IS-344

Computing Applications in Business

Spring 2015
WEEK 3

IS 344

Agenda
Course Overview
Week 1 Review and DQs
Week 2 Review and DQs
Final Project Overview
Break
Week 3 Lecture
Teams Case Study time

IS 344

Course Overview
This course will provide a comprehensive overview of various types of
information systems used by todays organizations in order to operate
effectively and efficiently.
Information systems that are used by all the major functional
departments within organizations are examined and evaluated to see
how applications are integrated to implement "business processes" that
flow across department and organizational boundaries.
The course will emphasize an understanding of information systems the
enable the business processes of order entry / management, customer
relationship management (CRM), procurement, supply chain
management (SCM), product life cycle management (PLM), and
enterprise resource planning (ERP).
The course is taught from the standpoint of an Enterprise Resource
Planning system.

IS 344

Course Overview
The students will be able to:
Understand how applications are integrated to implement "business
processes" that flow across department boundaries, and from
suppliers to customers
Gain experience in using an enterprise management system and
related computing applications to support key business functions
Apply knowledge of computing to define the appropriate computing
applications required to support an organizations business functions
Analyze the organizations processes in order to define the computing
application requirements appropriate to its needs
Participate in teams and work collaboratively to successfully
complete team assignments
Effectively communicate and present assignments to the whole class
and the instructor

IS 344

Course Organization
Class on Monday
Frequent team assignment
Learn to work and collaborate as part of a team
Practice written and oral presentation skills
Will provide time at end of class for team meeting and work

We will be using the Moodle with several discussion areas.

For each discussion topic you should participate and make relevant comments.
Your comments should add significantly to the discussion by suggesting other
solutions, pointing out problems, or even totally disagreeing! Simply saying "I
agree" is not enough ---- be sure to tell us WHY! Your discussion will be evaluated
based on:
1. Quality of your response
2. Timeliness of your response
3. Ability of your comments to motivate others in a collaborative effort.

Class members come with a myriad of backgrounds, experiences

and opinions. Everyone will benefit from everyone else's knowledge.
We are structuring the class to encourage discussion and expect
everyone to join in these discussions and contribute appropriately.

IS 344

Resources
Text
Ellen Monk, Bret Wagner, Concepts in Enterprise Resource
Planning, 4th Edition, Cengage Learning, 2011Journals and
Publications
Journal of Strategic Information Systems or Information &
Management Articles can be found at: http://www.library.njit.edu/
Industry publications

Computerworld
CIO
Harvard Business Review
And many others

Week

Topic

#1 Jan 26
#2 Feb 2

Course
Schedule

IS 344
Reading

Assignment Due

Course Introduction
Business Functions & Processes
Development of Enterprise Resource Planning Systems

Chapter 1
Chapter 2

Discussion Questions

#3 Feb 9

Marketing Information Systems and the Sales Order Process

Chapter 3

#4 Feb 16

Customer Information Systems Cust Relationship

Management
Production and Supply Chain Management

Chapter 3

Discussion Questions
Team Case Study
Discussion Questions

Chapter 4

Discussion Questions

(on line class)

#5 Feb 23

Post company background

#6 Mar 2

Accounting in ERP Systems

Chapter 5

#7 Mar 9

Human Resources Processes in ERP

Chapter 6

Discussion Questions
Team Case Study
Discussion Questions

Current Status Draft

#8 Mar 16
#9 Mar 23

SPRING BREAK
No Class
Process Modeling, Process Improvements in ERP systems

Chapter 7

#10 Mar 30
#11 Apr 6

Enterprise Architecture Implementing an ERP system

Business Intelligence

Chapter 7
Chapter 8

Discussion Questions
Exam (3/27)
Discussion Questions
Discussion Questions
Team Case Study

Future State Model Draft

#12 Apr 13
#13 Apr 20

Mobile Computing
Social Media
Cloud Computing

Chapter 8

Discussion Questions

Chapter 8

Quiz

Implementation Plan Draft

#14 Apr 27
#15- May 4

IT Security, Controls, Governance

Course Summary

Final Project Presentations

Final Project Presentations

IS 344

Assignments
Participation and discussions:
DiscussionQuestions designed to explore weekly topics and
concepts will be posted.
Generally,your responses to each discussion question should be
at least 250 words in length, but no more than a full page.You
should post your initial response to discussion questions not later
than FRIDAY of the due week; this will allow one week to complete
the answers and one week for discussions.
You are expected to comment on responses posted by others
when you have additional thoughts on the subject matter or if you
have any questions or feedback. We will also review the
discussion questions during our class time.

