customer payment (revenue cycle)

Human Capital Management (HCM) module

includes functions related to the recruitment, management, and administration of personnel, payroll processing, and personnel training and travel. Used to maintain data related to benefits, training, and work shifts. Facilitates processing of payroll and preparation of payroll reports

Pick and pack

includes picking the goods from the shelf in the warehouse and packing the goods for shipment. May be recorded in enterprise system to maintain record of progress and to retain control over location of goods

Payment Processing

includes preparing and recording cash disbursement and updating cash and accounts payable in the general ledger The enterprise system ensures the payment processing by using data from the vendors and accounts payable to schedule payments. These payments will follow the rules set forth in the vendor terms of agreement and have the buyer receive any applied discounts

Billing

includes preparing the customer invoice and recording sales and A/R data in the GL. Enterprise system links together sales, customer, and inventory data to ensure that the invoice contains correct quantities, prices, terms, addresses, etc.

purchase-to-pay

includes the events surrounding the purchase of goods from a vendor, the recognition of the cost of those goods, and the payment to the vendor (expenditure cycle)

Shipping

includes transferring the goods to the organization's transportation function, or to a third-party carrier, for shipment to customer. Enterprise system chooses appropriate routing and carrier, records reduction inventory quantity-on-hand, calculates and records COGS inventory reduction in GL, and records data to be used in billing process.

Product Life-Cycle Management (PLM) software

manages product data during product's life, from design through manufacture, and ending in disposal of the product

Supplier Relationship Management (SRM) software

manages the interactions with the organizations that supply the goods and services to an enterprise. Includes procurement and contract management

Describe the methods used to integrate ERP systems with third-party modules, back-end or legacy systems, the Web, and business partners

middleware - software product that connects 2 or more separate applications or software modules.

Financial Accounting (FI) module

plays central role in SAP system. Incorporates business events/data from other modules into general ledger accounts and external financial statements. Includes A/R and A/P functions to record and manage that data directly and to complete events begun in the SD and MM modules

Application programming interface (API)

provided by app developer. Means for connecting to a system or application. Apps are separate, but plug in to each other and work together like one canvas

Presales activities

responding to customer inquiries and customers' RFQs