Marianne Bradford, Ph.D Professor Poole College of Management North Carolina State University Raleigh, NC Copyright 2015 CDC CISA CISM CGEIT CRISC Consona Epicor Exact Expandable Fujitsu IBM Infor ISACA LoadRunner MicroStrategy NetSuite Oracle QuickScore SAP SE SAP Business All-in-One Salesforce SAS SugarCRM SYSPRO Tableau vi Credits Figure 12-2 Copyright © 2012 SAS Institute Inc All rights reser ved Reproduced with per mission of SAS Institute Inc., Cary, NC, USA Figure 12-3 Copyright © 2007 SAS Institute Inc All rights reser ved Reproduced with per mission of SAS Institute Inc., Cary, NC, USA Figure 12-4 Copyright © 2014 SAS Institute Inc All rights reser ved Reproduced with per mission of SAS Institute Inc., Cary, NC, USA This publication contains references to the products of SAP SE SAP and SAP All-in-One mentioned herein are trademarks of SAP SE in Ger many and other countries SAP SE is neither the author nor the publisher of this publication and is not responsible for its content SAP Group shall not be liable for errors or omissions with respect to the materials The only warranties for SAP Group products and ser vices are those that are set forth in the express warranty statements accompanying such products and ser vices, if any Nothing herein should be construed as constituting an additional warranty Clip art used with permission from Microsoft Copyright 2015 Dr Marianne Bradford ISBN: 978-1-312-66598-9 In memory of my brother Hudson who never got to write his own book You were so money Contents Preface xv Acknowledgements xvi About the Author xvii Chapter 1: Introduction to Enterprise Resource Planning Systems Objectives Introduction ERP Essentials Who Needs Knowledge of ERP Systems? When Does a Company Need an ERP System? Advantages of ERP Systems Disadvantages of ERP Systems ERP Evolution and Trends ERP Market 11 Summary 12 Keywords 13 Quick Review 13 Questions to Consider 14 Chapter 2: ERP Technology 17 Objectives 17 Introduction 17 Evolution of ERP Architecture 18 Relational Database Management Systems 21 Database Nor malization 27 Structured Query Language (SQL) 29 ERP Data 30 Configuration 31 Customization 32 Best of Breed 32 System Landscape 33 Cloud Computing 34 Mobility 36 Summary 37 Keywords 38 Quick Review 39 Questions to Consider 39 Index A Account, 151 Accounting cycle, 134 Accounts payable (AP), 136 Accounts payable (AP) subsidiary ledger, 136 Accounts receivable (AR), 135 Accounts receivable (AR) subsidiary ledger, 135 Active tag (RFID), 190 Activity, 66, 139 Activity-based costing (ABC), 139 A la carte approach (use of consultants), 116 Alert, 241 Application controls, 4 “As is” process, 47 “As is” process map, 65 Asset Management module, 142-144, 188 Association, 163 Associative entity, 25 See junction table Audit trail, 218 Authentication, 224-225 Authority ambiguity, 46 Authorization, 220-221 Authorization testing, 111 Availability, 226 Available to promise (ATP), 151 B Back-office systems, 3, 156 Balanced Scorecard, 250 Balance sheet, 133 Balanced approach (use of consultants), 116 Bench strength, 205 Benchmarking, 55 Benefits Administration module, 202 Best of breed, 32 Best practice, 6 Big bang implementation strategy, 118 See direct cutover strategy Big data, 244 Bill of lading, 152 Bill of material (BOM), 138, 184 Bin, 180 Biometric software, 225 Blocked stock, 187 Bolt-on, 108 Bottleneck, 46 Business analytics (BA), 238 Business case, 84 Business case rationales, 84 Business intelligence (BI), 239 Business logic, 19 Business metrics, 85 Business perfor mance management (BPM), 254 Business process, 2, 44, Business process improvement (BPI), 52 See business process reengineering Business process management (BPM), 54 Business process reengineering (BPR), 47 See business process improvement C Capacity plan, 185 Cardinality, 23 Career and Talent Management module, 205 Cash management, 136 Cash-to-cash cycle, 175 Casual user licensing, 87 Catalog management, 179 Center of Excellence (COE), 123 Certified Infor mation Security Manager (CISM), 230 Certified Infor mation System Auditor (CISA), 230 Certified in Risk and Infor mation Systems Control (CRISC), 231 Certified in the Governance of Enterprise IT (CGEIT), 231 Change agents, 8, 113 Change management, 8, 112 Change requests, 84 Chart of accounts (COA), 133 Chief Knowledge Officer (CKO), 166 Clean slate reengineering, 47 See technology enabled reengineering Client, 18 Client-ser ver computing, 18 Cloud computing, 34 Compensation Management module, 203 Composite key, 25 Concatenated key, 25 Concurrent user licensing, 87 Conference room pilot (CRP), 108 Configuration, 31, 105 Configuration data, 30 Configuration tables, 105 Constrained reengineering, 49 See technology- enabled reengineering Consultants, 115-117 Contact, 151 Contract management, 178 Contact-to-contract-to-cash process, 150 Control account, 135 Conversions, 106 Coordinate, 180 Core competency, 9, 47, 55 Core ERP, 3 Corporate perfor mance management (CPM), 248 Corporate social responsibility (CSR), 189 Cost accounting, 138 Cost allocation, 139 Cost center, 141 Cost drivers, 139 Cost object, 138 Cost pools, 141 Create, read, update, delete (CRUD), 221 Credit management, 136 Cross-functional, 2 Cross-functional flowcharts, 64 Customer-drive approach (use of consultants), 116 Customer exits, 107 Customer independent requirements, 184 Customer relationship management system (CRM), 154 Customization, 32, 106 See RICEF Cycle counting, 181 Cycle time, 46 D Dashboard, 241 Data, 245 Data access logic, 19 Database nor malization, 27 Data center controls, 226 Data cleansing, 109 Data collection, 109 Data duplication, 46 Data extraction, 109 Data governance, 252 Data governance committee, 252 Data har monization, 109 Data life cycle management, 253 Data loading, 109 Data mapping testing, 110 Data mart, 246 Data migration, 109 Data migration testing, 110 Data mining, 243 Data owner, 110, 201 Data quality, 245 Data scrubbing, 109 Data visualization, 241 Data warehouse, 245 Decision point (process map), 66 Demo days, 92 Dependent demand, 182 Deter minant, 28 Development (DEV), 33, 224 Direct costs, 138 Direct cutover strategy, 118 See Big bang implementation strategy Distributed computing, 18 Dual-factor authentication, 225 Dynamic cycle counting, 181 E EDI translator, 191 Edit checks, 218 Electronic data interchange (EDI), 191 Employee performance management (EPM), 206 Employee self-ser vice (ESS), 207 Enhancements, 107 Enterprise perfor mance management (EPM), 248 Enterprise resource planning (ERP) systems, 2 See Core ERP See Extended ERP Enterprise space, 11 Entity, 22 Entity integrity rule, 22 Entity relationship diagram (ERD), 23 Environmental, Health, and Safety (EHS) module, 189 See Corporate Social Responsibility ERP selection team, 90 ETL (extract, transfor m, load), 109, 245, 247 Event monitoring, 163 Explicit knowledge, 164 Extended ERP, 3 F Fat client, 19 Field, 22 Field ser vice, 158 Financial accounting, 132 Financial Accounting module, 132 First nor mal for m (1NF), 27-28 Fit/gap analysis, 94 Fixed asset life cycle, 143 Flow time, 70 Foreign key (FK), 23 For ms, 107 Front-office systems, 156 Full-time equivalents (FTE), 88 G General ledger (GL), 134 Generally accepted accounting principles (GAAP), 132 Goods/ser vices receipt, 176 Graphical user interface (GUI), 19 Group inter view method (process map), 67 H Handoffs, 46 