Papers and Articles will also be posted to foster

discussions and introduce important topics.
(30%) Due every week

IS 344

Assignments
Team Cases 3 (5% each) to be assigned by the
instructor
We will do four case studies for which I will provide you with
a series of questions. Groups will be formed and you will work
collaboratively on the answers. The result of your work will
be a written case study report and PowerPoint presentation
that you will present to the class, with the following content:
Introduction: Basic description of the case
Analysis: What is the problem or problems and why.
Solutions: What are the possible solutions and their Pros and
Cons
Recommendation: What would you propose as a solution to the
problem?
Answers to the case study questions.

Its very important to integrate the relevant articles

and course materials in to your analysis.

IS 344

Assignments
Mid-Term Exam (25%)
Quiz (5%)
Final Team Project (25%)
Select a company you are or have worked for or are familiar
with and write an IT strategic plan covering the topics
discussed in the course.

IS 344

Assignments and Grading

Assignment

Due Date

Participation and discussions

30%

As assigned

Team Case Studies Reports and

Presentations

15%

2/9, 3/2, 4/6

Mid-Term Exam

25%

03/23

Quiz

5%

4/20

Final Team Project Presentation

and Report

25%

4/27 and 5/4

Any evidence of cheating in any form, including plagiarism, will be dealt with according to the
honor code of NJIT (course failure and suspension or expulsion). Please note: There will be no
warnings or chances with regard to cheating. Any discovered case of cheating will be
immediately passed to the Dean of Students for further investigation.
This is your warning now. Cheating is not worth it - you may not only fail this course, but also be
suspended from NJIT. The full text of the NJIT Honor Code is available for your review at
http://www.njit.edu/academics/honorcode.php

IS 344

Questions ?

12

IS 344

Week 1 Review

Functional Areas of Operation (contd.)

IS 344

14
Figure 1-1 Examples of functional areas of operation and their business functions

IS 344

Business Processes
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 customers
perspective
examples of business processes

15

IS 344

Business Processes (contd.)

Figure 1-2 Sample business processes related to the sale of a personal smartphone

IS 344

Marketing and Sales (contd.)

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

17

IS 344

Supply Chain Management (contd.)

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

18

IS 344

Accounting and Finance (contd.)

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

19

IS 344

Human Resources (contd.)

Figure 1-7 The Human Resources functional area exchanges data with the
Accounting and Finance, Marketing and Sales, and Supply Chain Management
functional areas

20

IS 344

Summary
Basic functional areas:

Marketing and Sales,

Supply Chain Management,
Accounting and Finance,
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
21

IS 344

Summary (contd.)
Accounting and Finance: Financial accounting to provide
summaries of operational data in managerial reports,
controlling accounts, planning and budgeting, and cashflow 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

22

IS 344

Summary (contd.)
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

23

IS 344

Chapter 1 Recap
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 todays globally competitive
24
business environment

IS 344

Discussion Questions

Discussion Question 1
Distinguish between a business function and a
business process.
Describe how a business process cuts across
functional lines in an organization.
How might a manager organize his or her staff in
terms of business processes rather than functional
departments?
What benefits would there be with this type of
organization?
What challenges would it pose?
.

IS 344

IS 344
A business function is a business "activity, such as sales order processing,
production scheduling, cash-flow management, and recruiting personnel. A
business process is a collection of activities that takes one or more kinds of input
and creates an output that is of value to the customer.
A business process occurs when a series of activities are performed in more than one
functional area. Making and selling a product to a customer is a process that
involves sales, production, and accounting activities. The people who work in
each activity must work together to make the sale go smoothly - taking the order,
scheduling production, shipping the product, recording data about production and
sales and the ultimate collection of the customer's payment.

