Concepts in Enterprise Resource Planning   Third Edition Chapter Eight ERP and Electronic Commerce
Objectives <ul><li>After completing this chapter, you will be able to: </li></ul><ul><li>Describe business-to-business e-c...
Introduction <ul><li>Effectively competing in high-volume e-commerce may be impossible without the infrastructure provided...
Electronic Commerce Background <ul><li>Today most companies conduct at least part of their business operations through ele...
Business-to-Business E-Commerce <ul><li>Buying and selling between two companies over the Internet </li></ul><ul><li>Compa...
Business-to-Business E-Commerce (cont’d.) <ul><li>Electronic data interchange (EDI) (cont’d.) </li></ul><ul><ul><li>Benefi...
Business-to-Business E-Commerce (cont’d.) <ul><li>Internet-based procurement </li></ul><ul><ul><li>Use of Internet technol...
Business-to-Business E-Commerce (cont’d.) <ul><li>Internet-based procurement (cont’d.) </li></ul><ul><ul><li>Electronic ma...
Business-to-Business E-Commerce (cont’d.) <ul><li>Internet auctions and reverse auctions </li></ul><ul><ul><li>B2B e-comme...
Business-to-Business E-Commerce (cont’d.) <ul><li>Electronic commerce security </li></ul><ul><ul><li>Security is a major c...
E-Commerce and ERP <ul><li>Each technology complements the other, and each is necessary for success </li></ul><ul><li>Back...
Fitter Snacker and E-Commerce <ul><li>Currently, Fitter Snacker has neither a Web-based ordering system nor an ERP system ...
Using ERP through an Application Service Provider <ul><li>Many companies today outsource some of their operations to an ou...
Application Service Providers <ul><li>Application service provider (ASP) : company that provides management of application...
Concepts in Enterprise Resource Planning, Third Edition Figure 8-1  ERP responsibilities in-house versus with an ASP
Application Service Providers (cont’d.) <ul><li>Advantages of using an ASP </li></ul><ul><ul><li>Affordability </li></ul><...
Application Service Providers (cont’d.) <ul><li>Other considerations </li></ul><ul><ul><li>Companies should carefully scru...
NetWeaver <ul><li>Web services : combination of software tools that lets various programs within an organization communica...
NetWeaver Tools and Capabilities <ul><li>SAP’s NetWeaver: collection of components that support business transactions over...
NetWeaver Tools and Capabilities (cont’d.) <ul><li>Mobile Infrastructure </li></ul><ul><ul><li>Allows users to access and ...
NetWeaver Tools and Capabilities (cont’d.) <ul><li>Master Data Management </li></ul><ul><ul><li>Provides data consistency ...
NetWeaver at Work for Fitter Snacker <ul><li>Amy Sanchez: salesperson, works from home </li></ul><ul><ul><li>She logs on t...
Duet <ul><li>Microsoft and SAP have been working on Duet </li></ul><ul><li>Intended to let companies access SAP data and p...
Duet Challenges <ul><li>Duet brings its own challenges </li></ul><ul><ul><li>Companies must be using a relatively current ...
Duet Architecture Concepts in Enterprise Resource Planning, Third Edition
Accessing ERP Systems over the Internet <ul><li>ERP vendors now offer access to their systems through a Web browser </li><...
XML <ul><li>Extensible Markup Language (XML) </li></ul><ul><ul><li>New programming language of the Internet </li></ul></ul...
XML Example Concepts in Enterprise Resource Planning, Third Edition Figure 8-5  Fitter Snacker document in XML
XML (cont’d.) <ul><li>ERP systems now accept data in XML format </li></ul><ul><ul><li>Using XML, companies can transfer da...
Radio Frequency Identification Technology <ul><li>Radio frequency identification  ( RFID )   technology </li></ul><ul><ul>...
Radio Frequency Identification Technology (cont’d.) <ul><li>Pharmaceutical firms working toward adopting RFID technology <...
Summary <ul><li>E-commerce is transforming the way companies do business </li></ul><ul><li>Business-to-business e-commerce...
