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Chapter 2 enterprise system is an essential or shall we

(Enterprise Systems) say a vital part of a value chain.

 Describe the key features of an enterprise  Describe the problems caused by lack of
system information’s system integration.

1. Enterprise systems make possible the  If a company would have disaggregated


coordinated operation of the organization’s information processes if would have to take
functional areas and provide a central an employee, let’s say for example a customer
information resource for the organization. sales representative to compile up
2. Enterprise systems can reduce the risk that information from various sources (such as
unauthorized purchases will be made. contacting warehouse, availability of the item,
3. Organizations install enterprise systems to or if it’s not available, when would it be
differentiate themselves from their manufactured, the price of the item, the credit
competitors. (e.g. Conduct business in a limit of the customer and etc.) while actually
timelier and less costly manner) still talking to the phone on the customer. Of
course it would take hours to come up with
 Describe the key features of an ERP system all the information needed because it is not
compiled up into one source. It surely would
1. ERP systems are software packages that can not be a good customer service to keep the
be used for the core systems necessary to customer waiting on the phone.
support the enterprise systems.
2. If enterprise systems are the general  Describe the four ways that an enterprise
phenomenon then ERP systems are the system supports the functioning of an
specific instance of the phenomenon. organizations process.
3. ERP products are designed to offer
integration of virtually all of an organization’s 1. It facilitates the functioning of the
major business functions. organizations operations as business
events occur by, for example,
 What is a value chain? providing data as required to
complete the event, applying business
 Value Chain – a chain of activities performed rules to ensure that the event is
by the organization to transform inputs into handled properly, and comuunicating
outputs valued by the customer. Value is the need for action to various
created by performing the activities at lower business units.
costs and by enhancing differentiation of its 2. The information system retains
products or services. Differentiation is records about business events that
created through production of superior have occurred.
quality, with innovative products and 3. The information system stores data
services, and by responsiveness to customer that is useful for decision making.
requirements for such features as product 4. An enterprise system provides
design and customization, and quality of coordination of the organizations
service during and after the completion of a processes through sharing of data
sale. across the business process.

 What is the relationship of the organizational  Explain why it is important to capture the
value chain and an enterprise system? who, what, where, and when in describing
business events.
 As previously discussed, one of the value
provided by an enterprise system is the  It is important because once the details of the
coordination of value activities in the value 4 W’s are collected and recorded, the data can
chain. The system performs this coordination be aggregated and summarized in any
by sharing data across business processes. manner that a given user chooses.
From that said, we can conclude that an Aggregations and summarizations are
temporary and for the users application only,
but the event data remain available to other  Describe the 6 steps in the order-to-cash
users in their original form. For routine process.
applications such as the generation of
accounting reports, programmed procedures
can be developed to generate such reports
automatically.

 Describe the four modules of the SAP R/3


system.

1. Sales and Distribution – contains the


functions related to the sale of goods to
customers and includes recording a customer
order, shipping goods to the customers, and
billing the customer. The three major steps in
the SD process are order entry, shipment, and
billing.
a. Order entry – might start with the receiving
and recording an inquiry from a customer
and preparing and recording a sales
acquisition. So and so on.
b. Shipment – includes scheduling the shipment,
picking the goods for shipment, and recording
the shipment.
c. Billing – creates invoices for all shipments
that are ready to be billed. The billing process
may be automatically triggered by each
shipment or may be executed periodically by
an action taken by a billing clerk.  Describe the 6 process in the purchase-to-pay
2. Materials Management – contains the process
functions related to the acquisition of goods
from vendors and management of the goods
while they are in stock. The module includes
preparing and recording a purchase order,
receiving the goods from the vendor, and
recording the vendors invoice.
3. Financial Accounting – plays a central role in
the SAP R/3 system. Business events from
other module, such as SD and <<, are
incorporated by the FI module into the
general ledger accounts and included in the
external account statements, the balance
sheet, profit and loss statement, and
statement of cash flows.
4. Controlling and Profitability Analysis –
handles the accounting, including cost center
accounting, profitability analysis for sales,
activity-based accounting, and budgeting. For
example, the CO module can produce internal
profit and loss statements for portions of an
organizations business.
5. Human Resources – includes functions
related to the recruitment, management, and
administration or personnel, payroll
processing, and personnel training and travel.
 List the advantages and disadvantages of an
enterprise system.