Today, business managers try to think in terms of business processes that integrate
the functional areas, thus promoting efficiency and competitiveness. An
important aspect of this integration is the need to share information between
functional areas, and with business partners. ERP software provides this
capability by means of a single common database.

The better a company can integrate the activities of each functional area, the more
successful it will be in todays highly competitive environment. Integration also
contributes to improvements in communication and workflow. Each areas
information system depends on data from other functional areas.

IS 344

Discussion Question 2
How could a university organize its business
education around business processes rather
than business functions?
What would be the benefits to students?

IS 344

Discussion Question 3
How could a financial institution organize its
business around business processes rather
than business functions?
What would be the benefits to its customers?

IS 344

Joke of the week:

A crow was sitting on a tree, doing nothing all day.
A small rabbit saw the crow, and asked him, "Can I also sit like you and do
nothing all day long?"
The crow answered, "Sure, why not." So the rabbit sat on the ground
below the crow, and rested.
All of a sudden, a fox appeared, jumped on the rabbit and ate it.
MANAGEMENT LESSON?

30

IS 344

Joke of the week:

MANAGEMENT LESSON?
To be sitting and doing nothing, you must be sitting very, very high up.

31

IS 344

Chapter Two:
The Development of
Enterprise Resource
Planning Systems

IS 344

The Evolution of Information Systems

Silos
Information systems configuration used until recently
Companies had unintegrated information systems that
supported only the activities of individual business functional
areas

Current ERP systems evolved as a result of:

Advancement of hardware and software technology
Development of a vision of integrated information systems
Reengineering of companies to shift from a functional focus to
a business process focus

33

IS 344

The Manufacturing Roots of ERP

Manufacturing software developed during the 1960s and
1970s
Evolved from simple inventory-tracking systems to material
requirements planning (MRP) software

Electronic data interchange (EDI)

Direct computer-to-computer exchange of standard business
documents
Allowed companies to handle the purchasing process
electronically

34

IS 344

ERP Software Emerges: SAP and R/3

1972: five former IBM systems analysts in Mannheim,
Germany formed Systemanalyse und
Programmentwicklung (Systems Analysis and Program
Development, or SAP)
SAPs goals:
Develop a standard software product that could be configured to
meet the needs of each company
Data available in real time
Users working on computer screens, rather than with voluminous
printed output

35

IS 344

SAP Begins Developing Software Modules

During their work for German chemical company ICI, Plattner
and Hopp had developed the idea of modular software
development
Software modules: individual programs that can be purchased,
installed, and run separately, but that all extract data from the
common database
1982: SAP released its R/2 mainframe ERP software package
1980s: sales grew rapidly; SAP extended its softwares
capabilities and expanded into international markets
By 1988, SAP had established subsidiaries in numerous foreign
countries
36

IS 344

ERP Modules

Figure 2-5 Modules within the SAP ERP integrated information systems
environment (Courtesy of SAP AG)

37

IS 344

New Directions in ERP (contd.)

PeopleSoft
Founded by David Duffield, a former IBM employee
Today, PeopleSoft, under Oracle, is a popular software choice for
managing human resources and financial activities at universities

Oracle
SAPs biggest competitor
Began in 1977 as Software Development Laboratories (SDL)
Founders: Larry Ellison, Bob Miner, and Ed Oates

SAP ERP
Latest versions of ERP systems by SAP and other companies allow:
All business areas to access the same database
Elimination of redundant data and communications lags
Data to be entered once and then used throughout the organization
38

IS 344

SAP ERP Software Implementation

Not all companies that use SAP use all of the SAP ERP
modules
Companys level of data integration is highest when
it uses one vendor to supply all of its modules
Configuration options allow the company to
customize the modules it has chosen to fit the
companys needs

39

SAP ERP Software Implementation

(contd.)

