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Concepts in Enterprise Resource Planning Third Edition

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Title: Concepts in Enterprise Resource Planning Third Edition


1
Concepts in Enterprise Resource Planning Third
Edition
  • Chapter Eight
  • ERP and Electronic Commerce

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

Concepts in Enterprise Resource Planning, Third
Edition
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3
Objectives (contd.)
  • Describe the unique components of NetWeaver
  • Explain why accessing an ERP system through a Web
    browser is efficient
  • Define XML and its significance to ERP
  • Define RFID and its future role in logistics and
    sales

Concepts in Enterprise Resource Planning, Third
Edition
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4
Introduction
  • Effectively competing in high-volume e-commerce
    may be impossible without the infrastructure
    provided by Enterprise Resource Planning (ERP)
  • Companies can integrate ERP systems with the
    Internet and rent ERP software from
    special-purpose software companies
  • NetWeaver SAPs Web services platform

Concepts in Enterprise Resource Planning, Third
Edition
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5
Introduction (contd.)
  • XML is becoming the new markup language of the
    Internet
  • Use of radio frequency identification (RFID)
    devices in managing movement of goods in the
    supply chain

Concepts in Enterprise Resource Planning, Third
Edition
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6
Electronic Commerce Background
  • Today most companies conduct at least part of
    their business operations through electronic
    commerce (e-commerce)
  • E-commerce conduct of business over the Internet
  • Most of the business growth on the Internet has
    been in the area of business-to-business (B2B)
    e-commerce
  • Business-to-consumer (B2C) e-commerce

Concepts in Enterprise Resource Planning, Third
Edition
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7
Business-to-Business E-Commerce
  • Buying and selling between two companies over the
    Internet
  • Companies might be manufacturers, suppliers,
    wholesalers, or retailers
  • Transforming the way companies work with each
    other

Concepts in Enterprise Resource Planning, Third
Edition
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8
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
    service provider

Concepts in Enterprise Resource Planning, Third
Edition
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9
Business-to-Business E-Commerce (contd.)
  • Electronic data interchange (EDI) (contd.)
  • Benefits of EDI
  • Costs of paper, printing, and postage have almost
    disappeared
  • Errors have been minimized
  • Ordering is fast and efficient
  • Suppliers and buyers are locked into business
    relationships

Concepts in Enterprise Resource Planning, Third
Edition
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10
Business-to-Business E-Commerce (contd.)
  • 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

Concepts in Enterprise Resource Planning, Third
Edition
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11
Business-to-Business E-Commerce (contd.)
  • 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

Concepts in Enterprise Resource Planning, Third
Edition
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12
Business-to-Business E-Commerce (contd.)
  • 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

Concepts in Enterprise Resource Planning, Third
Edition
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13
Business-to-Business E-Commerce (contd.)
  • Electronic commerce security
  • Security is a major concern with e-commerce
  • Denial of service (DoS) attacks
  • Attackers block access to a Web-based service
    through a variety of means, including bombarding
    a site with so many messages that the site cannot
    handle the volume
  • Measures used by companies to protect their
    networks, Web sites, and privacy of customer data
  • Virus-scanning software, encryption, intrusion
    detection, etc.

Concepts in Enterprise Resource Planning, Third
Edition
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14
E-Commerce and ERP
  • Each technology complements the other, and each
    is necessary for success
  • Back-office processing
  • Efficient back-office operation is crucial for
    any companys success
  • E-commerce often exacerbates problems and reveals
    weaknesses in current back-office systems
  • Integrating Internet front-office operation and
    ERP back-office operation is fundamental in
    todays business environment

Concepts in Enterprise Resource Planning, Third
Edition
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15
Fitter Snacker and E-Commerce
  • Currently, Fitter Snacker has neither a Web-based
    ordering 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 without
    implementing an ERP package
  • FSs unintegrated information system would not be
    able to handle the additional Internet orders

Concepts in Enterprise Resource Planning, Third
Edition
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16
Fitter Snacker and E-Commerce (contd.)
  • An attractive Web site does not provide enough
    benefit on its own for an e-commerce business to
    stay afloat
  • Conventional back-office systems must be in place
    and operating correctly for the business to
    flourish

