Course: ISYS6126003-Enterprise System

Effective Period : September 2022

Business Process,
Integrated System and
Enterprise Systems

Session 1-2
Course: ISYS6126003-Enterprise System
Effective Period : September 2022

BRIEF EXPLANATION
 ISYS6126003
Enterprise System
Course Description
Enterprise System course gives knowledge to the
students to learn more details about Enterprise Resource
Planning (ERP), Supply Chain Management (SCM), Customer
Relationship Management (CRM) and their integration in
the Company. The students already know about the concept
and how to manage IS implementation in the company, but
the students have to know how to use information
technology that integrate application for identify the
problems, identify and analyze user requirement, how to
choose the vendor for Information Systems implementation,
how to develop Information Systems in the company, and
able to solve the problems effectively by using Information
Systems.
 ISYS6126003
Enterprise System
Learning Outcome
On successful completion of this course, students will be able to:
LO Remarks

LO1 Describe basic concept of enterprise system for Company. (C2)

LO2 Explain basic concept of system integration. (C2)

LO3 Analyze case study in enterprise systems. (C4)

Evaluate integration application and strategy in implementation

LO4 ERP in company. (C6)

Assess topic/idea of integration enterprise system activities

LO5 (ERP, SCM, CRM) needed by the Company. (C6)
 IMPORTANTS

• This course (Enterprise System) :

– Case Based/Flipped Classroom Learning Course
– Delivery in English
• Students have to learn Materials before enter Video
Conference session with Lecturer
• Group forming in regular class : 4-5 students/group
• Week 11 (Session 21-22) : Final Project Submission
• Week 12 (Session 24) : Final Project Presentation
• Week 13 (Session 25) : Final Project Presentation
 Acknowledgement

These slides have been adapted from:

Accounting Information Systems

14th (2018)
Marshall B. Romney, Paul John Steinbart
Pearson Education Limited, England
ISBN: 978-1-292-22008-6

Chapter 1
 Acknowledgement

These slides have been adapted from:

Essentials of Business Processes and

Information Systems. 1st Edition. (2009)
Simha R. Magal, PhD., Jeffrey Word Wiley.,
ISBN 978-0-470-23059-6.

Chapter 6
 Acknowledgement

These slides have been adapted from:

Enterprise Systems for Management

second edition (2014)
Luvai F. Motiwalla; Jeff Thompson
Pearson Education Limited, England
ISBN: 978-1-29202-348-9

Chapter 2
 Learning Outcome
Student will be able to :
• LO 1: Describe basic concept of enterprise system
for Company.
• LO 2: Explain basic concept of system integration.
 Learning Objectives
After studying this chapter, student will be able to :

• Explain the decisions an organization makes:

 The information needed to make them.
 The major business processes present in most
companies.
• Define end-to-end processes that integrate the fulfillment,
procurement, and production processes.
• Describe the steps in a fully integrated end-to-end
integrated process.
• Explain how enterprise systems support end-to-end
integrated processes.
 System
• A system is a set of two or
more interrelated
components that interact
to achieve a goal.

• System - Two or more

interrelated components
that interact to achieve a
goal, often composed of
subsystems that support
the larger system.
http://www.naesys.com/
system-integration.html#
 Information Needs and
Business Processes
business process - A set of related, coordinated, and
structured activities and tasks, performed by a person, a
computer, or a machine, that help accomplish a specific
organizational goal.
transaction - An agreement between two entities to exchange
goods or services, such as selling inventory in exchange for
cash; any other event that can be measured in economic terms
by an organization.
transaction processing – Process of
capturing transaction data, processing it,
storing it for later use, and producing
information output, such as a managerial
report or a financial statement.
 Information Needs and
Business Processes
revenue cycle - Activities associated with selling goods and
services in exchange for cash or a future promise to receive
cash.
expenditure cycle - Activities associated with purchasing
inventory for resale or raw materials in exchange for cash or a
future promise to pay cash.
production or conversion cycle - Activities associated with
using labor, raw materials, and equipment to produce
finished goods.
human resources/payroll cycle - Activities associated with
hiring, training, compensating, evaluating, promoting, and
terminating employees.
financing cycle - Activities associated with raising
money by selling shares in the company to
investors and borrowing money as well as paying
dividends and interest.
Interactions Between AIS and
Internal and External Parties
INTEGRATED
PROCESS
EXECUTION
 INTEGRATED PROCESS
EXECUTION

