IS 530 : Accounting Information Systems

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Enterprise Systems e-Business Systems

• IS 530 Accounting Information Systems
• http//www.csun.edu/dn58412

Lecture 2
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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.

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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.

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Porters Value Chain
     
VALUE
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
                                             
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND LOGISTICS
OPERATIONS
OUTBOUND LOGISTIC
MARKETING SALES LOGISTIC
SERVICE
MARGIN
COST
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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.

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Internal Focus Value Chain
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External Focus Value System
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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.

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Information Silos

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Problems With Information Silos
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Inefficient Customer Service
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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.

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Data Maintenance Create Customer Record
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Business Event Data ProcessingEnter Customer
Order
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Using Stored Data for Decision Making
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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.

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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.

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Enterprise Application Enterprise Resource
Planning
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Enterprise Application Enterprise Application
Integration (EAI)
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Selected ERP Vendors
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SAP Business Suite
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SAP NetWeaver
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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.

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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.

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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.

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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.

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ERP System Components
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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)

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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)

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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.

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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

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Major ERP Modules . . .

• Human Resources (HR)
• Recruiting, management and administration of
  personnel
• Payroll processing
• Training and travel
• Benefits
• Reports

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Order-to-Cash Process
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SD Menu Options in the SAP System
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SD Audit Trail for Completion of Steps in the SAP
Sales Process
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Purchase-to-Pay Process
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MM Menu Options in the SAP System
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Audit Trail for Completion of Steps in the SAP
Purchase Process
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Pros of Enterprise Systems
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Pros of ERP Packages
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Cons of Enterprise Systems and ERP Packages
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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.

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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

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Journalizing, Posting, and Summarizing in a
Manual Accounting System
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Automated Accounting System
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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

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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.

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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.

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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

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Electronic Data Interchange (EDI)
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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.

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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.
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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.

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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.

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Electronic Data Interchange Transaction Set
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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.

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EDI Component 4

1. Rather than connecting to each trading partner,
   an organization can use a VAN.

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Web Services Implementation of an SOA Application
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Typical Electronic Communications Connection for
Internet Commerce
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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

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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.

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Communication Networks in e-Business

• Client/server technology
• Local area networks (LANs)
• Wide area networks (WANs)
• Internet
• Web browsers
• Intranet
• Extranet

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Intranet System Architecture
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Extranet System Architecture
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B2B Sell-side Marketplace
Key mechanisms electronic catalogs and forward
auctions (sell to highest bid price)
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B2B Buy-side Marketplace
Key mechanisms electronic catalogs (RFQ) and
reverse auctions (buy from lowest bid price)
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Electronic Exchanges
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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.