Heavy user licensing, 87 Human capital, 200, 211 Human capital management (HCM), 200 Human Capital Management (HCM) suite, 202-207 Hybrid approach, 161 I Identification, 224 Identity and access management (IAM), 88, 224 Impact analysis, 224 Income statement, 132 Incremental implementation strategy, 118 Indirect costs, 138 Industry solutions, 7 Infor mation Systems Audit and Control Association (ISACA), 229 Implementation strategies, 117-119 Input controls, 219 Inspection lot, 186 Instance, 33 Integration partners, 4 Integration testing, 111 Intellectual capital, 164 Interface control, 219 Interfaces, 106 Inter mediaries, 46 Internal controls, 45, 216 International Financial Reporting Standards (IFRS), 132 Inventory status report, 185 Investment center, 142 Invoice, 153 IT application controls (ITACs), 219 IT auditor, 4 See CISA IT control, 216 IT general controls (ITGC), 221 IT governance, 231 IT risk management, 231 J Job pricing, 203 Junction table, 25 See associative entity K Key performance indicator (KPI), 249 Knowledge, 164 Knowledge base, 164 Knowledge discovery, 243 Knowledge management (KM), 164 Knowledge management (KM) system, 164 L Lagging indicator, 250 Lead, 150 Leading indicator, 250 Lead management, 151 Legacy systems, 2 Liquidity forecast, 137 Logical access controls, 224 M Mainframe architecture, 18 Maintenance, 123-125 Management accounting, 137-142 Management Accounting module, 137 Manual steps, 46 Manufacturing module, 182-186 Manufacturing resource planning (MRP II) systems, 10 Many-to-many relationship, 25 Master data, 30 Master production schedule (MPS), 184 Material, 186 Material requirements planning (MRP) systems, 9, 182 Middleware, 32 Mobility, 36 Modifications, 107 Modules, 2 Multi-factor authentication, 225 N Named user licensing, 87 Negative test, 228 O Off-page connector (process map), 66 Old ways, 46 Onboarding, 205 One-on-one inter view method (process map), 67 One-to-many relationship, 23-24 One-to-one relationship, 24 On-page connector (process map), 66 On-premise, 35 Opportunity, 151 Oracle 7, 8, 12, 22, 125, 240 Order acknowledgement, 151 Order fulfillment, 152 Order-to-cash process, 150 See quote-to-cash process Organizational knowledge, 164 Output controls, 219 Outsourcing, 208 Overhead costing, 138-139 P Packing slip, 152 Paper records, 46 Parallel accounting, 135 Parallel implementation strategy, 119 Partial dependency, 28 Partner channel management, 159 Passive tag (RFID), 190 Payroll module, 203-204 PeopleSoft, 12 Perfor mance load testing, 111 Personalization, 163 Personnel Administration module, 202 Phase (process map), 66 Phased implementation strategy, 118 Physical access controls, 225 Planned independent requirements, 184 Planned trip-to-payment process, 144 Plant Maintenance (PM) module, 188-189 Point of sale (POS) system, 153 Post-go-live audits, 123 Power users, 115 Predictive analytics, 243, 254 Predictive modeling, 163, 240 Predictor, 243 Presentation logic, 19 Pricing, 163 Primary key (PK), 22 Process-centered, 2 Process evaluator, 68 Process flow line (process map), 66 Process implementer, 68 Process inventory, 53 Process map, 64-66, 76 Process map facilitator, 67 Process mapping roles, 67-68 Process map symbols, 66 Process owner, 68 Processing controls, 219 Procure-to-pay process, 176 See purchase-to-pay process Product costing, 138 Production (PRD), 33, 224 Profiling, 163 Profitability analysis, 140 Profitability segment, 140 Profit center, 142 Program change controls, 222 Program manager, 82 Project charter, 83 Project governance, 98 Project manager (PM), 82 Project team, 81 Prospect, 151 Purchase order acknowledgment, 176 Purchase order (PO), 176 Purchase requisition, 176 