Integrated Process Execution

• The Fulfillment Process: Initial Steps
• Review Inventory of Finished Goods
• The Production Process: Initial Steps
• Review Inventory of Raw Materials
• The Procurement Process
• The Production Process Resumed
• The Fulfillment Process Resumed
 INTEGRATED PROCESS
EXECUTION
The Fulfillment Process: Initial Steps
The integrated process begins with the first
steps of the fulfillment process.
• A customer submits an inquiry;
• the company responds with a quotation;
• the customer then sends a purchase order.

we now have an additional step in our

integrated process, namely, a decision point
to determine whether the warehouse has
sufficient finished goods to fulfill the sales
order.
 INTEGRATED PROCESS
EXECUTION
The Fulfillment Process: Initial Steps
 INTEGRATED PROCESS
EXECUTION
Review Inventory of Finished Goods

In a manual environment, someone would physically check

the warehouse to determine if there were a sufficient
number of finished goods. When using an Enterprise System,
however, there are several ways to determine inventory
status. The simplest method is to retrieve an inventory report
from the Enterprise System. A third mechanism is to request a
stock requirements list.
 INTEGRATED PROCESS
EXECUTION
The Production Process: Initial Steps
Because the desired number of products is not available,
company must produce them to fulfill the sales order.
The production process begins with a request for production in
the form of a planned order.
A planned order can be created by anyone in the organization
who wishes to initiate the production process.
Planned orders are then reviewed by the production controller
and, if appropriate, production is authorized via a production
order.
The next step is to issue raw materials to
the production order. we must first verify
their availability. Therefore, a decision
point is needed to verify that company
has sufficient raw materials in house to
complete the production order.
 INTEGRATED PROCESS
EXECUTION
Review Inventory of Raw Materials
As with finished goods, several methods are available to
assess the inventory of raw materials. In the procurement
process, The warehouse staff physically observes that the
inventory of raw materials is low, and he initiates the
procurement process.
In the warehouse, The warehouse staff logs into the
Enterprise System and retrieves an inventory report of all
the materials needed to manufacture the products.
Alternatively, he retrieves a stock requirements list for these
materials.
INTEGRATED PROCESS
EXECUTION
Review Inventory of Raw Materials
 INTEGRATED PROCESS
EXECUTION
The Procurement Process

The purchase requisition is created.

A purchase order is created and sent to a suitable vendor,
goods are received into inventory,
an invoice is received, and payment is made.

Once the shipment from the

vendor is received into the
warehouse, an inventory
report will reveal that raw
materials are available, and
the production process can be
resumed.
 INTEGRATED PROCESS
EXECUTION
The Production Process Resumed
The production staff responsibility to check inventory
periodically (perhaps each morning). When he observes that a
new shipment has been received, he returns to the warehouse
to obtain the needed materials. Once he does this, the
production process continues until the finished goods are
received in the warehouse.
Alternatively, warehouse staff can periodically
check inventory and notify production staff
that he can now access the raw materials he
needs to continue the production process.
Finally, in highly automated processes, the
Enterprise System can be configured to notify
the appropriate persons when the needed
materials are available.
 INTEGRATED PROCESS
EXECUTION
The Fulfillment Process Resumed
Once the production process has been completed and the
products are in finished goods inventory, the integrated
process returns to the decision point labeled ‘‘sufficient
finished goods?’’ At this point, the fulfillment process can
continue because there is now a sufficient inventory of
completed products to fulfill the customer order.
 ADDITIONAL
INTRACOMPANY PROCESSES
Human Capital Management
The hire-to-retire process contain very detailed sub processes,
such as recruitment, on-boarding (transitioning new employees
into the company), career planning, performance management,
and off-boarding (transitioning employees out of the company).
 ADDITIONAL
INTRACOMPANY PROCESSES
Asset Management
The company must acquire, maintain, and eventually dispose
of assets such as machinery, computers, office furniture, and
transportation equipment. Asset management includes
activities related to procuring assets, maintaining and
repairing assets, replacing assets, accounting for the
depreciation of assets, and eventually disposing of, replacing,
or retiring assets.
 EXTENDED (INTERCOMPANY)
PROCESSES

• Supply Chain Management (SCM)

• Supplier Relationship Management (SRM)
• Product Life Cycle Management (PLM)
• Customer Relationship Management (CRM)
 EXTENDED (INTERCOMPANY)
PROCESSES

Supply Chain Management (SCM)

Supplier Relationship Management (SRM)

 EXTENDED (INTERCOMPANY)
PROCESSES

Product Life Cycle Management (PLM)

Customer Relationship Management (CRM)

