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IS 530 : Accounting Information Systems

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Title: IS 530 : Accounting Information Systems


1
Enterprise Systems e-Business Systems
  • IS 530 Accounting Information Systems
  • http//www.csun.edu/dn58412

Lecture 2
2
Enterprise Systems
  • Organization value chain and value system
  • Value of systems integration.
  • Enterprise systems and enterprise resources
    planning (ERP) systems.
  • How an enterprise system supports major business
    event processes.
  • Pros and cons of implementing enterprise systems.

3
Enterprise Systems Value Chain
  • The value chain is the system of activities that
    transform inputs into outputs valued by the
    customer.
  • Enterprise systems facilitate value chain
    management.
  • The goal of an organization is to add the
    greatest value at the lowest cost thus increasing
    competitive advantage.

4
Porters Value Chain
     
VALUE
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
                                             
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND LOGISTICS
OPERATIONS
OUTBOUND LOGISTIC
MARKETING SALES LOGISTIC
SERVICE
MARGIN
COST
5
Value-Added Activities
  • Customer-Value-Added Activity (maximize)
  • a business process that a customer is willing to
    pay for
  • Business-Value-Added Activity (minimize)
  • a business process that is essential to managing
    an organization
  • Non-Value-Added Activity (eliminate)
  • customer will not pay for business value will
    not be increased
  • Goals of a business system effective, efficient,
    competitive.

6
Internal Focus Value Chain
7
External Focus Value System
8
The Value of Systems Integration
  • Coordinate activities in the value chain.
  • Perform this coordination by sharing data across
    business processes.
  • The major objective of ERP systems integrate
    the functional areas of the organization by
    enabling seamless information flows across them.

9
Information Silos

10
Problems With Information Silos
11
Inefficient Customer Service
12
Solution to Inefficient Customer Service
  • Enterprise system establishes ATP (available to
    promise) by checking warehouses and scheduled
    manufacturing.
  • Enterprise systems uses the central database to
    automatically determine price and
    creditworthiness.

13
Data Maintenance Create Customer Record
14
Business Event Data ProcessingEnter Customer
Order
15
Using Stored Data for Decision Making
16
Enterprise Systems and ERPs
  • Enterprise systems
  • Integrate business processes and information from
    all of an organizations functional areas.
  • Helps coordinate the operation of business
    functions and provide a central information
    resource for the organization.
  • Enterprise Resource Planning (ERP) Systems
  • Software packages that can be used for the core
    systems necessary to support enterprise systems.

17
Integrate Business Process Functionality
  • When purchasing office equipment an enterprise
    system might
  • Provide an electronic order form.
  • Apply business rules.
  • Route the order for approvals.
  • Send the order to a buyer.
  • Connect to the vendor.
  • Use data to receive goods, project funding
    requirements, compare to budget, and analyze
    vendor performance.

18
Enterprise Application Enterprise Resource
Planning
19
Enterprise Application Enterprise Application
Integration (EAI)
20
Selected ERP Vendors
21
SAP Business Suite
22
SAP NetWeaver
23
Third-Party Modules
  • Customer relationship management (CRM) software
    builds and maintains customer-related database.
  • Customer self-service (CSS) software allows
    customers to complete tasks without aid of
    organizations employees.
  • Sales force automation (SFA) software automates
    sales tasks such as order processing and tracking.

24
Third-Party Modules . . .
  • Supply Chain Management (SCM) software plans and
    executes demand planning, inventory acquisition,
    manufacturing, distributing and selling.
  • Product Lifecycle Management (PLM) software
    manages product data from design through disposal
    of product.
  • Supplier Relationship Management (SRM) software
    manages the interactions with organizations that
    supply the goods and services to an enterprise
    includes procurement and contract management.

25
Connecting Third-Party Modules
  • Third-party modules are connected to ERP systems
    using middleware (software for connecting
    applications or modules)
  • Application programming interface (API), provided
    by the application developer.
  • Enterprise application integration (EAI),
    processes, software, standards, and hardware to
    link systems, allowing them to act as one.

26
Other Methods for Systems Integration
  • Event-driven architecture (EDA), business events
    trigger messages sent by middleware between
    independent software modules.
  • Enterprise systems bus (ESB), communications-broke
    r software that uses standardized protocols to
    let EDA applications communicate.
  • Business process management, comprehensive method
    for integrating manual and automated processes,
    applications, and systems.

27
ERP System Components
28
Major ERP Modules
  • Sales and Distribution (SD)
  • Record customer orders
  • Shipping
  • Billing
  • Connections to
  • Materials management module (MM)
  • Financial accounting module (FI)
  • Controlling module (CO)

29
Major ERP Modules . . .
  • Materials Management (MM)
  • Acquisition and management of goods from vendors
  • Purchase order preparation
  • Receiving
  • Recording invoice
  • Interacts with
  • Sales and distribution module (SD)
  • Financial accounting module (FI)
  • Controlling module (C0)

30
Major ERP Modules . . .
  • Financial Accounting (FI)
  • Plays a central role in the SAP system.
  • Incorporates data from other modules into general
    ledger accounts and financial statements.
  • Business events from other modules are
    incorporated into the general ledger accounts and
    included in the external financial statements.
  • The FI module also includes accounts receivable
    and accounts payable functions to record and
    manage that data directly and to complete events
    begun in the SD and MM modules.

