Copyright © 2016 Curt Hill Enterprise Systems Doing the routine work

Introduction There are a large number of tasks that need to be done by any enterprise Most of these are very well understood –Common enough that best practices exist These may be internal or external These are core business processes Copyright © 2016 Curt Hill

Sample Processes Order-to-Cash –Process of selling goods or services and collecting revenue Procure-to-Pay –Process of ordering goods or services and paying for them Make-to-Stock/Make-to-Order –Process of manufacturing goods, either based on forecasts or based on orders Copyright © 2016 Curt Hill

Common Tasks The manufacture or redistribution of materials may be unlike anything else Yet certain things are quite universal In Order-to-Cash we need to: –Market the product –Manage a sales force –Support items after the sale –Account for the income –Finance the production or distribution These common things are well understood Copyright © 2016 Curt Hill

Well Understood A task that is well understood may be automated in some way This automation is not necessarily unique to a particular enterprise –Therefore a market for such software exists The enterprise may either develop the software itself of purchase it Purchase software may range from highly customizable to one size fits all Copyright © 2016 Curt Hill

Supply Chain Very few companies produce everything they need and then sell it directly to the consumer Usually we see a supply chain Businesses buy something and then use it in the manufacture of their product This supply chain may be long Copyright © 2016 Curt Hill

Example A mining company produces ore –They sell it to a metals company The metals company refines it –They produce iron sheets and rods A milling company buys rods and sheets –They produce nuts and bolts The car company buys the nuts and bolts –They produce cars The dealer buys the cars and sells to consumer Copyright © 2016 Curt Hill

Value Chain Each of the previous businesses took something and changed it –They added value to what they started with –Then they sold it The supply chain is also known as a value chain Copyright © 2016 Curt Hill

Value Chain Activities Copyright © 2016 Curt Hill

Chaining Each of the businesses on the supply chain have all or most of these activities Information flows between companies for efficient operation of the value chain Automation of these information flows tends to make for a more efficient process Copyright © 2016 Curt Hill

Evolution One of my favorite sayings: –If it is worth doing, it is worth doing wrong until you find out how to do it right This exemplifies the process of change in enterprise systems We start out doing the best we can Later we realize there is a better way, so we adopt it What we end with may not have been possible at the beginning Copyright © 2016 Curt Hill

In The Beginning At the dawn of data processing –Computers were slow –Hardware vendors sold an OS –Little else came with the machine The companies that could afford computers developed their own systems These directly replaced a manual system They did it the way the company did it – which may have been unique Copyright © 2016 Curt Hill

Standalone Systems The original machines were slow so typically a program ran alone These were standalone systems The data was not obtained from other systems and results were reports –Not data for other programs Sometimes referred to as silos –No interconnectedness Copyright © 2016 Curt Hill

The Rise of Venders As machines and software reduces in price the number of enterprises that can afford systems greatly increase The software vendors become important An accounting package or accounts receivable package could now be purchased rather than developed in- house Copyright © 2016 Curt Hill

Generalization The software vendors must generalize the software It must be equally usable in many different enterprises The vendors will now advertise that their products conform to best practices The original versions could not be modified –This limited the companies that could purchase, so easy customization was introduced Copyright © 2016 Curt Hill

Scope These systems were either internally or externally focused The internally focused typically had all their inputs generated by the company –Similarly outputs were consumed internally –Payroll is typical Externally focused had to consider external entities as well –Generating shipping invoices Copyright © 2016 Curt Hill

The Problems Sharing of data between systems Data duplication Data inconsistency Applications that don’t talk to one another Limited or lack of integrated information Isolated decisions lead to overall inefficiencies Increased expenses Copyright © 2016 Curt Hill

The End Result The previous problems led to the Enterprise Resource Planning (ERP) systems A set of integrated business applications, or modules which carry out common business functions Usually built around a relational database The Y2K problem and the adoption of the Euro convinced many businesses Copyright © 2016 Curt Hill

Finally Data processing has a industry dates back to the 1960s It has changed greatly in this time –More enterprises have been able to utilize –The software is now purchased rather than developed internally –Gives a better Return On Investment The ERP will be considered in a separate presentation Copyright © 2016 Curt Hill