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Concepts in Enterprise Resource Planning Third Edition

Concepts in Enterprise Resource Planning Third Edition

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Concepts in Enterprise Resource Planning Third Edition

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  1. Concepts in Enterprise Resource PlanningThird 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 SAP’s NetWeaver Concepts in Enterprise Resource Planning, Third Edition

  3. Objectives (cont’d.) • 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

  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: SAP’s Web services platform Concepts in Enterprise Resource Planning, Third Edition

  5. Introduction (cont’d.) • 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

  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

  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

  8. Business-to-Business E-Commerce (cont’d.) • 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

  9. Business-to-Business E-Commerce (cont’d.) • Electronic data interchange (EDI) (cont’d.) • 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

  10. Business-to-Business E-Commerce (cont’d.) • 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 buyer’s Web site Concepts in Enterprise Resource Planning, Third Edition

  11. Business-to-Business E-Commerce (cont’d.) • Internet-based procurement (cont’d.) • 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

  12. Business-to-Business E-Commerce (cont’d.) • 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

  13. Business-to-Business E-Commerce (cont’d.) • 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

  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 company’s 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 today’s business environment Concepts in Enterprise Resource Planning, Third Edition

  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: • FS’s unintegrated information system would not be able to handle the additional Internet orders Concepts in Enterprise Resource Planning, Third Edition

  16. Fitter Snacker and E-Commerce (cont’d.) • 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

  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

  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 company’s employees Concepts in Enterprise Resource Planning, Third Edition

  19. Figure 8-1 ERP responsibilities in-house versus with an ASP Concepts in Enterprise Resource Planning, Third Edition

  20. Application Service Providers (cont’d.) • Advantages of using an ASP • Affordability • Shorter implementation time • Expertise Concepts in Enterprise Resource Planning, Third Edition

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

  22. Application Service Providers (cont’d.) • Other considerations • Companies should carefully scrutinize the ASP’s 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

  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

  24. NetWeaver Tools and Capabilities • SAP’s 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 Edition

  25. NetWeaver Tools and Capabilities (cont’d.) • 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

  26. NetWeaver Tools and Capabilities (cont’d.) • Master Data Management • Provides data consistency within a company’s SAP system • Exchange Infrastructure • Allows different applications to share data • Companies don’t have to write code to enable different applications to transmit data Concepts in Enterprise Resource Planning, Third Edition

  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 SAP’s Mobile Infrastructure and Business Intelligence modules Concepts in Enterprise Resource Planning, Third Edition

  28. 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

  29. Duet (cont’d.) • 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 Concepts in Enterprise Resource Planning, Third Edition

  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 Concepts in Enterprise Resource Planning, Third Edition

  31. 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 Concepts in Enterprise Resource Planning, Third Edition

  32. XML (cont’d.) • 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 Concepts in Enterprise Resource Planning, Third Edition

  33. XML (cont’d.) Figure 8-5 Fitter Snacker document in XML Concepts in Enterprise Resource Planning, Third Edition

  34. XML (cont’d.) • 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 Concepts in Enterprise Resource Planning, Third Edition

  35. 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 Concepts in Enterprise Resource Planning, Third Edition

  36. Radio Frequency Identification Technology (cont’d.) • 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 • SAP’s ERP software is RFID-ready • Through NetWeaver, SAP can integrate RFID data into both SAP and non-SAP applications Concepts in Enterprise Resource Planning, Third Edition

  37. Summary • E-commerce is transforming the way companies do business • Business-to-consumer e-commerce can: • Streamline a company’s 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 Concepts in Enterprise Resource Planning, Third Edition

  38. Summary (cont’d.) • 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

  39. Summary (cont’d.) • SAP’s 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