Module 2

Enterprise Systems

ACINSY23S: Accounting Information System

Academic Year 2020-2021
Second Semester
Phase 3
Synopsis
This module:
 Explores the enterprise systems that help in

the operation of an organization’s business

processes and integrate—in the enterprise
database—all of the data related to those
business processes.
 Describes these systems and the functionality

they provide.
 Introduces the business processes that ERP

systems support.
Introduction
 Enterprise systems (enterprise-wide
information systems and enterprise
information systems) integrate and automate
business process functionality and information
from all of an organization’s functional areas.
 A business event includes any change in the
state of an enterprise, such as the purchase of
goods and services.
Introduction
 ERP systems have received an exponential boost in
importance for businesses in the era of Big Data and
business analytics.
Gartner defines:
 Big Data as “high-volume, high-velocity and/or high
variety information assets that demand cost-effective,
innovative forms of information processing that enable
enhanced insight, decision making, and process
automation.”
 Business analytics as “solutions used to build analysis
models and simulations to create scenarios, understand
realities and predict future states...”
Learning Objectives
1. Describe enterprise systems and enterprise
resource planning (ERP) systems.
2. Illustrate the organization value chain.
3. Describe the relationship of the organization
value chain and an enterprise system.
4. Demonstrate the value of systems integration.
5. Describe how an enterprise system supports
major business event processes.
6. Enumerate the pros and cons of implementing
enterprise systems.
Enterprise Resource
Planning (ERP) Systems
 Enterprise resource planning (ERP)
systems are software packages that can be
used for the core systems necessary to
support enterprise systems.
 Best-of-breed approach combines modules
from various vendors to create an information
system that better meets an organization’s
needs than a standard ERP system.
Enterprise Resource
Planning (ERP) Systems
Enterprise Resource
Planning (ERP) Systems
Third-party add-on modules:
 Customer relationship management (CRM)
software: Builds and maintains customer-related
database.
 Customer self-service (CSS) software: Allows
customers to complete tasks without the help of an
organization’s employees.
 Sales force automation (SFA) software:
Automates sales tasks such as order processing
and tracking.
Enterprise Resource
Planning (ERP) Systems
 Supply Chain Management (SCM)
software: Enables the steps in the supply
chain including demand planning, inventory
acquisition, manufacturing, distributing and
selling.
 Product Lifecycle Management (PLM)
software: Manages product data from
design through manufacturing and ending in
the disposal of a product.
Enterprise Resource
Planning (ERP) Systems
 Supplier Relationship Management (SRM)
software: Manages the interactions with
organizations that supply the goods and
services to an enterprise; includes
procurement and contract management.
Enterprise Resource
Planning (ERP) Systems
 Third-party modules are connected to ERP
systems using middleware (software for
connecting two or more software applications or
modules):
 Application programming interface (API) is
provided by the application developer.
 Enterprise application integration (EAI)
combines processes, software, standards, and
hardware to link two or more systems together,
allowing them to act as one.
Enterprise Resource
Planning (ERP) Systems
Enterprise Resource
Planning (ERP) Systems
Business process management (BPM)
 Takes into account modeling, automating, managing,
and optimizing business processes, including:
‒ A design environment for modeling and documenting
business processes targeted at improvements.
‒ Conversion of manual processes to automated
processes.
‒ Implementation of data entry forms that prevent error.
‒ Engine to facilitate change.
‒ Monitoring to enable process improvement and
optimization.
Enterprise Systems Value
Chain
 A value chain is a chain of activities performed
by an organization that transform inputs into
outputs valued by the customer.
 An organization creates a competitive
advantage to creating more value for customers
than its competitors.
 Organizations create value by performing
activities at lower cost or enhancing
differentiation of products or services.
Enterprise Systems Value
Chain
The Value of Systems
Integration
The Value of Systems
Integration
The Problem
 When a call is received, Lanni needs to know if it
is from a customer in good standing.
 If so, Lanni needs to be able to tell the customer
when they will receive the item (available to
promise or ATP).
 Without an integrated system, it is a long
process that could take a day or more.
The Value of Systems
Integration
The Solution
 Integrate disaggregated processes into an
enterprise system.
 Enterprise system establishes ATP (available
to promise) by determining availability.
 System automatically determines price and
customer creditworthiness.
The Value of Systems
Integration
Additional Value
 Integrated information systems provide
additional value by improving consistency,
completeness, and accuracy.
 Without integrated information systems,
organizations have difficulty managing on a
day-to-day basis and being successful in the
long run.
Enterprise Systems Support
for Organizational Processes
 An information system supports the
functioning of an organization in several
ways:
 It facilitates the functioning of the organization’s
operations.
 The information system retains records about
business events that have occurred.
 The information system stores data that is useful
for decision making.
Capturing Data during
Business Events
Data collected and stored should relate to the four W’s:
 The who relates to all individuals and organizations that
are involved in the event (sometimes called agents).
 The what relates to all resources exchanged due to the
event.
 The where relates to the locations at which (1) the event
takes place, (2) exchanged resources reside before and
after the event, and (3) the agents are during the event.
 The when relates to the time periods involved in
completion of the event including future exchanges of
resources.
Enterprise Systems Data
Facilitate Functioning of the
Organization’s Operations
 A character is a basic unit of data.
 A field (single cell in a table) is a collection of
related characters that comprise an attribute.
 A record (a row in a table) is a collection of
related data fields (attributes) that belongs to a
particular entity or event.
 A table (or file) is a collection of related records
(sometimes called entity/event instances).
Enterprise Systems Data
Facilitate Functioning of the
Organization’s Operations
Enterprise Systems Data
Facilitate Functioning of the
Organization’s Operations
Enterprise Systems Record That
Business Events Have Occurred
 As the business event progresses, the information
system must capture the multifaceted data to track
the progression of the process.
 All of the data that are required for the sales, billing,
purchasing, and general ledger functions are
captured and available in a typical information
system.
 With an enterprise system, the data are linked
together.
Enterprise Systems Store
Data for Decision Making
Enterprise Systems Store
Data for Decision Making
Major ERP Modules
 Modules that are part of the SAP Business Suite
include:
1. Sales and Distribution (SD)