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Chapter8_ECommerce.ppt

  1. 1. Concepts in Enterprise Resource Planning Third Edition Chapter Eight ERP and Electronic Commerce
  2. 2. Objectives <ul><li>After completing this chapter, you will be able to: </li></ul><ul><li>Describe business-to-business e-commerce </li></ul><ul><li>Explain the importance of ERP to the success of a company engaged in e-commerce </li></ul><ul><li>Describe the function of an application service provider (ASP) </li></ul><ul><li>Describe the delivery of ERP services through an ASP </li></ul><ul><li>Describe Web services and SAP’s NetWeaver </li></ul><ul><li>Describe the unique components of NetWeaver </li></ul><ul><li>Explain why accessing an ERP system through a Web browser is efficient </li></ul><ul><li>Define XML and its significance to ERP </li></ul><ul><li>Define RFID and its future role in logistics and sales </li></ul>Concepts in Enterprise Resource Planning, Third Edition
  3. 3. Introduction <ul><li>Effectively competing in high-volume e-commerce may be impossible without the infrastructure provided by Enterprise Resource Planning (ERP) </li></ul><ul><li>Companies can integrate ERP systems with the Internet and “rent” ERP software from special-purpose software companies </li></ul><ul><li>NetWeaver: SAP’s Web services platform </li></ul><ul><li>XML is becoming the new markup language of the Internet </li></ul><ul><li>Use of radio frequency identification (RFID) devices in managing movement of goods in the supply chain </li></ul>Concepts in Enterprise Resource Planning, Third Edition
  4. 4. Electronic Commerce Background <ul><li>Today most companies conduct at least part of their business operations through electronic commerce (e-commerce) </li></ul><ul><li>E-commerce: conduct of business over the Internet </li></ul><ul><li>Most of the business growth on the Internet has been in the area of business-to-business (B2B) e-commerce </li></ul><ul><li>Business-to-consumer (B2C) e-commerce </li></ul>Concepts in Enterprise Resource Planning, Third Edition
  5. 5. Business-to-Business E-Commerce <ul><li>Buying and selling between two companies over the Internet </li></ul><ul><li>Companies might be manufacturers, suppliers, wholesalers, or retailers </li></ul><ul><li>Transforming the way companies work with each other </li></ul><ul><li>Electronic Data Interchange (EDI) </li></ul><ul><ul><li>Electronic computer-to-computer transfer of standard business documents </li></ul></ul><ul><ul><li>Been used by companies since the 1960s </li></ul></ul><ul><ul><li>Value-added network (VAN) : intermediary Internet-based network run by an outside EDI service provider </li></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  6. 6. Business-to-Business E-Commerce (cont’d.) <ul><li>Electronic data interchange (EDI) (cont’d.) </li></ul><ul><ul><li>Benefits of EDI: </li></ul></ul><ul><ul><ul><li>Costs of paper, printing, and postage have almost disappeared </li></ul></ul></ul><ul><ul><ul><li>Errors have been minimized </li></ul></ul></ul><ul><ul><ul><li>Ordering is fast and efficient </li></ul></ul></ul><ul><ul><ul><li>Suppliers and buyers are “locked” into business relationships </li></ul></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  7. 7. Business-to-Business E-Commerce (cont’d.) <ul><li>Internet-based procurement </li></ul><ul><ul><li>Use of Internet technologies for procurement activities </li></ul></ul><ul><ul><li>Benefits: </li></ul></ul><ul><ul><ul><li>Less expensive to use the Internet than private EDI networks </li></ul></ul></ul><ul><ul><ul><li>Purchasing costs further reduced as suppliers compete for orders on buyer’s Web site </li></ul></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  8. 8. Business-to-Business E-Commerce (cont’d.) <ul><li>Internet-based procurement (cont’d.) </li></ul><ul><ul><li>Electronic marketplace : gathering place for buyers and sellers on the Internet </li></ul></ul><ul><ul><li>Exchanges : one type of B2B electronic marketplace </li></ul></ul><ul><ul><ul><li>Typically, the focus is on a single industry </li></ul></ul></ul><ul><ul><li>Private exchange </li></ul></ul><ul><ul><ul><li>One type of industry marketplace </li></ul></ul></ul><ul><ul><ul><li>Membership is restricted to select participants </li></ul></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  9. 