IS 344

Features of SAP ERP

First software that could deliver real-time ERP integration

Usability by large companies
High cost
Automation of data updates
Applicability of best practices
Best practices: SAPs software designers choose the best, most
efficient ways in which business processes should be handled

40

IS 344

Choosing Consultants and Vendors

One person cannot fully understand a single ERP system
Before choosing a software vendor, most companies:
Study their needs
Hire an external team of software consultants to help choose the
right software vendor(s) and the best approach to implementing
ERP

41

IS 344

The Significance and Benefits of ERP

Software and Systems
More efficient business processes that cost less than
those in unintegrated systems
Easier global integration
Integrates people and data while eliminating the need to
update and repair many separate computer systems
Allows management to manage operations, not just
monitor them
Can dramatically reduce costs and improve operational
efficiency
42

IS 344

How Much Does an ERP System Cost?

Size of the ERP software
Corresponds to the size of the company it serves

Need for new hardware that is capable of running

complex ERP software
Consultants and analysts fees
Time for implementation
Causes disruption of business

Training
Costs both time and money
43

Should Every Business Buy an ERP

Package?

IS 344

Some of a businesss operations, and some segments of

its operations, might not be a good match with the
constraints of ERP
Sometimes, a company is not ready for ERP
ERP implementation difficulties result when management
does not fully understand its current business processes
and cannot make implementation decisions in a timely
manner

44

IS 344

Is ERP Software Inflexible?

Many people claim that ERP systems, especially the
SAP ERP system, are rigid
Options for customization offered by SAP ERP
Numerous configuration options that help businesses
customize the software to fit their needs
Programmers can write specific routines using Advanced
Business Application Programming (ABAP)

Once an ERP system is in place, trying to reconfigure

it while retaining data integrity is expensive and
time-consuming

45

IS 344

What Return Can a Company Expect from

Its ERP Investment?
ERP eliminates redundant efforts and duplicated data;
can generate savings in operations expense
ERP system can help produce goods and services more
quickly
Company that doesnt implement an ERP system might
be forced out of business by competitors that have an
ERP system
Smoothly running ERP system can save a companys
personnel, suppliers, distributors, and customers much
frustration
46

IS 344

How Long Does It Take to See a Return on

an ERP Investment?
Return on investment (ROI): assessment of an
investment projects value
Calculated by dividing the value of the projects benefits by the
projects cost

ERP systems ROI can be difficult to calculate

Peerstone Research study
63 percent of companies that performed the calculation reported
a positive ROI for ERP
Most companies felt that nonfinancial goals were the reason
behind their ERP installations

47

IS 344

Why Do Some Companies Have More

Success with ERP Than Others?
Usually, a bumpy rollout and low ROI are caused by
people problems and misguided expectations, not
computer malfunctions
Executives blindly hoping that new software will cure
fundamental business problems that are not curable by any
software
Executives and IT managers not taking enough time for a proper
analysis during planning and implementation phase
Executives and IT managers skimping on employee education
and training

48

IS 344

Why Do Some Companies Have More

Success with ERP Than Others? (contd.)
Usually, a bumpy rollout and low ROI are caused by
people problems and misguided expectations, not
computer malfunctions (contd.)
Companies not placing ownership or accountability for the
implementation project on the personnel who will operate the
system
Unless a large project such as an ERP installation is promoted
from the top down, it is doomed to fail
ERP implementation brings a tremendous amount of change for
users

For many users, it takes years before they can take

advantage of many of an ERP systems capabilities
Most ERP installations do generate returns
49

IS 344

Summary
Speed and power of computing hardware increased
exponentially, while cost and size decreased
Early client-server architecture provided the conceptual
framework for multiple users sharing common data
Increasingly sophisticated software facilitated
integration, especially in two areas: A/F and
manufacturing resource planning

50

IS 344

Summary (contd.)
Growth of business size, complexity, and competition
made business managers demand more efficient and
competitive information systems
SAP AG produced a complex, modular ERP program
called R/3
Could integrate a companys entire business by using a common
database that linked all operations

