Information System

&
Basics of ERP

Prof. Sourabh Sharma

 Course Objectives
• Provide an overview of enterprise systems including their business use,
evolution, features, advantages, modules and business applications.
• Develop an understanding of how ERP systems automate business processes
used to run organizations.
• Provide hands-on exposure to work on a real ERP system and develop an
appreciation for SAP software
• Learn how to manage the supply chain of an organization using an ERP
system
• Get an understanding of the architecture of ERP systems.
• Learn the importance of managing change and reengineering while
implementing ERP systems.
• Get an understanding of the strategy behind planning, designing and
implementing an ERP and associated challenges
• Develop an understanding of the complementary technologies of ERP and its
future
• Gain an understanding of the integration potential of ERP
• Prepare students for career opportunities in industry
2
 Evaluation Pattern

• Quiz 20%
• Case 20%
• Assignment 20%
• End Term 40%

3
 What is an Information System?

• Information system is a set of procedures that

collects, process, store and disseminate
information to support decision making.
• From a Business Perspective – An Information
System is an organisational and management
solution, based on information technology, to a
challenge posed by the environment.
• Information Systems are more than Computers….

4
INFORMATION SYSTEMS

ORGANIZATIONS TECHNOLOGY

INFORMATION
SYSTEMS

MANAGEMENT

5
Major Roles of Information Systems

Support of
Strategic
Advantage

Support of
Managerial
Decision Making

Support of
Business Operations

6
June, 2011 7
 Why ERP?

• What are the Problems of Legacy Applications?

• What are some of the problems of Businesses that
are not on ERP?

8
Organizations with
Legacy Systems

9
 Features of Legacy Systems

• Automates running processes

• Normally not driven by organization strategy and
business vision.
• Develop one application at a time. No integration
between applications – just transaction passing.
• Decentralized applications.
• Are relatively inflexible to accommodate changes in
the business environment.

10
 Features of Legacy Systems
….Cont

• Written in language / platform prevalent at the time

of development.
• Up gradation to latest technology is difficult
• Usually not well documented.
• Maintenance is a problem – largely because of
poor documentation and staff attrition.

11
 ERP Overview

• Enterprise Resource Planning (ERP) programs are

software used by companies to manage information
in every area of the business.
• ERP programs help manage company-wide
business processes using a common database and
shared management reporting tools.
• ERP software supports the efficient operation of
business processes by integrating activities
throughout a business.

12
• What is a Business Process?
• Why Integrated Systems needs to understand the
concept of a Business Process.

13
 Business Processes
• A business process is a collection of activities that
takes one or more inputs and creates an output that is
of value to the customer
• The customer may be the traditional external customer
who buys the product or service, or an internal
customer (a colleague in another department)
• The business process view is the customer’s
perspective.
• The customer does not care that different functions
are involved in processing their order, and will not
tolerate mistakes and delays caused by poor
coordination of business functions 14
Process View of Business
Customer Order Process

Accounting

Purchasing

Production

Logistics
Function

Function

Function

Function

Function
Sales

Material Order Process

A process view of business

15
Understanding ERP

16
 Integrated Systems Approach

• Common set of applications

• Usually requires re-engineering business
processes
– Better alignment
• Limited customization
– Easier upgrades
• Overcomes inefficiencies of independent systems
• Integrated data supports multiple business
functions

17
 Reengineering Defined
• “(T)he fundamental rethinking and radical redesign of
business processes to achieve dramatic improvements in
critical, contemporary measures of performance, such as
cost, quality, service, and speed”
– Hammer and Champy, Reengineering the Corporation,
1993
 Enterprise Resource Planning

... synchronization of Company functions...

