concepts in information management systems

7/31/2019 Concepts in INformation management Systems

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Concepts in EnterpriseResource Planning

Third Edition

Chapter Eight ERP and Electronic Commerce


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Concepts in Enterprise Resource Planning, Third Edition 2

Objectives

After completing this chapter, you will be able to: Describe business-to-business e-commerce Explain the importance of ERP to the success of a

company engaged in e-commerce Describe the function of an application service

provider (ASP) Describe the delivery of ERP services through an

ASP Describe Web services and SAPs NetWeaver


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Introduction

Effectively competing in high-volume e-commercemay be impossible without the infrastructureprovided by Enterprise Resource Planning (ERP)

Companies can integrate ERP systems with theInternet and rent ERP software from special -purpose software companies

NetWeaver: SAPs Web services platform


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Introduction (contd.)

XML is becoming the new markup language of theInternet

Use of radio frequency identification (RFID)

devices in managing movement of goods in thesupply chain


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Business-to-Business E-Commerce

Buying and selling between two companies overthe Internet

Companies might be manufacturers, suppliers,

wholesalers, or retailers Transforming the way companies work with each

other


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Business-to-Business E-Commerce(contd.)

Electronic Data Interchange (EDI) Electronic computer-to-computer transfer of

standard business documents

Been used by companies since the 1960s Value-added network (VAN) : intermediary Internet-

based network run by an outside EDI serviceprovider


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Internet-based procurement Use of Internet technologies for procurement

activities

Benefits: Less expensive to use the Internet than private EDI

networks Purchasing costs further reduced as suppliers

compete for orders on buyers Web site


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Internet- based procurement (contd.) Electronic marketplace : gathering place for buyers

and sellers on the Internet

Exchanges : one type of B2B electronic marketplace Typically, the focus is on a single industry

Private exchange One type of industry marketplace

Membership is restricted to select participants


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Internet auctions and reverse auctions B2B e-commerce allows companies to do online

bidding through auctions and reverse auctions

Reverse auctions : one buyer and many sellers Internet-based auctions are changing the way in

which commodities are purchased Internet has replaced the intermediary

Pricing is open and dynamic


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E-Commerce and ERP

Each technology complements the other, and eachis necessary for success

Back-office processing

Efficient back-office operation is crucial for anycompanys success

E-commerce often exacerbates problems andreveals weaknesses in current back-office systems

Integrating Internet front-office operation and ERPback- office operation is fundamental in todaysbusiness environment


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Fitter Snacker and E-Commerce

Currently, Fitter Snacker has neither a Web-basedordering system nor an ERP system

FS executives looking at two IS investment options:

Implement a Web-based ordering system, or Implement an ERP package

If Web-based ordering system implemented withoutimplementing an ERP package: FSs unintegrated information system would not be

able to handle the additional Internet orders


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Fitter Snacker and E-Commerce(contd.)

An attractive Web site does not provide enoughbenefit on its own for an e-commerce business tostay afloat

Conventional back-office systems must be in placeand operating correctly for the business to flourish


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Using ERP through an ApplicationService Provider

Many companies today outsource some of theiroperations to an outside service provider

Outside service provider sometimes called a third

party Outsourcing can simplify management of ERP

systems


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Application Service Providers

Application service provider (ASP) : companythat provides management of applications for acompany over a network

Network is usually the Internet ASP owns the hardware and rights to the software ASP employs workers who run outsourced

applications Users of the system are the companys employees


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Figure 8-1 ERP responsibilities in-house versus with an ASP


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Application Service Providers (contd.)

Advantages of using an ASP Affordability Shorter implementation time

Expertise


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Application Service Providers (contd.)

Disadvantages of using an ASP Security Bandwidth/response time

Flexibility No frills Technical, not business focus


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NetWeaver

Web services : combination of software tools thatlets various programs within an organizationcommunicate with other applications

Also known as SOA, or service-oriented architecture Benefit of adopting SOA

Ability to add new applications quickly

Implementing SOA is not easy Return on an SOA investment is often difficult to

determine


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NetWeaver Tools and Capabilities(contd.)