SAP R/3, now called SAP ERP, is modular software

offering modules for Sales and Distribution, Materials
Management, Production Planning, Quality Management,
and other areas
51

IS 344

Summary (contd.)
ERP software is expensive to purchase and timeconsuming to implement, and it requires significant
employee trainingbut the payoffs can be spectacular
For some companies, ROI may not be immediate or even
calculable

Experts anticipate that ERPs future focus will be on

managing customer relationships, improving planning
and decision making, and linking operations to the
Internet and other applications through service-oriented
architecture

52

IS 344

Chapter 2 Recap
Identify the factors that led to the development of
Enterprise Resource Planning (ERP) systems
Describe the distinguishing modular characteristics of
ERP software
Discuss the pros and cons of implementing an ERP
system
Summarize ongoing developments in ERP

53

IS 344

Discussion Questions

IS 344

Discussion Question 1
What are the main
characteristics of an ERP system?
What are some newly developed
features of ERP systems?

IS 344

Discussion Question 2
Much has been written in the news media about
ERP systems, both in print and online.
Using library resources or the Internet, report
on one companys positive experience with
implementing an ERP system, and on another
companys disappointing experience.

IS 344

Discussion Question 3
Some of the examples shown in this chapter are from a
traditional ERP system, SAP.
Consider some smaller ERP systems. Look on the
Internet at Business One by SAP, and an additional
smaller system, such as Pronto software or Exact
software.
Compare two of the systems, and list the similarities
between the module-type offerings.
Are there any clear differences between them?

IS 344

Final Project overview

IS 344

Final Team Project

Each Team will prepare an Applied Case Project, consisting of a 1520 page paper and a presentation. The project is the development
of an Information Technology Plan for a small business, a nonprofit organization or a department within a larger organization.

Objective
Create a Computer Systems Information Technology Plan.
Each Team will select a small business, a non-profit organization
or a department within a larger organization to use as the subject
of the project and for which you will design an Information
Technology Plan. In making the selection, choose a subject whose
Information Technology Plan can be completed within the time
constraints of the course..
Once your group has selected the subject of the project, you need
to begin the analysis of the current goals, objectives and
operations of the business in preparation for the design of the
Information Technology Plan.
59

IS 344
Project Outline
The outline should be 2-3 pages and should contain a discussion of the current
operations, goals and objectives of the business being used as the subject of the
project.

Current Status Assessment

Write a 3-5 page Current Status Assessment. The paper should analyze the current
status of the use of information technology within your organization. The paper
should cover the following topics:

A description of the hardware in use within the organization. The description should
include the quantity and types of various hardware devices and who uses them.

A description of the software used within the organization. The description should include
the software products in use from operating systems to applications.

A description of the applications to which information technology is being applied. As far

as possible, an analysis should be made as to the perceived effectiveness of each
application.

An analysis of the information systems organization, including size of staff, skill levels and
primary responsibilities.

Any organizational issues impacting the use of information technology within the
organization.

Remember that the Current Status Assessment will also be incorporated into the
team final written report.
60

IS 344

The report will consist of the following sections:

An overview of the business and its goals and objectives.
An analysis of the ways in which information technology and computing
applications can support the business goals and objectives.
A Current Status Assessment of the information technology environment
including hardware, software, computing applications, information
systems, personnel and organizational structure.
A model of the Future information technology environment required to
achieve the business objectives, including hardware, software,
computing applications, information systems, personnel and
organizational structure.
A prioritized list of specific projects required to implement the
information technology model. Each project will contain information
regarding the project objectives, resource requirements, costs and
benefits, estimated time frames and potential risks.
An implementation plan including support requirements, management
tools and structure required to make the plan a reality.
A bibliography.

