Enterprise-Wide Information Systems in the Modern Organization

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1 Enterprise-Wide Information Systems in the Modern Organization Module SAP 1 1

2 ERP in Modern Business: Topics Historical Perspective of IS in Business Levels of IT in Organization Examine ERP s and SAP in particular Overview Current Trends and Issues 2

3 Historical Perspective 1950 s - early 1960 s Special purpose computers Most advances in scientific computing In 1955, a few dozen computers installed in the US About 4,000 computers by the end of the decade 1954: Univac I First electronic computer used for business data processing 3

4 Predictions of Future Computing Leavitt and Whisler (1958) Visionary view of business computing s impact on management and organizational structure Major changes predicted for middle management layer of the organization ❿ One larger portion who perform programmed tasks ❿ One specialized layer dealing with information processing / creative activities Technology to allow managers a greater ability to process data and improve decision making Technology will drastically alter organization form and function 4

5 Initial Definition of Information Technology First defined by Leavitt and Whisler in 1958 Several related parts High speed computer for processing large amounts of information Application of statistical and mathematical methods to the decisionmaking process A situation of higher-order thinking through computer programs ❿ Early prediction of Artificial Intelligence 5

6 1958 Computing Environment Special Purpose Computers Majority of computer expenditure for scientific computers Very few business data processing computers Hardwired (plug-board) programs Punch cards for input Printed output Magnetic tape for secondary storage 6

7 General Purpose Computing 1963: IBM S/360 First general purpose (scientific and business) computer Between 1963 and 1973, worldwide computer installations increased from 15,000 to 85,000 Virtually no corporate computer use in 1955 Growing but fragmented use by 1965 (~20,000 computers) Widespread use by : Concept of MIS began 7

8 Cybernetics and Total Systems Theory Early views of management process as cybernetic control with computer as a control system Dyer 1965 A room completely equipped with electronic display devices connected to a gigantic real-time computer system Having the company s entire information on-line and programmed to deliver information in the form of charts and graphs Couple this with closed-circuit television connecting key managers and the principle locations in the plant Could be called a command headquarters 8

9 Historical Perspective of IS in Business: 1965 Proposed Model Executive IS Strategic Information Decision Support Managerial Information Sales & Marketing Manufacturing HR Procurement Accounting & Finance One Integrated Information System Transaction Information 9

10 1965 Limitations Hardware could not handle the volume Networks were limited or non-existent Operating systems were primitive Database Technology was hierarchical Reliability of Systems was limited Processing was done in Batch Mode Interactive Programming did not Exist

11 Islands of Information-1982 Felt need that different areas of information processing needed to communicate The Islands Office Automation Telecommunications Data Processing Should be managed and coordinated in an integrated manner 11

12 Evolution of Information Technology Overall goal: Enter Data one time one place at the source -- use many times, many places One time implies an integrated DBMS or ability to replicate needed data seamlessly from one application to another One place implies network or access to the integrated DBMS (place changed from Batch to On-line) At the Source = Greatest Potential to Change Batch -->On-line Data Entry --> Electronic Data Interchange (EDI) - -> E-commerce --> Extended Supply Chain E-commerce 12

13 Enterprise Systems Overview ESS (Executive Support Systems) and/or EIS (Executive Information Systems) Top level big picture with drill down Can have DSS component Enterprise Wide Systems (EWS) Enterprise Resource Planning Systems (ERP) For our purposes; EWS = ERP 13

14 What Is Enterprise Resource Planning? The integration of all computing within an organization such that: all major business processes are encompassed and standardized and all data are usable by all functional areas of the business Enterprise Resource Planning = ERP Integrate many business functions into one seamless application Usually applications systems that run on top of a RDBMS Replace 0s of legacy systems in organizations who use an ERP 14

15 What Is Enterprise Resource Planning? Realization of the 1965 goal Executive IS Strategic Information Decision Support Managerial Information Sales & Marketing Manufacturing HR Procurement Accounting & Finance One Integrated Information System Transaction Information 15

16 Characteristics of ERPs Link all business processes automatically Reduce interprocessing time (transactions occur one time at the source) Maintain complete audit trail of all transactions Utilize one common database Perform automatic internal conversions (e.g., foreign currency, taxes, legal rules for payroll) Improve customer service by putting data at the fingertips of any employee Involve users in the entire functional cycle Unify backup, recovery procedures and other system administration tasks Secure the system from disaster and unauthorized use 16

17 What Is SAP R/3? SAP is an example of an ERP System SAP R/3 Baan, Peoplesoft, JD Edwards, Oracle Financials = other examples SAP s Client Server version (Distributes process and presentation) Based on R/2 (Mainframe version - centralization of data and process) R/3 4.0: New release (May 1998) distributes data, process, and presentation 03/09/99 17

18 R/3 Integrated Products Client/Server Architecture Comprehensive Functionality Integrated Solution Open System Designed for all types of business PP Production Planning QM SD Sales MM Materials Mgmt Quality Mgmt PM Plant Maint. R/3 Client / Server HR Human Resources FI Financial Acctg. CO Controlling WF AM Asset Mgmt PS Project System Workflow IS Industry Solutions Graphical User Interface Multinational Over 12,000 installations around the world 18 03

19 Summary: What is SAP R/3? Highly Integrated Application Software Client/Server Technology Based on Best Business Practices Based on Open Standards 03/09/99 ❿ Various RDBMS: Oracle, Informix, etc. ❿ TCP/IP (standard communication protocol) ❿ UNIX, Windows NT, OS/400, etc. ❿ OLE, RPC s, Open Interfaces 20

20 Main Features of R/3 ALL Business processes draw on same database Rules are configurable and drive data integrity Operates in many languages Translates currency automatically Documents workflow, business processes and the data in one set of models that are highly integrated Integrates several views of data: transactions, managerial, decision support or executive Fully customizable 03/09/99 21

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