 Review
INTEGRATED PROCESS EXECUTION
1. Receive a customer inquiry
2. Create a quotation
3. Receive a customer purchase order
4. Create a sales order
5. Review the inventory of finished goods
6. Create a planned order
7. Convert the planned order to a production order
8. Review the inventory of raw materials
9. Create a purchase requisition for a number of raw
materials
10. Convert the requisition to a purchase order
11. Receive goods from the vendor
12. Enter a vendor invoice into the system
13. Record a payment to the vendor
14. Review the inventory of raw materials (return to
step 8, but this time follow a different path in the
process)
15. Issue materials to the production order
16. Confirm the production of the finished goods
17. Move the finished materials to inventory
18. Review the inventory of finished goods (return to
step 5, but this time follow a different path in the
process)
19. Prepare the shipment (pick and pack)
20. Send the shipment (post goods issue)
21. Create a customer invoice
22. Receive a customer payment
 Learning Objectives

After studying this chapter, student will be able to :

• Understand the impact of organizational structure on
information systems.
• Find out about the types of functional silos in
organizations.
• Learn about the evolution of information systems
technology generations and architectures and its
influence on silo environment.
• Know what systems integration is and why it is important
for organizations.
• Understand the role of Enterprise Resource Planning
(ERP) systems in systems integration.
 Preview

• Systems integration means that you allow a

heterogeneous (hodgepodge) IS to communicate
or integrate and share information (or data)
seamlessly with one another.
• ERP systems are a major kind of enterprise
information system allowing organizations to
integrate different systems into one organization-
wide application with an integrated database
management system.
 Information Silos and
Systems Integration
• Over time, Information Systems create a hodgepodge of
independent nonintegrated systems ultimately creating
bottlenecks and interfering with productivity.

http://csbapp.uncw.edu/mis213/10/10-3.html
 Information Silos and
Systems Integration
• Organizations need to be agile and flexible and will require
their information systems to have integrated data,
applications, and resources from across the organization.
• To compete effectively,
organizations have to be
customer focused.
 This requires cross-
functional integration
among the accounting,
marketing and other
departments of the
organization.
https://e-ngenium.blogspot.com/2011/11/historia-de-los-sistemas-erp.html
 Enterprise Resource
Planning (ERP) Systems
WHAT IS AN ERP SYSTEM?
Enterprise Resource Planning Systems
are the first generation of enterprise
systems meant to integrate data and
support all the major functions of
organizations.
ERP systems integrate various
functional aspects of the organization
as well as systems within the
organization of its partners and
suppliers.
http://blog.aicpa.org/2018/01/5-things-i-wish-i-knew-when-selecting-an-erp-
The goal of an ERP system is to make system.html#sthash.NgFMiLve.dpbs

the information flow dynamic and

immediate, therefore, increasing its
usefulness and value.
 Enterprise Resource
Planning (ERP) Systems
Figure 1-2
• Another goal of ERP is to integrate Integrated Systems ERP
departments and functions across
an organization into a single
infrastructure that serves the needs
of each department.
• ERP systems replace an assortment
of systems that typically existed in
organizations. (Accounting, HR,
Materials Planning, Transaction
Processing, etc.).
• ERP solves the critical problem of
integrating information from
different sources and makes it
available in real-time.
 Functional Silos

• Functional silos categorize an organization’s tasks and

activities into groups to improve efficiency and
responsibility of work in the organization. They are
generally represented as such departments as accounting
or HR, each having its own goals and responsibilities.
• As organizations grow in size and complexity, they are
divided into horizontal functions and vertical layers.
 Horizontal grouping is called functional divisions.
 Vertical grouping of management functions is called
management hierarchy.
• Silos are basically compartmentalized operating units
isolated from their environment.
 Functional Silos

Horizontal Silos
• The POSDCORB (Planning, Organizing, Staffing, Directing,
Coordinating, Reporting and Budgeting) categorization by Luther
Gulick led to a set of formal organization functions such as control,
management, supervision, and administration starting in late 1930s.
• Classification of organizations into departments like Accounting and
Human Resources, reflects the breaking of complex tasks into smaller
manageable tasks that could be assigned to a group of people who
could then be held responsible.

Figure 2-1 Functional Model of Organization (POSDCORB)

 Functional Silos

Vertical Silos
• Organizations also divided roles in
hierarchical layers from strategic planning
to management control and operation
control.
• CEOs and Presidents plan long-term
strategy, midlevel management focuses
on tactical issues and on the execution of
organizational policy whereas the lower-
level management task is to focus on the
day-to-day operations of the company.
• As organizations get big and complex,
they tend to break functions into smaller
Figure 2-2 Hierarchical Model of Organization
units and assign staff the responsibility for
these activities allowing them to manage
complexity as well as specialize in
activities that enhance productivity and
efficiency.
 Business Process and Silos

• The problem of functional silos gave birth to business process re-

engineering (BPR).
• The cross-functional business process can involve people and resources
from various functional departments working together, sharing
information at any level of the organization.
• The cross-functional organizational structure breaks the functional silos
by opening up the informational flows from one department to another.