9. Business-to-Business E-Commerce (cont’d.) <ul><li>Internet auctions and reverse auctions </li></ul><ul><ul><li>B2B e-commerce allows companies to do online bidding through auctions and reverse auctions </li></ul></ul><ul><ul><li>Reverse auctions : one buyer and many sellers </li></ul></ul><ul><ul><li>Internet-based auctions are changing the way in which commodities are purchased </li></ul></ul><ul><ul><ul><li>Internet has replaced the intermediary </li></ul></ul></ul><ul><ul><ul><li>Pricing is open and dynamic </li></ul></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  10. 10. Business-to-Business E-Commerce (cont’d.) <ul><li>Electronic commerce security </li></ul><ul><ul><li>Security is a major concern with e-commerce </li></ul></ul><ul><ul><li>Denial of service (DoS) attacks </li></ul></ul><ul><ul><ul><li>Attackers block access to a Web-based service through a variety of means, including bombarding a site with so many messages that the site cannot handle the volume </li></ul></ul></ul><ul><ul><li>Measures used by companies to protect their networks, Web sites, and privacy of customer data </li></ul></ul><ul><ul><ul><li>Virus-scanning software, encryption, intrusion detection, etc. </li></ul></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  11. 11. E-Commerce and ERP <ul><li>Each technology complements the other, and each is necessary for success </li></ul><ul><li>Back-office processing </li></ul><ul><ul><li>Efficient back-office operation is crucial for any company’s success </li></ul></ul><ul><ul><li>E-commerce often exacerbates problems and reveals weaknesses in current back-office systems </li></ul></ul><ul><li>Integrating Internet front-office operation and ERP back-office operation is fundamental in today’s business environment </li></ul>Concepts in Enterprise Resource Planning, Third Edition
  12. 12. Fitter Snacker and E-Commerce <ul><li>Currently, Fitter Snacker has neither a Web-based ordering system nor an ERP system </li></ul><ul><li>FS executives looking at two IS investment options: </li></ul><ul><ul><li>Implement a Web-based ordering system, or </li></ul></ul><ul><ul><li>Implement an ERP package </li></ul></ul><ul><li>If Web-based ordering system implemented without implementing an ERP package: </li></ul><ul><ul><li>FS’s unintegrated information system would not be able to handle the additional Internet orders </li></ul></ul><ul><li>An attractive Web site does not provide enough benefit on its own for an e-commerce business to stay afloat </li></ul><ul><li>Conventional back-office systems must be in place and operating correctly for the business to flourish </li></ul>Concepts in Enterprise Resource Planning, Third Edition
  13. 13. Using ERP through an Application Service Provider <ul><li>Many companies today outsource some of their operations to an outside service provider </li></ul><ul><li>Outside service provider sometimes called a third party </li></ul><ul><li>Outsourcing can simplify management of ERP systems </li></ul>Concepts in Enterprise Resource Planning, Third Edition
  14. 14. Application Service Providers <ul><li>Application service provider (ASP) : company that provides management of applications for a company over a network </li></ul><ul><ul><li>Network is usually the Internet </li></ul></ul><ul><li>ASP owns the hardware and rights to the software </li></ul><ul><li>ASP employs workers who run outsourced applications </li></ul><ul><li>Users of the system are the company’s employees </li></ul>Concepts in Enterprise Resource Planning, Third Edition
  15. 15. Concepts in Enterprise Resource Planning, Third Edition Figure 8-1 ERP responsibilities in-house versus with an ASP
