Concepts in Enterprise Resource Planning

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1 Objectives Concepts in Enterprise Resource Planning Third Edition Chapter Eight ERP and Electronic Commerce After completing this chapter, you will be able to: Describe business-to-business b i e-commerce Explain the importance of ERP to the success of a company engaged din 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 Describe the unique components of NetWeaver Explain why accessing an ERP system through a Web browser is efficient Define XML and its significance ifi to ERP Define RFID and its future role in logistics and sales Concepts in Enterprise Resource Planning, Third Edition 2 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 specialpurpose software companies NetWeaver: SAP s Web services platform XML is becoming the new markup language g of the Internet Use of radio frequency identification (RFID) devices in managing movement of goods in the supply chain 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 3 Concepts in Enterprise Resource Planning, Third Edition 4

2 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 Electronic Data Interchange (EDI) Electronic computer-to-computer p 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 Business-to-Business E-Commerce Electronic data interchange (EDI) Benefits of EDI: Costs of paper, printing, and postage have almost disappearedd Errors have been minimized Ordering is fast and efficient Suppliers and buyers are locked into business relationships Concepts in Enterprise Resource Planning, Third Edition 5 Concepts in Enterprise Resource Planning, Third Edition 6 Business-to-Business E-Commerce Internet-based procurement Use of Internet t 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 Business-to-Business E-Commerce Internet-based procurement 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 7 Concepts in Enterprise Resource Planning, Third Edition 8

3 Business-to-Business E-Commerce 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 Business-to-Business E-Commerce 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 t their networks, Web sites, and privacy of customer data Virus-scanning software, encryption, intrusion detection, etc. Concepts in Enterprise Resource Planning, Third Edition 9 Concepts in Enterprise Resource Planning, Third Edition 10 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 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 based ordering system, or Implement an ERP package If Web-based based ordering system implemented without implementing an ERP package: FS s unintegrated information system would not be able to handle the additional Internet orders 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 11 Concepts in Enterprise Resource Planning, Third Edition 12

4 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 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 13 Concepts in Enterprise Resource Planning, Third Edition 14 Application Service Providers (cont d d.) Figure 8-1 ERP responsibilities in-house versus with an ASP Concepts in Enterprise Resource Planning, Third Edition 15 Advantages of using an ASP Affordability Shorter implementation time Expertise Disadvantages of using an ASP Security Bandwidth/response dt se time Flexibility No frills Technical, not business focus Concepts in Enterprise Resource Planning, Third Edition 16

5 Application Service Providers Other considerations Companies should carefully scrutinize i 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 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 17 Concepts in Enterprise Resource Planning, Third Edition 18 NetWeaver Tools and Capabilities SAP s NetWeaver: collection of components that support business transactions over the Internet Modules included: Enterprise Portal, Mobile Infrastructure, t 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 Mobile Infrastructure Allows users to access and work with data through h 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 19 Concepts in Enterprise Resource Planning, Third Edition 20

6 NetWeaver Tools and Capabilities 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 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 21 Concepts in Enterprise Resource Planning, Third Edition 22 Duet Duet Challenges Microsoft and SAP have been working on Duet Intended d 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 brings its own challenges Companies must be using a relatively l 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 23 Concepts in Enterprise Resource Planning, Third Edition 24

7 Duet Architecture 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 25 Concepts in Enterprise Resource Planning, Third Edition 26 XML Extensible Markup Language (XML) New programming g language g 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 Internet pages written in Hypertext Markup Language g (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 Example Figure 8-5 Fitter Snacker document in XML Concepts in Enterprise Resource Planning, Third Edition 27 Concepts in Enterprise Resource Planning, Third Edition 28

8 XML 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 Radio frequency identification (RFID) technology Becoming an efficient i way of tracking items through h 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 29 Concepts in Enterprise Resource Planning, Third Edition 30 Radio Frequency Identification Technology Pharmaceutical firms working toward adopting RFID technology To comply with upcoming FDA regulations that would require track-and-trace t 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 E-commerce is transforming the way companies do business 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 Application service providers (ASPs) are allowing companies to use ERP without a large initial investment Web services, or service-oriented architecture, offers a combination of software tools that lets various programs within an organization communicate with other applications SAP s Web services platform is NetWeaver Users of ERP systems often access those systems through a Web browser XML, or Extensible Markup Language, defines data on a Web page RFID devices, or radio frequency identification devices, are used in tracking items in transit Concepts in Enterprise Resource Planning, Third Edition 31 Concepts in Enterprise Resource Planning, Third Edition 32

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