Purchase-to-pay process, 175 See procure-to-pay process Purchasing module, 91, 136, 144, 175-176, 178, 188 Purchasing plan, 185 Q Qualify, 150 Quality assurance (QA), 33, 56 Quality Assurance (QA) module, 186-187 Quality control, 46, 56 Query (-ies), 29, 241 Query by example (QBE), 241 Quotation, 151, 178 Quote-to-cash process, 150 See order-to-cash process R Radio frequency identification (RFID), 190 Record, 22 Recruitment Management module, 204 Recruit-to-retire process, 200 Reference visit, 95 Referential integrity rule, 26 Relational database management systems (RDBMS), 21 Relations, 22 Reliability, 226 Remittance advice, 153 Reports, 106, 240 Request for proposal (RFP), 92 Request for quote (RFQ), 176 Requirements analysis, 90 Requirements document, 91 Restricted stock, 186 Retro-fit, 107 Rework, 46 RICEF (Reports, Interfaces, Conversions, Enhancements, For ms), 106-107 Risk management, 120, 231 Role, 64, 222 Role ambiguity, 46 Role-based access control (RBAC), 220 Routing, 138, 186 S Sales module, 134, 135, 150 Sales order, 151 Sales pipeline, 158 Sandboxes, 33 SAP, 7, 8, 12, 18, 20, 32, 87, 89, 105, 107, 120, 124, 133, 202, 240 Sarbanes-Oxley Act of 2002 (SOX), 5, 59, 217 Scope creep, 84 Scope management, 84 Scope statement, 83 Scorecards, 242 Second nor mal for m (2NF), 28 Segmentation, 163 Segregation of duties (SoD), 45, 220 Segregation of duties violations, 46 Selfgenerate method (process map), 67 Serpentine picking, 180 Ser ver, 18 Ser vice level agreement (SLA), 35 Ser vice provider, 208 Shared ser vices, 44 Small-to-medium sized enterprises (SMEs), 11 Social CRM, 160 Social media, 160 Social media monitoring, 160 Software as a ser vice (SaaS), 35 Software contract value, 89 Software implementation, 104 Software installation, 104 Source document, 134 Sourcing, 176 Spend analysis, 178 Stabilization, 122 Start/stop (process map), 66 Statement of cash flows, 133 Statement of retained earnings, 133 Steering committee, 83 Strategy map, 251 Structured data, 239 Structured Query Language (SQL), 29-30 Subject matter expert, 68 Subscription-based licensing, 87 Subsidiary ledger, 135 Succession planning, 205 Super user, 115 Supplier perfor mance management (SPM), 178 Supplier relationship management (SRM), 178- 179 Supply chain, 174 Supply chain management (SCM), 174 Swim lanes, 68 Swim lane diagram, 64 System, 64 System implementation assurance (SIA), 226 System landscape, 33 Systems diagram (SD), 64 T Table, 22 Tacit knowledge, 164 Talent profile, 206 Technology enabled reengineering, 49 See constrained reengineering Thin client, 20 Third nor mal for m (3NF), 28 Three-tier client-ser ver architecture, 20 Three-way match, 177, 216, 218, 222 Tier (ERP vendors), 11 Time and Attendance Management module, 202-203 Time period principle, 134 “To be” process, 47 “To be” process map, 65 Tolerance limits, 177 Total cost of ownership (TCO), 86 Trading partners, 191 Training, 114-115 Train-the-trainer, 114 Transaction data, 30 Transactions, 134 Transceiver, 190 Transitive dependency, 28 Transportation Management System (TMS),181 Trial balance, 134 Trigger, 68 Turnkey approach (use of consultants), 116 Two-step picking, 180 Two-tier architecture, 18 U Unit testing, 111 Unqualified audit report, 217 Unrestricted stock, 187 Unstructured data, 239 Upgrading, 125 User acceptance testing, 111 V Value-added activity, 45 Value-added network (VAN), 192 Value driver, 249 Vanilla implementation, 105 Vanilla software, 92 Vendor managed inventory (VMI), 192 Vertical solutions, 7 W Walkthrough, 54 Warehouse Management System, 180 Waved implementation strategy, 118 See phased implementation strategy Wave picking, 180 Weighted score sheet, 93 Work center, 186