1. 1 REVIEW FOR EXAM 3 BUS3500 - Abdou Illia, Fall 2007

2. 2 Information Systems for Business Integration: ERP Systems Part 1

3. 3 Business Integration? Sales Department Logistics Department Production Department Horizontal Integration VerticalVertical IntegrationIntegration Suppliers Customers

4. 4 Systems for Horizontal Integration  Enterprise Resource Planning (ERP) systems integrate all the internal processes through a common information system (or an integrated set of info systems) ERP system Sales Department Logistics Department Production Department Warehousing Marketing Department Accounting Department Process1Process2Process1Process2Process1Process2Process1Process2Process1Process2Process1Process2 Common Database

5. 5 ERP Components (or Modules)  Two types of components Core ERP Components Extended ERP Components  Core ERP Components Traditional components found in most ERP systems They primarily focus on internal operations Common Database Finance & Accounting Manufacturing* * Also called Production & Material Management * Helps from new products development to actual production * Handles demand forecasting, production planning, production scheduling, quality control, etc. Human Resource

6. 6 ERP Components (or Modules)  Extended ERP Components Extra components that might be included They primarily focus on external operations Common Database Customer Relationship Management Supply Chain Management Business Intelligence 1 E-Business 2 1 Provide information that help users in decision-making 1 Collects info used throughout the organization, organize it, and uses analytical tools to help decision-making process 2 Includes e-logistics (managing transportation & storage of goods over the Internet) and e-procurement (B2B purchase & sale of supplies & services over the Internet)

7. 7 ERP Components (or Modules)  ERP mainly used by medium and large businesses Average lifetime cost: $15 Million (2003 surveys) Implementation process: up to 5 years The largest vendors worldwide in 2005 according to Gartner DataquestGartner Dataquest # Vendor Revenue (million $) Market share (%) 1SAP472628.7 2Oracle Applications*167410.2 3The Sage Group12217.4 4Microsoft Dynamics6163.7 5SSA Global Technologies4642.8 * In January 2005, Oracle bought PeopleSoft the 3 rd player until then.

8. 8 Factors in ERP System Success  Active support of upper management  Having the best people on the implementation team  Managing the time line well  User involvement in the planning and implementing ERP systems

9. 9 Summary Questions BookNotes 1)What is the difference between Horizontal integration and Vertical integration? What could be the consequences of a bad horizontal integration? 5,6 2) (a) What kind of information system is typically used by organizations for horizontal integration? 7 3)(a) What are the core modules found in ERP systems?.? 10 4)What does the Manufacturing ERP component allow? Name some of the activities it handles 10 5)Name the major three ERP software vendors 12 6)What are the success factors of ERP implementation? 14 Refers to the slide # in class posted notes

10. 10 Review Questions  Make sure you can answer the following questions about ERP: Chapter 10 Review Questions available in the Notes’ section of the course web site. Quiz 2 (Part 1/2)

11. 11 Information Systems for Business Integration: EDI, SCM, CRM Systems Part 1 (Cont.)

12. 12 Supply Chain Management SCM

13. 13 Supply Chain  Supply Chain includes parties involved in the procurement of product or raw material  Upstream parties  Downstream parties

14. 14 Supply Chain Management SCM  SCM implies the management of information flow between a company and upstream and downstream parties of the supply chain  Which of the following is NOT a potential benefit of SCM? a)It helps avoid shortage of raw material b)It could shorten the time for delivering finished products to distributors c)It could help organizations better forecast their production of goods and services d)It could help organizations better forecast the needs of their distributors e)None of the above

15. 15 SCM Process  Stages of SCM (SC Council’s Reference Model): 1)Planning: develop and implement processes that attempt to forecast demand for products and services  Goal: Balance demand with supply of raw material 2)Sourcing: determine who should supply the items required  Goal: Be supplied on time, within budget 3)Production: make the product 1)Schedule production 2)Ensure raw materials are on hand when needed 4)Product delivery (logistics) 1)Everything from receiving a customer inquiry to invoicing 2)Warehouse management is one very important factor 5)Returns: managing returns of raw materials as well as finished goods

16. 16 EDI: a SCM Technology  Electronic Data Interchange (EDI): A network technology that allows the transfer and processing of business documents (usually orders) between a company and its suppliers Suppliers Company’s Internal processes Sales Department Process1 Process2 Delivery Department Process1 Process2 Production Department Process1 Process2 EDI System Value Added Network (VAN) or Private network connection EDI Sys.