Concepts in Enterprise Resource Planning, Third
Edition
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17
Using ERP through an Application Service Provider
  • Many companies today outsource some of their
    operations to an outside service provider
  • Outside service provider sometimes called a third
    party
  • Outsourcing can simplify management of ERP
    systems

Concepts in Enterprise Resource Planning, Third
Edition
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18
Application Service Providers
  • Application service provider (ASP) company that
    provides management of applications for a company
    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

Concepts in Enterprise Resource Planning, Third
Edition
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19
Figure 8-1 ERP responsibilities in-house versus
with an ASP
Concepts in Enterprise Resource Planning, Third
Edition
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20
Application Service Providers (contd.)
  • Advantages of using an ASP
  • Affordability
  • Shorter implementation time
  • Expertise

Concepts in Enterprise Resource Planning, Third
Edition
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21
Application Service Providers (contd.)
  • Disadvantages of using an ASP
  • Security
  • Bandwidth/response time
  • Flexibility
  • No frills
  • Technical, not business focus

Concepts in Enterprise Resource Planning, Third
Edition
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Application Service Providers (contd.)
  • Other considerations
  • Companies should carefully scrutinize the ASPs
    contract before signing it to uncover
  • Hidden costs
  • Other potential problems
  • SAP is offering an ASP version of its ERP product
    for midsized companies
  • Business ByDesign delivered to customers over
    the Web

Concepts in Enterprise Resource Planning, Third
Edition
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23
NetWeaver
  • Web services combination of software tools that
    lets various programs within an organization
    communicate 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

Concepts in Enterprise Resource Planning, Third
Edition
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NetWeaver Tools and Capabilities
  • SAPs NetWeaver collection of components that
    support business transactions over the Internet
  • Modules included Enterprise Portal, Mobile
    Infrastructure, Business Intelligence, Master
    Data Management, and Exchange Infrastructure
  • Enterprise Portal
  • mySAP.com
  • Gives users complete access, or a portal, to all
    their work on a single screen, using links to all
    major aspects of their jobs

Concepts in Enterprise Resource Planning, Third
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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 mining
    tools
  • Can be delivered in a personalized manner with
    Enterprise Portal

Concepts in Enterprise Resource Planning, Third
Edition
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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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Edition
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27
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

Concepts in Enterprise Resource Planning, Third
Edition
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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 by making
    workers more efficient
  • Duet has numerous advantages

Concepts in Enterprise Resource Planning, Third
Edition
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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 in
    the ERP software market

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30
Accessing ERP Systems over the Internet
  • ERP vendors now offer access to their systems
    through 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 the
    browser
  • Avoids the time-consuming installation of the
    standard 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 page
    into 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 Markup
    Language (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, or
    define, 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
    reduces server 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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Edition
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Radio Frequency Identification Technology
  • Radio frequency identification (RFID) technology
  • Becoming an efficient way of tracking items
    through a supply chain
  • RFID device small package, or tag, that includes
    a microprocessor and an antenna and can be
    attached to 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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36
Radio Frequency Identification Technology
(contd.)
  • Pharmaceutical firms working toward adopting RFID
    technology
  • To comply with upcoming FDA regulations that
    would require track-and-trace technology on all
    drug packages 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 do
    business
  • Business-to-consumer e-commerce can
  • Streamline a companys ordering operations
  • Record information about customers
  • Business-to-business e-commerce is changing the
    way companies buy and sell goods
  • ERP is an essential component for all forms of
    e-commerce

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Edition
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Summary (contd.)
  • Application service providers (ASPs) are allowing
    companies to use ERP without a large initial
    investment
  • 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 organization
    communicate with other applications

Concepts in Enterprise Resource Planning, Third
Edition
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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 systems
    through a Web browser
  • XML, or Extensible Markup Language, defines data
    on a Web page
  • ERP systems are using XML to integrate systems
    between suppliers and customers
  • RFID devices, or radio frequency identification
    devices, are used in tracking items in transit

Concepts in Enterprise Resource Planning, Third
Edition
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