61

IS 344

Chapter Three:
Marketing Information
Systems and the Sales
Order Process

IS 344

Objectives
After completing this chapter, you will be able to:
Describe the unintegrated sales processes of the fictitious
Fitter Snacker company
Explain why unintegrated Marketing and Sales information
systems lead to company-wide inefficiency, higher costs, lost
profits, and customer dissatisfaction
Discuss sales and distribution in the SAP ERP system, and
explain how integrated data sharing increases companywide efficiency
Describe how SAP ERP processes a standard sales order
Describe the benefits of customer relationship
management (CRM) software
63

IS 344

Introduction
Fitter Snacker (FS)
Fictitious company that makes healthy snack bars
Does not have an integrated information system

Marketing and Sales (M/S) is the focal point of many of

FSs activities
FSs M/S information systems are not well integrated
with companys other information systems
Company-wide use of transaction data is inefficient

64

IS 344

Overview of Fitter Snacker

Manufactures and sells two types of nutritious snack
bars:
NRG-A: advanced energy
NRG-B: body building proteins

Has organized its sales force into two groups, known as

divisions:
Wholesale Division
Direct Sales Division

The two sales divisions differ in terms of quantities of

orders and pricing terms
Sells snack bars under the Fitter Snacker brand name
Packages the bars in store-brand wrappers for some
chain stores
65

Problems with Fitter Snackers Sales

Process

IS 344

Many of Fitter Snackers sales orders have problems, such

as:

Incorrect pricing
Excessive calls to the customer for information
Delays in processing orders
Missed delivery dates

Reasons for problems:

FS has separate information systems throughout the company for
three functional areas:
Sales order system
Warehouse system
Accounting system

High number of transactions that are handled manually

Information stored in the three systems is not available in real time
66

IS 344

Problems with Fitter Snackers Sales Process

Figure 3-1 The sales process

67

IS 344

Sales Quotations and Orders

Giving a customer a price quotation and then taking
the customers order at FS
Sales call: salesperson either telephones the customer or
visits in person
At the end of sales call, salesperson prepares a handwritten
quotation on a form that generates two copies
Original sheet goes to the customer
Middle copy is first faxed and then mailed to the sales office
Salesperson keeps the bottom copy for his or her records

68

IS 344

Sales Quotations and Orders (contd.)

Giving a customer a price quotation and then taking the
customers order at FS (contd.)
Quotation form has an 800 number that the customer can call to
place an order

Problems can occur with this process

Inefficiencies in the rest of the ordering process
Determining the delivery date
Checking customers credit status
Entering customers order into the current order entry system

69

IS 344

Order Filling
Packing lists and shipping labels
Printed twice a day
Hand-carried to the warehouse
At warehouse, hand-sorted into small orders and large orders

Warehouse
Small-order packing area
Large-order packing area

FS uses a PC database program to manage inventory levels in

the warehouse
FS keeps inventory levels fairly low, and inventory levels
change rapidly during the day
Picker might go to the shelves to pick an order and discover that there
are not enough of the desired type of snack bars to fill the order
To determine what to do in this situation, order picker might have
conversations with warehouse supervisor, production supervisor, and
sales clerks
70

IS 344

Accounting and Invoicing

Invoicing the customer is problematic
Sales clerks send the Accounting department the sales
order data for customer invoices
Accounting department loads the data into PC-based
accounting program
Clerks manually make adjustments for partial shipments
and any other changes
Sometimes, order corrections are delayed and dont
catch up to the invoicing process
Results in late or inaccurate invoices

71

IS 344

Payment and Returns

Problems with procedure for processing payments
If any errors have occurred in the sales process, customer will
receive an incorrect invoice
Many customers dont return a copy of the invoice with their
payment; errors can result

FSs returns processing is flawed

Many customers do not call for the RMA number, or fail to include
it with their returned material
Makes it more difficult for Accounting department to credit the
appropriate account

Poor penmanship on the returned material sheet can create

problems for Accounting

If a customers account has not been properly credited,

customer may receive a dunning letter in error
72

IS 344

Sales and Distribution in ERP

ERP systems can minimize data entry errors and provide
accurate information in real time to all users
ERP systems can track all transactions (such as invoices,
packing lists, RMA numbers, and payments) involved in the
sales order
SAP ERP Sales and Distribution module treats the sales order
process as a cycle of events:

Pre-sales activities
Sales order processing
Inventory sourcing
Delivery
Billing
Payment
73

