Erp ch8

CONCEPTS IN ENTERPRISE RESOURCE PLANNING THIRD EDITION

Chapter EightERP and Electronic Commerce

Objectives

Concepts in Enterprise Resource Planning, Third Edition

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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

Objectives (cont’d.)


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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

Introduction


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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

Introduction (cont’d.)


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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

Electronic Commerce Background


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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

Business-to-Business E-Commerce


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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

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


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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



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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



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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 buyer’s Web site



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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



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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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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.

E-Commerce and ERP


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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

Fitter Snacker and E-Commerce


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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

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


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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

Using ERP through an Application Service Provider


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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

Application Service Providers


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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


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

Application Service Providers (cont’d.)


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Advantages of using an ASP Affordability Shorter implementation time Expertise



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Disadvantages of using an ASP Security Bandwidth/response time Flexibility No frills Technical, not business focus



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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

NetWeaver


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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

NetWeaver Tools and Capabilities


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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

NetWeaver Tools and Capabilities (cont’d.)


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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

NetWeaver Tools and Capabilities (cont’d.)


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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

NetWeaver at Work for Fitter Snacker


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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

Duet


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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

Duet (cont’d.)


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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

Accessing ERP Systems over the Internet


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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

XML


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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

XML (cont’d.)


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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

XML (cont’d.)


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Figure 8-5 Fitter Snacker document in XML

XML (cont’d.)


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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

Radio Frequency Identification Technology


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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

Radio Frequency Identification Technology (cont’d.)


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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

Summary


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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

Summary (cont’d.)


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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

Summary (cont’d.)


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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

Erp ch8

Documents

business ecommerce

conduct of business

business operations

business growth

internet companies

internet auctions

highvolume ecommerce

internet exchanges