Chapter 11: ERP (AUDCIS) PDF

 In-house design limits connectivity outside the company  Tendency toward separate IS’s within firm  Lack of integration limits communication within the company  Strategic decision-making not supported  Long-term maintenance costs high  Limits ability to engage in proc...

 In-house design limits connectivity outside the company  Tendency toward separate IS’s within firm  Lack of integration limits communication within the company  Strategic decision-making not supported  Long-term maintenance costs high  Limits ability to engage in process reengineering  Similar in concept to flat-file approach  Data remains the property of the application  Fragmentation limits communications  Existence of numerous distinct and independent databases  Redundancy and anomaly problems  Paper-based  Requires multiple entry of data  Status of information unknown at key points  BUSINESS ENTERPRISE Products Materials Manufacturing Order Entry and Procurement Purchases Orders Supplier Customer System Distribution System System Customer Production Vendor Sales Scheduling Accts Pay Account Rec Shipping Inventory Customer Database Manufacturing Procurement Database Database Traditional Information System with Closed Database Architecture  Those activities supported by multi- module application software that help a company manage the important parts of its business in an integrated fashion  Key features include:  Smooth and seamless flow of information across organizational boundaries  Standardized environment with shared database independent of applications and integrated applications  ERP System BUSINESS ENTERPRISE Legacy Data Warehouse Systems ERP System On-Line Analytical Processing Bolt-On Applications (OLAP) (Industry Specific Functions) Customers Suppliers Core Functions [On-Line Transaction Processing (OLTP)] Sales Business Shop Floor & Logistics Planning Control Distribution Operational Database Customers, Production, Vendor, Inventory, etc. Core applications:  A.K.A. On-line Transaction Processing (OLTP)  Transaction processing systems  Support the day-to-day operational activities of the business  Support mission-critical tasks through simple queries of operational databases  Include sales and distribution, business planning, production planning, shop floor control, and logistics modules Business analysis applications:  A.K.A. On-line Analytical Processing (OLAP)  Decision support tool for management-critical tasks through analytical investigation of complex data associations  Supplies management with “real-time” information and permits timely decisions to improve performance and achieve competitive advantage  Includes decision support, modeling, information retrieval, ad-hoc reporting/analysis, and what-if analysis  Supports management-critical tasks through analytical investigation of complex data associations captured in data warehouses:  Consolidation is the aggregation or roll- up of data.  Drill-down allows the user to see data in selective increasing levels of detail.  Slicing and Dicing enables the user to examine data from different viewpoints often performed along a time axis to depict trends and patterns. Two-tier (Figure 11.3): Common server handles both application and database duties Used especially in LANs  TWO-TIER CLIENT SERVER User First Tier Presentation Layer Application Server and Database Second Tier Server Layer Applications Database Three-tier: Client links to the application server which then initiates a second connection to the database server Used especially in WANs  THREE-TIER CLIENT SERVER User First Tier Presentation Layer Application Second Tier Applications Server Application Layer Database Database Database Server Third Tier Layer  ERP WITH OLTP AND OLAP CLIENT SERVER USING DATA WAREHOUSE User First Tier Presentation Layer OLTP OLAP Second Applications Applications Application Tier OLTP OLAP Layer Server Server Operations Data Operations Data Database Third Tier Database Database Warehouse Layer Server Warehouse Server  Database Configuration  Selection of database tables in the thousands  Setting the switches in the system  Bolt-on Software  Third-party vendors provide specialized functionality software  Supply-Chain Management (SCM) links vendors, carriers, third-party logistics companies, and information systems providers  A relational or multi-dimensional database that may consume hundreds of gigabytes or even terabytes of disk storage  The data is normally extracted periodically from operational database or from a public information service.  A database constructed for quick searching, retrieval, ad-hoc queries, and ease of use  An ERP system could exist without having a data warehouse. The trend, however, is that organizations that are serious about competitive advantage deploy both. The recommended data architecture for an ERP implementation includes separate operational and data warehouse databases.  The five essential stages of the data warehousing process are:  Modeling data for the data warehouse  Extracting data from operational databases  Cleansing extracted data  Transforming data into the warehouse model  Loading the data into the data warehouse database  DATA WAREHOUSE SYSTEM Legacy Systems Order Entry System VSAM Files Purchases System Hierarchical DB The Data Warehouse Network DB ERP Sales Data Summarized System Annually Sales Data Summarized Quarterly Data Cleansing Operations Process Database Current (this weeks) Detailed Sales Data  Pace of implementation  ‘Big Bang’--switch operations from legacy systems to ERP in a single event  ‘Phased-In’--independent ERP units installed over time, assimilated and integrated  Opposition to changes to the businesses culture  User reluctance and inertia  Need of (upper) management support  Choosing the wrong ERP  Goodness of fit: no ERP system is best for all industries  Scalability: system’s ability to grow  Choosing the wrong consultant  Common to use a third-party (the Big Five)  Be thorough in interviewing potential consultants  Establish explicit expectations  High cost and cost overruns  Common areas with high costs: Training Testing and integration Database conversion  Disruptions to operations  ERP is reengineering--expect major changes in how business is done  A cost overrun, also known as a cost increase or budget overrun, involves unexpected costs incurred in excess of budgeted amounts due to an underestimation of the actual cost during budgeting.  Transaction authorization  Controls are needed to validate transactions before they are accepted by other modules  ERPs are more dependent on programmed controls than on human intervention  Segregation of duties  Manual processes that normally require segregation of duties are often eliminated  User role: predefined user roles limit a user’s access to certain functions and data  Supervision  Supervisors need to acquire a technical and operational understanding of the new system  Employee-empowered philosophy should not eliminate supervision  Accounting records  Corrupted data may be passed from external sources and from legacy systems  Loss of paper audit trail  Access controls  Critical concern with confidentiality of information  Who should have access to what?  Access to data warehouse  Data warehouses often involve sharing information with suppliers and customers.  Contingency planning  How to keep business going in case of disaster  Key role of servers requires backup plans: redundant servers or shared servers  Independent verification  Traditional verifications are meaningless  Need to shift from transaction level to overall performance level  Oracle  Tailored to e-business focus  Internet based vs. client-server based applications  PeopleSoft  Open, modular architecture allows rapid integration with existing systems  Baan  Use of “best-of-class” applications