IS 344

Pre-Sales Activities
Customers can get pricing information about the
companys products:
Through an inquiry or a price quotation

Marketing activities such as tracking customer contacts,

including sales calls, visits, and mailings
Company can maintain data about customers and
generate mailing lists based on specific customer
characteristics

74

IS 344

Sales Order Processing

Sales order processing: series of activities that must take
place to record a sales order
Sales order can start from a quotation or inquiry
generated in the pre-sales step
Information collected from the customer to support the
quotation is immediately included in sales order
Critical steps in sales order processing:
Recording the items to be purchased
Determining the selling price
Recording the order quantities
75

IS 344

Sales Order Processing (contd.)

Users can define various pricing alternatives in the SAP
ERP system
SAP ERP system checks the Accounts Receivable tables
in the SAP ERP database to confirm the customers
available credit
If customer has sufficient credit available
Order is completed

If customer does not have sufficient credit available

SAP ERP system prompts sales personnel to take one of the
possible appropriate actions
76

IS 344

Inventory Sourcing
Available-to-Promise (ATP) check
SAP ERP system checks companys inventory records and
production planning records to see whether:
Requested material is available
Requested material can be delivered on the date the customer desires

Includes expected shipping time

System can recommend an increase in planned

production if a shortfall is expected

77

IS 344

Delivery
Delivery in SAP ERP system
Releasing the documents that the warehouse uses to pick, pack,
and ship orders

Delivery process allows deliveries to be created so that

the warehouse and shipping activities are carried out
efficiently
Once the system has created documents for picking,
packing, and shipping, documents are transferred to
Materials Management module

78

IS 344

Billing
SAP ERP system creates an invoice by copying sales
order data into the invoice document
Accounting can print this document and mail it, fax it, or
transmit it electronically to the customer
Accounting records are updated at this point

79

IS 344

Payment
When the customer sends in a payment, it is
automatically processed by the SAP ERP system
Debits cash and credits (reduces) customers account

Timely recording of this transaction has an effect on the

timeliness and accuracy of any subsequent credit checks
for the customer

80

IS 344

Taking an Order in SAP ERP

Order entry screen in SAP ERPs 4.7 Enterprise system
A unique number is assigned by the company to each
customer in the database
For most data entry fields, SAP ERP system determines
whether an entry is valid
Search screen for customers

81

IS 344

Taking an Order in SAP ERP (contd.)

Figure 3-2 SAP ERP order entry screen

82

IS 344

Taking an Order in SAP ERP (contd.)

Figure 3-3 Data entry fields in the order entry screen

83

IS 344

Taking an Order in SAP ERP (contd.)

Figure 3-4 Some of the sales order document types predefined in SAP ERP

84

IS 344

Taking an Order in SAP ERP (contd.)

Figure 3-5 Search screen for customers

85

IS 344

Taking an Order in SAP ERP (contd.)

Figure 3-6 Result of customer search

86

IS 344

Taking an Order in SAP ERP (contd.)

Figure 3-7 Order screen with complete date

87

IS 344

Taking an Order in SAP ERP (contd.)

Figure 3-8 Order proposals

88

IS 344

Taking an Order in SAP ERP (contd.)

Customer master data
Master data: data that remain fairly stable
Maintained in the central database and available to all SAP ERP
modules

Material master data

Organizational structures
SAP ERP system allows the user to define various ways to group
customers and salespeople
Distribution Channel

89

IS 344

Taking an Order in SAP ERP (contd.)

When a sales order is saved, SAP ERP system assigns a
document number to the sales order transaction
SAP ERP system keeps track of the document numbers
for the sales order
Employees can track status of an order while it is in process or
research it after shipping

Document flow in SAP ERP: linked set of document

numbers related to an order

90

IS 344

Taking an Order in SAP ERP (contd.)