17. 17 EDI: SCM Technology  EDI documents must be formatted according to specific standards ANSI X12 – used in North America EDIFACT – international, but widely used in Europe  Advantages: Eliminates paperwork Reduces errors Speeds supply process  Disadvantages: Provides connection only between two companies Limits freedom of comparing prices.

18. 18 SCM information system  Part of extended ERP components  Could be bought separately Company’s Internal processes Sales Department Process1 Process2 Delivery Department Process1 Process2 Production Department Process1 Process2 SCM System Network connection Suppliers SCM Sys. - Forecast demand - Handle purchase of supply - Manage storage + shipping Three main functions

19. 19 Customer Relationship Management CRM

20. 20 CRM systems  CRM systems are systems that can help manage all aspects of organizations’ relation with their customers.  Which of the following is NOT a potential benefit of CRM systems? a)Provide better customer service b)Make call centers more efficient c)Help sales staff close deals faster d)Simplify marketing and sales processes e)Discover new customers f)None of the above

21. 21 Goals of CRM systems  Goal of CRM is to increase sales and repeat business by learning the customer Determine the customer’s needs and preferences Determine the customer’s satisfaction with service Determine which customers are in the magic 20 percent (or have the potential to become part of it)  Recency, Frequency, Monetary value (RFM) at heart of CRM systems How recently a customer purchased items (Recency) How frequently a customer purchased items (Frequency) How much a customer spends on each purchase (Monetary Value

22. 22 Summary Questions BookNotes 1)Is the information flow between a company and its retailers part of its supply chain? 6 2) What are the potential benefit of SCM systems? 7 3)What are the 5 stages of SCM according to the SC Council’s Reference Model? 8 4)What is EDI? What kind of network connections are usually used in EDI? What is the EDI message standard used in the U.S.? 9 5)Are SCM systems part of ERP systems? Are SCM systems sold as separate system from ERP systems? 11 5)What are the potential benefit of CRM systems? 14 5)What is the main goal of using CRM systems? What is meant by RFM? 15 Refers to the slide # in class posted notes

23. 23 Review Questions  Make sure you can answer the following questions: Quiz 2 (Part 2/2)

24. 24 Managing Security Part 2

25. 25 Best way to prepare  Review the ppt notes or chapter 4 in the book to make sure you can answer the following questions Chapter 4 Review Questions available in the Notes section of course web site Quiz 3 (1/2)

26. 26 Managing the Development and Purchase of IS Part 3

27. 27 Systems Development Methodology?  The process companies go through to develop and maintain an information system  Framework for successful IS development  A System Development Methodology is used For building a new system Or for modifying an existing system  Examples of SDM: System Development Life Cycle ￭ Prototyping Joint Application Development ￭ Rapid Application Development

28. 28 Questions  Which of the following is true about SDM? 1)They provide guidelines for developing IS and maintaining them which includes upgrading and improving them. 2)SDM are needed when a brand new IS has to be developed, but you don’t need to use a SDM when it comes to modifying an existing IS. 3)When a company is engaged in developing an IS, the process involves the company’s employees who would be the future users of the IS, and IS professionals like system analysts and programmers. But it doesn’t involve the company’s management 4)All of the above

29. 29 Traditional Systems Development Life Cycle (SDLC)  Seven phases 1)Planning5) Testing 2)Systems Analysis6) Implementation 3)Systems Design7) Maintenance 4)Development  Typically one phase needs to be completed before beginning the next  Problem in later phase may require return to previous phase Planning Analysis Design Development Testing Implementation Maintenance

30. 30 Question  In SDLC, the 7 phases are typically followed in a sequential order, which means we don’t return to a previous phase in any circumstances  True  False

31. 31 Planning  Feasibility analyses Technical Analysis  Do the technologies exist to develop the system? Economic Analysis  Can the organization afford the system?  Will it provide an adequate Benefit? Operational Analysis (i.e. assessing the human element of the proposed system)  Resistance to change  Organizational politics  System development schedule Is the proposed development time line realistic? Is the programming team available during Programming step?  Planning performed by Project Manager using Search and investigation (e.g. for technical analysis step) Total Cost of Ownership analysis Project Management software Feasibility Analyses System Development Schedule

32. 32 Systems Analysis  Systems analyst works with company to understand the problem fully and to detail the requirements of the proposed system  Step 1: Analyze current system Objectives:  Understand what things are done and how (business processes)  Identify any problems associated w/ current business processes Techniques:  Observe employees at work  Talk to employees (potential users) Analyze current system Define new system requirement