  16. 16. Application Service Providers (cont’d.) <ul><li>Advantages of using an ASP </li></ul><ul><ul><li>Affordability </li></ul></ul><ul><ul><li>Shorter implementation time </li></ul></ul><ul><ul><li>Expertise </li></ul></ul><ul><li>Disadvantages of using an ASP </li></ul><ul><ul><li>Security </li></ul></ul><ul><ul><li>Bandwidth/response time </li></ul></ul><ul><ul><li>Flexibility </li></ul></ul><ul><ul><li>No frills </li></ul></ul><ul><ul><li>Technical, not business focus </li></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  17. 17. Application Service Providers (cont’d.) <ul><li>Other considerations </li></ul><ul><ul><li>Companies should carefully scrutinize the ASP’s contract before signing it to uncover: </li></ul></ul><ul><ul><ul><li>Hidden costs </li></ul></ul></ul><ul><ul><ul><li>Other potential problems </li></ul></ul></ul><ul><ul><li>SAP is offering an ASP version of its ERP product for midsized companies </li></ul></ul><ul><ul><ul><li>Business ByDesign: delivered to customers over the Web </li></ul></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  18. 18. NetWeaver <ul><li>Web services : combination of software tools that lets various programs within an organization communicate with other applications </li></ul><ul><ul><li>Also known as SOA, or service-oriented architecture </li></ul></ul><ul><li>Benefit of adopting SOA </li></ul><ul><ul><li>Ability to add new applications quickly </li></ul></ul><ul><li>Implementing SOA is not easy </li></ul><ul><li>Return on an SOA investment is often difficult to determine </li></ul>Concepts in Enterprise Resource Planning, Third Edition
  19. 19. NetWeaver Tools and Capabilities <ul><li>SAP’s NetWeaver: collection of components that support business transactions over the Internet </li></ul><ul><ul><li>Modules included: Enterprise Portal, Mobile Infrastructure, Business Intelligence, Master Data Management, and Exchange Infrastructure </li></ul></ul><ul><li>Enterprise Portal </li></ul><ul><ul><li>mySAP.com </li></ul></ul><ul><ul><li>Gives users complete access, or a portal, to all their work on a single screen, using links to all major aspects of their jobs </li></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  20. 20. NetWeaver Tools and Capabilities (cont’d.) <ul><li>Mobile Infrastructure </li></ul><ul><ul><li>Allows users to access and work with data through mobile devices such as PDAs, cell phones, and pagers </li></ul></ul><ul><li>Business Intelligence (BI) </li></ul><ul><ul><li>Incorporates a data warehouse and data mining tools </li></ul></ul><ul><ul><li>Can be delivered in a personalized manner with Enterprise Portal </li></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  21. 21. NetWeaver Tools and Capabilities (cont’d.) <ul><li>Master Data Management </li></ul><ul><ul><li>Provides data consistency within a company’s SAP system </li></ul></ul><ul><li>Exchange Infrastructure </li></ul><ul><ul><li>Allows different applications to share data </li></ul></ul><ul><ul><li>Companies don’t have to write code to enable different applications to transmit data </li></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  22. 22. NetWeaver at Work for Fitter Snacker <ul><li>Amy Sanchez: salesperson, works from home </li></ul><ul><ul><li>She logs on to SAP system with her laptop computer, using the SAP GUI </li></ul></ul><ul><li>Donald Brown: salesperson, deals with distributors </li></ul><ul><ul><li>Tester for new NetWeaver SAP server </li></ul></ul><ul><ul><li>Every day logs on to his Enterprise Portal </li></ul></ul><ul><ul><li>Also uses SAP’s Mobile Infrastructure and Business Intelligence modules </li></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  23. 23. Duet <ul><li>Microsoft and SAP have been working on Duet </li></ul><ul><li>Intended to let companies access SAP data and processes using the familiar Microsoft Office interface </li></ul><ul><li>Goal of Duet </li></ul><ul><ul><li>Expand and simplify adoption of SAP ERP by making workers more efficient </li></ul></ul><ul><li>Duet has numerous advantages </li></ul>Concepts in Enterprise Resource Planning, Third Edition
  24. 24. Duet Challenges <ul><li>Duet brings its own challenges </li></ul><ul><ul><li>Companies must be using a relatively current version of SAP ERP </li></ul></ul><ul><ul><li>Companies must run Microsoft server software </li></ul></ul><ul><ul><li>May require company to use other SAP products </li></ul></ul><ul><li>Growing competition between SAP and Microsoft in the ERP software market </li></ul>Concepts in Enterprise Resource Planning, Third Edition
  25. 25. Duet Architecture Concepts in Enterprise Resource Planning, Third Edition