Mobile Infrastructure Allows users to access and work with data through

mobile devices such as PDAs, cell phones, and

pagers Business Intelligence (BI)

Incorporates a data warehouse and data miningtools

Can be delivered in a personalized manner withEnterprise Portal


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NetWeaver Tools and Capabilities(contd.)

Master Data Management Provides data consistency within a companys SAP

system

Exchange Infrastructure Allows different applications to share data Companies dont have to write code to enable

different applications to transmit data


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NetWeaver at Work for Fitter Snacker

Amy Sanchez: salesperson, works from home She logs on to SAP system with her laptop

computer, using the SAP GUI

Donald Brown: salesperson, deals with distributors Tester for new NetWeaver SAP server Every day logs on to his Enterprise Portal Also uses SAPs Mobile Infrastructure and Business

Intelligence modules


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Duet

Microsoft and SAP have been working on Duet Intended to let companies access SAP data and

processes using the familiar Microsoft Office

interface Goal of Duet

Expand and simplify adoption of SAP ERP bymaking workers more efficient

Duet has numerous advantages


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Duet (contd.)

Duet brings its own challenges Companies must be using a relatively current

version of SAP ERP

Companies must run Microsoft server software May require company to use other SAP products

Growing competition between SAP and Microsoft inthe ERP software market


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Accessing ERP Systems over theInternet

ERP vendors now offer access to their systemsthrough a Web browser Web browsers such as Microsoft Internet Explorer or

Netscape Navigator Users and systems administrators find it much

more efficient to access ERP systems through thebrowser

Avoids the time-consuming installation of thestandard ERP GUI


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XML

Extensible Markup Language (XML) New programming language of the Internet Uses tags that define the data contained within them

XML-coded data can go directly from a Web pageinto a database Data does not have to pass through middleware or

be rekeyed into the system


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XML (contd.)

Internet pages written in Hypertext MarkupLanguage (HTML) HTML specifies only how your information will look

when viewed through a browser XML users can create their own tags

Customized tags in the document describe, ordefine, the data


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XML (contd.)

Figure 8-5 Fitter Snacker document in XML


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XML (contd.)

ERP systems now accept data in XML format Using XML, companies can transfer data from their

Web sites directly into their ERP systems

Streamlines data entry, reduces errors, and reducesserver loads

XML is very attractive to smaller companies Small companies often transfer data over telephone

lines or using fax machines Using XML makes electronic data transfer much

more affordable


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Radio Frequency IdentificationTechnology

Radio frequency identification (RFID ) technology Becoming an efficient way of tracking items through

a supply chain

RFID device: small package, or tag, that includes amicroprocessor and an antenna and can be attachedto products

RFID technology has become inexpensive enough

to be cost-effective Wal-Mart is in the process of implementing an

RFID system for its supply chain


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Radio Frequency IdentificationTechnology (contd.)

Pharmaceutical firms working toward adoptingRFID technology To comply with upcoming FDA regulations that

would require track-and-trace technology on all drugpackages to prevent counterfeiting Procter & Gamble is using RFID technology to

collect information about the sales of its products

SAPs ERP software is RFID -ready Through NetWeaver, SAP can integrate RFID data

into both SAP and non-SAP applications


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Summary

E-commerce is transforming the way companies dobusiness Business-to-consumer e-commerce can:

Streamline a companys ordering operations Record information about customers

Business-to-business e-commerce is changing theway companies buy and sell goods

ERP is an essential component for all forms of e-commerce


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Summary (contd.)

Application service providers (ASPs) are allowingcompanies to use ERP without a large initialinvestment

Make ERP systems available to smaller companies Decision to buy or lease must be weighed carefully

Web services, or service-oriented architecture,offers a combination of software tools that lets

various programs within an organizationcommunicate with other applications


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l h d d

Summary (contd.)

SAPs Web services platform is NetWeaver Includes tools for seamless connectivity of diverse

applications through the World Wide Web

Users of ERP systems often access those systemsthrough a Web browser XML, or Extensible Markup Language, defines data

on a Web page

ERP systems are using XML to integrate systemsbetween suppliers and customers

RFID devices, or radio frequency identificationdevices, are used in tracking items in transit

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