Figure 3-9 The Document Flow tool, which links sales order documents

91

IS 344

Discount Pricing in SAP ERP

When a company installs an ERP system, it can configure
it for a number of pricing strategies
Various kinds of discounts can be allowed
As a safeguard, system can enforce limits on the size of
discounts
Condition technique
Control mechanism developed by SAP to accommodate various
ways that companies offer price discounts

92

IS 344

Discount Pricing in SAP ERP (contd.)

Figure 3-10 Pricing conditions for sales order

93

Integration of Sales and Accounting

(contd.)

Figure 3-11 West Hills Athletic Club price Discount

IS 344

94

Integration of Sales and Accounting

(contd.)
ERP
systems integrate Accounting with all business processes

IS 344

When a sales order is recorded, related accounting data are updated automatically

Figure 3-12 Accounting detail for the West Hills sales order

95

IS 344

Class Discussion Topics

1. What is the difference between data mining and
statistics?
2. How can Fitter use SAP ERP to promote and advertise
their products?
3. Discuss the advantages and disadvantages of having an
integrated information system.
4. Discuss the relationship between customer service and
customer relationship management.
5. Discuss how data mining is being used by corporate
executives to improve strategic planning and to increase
market share.
6. Which ERP modules can Fitter Snack benefit most from ?

IS 344

Customer Relationship Management

Companies without a good connection between their
workers and their customers run the risk of losing
business
Customer relationship management (CRM)
software can help companies streamline their
interactions with customers
On-demand CRM: software and computer equipment
reside with CRM provider

97

IS 344

Core CRM Activities

One-to-one marketing
Sales force automation (SFA)
Sales campaign management
Marketing encyclopedias
Call center automation

98

IS 344

SAPs CRM Software

Examples of tools that provide CRM functionality within
the SAP ERP system
Contact management tool
To make sure that information about sales contacts is available
throughout the organization

Sales activity manager

Supports a strategic and organized approach to sales activity planning
and can help make sure that follow-up activities are accomplished

Employing a separate CRM system that communicates

with the ERP system

99

IS 344

SAPs CRM Software

Figure 3-13 SAP ERP contact manager

100

IS 344

SAPs CRM Software

Figure 3-14 SAP ERP sales activity manager

101

IS 344

SAPs CRM Software (contd.)

SAP ERP system processes business transactions and
provides much of the raw data for CRM
SAPs Business Warehouse: system for reporting and
analysis of transactional data
Advanced Planner and Optimizer (APO): system that
supports efficient planning of the supply chain
SAPs view of CRM is to provide a set of tools to manage
the three basic task areas, or jobs:
Marketing, sales, and service

102

IS 344

SAPs CRM Software (contd.)

Figure 3-15 SAP CRM system landscape

103

IS 344

SAPs CRM Software (contd.)

Four phases of the cultivation of customer relationship:

Prospecting
Acquiring
Servicing
Retaining

Contact Channels
Marketing and Campaign Management
Campaign Execution Activity Management
Campaign Analysis tool
104

IS 344

SAPs CRM Software (contd.)

Figure 3-16 Marketing and campaign planning

105

IS 344

The Benefits of CRM

Lower costs
Higher revenue
Improved strategy and performance measurement

106

IS 344

Summary
Fitter Snackers unintegrated information systems are at
the root of an inefficient and costly sales order process
An ERP system such as SAP ERP treats a sale as a
sequence of related functions
Including: taking orders, setting prices, checking product
availability, checking the customers credit line, arranging for
delivery, billing the customer, and collecting payment
In SAP ERP, all these transactions, or documents, are
electronically linked

107

IS 344

Summary (contd.)
Installing an ERP system means making various
configuration decisions
Configuration decisions reflect managements view of how
transactions should be recorded and later used for decision
making

ERP systems central database contains:

Tables of master data: relatively permanent data about
customers, suppliers, material, and inventory
Transaction data tables: store relatively temporary data such as
sales orders and invoices

108

IS 344

Summary (contd.)
Customer relationship management (CRM) systems
Build on the organizational value that ERP provides
Specifically increase the flexibility of the companys common
database regarding customer service
Various kinds of CRM software are available
Can be installed in-house or on-demand

109

IS 344

Team Case Studies