FIGURE 3 Matrix Structure of Organization https://www.pinterest.ca/pin/371265563011055535/

 Systems Integration

Logical
• Develop information systems that allow organizations to share data
with all of its stakeholders based on need and authorization.
• Management needs to change organizational structures,
processes, and employee roles and responsibilities.

Physical
• Provide seamless connectivity between heterogeneous systems.
• Business process reengineering involves changing the mindset of
the employees in the organization, encouraging and enabling them
to do their tasks in a new way.
 Steps in Integrating Systems
Step 1 Resource categorization Instituting IT support for an integrated systems
environment is necessary to avoid support and
maintenance problems with the integrated system.
Step 2 Compliance and Develop a single sign-on policy because all employees
standards and external partners will need access to an integrated
system from anywhere, anytime.
Step 3 Legacy systems support Develop a policy in support of older legacy applications.
Step 4 Middleware tools Middleware tools are essential for integration in the
short term if existing applications must be used by the
organization.
Step 5 Authentication and Single sign-on policy for application and data access
authorization because all employees and external partners will need
policies access to an integrated system from anywhere,
anytime.
Step 6 Centralized IT services The IT staff needs to be able to support all applications
and support and platforms with a centralized IT help desk support.
Step 7 Back-up, recovery, and A good back-up and recovery system is essential if
security there is a system failure or a major disaster.
Step 8 Hardware and software Develop organization standards and policy on
standardization acquisition of new hardware and software which is
aligned with organization IT strategy.
 Benefits and Limitations
of Systems Integration
Benefits Limitations
Increased Revenue and Growth High Initial Set-up Costs
Leveling the Competitive Power and Interdepartmental
Environment Conflicts (due to the sharing of
information)
Enhanced Information Visibility Long-term and Intangible ROI
(Usually several years)
Increased Standardization Creativity Limitations (Restricts
Creativity and Independence)
 ERP and Systems Integration

• Enterprise Resource Planning (ERP) systems are

integrated, multi-module application software packages
designed to serve and support several business
functions across an organization.
• ERP systems are typically commercial software packages
that facilitate collection and integration of information
related to various areas of an organization.
• ERP systems enable the organization to standardize and
improve its business processes to implement best
practices for its industry.
 ERP’s Role in
Logical Integration

• ERP systems require organizations to focus on business

process rather than on functions.
• ERP systems come with built-in processes for a wide
variety of common business functions.
• An ERP system implements best practices via specific
built-in steps for processing a customer order in terms of:
– order entry.
– routing through departments.
– communication of output to various parties.
 ERP’s Role in
Physical Integration

• Before installing the ERP system, an organization may

have to upgrade or install middleware or get rid of their
legacy system’s hardware and software.
• Integration is also required at the Data level, Client
level, and at the Application level.
• A good ERP implementation improves operational
efficiency with better business processes that focuses
on organizational goals rather than on individual
departmental goals.
• Improved efficiency with a paperless flow and
electronic data interchange (EDI) or business-to-
business (B2B) commerce environment with partners.
 Implications for Management

• Silos do not work.

– Most organizations lose out in the long-term when information is not
shared in real time across the functional boundaries within the company.
• System integration has many hidden benefits.
– Allows decision making to be cascaded to all departments
– Allows employees at lower-levels to make better decisions while
interacting with clients or partners.
• System integration has many challenges.
– Replacing old hardware and software
– Working with IT consultants
– Human challenges, such as impact on IT staff, department heads losing
control of data, and rumors of layoffs
• Systems integration raises many new ethical issues.
– Possibility of some employees exploiting information for personal
advantage and illegal access of information.
• Remedies can consist of:
– Develop policies on ethical usage of information.
– Install proper security software and hardware (like firewalls).
– Allocate resources for training and education on accessing information.
 Summary

• Functional silos categorize an organization’s tasks and activities into

groups to improve efficiency and responsibility of work in the
organization.
• Silos can improve productivity, but they often lead employees to
achieve departmental goals rather than overall organizational goals.
• IS over the years have been divided horizontally by functions and
vertically by hierarchical levels.
• IS architecture has evolved from centralized mainframe architecture to
personal computers with distributed or client–server architecture.
• In order for systems integration to be successful, organizations have to
focus both on the human or logical level and on the physical or
systems level.
• ERP systems thus make the process of systems integration easier, but
they are expensive and often require organizations to start from
scratch.
• System integration involves the whole organization, requiring top-
management support and resources for a long-term period.
Management must be ready to face the human and ethical challenges
in a systems integration project.
Continued to session 3

Thank you