2. Materials Management (MM)

3. Financial Accounting (FI)

4. Controlling (CO)

5. Human Capital Management (HCM)

Enterprise Systems Store
Data for Decision Making
Sales and Distribution
 Three major steps in the SD process:
 Order entry

 Shipment

 Billing

 Connections to:
 Materials management module (MM)

 Financial accounting module (FI)

 Controlling module (CO)

Enterprise Systems Store
Data for Decision Making
Materials Management
 Acquisition of goods from vendors and management
of the goods while they are in stock:
 Preparing and recording a purchase order

 Recording the vendor’s invoice

 Interacts with:
 Sales and distribution module (SD)

 Financial accounting module (FI)

 Controlling module (CO)

Enterprise Systems Store
Data for Decision Making
Financial Accounting
 Plays a central role in the SAP system.
 Incorporates data from other modules into
general ledger accounts and external financial
statements.
 Includes accounts receivable and accounts
payable functions to record and manage that
data directly and to complete events begun in
the SD and MM modules.
Enterprise Systems Store
Data for Decision Making
Controlling and Profitability Analysis
 Often called Controlling and Profitability
Analysis (CO/PA).
 Handles internal accounting, including:

 Cost center accounting

 Profitability analysis for sales, activity-based
accounting
 Budgeting
Enterprise Systems Store
Data for Decision Making
Human Capital Management
 Managed in SAP by the Human Capital Management
(HCM) module.
 Module includes functions related to:
 Recruitment
 Management and administration of personnel
 Payroll processing
 Personnel training
 Travel
 Maintains data related to benefits, training, and work
shifts.
Enterprise Systems Support for
Major Business Event Processes
 Most organizations group their major
business events into two processes:
 The order to-cash (or revenue) process.
 The purchase-to-pay (or expenditure) process.
Order-to-Cash
Order-to-Cash
Order-to-Cash
Purchase-to-Pay
Purchase-to-Pay
Purchase-to-Pay
Summary
 Enterprise systems achieve quality of
information goals by:
 Collecting data about business events.

 Making that data available for use by

interested and authorized parties.

 Data should:
 Help all users (relevance, understandability).

 Make decisions (decision usefulness).

 Analyze past events to make predictions about

future events (predictive/feedback value).

Summary
 An enterprise system’s central database:
 Retains one version of data elements.
 Uses data to verify the accuracy of new data
elements.
 Permits only authorized changes to the database.
 Improves reliability, validity, and accuracy of the
database.
Summary
 Enforcement of data standards and
business rules means:
 Business events are handled consistently.
 All relevant data is collected – completeness.
 Collected data is verifiable and neutral.
 All data is available in a timely manner.
 The system facilitates the sharing of
services for efficiency and consistency.
Summary
End of Module 2
ENTERPRISE SYSTEMS
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