Purchase

Manufacturing Finance

Sales

19
 Characteristics of an ERP System

• Includes business management software that

enables finance and human resources in a
completely integrated fashion
• Enables high levels of integration across business
functions and units
• Provides for widespread sharing of data from a single
information repository
• Drives extensive business transformation and
change management efforts
• Requires high levels of implementation effort and
support 20
 ERP Implementation Benefits
• Streamlines or eliminates inefficient manual
processes

• Eliminates disparate stand-alone systems

• Provides integrated, enterprise-wide common

tools, processes and systems

• Establishes a backbone structure that can be

leveraged to handle all operational processes
21
 ERP Implementation Benefits
(continued)
• Provides enterprise-wide reporting and
decision support

• Presents opportunity for re-engineering with

industry best practices and templates

• Presents opportunity to lever vendors’ future

investment in enhanced functionality

• Incorporates new functionality and technology

- provides a springboard to e-Business 22
SAP Overview
•Systems Applications & Products
 SAP

• Systemanalyse und Programmentwicklung (SAP)

was formed in Mannheim, Germany, in 1972 by five
former IBM systems analysts
• Systems, Applications, and Products in Data
Processing (SAP)
• Name of the software
– SAP R/2 – Mainframe version
– SAP R/3 – Client/Server version

© SAP AG - University Alliances. All rights reserved. 24

 SAP Portfolio Strength
• World-wide usage
• Designed to satisfy the information needs for all
business sizes (small local to large all international)
– Multi-lingual
– Multi-currency
– Multi-balance (parallel G/L Accounting)
• Designed to satisfy the information needs for all
industries, e.g.
– Automotive
– Banking
– Retail
– Public Sector
– Higher Education and Research etc.
 SAP Architecture

• Client/Server Environment
– Client – hardware/software environment that can make a
request for services for a central repository of resources
– Server – hardware/software combination that can
provide services to a group of clients in a controlled
environment

• Three – Tier Structure

– User Interface
• Graphical User Interface or Web Interface
– Application Server
• One or more, help distribute work load
– Database Server
 SAP R/3 : 3 Tier Architecture
The Presentation Layer
Those SAP R/3 software components that
specialize in interacting with end-users
form the Presentation Layer.

The Application Layer

Those SAP R/3 software components that
specialize in processing business
applications form the Application Layer.

The Database Layer

Those SAP R/3 software components that

specialize in the management , storage and
retrieval of data form the Database Layer

© SAP AG - University Alliances. All rights reserved. 27

08/25/2021
 SAP R/3 : 3 Tier Architecture

Application Layer Database Layer

Presentation Layer
components components components

reside in: reside in: reside in:

Presentation servers: Application servers: Database servers:

Systems capable of Specialized systems Specialized systems
providing a graphical multiple CPUs and with fast and large
interface. vast amounts of RAM. hard drives.
© SAP AG - University Alliances. All rights reserved.
28 08/25/2021
 SAP ECC 6
 SAP for Aerospace & DefenseSAP for <Industry>
 SAP for Automotive
mySAP ERP is a
 Service Management for SAP Packaged solution located in
<Industry> Solutions mySAP Business Suite
 Financial Insights for <Industry>

SAP xApps mySAP Business Suite SAP Smart

Business Solutions
 SAP xApp Resource mySAP PLM
& Program Mgmt  mySAP  SAP
 SAP xApp Product mySAP ERP All-in-One Business
mySAP Analytics mySAP One
Definition Financials
SRM Human Resources CRM
 SAP xApp Mergers &
Corporate Services
Acquisition Operations
 ...
mySAP SCM

SAP NetWeaver  SAP

 SAP Enterprise Portal  SAP Business Intelligence  --- Business
One
 SAP Master Data Mgmt  SAP Exchange Infrastructure  ... Server

© SAP AG - University Alliances. All rights reserved. 29

 Integrated Business Solutions
Software Vendors

• SAP
• Oracle (Peoplesoft and J.D. Edwards)
• Microsoft – Great Plains, Axapta, Solomon
• IBM
• BAAN

© SAP AG - University Alliances. All rights reserved. 30

 Relational Database

• Tables: Defines and links thousands of tables of

information (25,000+)
• Advantages
– Consistent and accurate data
– Common definitions for terms
– Shared, but restricted usage (e.g., profiles)
– Eliminates data redundancy