  26. 26. Accessing ERP Systems over the Internet <ul><li>ERP vendors now offer access to their systems through a Web browser </li></ul><ul><ul><li>Web browsers such as Microsoft Internet Explorer or Netscape Navigator </li></ul></ul><ul><li>Users and systems administrators find it much more efficient to access ERP systems through the browser </li></ul><ul><ul><li>Avoids the time-consuming installation of the standard ERP GUI </li></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  27. 27. XML <ul><li>Extensible Markup Language (XML) </li></ul><ul><ul><li>New programming language of the Internet </li></ul></ul><ul><ul><li>Uses tags that define the data contained within them </li></ul></ul><ul><li>XML-coded data can go directly from a Web page into a database </li></ul><ul><ul><li>Data does not have to pass through middleware or be rekeyed into the system </li></ul></ul><ul><li>Internet pages written in Hypertext Markup Language (HTML) </li></ul><ul><ul><li>HTML specifies only how your information will look when viewed through a browser </li></ul></ul><ul><li>XML users can create their own tags </li></ul><ul><ul><li>Customized tags in the document describe, or define, the data </li></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  28. 28. XML Example Concepts in Enterprise Resource Planning, Third Edition Figure 8-5 Fitter Snacker document in XML
  29. 29. XML (cont’d.) <ul><li>ERP systems now accept data in XML format </li></ul><ul><ul><li>Using XML, companies can transfer data from their Web sites directly into their ERP systems </li></ul></ul><ul><ul><ul><li>Streamlines data entry, reduces errors, and reduces server loads </li></ul></ul></ul><ul><li>XML is very attractive to smaller companies </li></ul><ul><ul><li>Small companies often transfer data over telephone lines or using fax machines </li></ul></ul><ul><ul><li>Using XML makes electronic data transfer much more affordable </li></ul></ul>Concepts in Enterprise Resource Planning, Third Edition
  30. 30. Radio Frequency Identification Technology <ul><li>Radio frequency identification ( RFID ) technology </li></ul><ul><ul><li>Becoming an efficient way of tracking items through a supply chain </li></ul></ul><ul><ul><li>RFID device: small package, or tag, that includes a microprocessor and an antenna and can be attached to products </li></ul></ul><ul><li>RFID technology has become inexpensive enough to be cost-effective </li></ul><ul><li>Wal-Mart is in the process of implementing an RFID system for its supply chain </li></ul>Concepts in Enterprise Resource Planning, Third Edition
  31. 31. Radio Frequency Identification Technology (cont’d.) <ul><li>Pharmaceutical firms working toward adopting RFID technology </li></ul><ul><ul><li>To comply with upcoming FDA regulations that would require track-and-trace technology on all drug packages to prevent counterfeiting </li></ul></ul><ul><li>Procter & Gamble is using RFID technology to collect information about the sales of its products </li></ul><ul><li>SAP’s ERP software is RFID-ready </li></ul><ul><li>Through NetWeaver, SAP can integrate RFID data into both SAP and non-SAP applications </li></ul>Concepts in Enterprise Resource Planning, Third Edition
  32. 32. Summary <ul><li>E-commerce is transforming the way companies do business </li></ul><ul><li>Business-to-business e-commerce is changing the way companies buy and sell goods </li></ul><ul><li>ERP is an essential component for all forms of e-commerce </li></ul><ul><li>Application service providers (ASPs) are allowing companies to use ERP without a large initial investment </li></ul><ul><li>Web services, or service-oriented architecture, offers a combination of software tools that lets various programs within an organization communicate with other applications </li></ul><ul><li>SAP’s Web services platform is NetWeaver </li></ul><ul><li>Users of ERP systems often access those systems through a Web browser </li></ul><ul><li>XML, or Extensible Markup Language, defines data on a Web page </li></ul><ul><li>RFID devices, or radio frequency identification devices, are used in tracking items in transit </li></ul>Concepts in Enterprise Resource Planning, Third Edition

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