chapter one business functions and business processesdliu/is551 ppts/erp_01 - biz functions,...
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Chapter One Business Functions and Business Processes
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After completing this chapter, you will be able to:
Name the main functional areas of operation used in business
Differentiate between a business process and a business function
Identify the kinds of data each main functional area produces
Identify the kinds of data each main functional area needs
Define integrated information systems, and explain why they are essential in today’s globally competitive business environment
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Enterprise Resource Planning (ERP) programs: Core software used by companies to coordinate information in every area of business
◦ Help manage companywide business processes
◦ Use common database and shared management reporting tools
Business process: collection of activities that takes some input and creates an output that is of value to the customer
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To understand ERP, you must understand how a business works
◦ Functional areas of operation
◦ Business processes
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Marketing and Sales (M/S)
Supply Chain Management (SCM)
Accounting and Finance (A/F)
Human Resources (HR)
Business functions: Activities specific to a functional area of operation
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Figure 1-1 Examples of functional areas of operation and their business functions
Functional Areas of Operation (cont’d.)
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Functional areas are interdependent
◦ Each requires data from the others
Better integration of functional areas leads to improvements in communication, workflow, and success of company
Information system (IS): Computers, people, procedures, and software that store, organize, and deliver information
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Hardware Software Database
Network
Procedures
People
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Information Systems Inside an Organization
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Information Systems Among Organizations
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Collection of activities that takes one or more kinds of input and creates an output that is of value to customer
◦ Customer can be traditional external customer or internal customer
Thinking in terms of business processes helps managers to look at their organization from the customer’s perspective
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Figure 1-2 Sample business processes related to the sale of a
personal smartphone
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Businesses must always consider customer’s viewpoint in any transaction
Successful customer interaction
◦ Customer (either internal or external) is not required to interact with each business function involved in the process, i.e. customer-facing functions versus support functions
Successful business managers view business operations from the perspective of a satisfied customer
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Planning, Fourth Edition
Sharing data effectively and efficiently between and within functional areas leads to more efficient business processes
Integrated information systems: Systems in which functional areas share data
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Figure 1-3 A process view of business
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Businesses take inputs (resources) and transform these inputs into goods and services for customers
◦ Inputs: Material, people, equipment
Managing inputs and business processes effectively requires accurate and up-to-date information
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Personal Business
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The next slide shows an example of a business process: ordering an E-ticket from an airline web site
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Plan Trip
Check Flights
Submit Ticket Order
Receive e-Ticket
Seats Available
?
NO
YES
Traveler
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Notify Traveler
Receive Ticket Order
Reserve Seats
Charge Credit Card
Confirm Flight(s)
Issue e-Ticket
Plan Trip
Check Flights
Submit Ticket Order
Receive e-Ticket
Seats Available
Use Credit Card?
Charge OK?
Seats Available
?
Notify Traveler
Frequent Flyer Mileage
Sufficient?
Subtract Mileage
NO
YES
NO
YES
NO
YES
NO
YES
Traveler Airline Web Site
YES
NO
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Example: A fictitious coffee shop
◦ Examine business processes of the coffee shop
◦ See why coordination of functional areas helps achieve efficient and effective business processes
◦ Look at how integration of the information system improves the business
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Functions of Marketing and Sales
◦ Developing products
◦ Determining pricing
◦ Promoting products to customers
◦ Taking customers’ orders
◦ Helping create a sales forecast
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Marketing and Sales tasks for the coffee shop
◦ Formal recordkeeping not required
◦ Need to keep track of customers
◦ Product development can be done informally
◦ Good repeat customers allowed to charge purchases—up to a point
Records must show how much each customer owes and his or her available credit
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Functions within Supply Chain Management
◦ Making the coffee (manufacturing/production)
◦ Buying raw materials (purchasing)
Production planning requires sales forecasts from M/S functional area
◦ Sales forecasts: Analyses that attempt to predict the future sales of a product
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Production plans used to develop requirements for raw materials and packaging
◦ Raw materials: Bottled spring water, fresh lemons, artificial sweetener, raw sugar
◦ Packaging: Cups, straws, napkins
SCM and M/S must choose a recipe for each coffee product sold
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Functions within Accounting and Finance
◦ Recording raw data about transactions (including sales), raw material purchases, payroll, and receipt of cash from customers
Raw data: Numbers collected from sales, manufacturing and other operations, without any manipulation, calculation, or arrangement for presentation
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Data from Accounting and Finance used by Marketing and Sales and Supply Chain Management
◦ Sales records are important component of sales forecast
◦ Sales forecast is used in making staffing decisions and in production planning
◦ Records from accounts receivable used to monitor the overall credit-granting policy of the coffee shop
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Functions of Human Resources
◦ Recruit, train, evaluate, and compensate employees
HR uses sales forecasts developed by the individual departments to plan personnel needs
Systems integrated using ERP software provide the data sharing necessary between functional areas
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Potential inputs and outputs for each functional area described next
Note the kinds of data needed by each area and how people use the data
Information systems maintain relationships between all functional areas and processes
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Needs information from all other functional areas
Customers communicate orders to M/S in person or by telephone, e-mail, fax, the Web, etc.
