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 reserved Reproduced with permission of SAS Institute Inc., Cary, NC, USA Figure 12-3 Copyright © 2007 SAS Institute Inc All rights reserved Reproduced with permission of SAS Institute Inc., Cary, NC, USA Figure 12-4 Copyright © 2014 SAS Institute Inc All rights reserved Reproduced with permission 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 Germany 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 services are those that are set forth in the express warranty statements accompanying such products and services, 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 About the Author xvi 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 Database Normalization 27 Structured Query Language (SQL) 29 ERP Data 30 Configuration 31 Customization 32 Best of Breed 32 System Landscape 33 Cloud Computing 34 21 Mobility 36 Summary 37 Keywords 38 Quick Review 39 Questions to Consider 39 Chapter 3: ERP and Business Process Redesign Objectives 43 Introduction 43 Business Processes 44 Common Problems with Business Processes 45 Business Process Reengineering 47 Factors for Reengineering Success 50 Business Process Improvement 52 Business Process Improvement Model 53 Processes in Need of Change 55 Stakeholders for Business Process Transformation Summary 59 Keywords 60 Quick Review 60 Questions to Consider 61 Chapter 4: ERP and Process Mapping Objectives 63 Introduction 63 Systems Diagrams 64 The Process Map 64 Benefits of Process Mapping 66 Gathering Information for the Process Map Process Mapping Roles 67 Steps for Drawing Process Maps 68 Process Map Example – Electric City 69 Extensions to the Electric City Process Map Advanced Process Map Example – Fit Gear Summary 75 Keywords 76 Quick Review 76 Questions to Consider 77 43 58 63 67 70 72 Chapter 5: ERP Life Cycle: Planning and Package Selection 79 Objectives 79 Introduction 79 ERP Life Cycle – Planning 80 ERP Life Cycle – Package Selection Summary 99 Keywords 99 Quick Review 100 Questions to Consider 100 89 Chapter 6: ERP Life Cycle: Implementation and Operation and Maintenance 103 Objectives 103 Introduction 103 ERP Life Cycle – Implementation 104 ERP Life Cycle – Operation and Maintenance 122 Summary 125 Keywords 126 Quick Review 127 Questions to Consider 127 Chapter 7: ERP Financial Management 131 Objectives 131 Introduction 131 Financial Accounting 132 Management Accounting 137 Asset Management 142 Travel and Expense Management 144 Summary 145 Keywords 145 Quick Review 146 Questions to Consider 146 Chapter 8: ERP Sales, Customer Relationship Management, and Knowledge Management 149 Objectives 149 Introduction 149 Sales Process 150 Point of Sale (POS) Systems 153 Customer Relationship Management 154 CRM vs ERP 156 CRM Functionality 157 CRM Interaction Channels 159 Social CRM 160 Determinant, 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-service (ESS), 207 Enhancements, 107 Enterprise performance management (EPM), 248 Enterprise resource planning (ERP) systems, 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, transform, load), 109, 245, 247 Event monitoring, 163 Explicit knowledge, 164 Extended ERP, F Fat client, 19 Field, 22 Field service, 158 Financial accounting, 132 Financial Accounting module, 132 First normal form (1NF), 27-28 Fit/gap analysis, 94 Fixed asset life cycle, 143 Flow time, 70 Foreign key (FK), 23 Forms, 107 Front-office systems, 156 Full-time equivalents (FTE), 88 G General ledger (GL), 134 Generally accepted accounting principles (GAAP), 132 Goods/services receipt, 176 Graphical user interface (GUI), 19 Group interview 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, Information Systems Audit and Control Association (ISACA), 229 Implementation strategies, 117-119 Input controls, 219 Inspection lot, 186 Instance, 33 Integration partners, Integration testing, 111 Intellectual capital, 164 Interface control, 219 Interfaces, 106 Intermediaries, 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, 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, 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, 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 interview 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 Performance 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, 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, Forms), 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 normal form (2NF), 28 Segmentation, 163 Segregation of duties (SoD), 45, 220 Segregation of duties violations, 46 Self-generate method (process map), 67 Serpentine picking, 180 Server, 18 Service level agreement (SLA), 35 Service provider, 208 Shared services, 44 Small-to-medium sized enterprises (SMEs), 11 Social CRM, 160 Social media, 160 Social media monitoring, 160 Software as a service (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 performance 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 normal form (3NF), 28 Three-tier client-server 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, 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 ... essentials of ERP systems, advantages and disadvantages of ERP systems, ERP evolution, and the ERP marketplace ERP Essentials Enterprise resource planning (ERP) systems are business systems that... 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. .. Keywords 38 Quick Review 39 Questions to Consider 39 Chapter 3: ERP and Business Process Redesign Objectives 43 Introduction 43 Business Processes 44 Common Problems with Business Processes 45 Business