31
Major ERP Modules . . .
  • Controlling (CO)
  • Often called Controlling and Profitability
    Analysis (CO/PA)
  • Handles internal accounting including
  • Cost center accounting
  • Profitability analysis for sales
  • Activity-based accounting
  • Budgeting

32
Major ERP Modules . . .
  • Human Resources (HR)
  • Recruiting, management and administration of
    personnel
  • Payroll processing
  • Training and travel
  • Benefits
  • Reports

33
Order-to-Cash Process
34
SD Menu Options in the SAP System
35
SD Audit Trail for Completion of Steps in the SAP
Sales Process
36
Purchase-to-Pay Process
37
MM Menu Options in the SAP System
38
Audit Trail for Completion of Steps in the SAP
Purchase Process
39
Pros of Enterprise Systems
40
Pros of ERP Packages
41
Cons of Enterprise Systems and ERP Packages
42
E-Business Systems
  • Changes to organizational processes that occur
    when e-business is introduced.
  • Major approaches used to transfer electronic data
    during business events processing.
  • Complexities surrounding (EDI) when linking two
    different organizations computer systems for
    joint business event data processing.
  • Challenges when organizations pursue direct
    business links with customers via the Internet or
    other networks.
  • Business advantages through effective use of
    e-business.

43
Electronic Business (e-Business)
  • Electronic business (e-Business) application of
    electronic networks (including the Internet) to
    exchange information and link business processes
    among organizations and individuals.
  • Processes include interaction between back-office
    (i.e., internal) processes, such as distribution,
    manufacturing, and accounting, and front-office
    (i.e., external) processes, such as those that
    connect an organization to its customers and
    suppliers

44
Journalizing, Posting, and Summarizing in a
Manual Accounting System
45
Automated Accounting System
46
Batch Processing andPeriodic Mode
  • Batch processing the aggregation of several
    business events over some period of time with the
    subsequent processing of these data as a group by
    the information system.
  • Periodic mode processing mode with delay between
    the various data processing steps.
  • Business event occurs
  • Record business event data
  • Update master data
  • Generate outputs

47
Online Transaction Entry (OLTE)
  • Enter business events directly, using computer
    input device or PC, into the information system
    at the time and place the event occurs.
  • Merges the traditional subprocesses of business
    event occurrence (usually eliminating a source
    document) and record business event data.
  • Considered online because the data entry device
    is connected to the computer.

48
Online Real-Time (OLRT)
  • Gather and record business event data at time of
    occurrence.
  • Update master data instantaneously.
  • Provide results in real time.
  • Also known as immediate mode in which little or
    no delay occurs between any two data processing
    steps.

49
Methods of Conducting E-business
  • E-mail non-standardized messages
  • Electronic Document Management capture,
    storage, management, and control of document
    images.
  • Electronic Data Interchange (EDI)-
    computer-to-computer exchange of business data in
    structured formats that allow direct processing
    of those electronic documents by the receiving
    computer system.
  • Internet Commerce - computer-to-computer exchange
    of business event data in structured or
    semi-structured formats via Internet
    communication that allows the initiation and
    consummation of business events

50
Electronic Data Interchange (EDI)
51
Virtual Private Network ( VPN )
  • Tunneling
  • A technology that encapsulates, encrypts, and
    transmits data over the Internet
  • A secure tunnel is created over the VPN
    connecting the two intranets
  • Authentication
  • Confirms the identity of the remote user who is
    attempting to access information.

52
EDI Components
1. An originating application prepares an
electronic business document, such as a purchase
order (PO). 7. At the destination organization,
an application processes the business data.
53
EDI Components 1 and 7
  • Originating application prepares electronic
    business document, such as a purchase order (PO).
  • At the destination organization, an application
    processes the business data.

53
54
EDI Components 2 and 6
  • 2. and 6. An applications electronic business
    document must be translated from standard message
    format to the structured EDI format that will be
    recognized by the receiving computer.

54
55
Electronic Data Interchange Transaction Set
56
EDI Components 3 and 5
  • 3. and 5. Establish a method to communicate
    electronic message. EDI service bureaus or the
    Internet may be used, saving time and money over
    other methods.

56
57
EDI Component 4
  1. Rather than connecting to each trading partner,
    an organization can use a VAN.

57
58
Web Services Implementation of an SOA Application
59
Typical Electronic Communications Connection for
Internet Commerce
60
Typical Electronic Communications Connection for
Internet Commerce . . .
  • Circles 1 and 7 Customer connects to vendor in
    an extended form of client/server application
  • Circles 2 and 5 Connection to Internet through
    direct connection or network provider
  • Circles 4 and 6 Assurance services provide
    limited assurance that Web site is reliable and
    secure
  • Circle 3 Internet connection

61
E-Business Models
  • Electronic storefronts Internet-located
    resources for displaying goods and services for
    sale and for conducting related sales events.
  • Internet auction markets Internet base for
    companies to put products up for bid or for
    buyers to put proposed purchases up for bid.
  • Internet market exchanges bring together a
    variety of suppliers in a given industry with one
    or more buyers in the same industry to provide
    Internet commerce through organized markets.

62
Communication Networks in e-Business
  • Client/server technology
  • Local area networks (LANs)
  • Wide area networks (WANs)
  • Internet
  • Web browsers
  • Intranet
  • Extranet

63
Intranet System Architecture
64
Extranet System Architecture
65
B2B Sell-side Marketplace
Key mechanisms electronic catalogs and forward
auctions (sell to highest bid price)
66
B2B Buy-side Marketplace
Key mechanisms electronic catalogs (RFQ) and
reverse auctions (buy from lowest bid price)
67
Electronic Exchanges
68
Current E-Business Concepts
  • Internet Assurance service provided for a fee to
    vendors to provide limited assurance to users of
    the vendors Web site that the site is in fact
    reliable and event data security is reasonable.
    Examples include CPA WebTrust.
  • Cloud Computing the use of the Internet to
    provide scalable services, such as software, and
    resources, such as data storage, to users.
    Examples include Gmail.
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