M/S has a role in determining product prices
◦ Pricing might be determined based on a product’s unit cost, plus some percentage markup
◦ Requires information from Accounting and Finance, and Supply Chain Management data
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Figure 1-4 The Marketing and Sales functional area exchanges data with customers and with the Human Resources, Accounting and Finance, and Supply Chain Management functional areas
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M/S needs to interact with Human Resources to exchange information on hiring needs, legal requirements, etc.
Inputs for M/S
◦ Customer data
◦ Order data
◦ Sales trend data
◦ Per-unit cost
◦ Company travel expense policy
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Outputs for M/S
◦ Sales strategies
◦ Product pricing
◦ Employment needs
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Needs information from various functional areas
Production plans based on information about product sales (actual and projected) that comes from Marketing and Sales
With accurate data about required production levels:
◦ Raw material and packaging can be ordered as needed
◦ Inventory levels can be kept low, saving money
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Supply Chain Management data and records can:
◦ Provide data needed by Accounting and Finance to determine how much of each resource was used
◦ Support the M/S function by providing information about what has been produced and shipped
Supply Chain Management interacts in some ways with Human Resources
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Figure 1-5 The Supply Chain Management functional area exchanges data
with suppliers and with the Human Resources, Marketing and Sales, and
Accounting and Finance functional areas
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Inputs for SCM
◦ Product sales data
◦ Production plans
◦ Inventory levels
◦ Layoff and recall company policy
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Outputs for SCM
◦ Raw material orders
◦ Packaging orders
◦ Resource expenditure data
◦ Production and inventory reports
◦ Hiring information
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Needs information from all other functional areas
A/F personnel:
◦ Record company’s transactions in the books of account
◦ Record accounts payable when raw materials are purchased and cash outflows when they pay for materials
◦ Summarize transaction data to prepare reports about company’s financial position and profitability
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People in other functional areas provide data to A/F
◦ M/S provides sales data
◦ SCM provides production and inventory data
◦ HR provides payroll and benefit expense data
M/S personnel require data from A/F to evaluate customer credit
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Figure 1-6 The Accounting and Finance functional area exchanges data with
customers and with the Human Resources, Marketing and Sales, and Supply
Chain Management functional areas
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Inputs for A/F
◦ Payments from customers
◦ Accounts receivable data
◦ Accounts payable data
◦ Sales data
◦ Production and inventory data
◦ Payroll and expense data
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Outputs for A/F
◦ Payments to suppliers
◦ Financial reports
◦ Customer credit data
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HR needs information from the other departments
Tasks related to employee hiring, benefits, training, and government compliance are all responsibilities of HR
HR needs accurate forecasts of personnel needs from all functional units
HR needs to know what skills are needed to perform a particular job and how much the company can afford to pay employees
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Figure 1-7 The Human Resources functional area exchanges data with the
Accounting and Finance, Marketing and Sales, and Supply Chain
Management functional areas
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Observing governmental regulations in recruiting, training, compensating, promoting, and terminating employees
Inputs for HR
◦ Personnel forecasts
◦ Skills data
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Outputs for HR
◦ Regulation compliance
◦ Employee training and certification
◦ Skills database
◦ Employee evaluation and compensation
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Significant amount of data is maintained by and shared among the functional areas
Timeliness and accuracy of these data critical to each area’s success and to company’s ability to make a profit and generate future growth
ERP software allows all functional areas to share a common database
◦ Allows accurate, real-time information to be available
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Basic functional areas: Marketing and Sales, Supply Chain Management, Accounting and Finance, and Human Resources