© SAP AG - University Alliances. All rights reserved. 31

 Example of How SAP Work

• Step 1 : Brazilian retailer orders, via the Internet,

1,000 shoes from International Shoe Co. A sales
rep takes the order, routes it to SAP’s ordering
module, SAP checks the retailer credit, price, etc.
The order is approved.
• Step 2 : Simultaneously SAP’s inventory module
checks the stocks and notifies the rep that half
the order can be filled immediately from stock.
The other half will be manufactured and
delivered in 5 days directly from the factory in
Taiwan.
© SAP AG - University Alliances. All rights reserved. 32
 Example of How SAP Work
• Step 3 : SAP’s manufacturing module schedules
the production in Taiwan and instructs the
warehouse (in China) to ship the shoes to Brazil
and print up an invoice (in Portuguese).
• Step 4 : SAP’s human resources module calculates
labor requirements. Due to a shortage, the
personnel manager in Taiwan is instructed to get
temporary workers.
• Step 5 : SAP’s material planning module notifies the
purchasing manager about a shortage of purple
dye. A purchase order is automatically issued.
© SAP AG - University Alliances. All rights reserved. 33
 Example of How SAP Work

• Step 6 : The customer logs on via the

extranet to the company’s sneakers
division. He can see that 500 shoes were
shipped from the regional warehouse. This
is done with SAP tracing capabilities.
• Step 7 : Based on data from SAP’s
forecasting and financial modules, the CEO
can determine both demand and profitability
per product. The financial module also
converts all foreign money to $U.S.,
whenever needed
© SAP AG - University Alliances. All rights reserved. 34
mySAP ERP Modules

SD FI
Sales and Financial
Distribution Accounting
MM CO
Materials Controlling
PP Mgmt.
Production
SM Planning
ECC6 AM
Fixed Assets
Mgmt. EC
Service Enterprise
Mgmt.
QM Integrated Business PS
Controlling
Quality
Project
Mgmt.
PM Solution WF System
Plant Maintenance Workflow
HR IS
Human Industry
Resources Solutions

© SAP AG - University Alliances. All rights reserved. 35

 SAP Basics

• Instance – each install of the SAP software on

an individual application server

• Configurable – each instance can be

distinctively configured to fit the needs and
desires of the customer (within limits)

• Most of the infrastructure decisions, including

configuration decisions, occur during project
implementation

© SAP AG - University Alliances. All rights reserved. 36

 Configuration

• The process of tailoring SAP software by

selecting specific functionality from a list of those
supported by the software, very much like
setting defaults (e.g., Word, Access)

• DOES NOT involve changes to the underlying

software code

© SAP AG - University Alliances. All rights reserved. 37

 Programming Code Modifications

• Changes to the delivered code

• ABAP/4 – Advanced Business Application

Programming (ABAP)

• This should be done sparingly and carefully as it

can make migration to new versions of the
software much more difficult

© SAP AG - University Alliances. All rights reserved. 38

 ERP Solution Components

© SAP AG - University Alliances. All rights reserved. 39

 SAP ERP Business Modules

• Collections of logically related transactions within

identifiable business functions
– MM (“Buy”)
– PP (“Make”)
– SD (“Sell”)
– FI and CO (“Track”)
– HCM (“People”)
– WM (“Store”)
– EAM (“Maintain”)
– CS (“Service”)
 SAP ERP Core Applications
• Logistics
 Human Capital Management
- Personnel Management
- Benefits
– Sales & Distribution - Payroll
– Materials
Management
– Production Planning
– Plant Maintenance
– Quality Management
• Finance
– Financial Accounting
– Managerial
Accounting
– Asset Management
–
 SAP Basics
• Instance – each install of the SAP software
on an individual application server
• Configurable – each instance can be
distinctively configured to fit the needs and
desires of the customer (within limits)
• Most of the infrastructure decisions,
including configuration decisions, occur
during project implementation
• Each Instance is a Client
• Each Client is an Enterprise

© SAP AG - University Alliances. All rights reserved. 42

 What´s New?

• SAP S/4HANA …

1979
1992
… is the next generation R/2
2004
2015
R/3
Business Suite ERP S/4HA
NA

… is the biggest innovation since

SAP R/3

… connects people, business

networks and devices
 What´s New?

• SAP S/4HANA … • Column Store

In-Memory • In-Memory Processing
Database • Compression
• Parallel Processing

• Hardware independence
Fiori
• Mobile devices
… works with in-
memory OLAP + OLTP •
• Real-time analytics on
current data
Consolidated forecasts
together including actual and
planned cash data

… has a new and

modern design