33. 33 Systems Analysis  Step 2: Define new system’s requirements Main Objective:  Specify What need to be done (not how to do it) To be defined:  Input requirements (nature of data, source, etc.)  Processing requirements  Output requirements (Types of reports, content, etc.)  Storage requirements Tools and techniques  Data flow diagrams (DFD)  Start with high level process  Add more levels with increased levels of detail  Computer-Aided Software Engineering (CASE) tools  Software that eases the systems development process Analyze current system Define new system requirements

34. 34 Data Flow Diagrams (DFD) Data flow Process External Entity Data storage Shows data being passed from or to a process Action that transform or manipulate data Something (person, group, department, etc.) outside the system that interact with the system by providing or receiving data Used to store data in the system. Represents a file, a database, etc.

35. 35 DFD Exercise  You should be able to answer Questions 1, 2, and 3 of the Lincoln Pizza’s ordering system DFD exercise. Hardcopies were given in class. You can also get a copy in the Review For Exam 3 web page on the course web site.

36. 36 Systems Design  Using the requirements from Systems Analysis phase to design the new or modified system. Logical systems design  Details the system’s functionality (what it should do?)  Uses Structure charts to create top-down representation of system’s modules  Uses System flowcharts to show relationships between modules Physical systems design  Specifies all of the actual components (hardware, network, etc) used to implement the logical design Design frozen at end of this phase  Scope creep  Feature creep  Performed by system designer or (system analyst in some case)

37. 37 Systems Design tools SALES DATA WEEKLY SALES PROGRAM WEEKLY SALES REPORT PAYROLL PROGRAM PAYCHECKS PAYROLL SUMMARY REPORT PAYROLL EXCEPTION REPORT Module 1 Module 2 System Flowchart: Graphical representation of all programs within the system and how they interrelate Process Pizza Order Order Entry Payment Processing Inventory Management Delivery Structure charts

38. 38 Development  Programming process is usually the most difficult and time consuming in the Development process.  Development performed by programmers, database developers, and network engineers  Programmers use Program Development Cycle 1) Review the input, processing, output, and storage requirements 2) Develop the logic of the programs (using Flowcharts and Pseudo code) 3) Write the programs using code generators & programming languages 4) Test and debug the programs 5) Complete the programs documentation

39. 39 Development tools Program Flowchart: Graphical illustration of the problem-solving logic within a program Pseudocode: English-language statements that describe the processing steps of a program in paragraph form. Programming languages: -Java -C++ -Visual Basic -Etc.

40. 40 Testing  Programmers test modules  Do they return proper outputs?  Do they handle incorrect data appropriately?  Development team do unit testing  i.e. testing how modules work together  System testing (software along with database and network component) Verification: Testing system in simulated environment with simulated data Validation: Testing system in real working environment with real data

41. 41 Implementation  Implementation strategies Direct cutover: Quick change to new system Parallel conversion: Old and new systems used in parallel for a while. Pilot testing: New system installed at only one location or one department Staged conversion: Only one part of the system installed, then another part is installed.  User training

42. 42 Maintenance  Maintenance counts for as much as 80% of the total cost of an information system  Tasks Correct errors found during implementation System enhancements  Incremental upgrades  Addition of major new features

43. 43 Summary Questions BookNotes 1)What is a System Development Methodology? What is it used for? 2) What are the 7 phases of the SDLC methodology? 3)What kind of Feasibility analyses need to be performed during the Planning phase? Why is the system development schedule important? 4)What are the two steps in the Systems Analysis phase? What techniques and tools are used during the Systems Analysis phase? 5)What tools do programmers usually use during the Development phase? 6)What is the difference between the Verification and the Validation tests performed during systems testing?

44. 44 SDLC: Recap StepsKey actorsTools/Techniques 1. PlanningProject ManagerProject Management software, Total Cost Ownership analysis, etc. 2. System AnalysisSystem Analyst, Users.Interviews, observing users at work, DFD 3. System DesignSystem analyst (or system designer) System Flowchart, Structure chart 4. DevelopmentProgrammers, database developers, network engineers Program Flowchart, Pseudo code, programming languages, DBMS 5. TestingDevelopment team, UsersUnit testing, verification, validation 6. ImplementationDevelopment team, UsersDirect cutover, parallel conversion, pilot testing, staged conversion 7. Maintenanceinternal IS staff, external consultant