Marketing and Sales: Sets product prices, promotes products through advertising and marketing, takes customer orders, supports customers, and creates sales forecasts
Supply Chain Management: Develops production plans, orders raw materials from suppliers, receives raw material, manufactures products, maintains facilities, and ships products to customers
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Accounting and Finance: Financial accounting to provide summaries of operational data in managerial reports, controlling accounts, planning and budgeting, and cash-flow management
Human Resources: Recruits, hires, trains, and compensates employees, ensures compliance with government regulations, and oversees the evaluation of employees
Information systems capture, process, and store data to provide information needed for decision making
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Employees working in one functional area need data from employees in other functional areas
◦ Functional area information systems should be integrated, so shared data are accurate and timely
Managers think in terms of business processes that integrate the functional areas
◦ Need to share information between functions and functional areas
◦ ERP software provides this capability by means of a single common database
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• Credit card swipes
• E-mails
• Digital video
• Online TV
• RFID tags
• Blogs
• Digital video surveillance
• Radiology scans
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In the zettabyte range
A zettabyte is 1,000 exabytes
1021 or 270
1018 or 260
Just under 64-bit
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• Growing exponentially
• Scattered
• Multiple sources
• Timeliness
• Data Security
• Data Quality
• Data Integrity
• Data Consistency
• Federal regulations
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See video
•Data Governance •Master Data Management •Master Data
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John Stevens registers for Introduction to Management Information Systems (ISMN 3140) from 10 AM until 11 AM on Mondays and Wednesdays in Room 41 Smith Hall, taught by Professor Rainer.
Transaction Data Master Data John Stevens Student Intro to Management Information Systems Course ISMN 3140 Course No. 10 AM until 11 AM Time Mondays and Wednesdays Weekday Room 41 Smith Hall Location Professor Rainer Instructor
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Database management system (DBMS) minimize the following problems:
Data redundancy
Data isolation
Data inconsistency
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DBMSs maximize the following issues:
Data security
Data integrity
Data independence
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Database management system (DBMS)
Relational database model
◦ Structured Query Language (SQL)
◦ Query by Example (QBE)
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Minimum redundancy
Maximum data integrity
Best processing performance (most of the time)
Normalized data occurs when attributes in the table depend only on the primary key.
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◦ Organized by business dimension or subject
◦ Multidimensional
◦ Historical
◦ Use online analytical processing
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Systems Investigation
Systems Analysis (i.e. Define)
Systems Design
Programming and Testing
Implementation (i.e. Deploy)
Operation and Maintenance
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Prototyping
Systems
Investigation
Deliverable:
Go/No Go
Decision
Systems
Analysis
Deliverable:
User
Requirement
Systems
Design
Deliverable:
Technical
Specification
Programming
and Testing
Implement
The
System
Operation and
Maintenance
Business
Need
Joint
Application
Design (JAD)
Upper CASE
Tools
Lower CASE
Tools
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Joint application design (JAD)
Rapid application development (RAD)
Agile development
End-user development
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Stages
Development
Change Management
Deployment
Release Management
Traditional Environments
Development Integration – common to all developers
to commit code changes
Staging – can double for demonstration
and training
Production
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Deployment Activities
Release
Install and Activate (executable
component of software)
Deactivate
Adapt (modify what is already installed.
Usually initiated by local event)
Update (from remote software producer)
Built-in
Version Tracking
Uninstall
Retire
Deployment Roles
Pre-Production Environment
◦ Application Developer
◦ Build-and-release engineer
◦ Release manager
◦ Development Coordinators
Production Environment
◦ System Administrator
◦ Database Administrator
◦ Release Coordinators
◦ Operations project manager
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