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146 Cards in this Set

  • Front
  • Back
Enterprise resource planning
an industry term for the broad set of activities that managers use to run the important parts of an organization such as purchasing, human resources, accounting, production, and sales
By serving the information requirements of more than one function, ERP systems are considered what in nature?
cross-functional
By organizing around processes, ERP systems are considered what?
process-centered
Process centered
refers to ERP systems--the application is built around business processes
Legacy systems
standalone, disparate systems (what ERP systems aim to replace within a company)
What are ERP systems sold in?
modules
Modules
groups of related programs that perform a major function within an ERP system
Do organizations have to purchase and implement all modules within an ERP system for successful integration?
No, but more modules leads to greater integration, which in turn, can lead to a greater return on investment
Core ERP
financials, human resources and operations modules
For what three reasons may management oppose conforming to a common data structure for enterprise-wide use?
1. additional training required
2. process modifications
3. organizational change

(all of which inevitably do occur)
Application controls
programmed controls in the ERP software that maintain accuracy, reliability, completeness, security, and privacy of the data
What additional services to ERP provider firms often offer?
1. business process analysis
2. software customization
3. maintenance contracts
4. project management
5. hosting services
What differentiates one ERP package from others available?
Matching best practices (what is embedded into the ERP system) to organizational needs. This is a key contributor to the ultimate success of the implementation
Vertical solution
a business system that is targeted to a single, specific industry
What happens to data once it is entered into an ERP system?
It is immediately readily available on-line and real-time to users in all departments with authority to view the data
Business process
a collection of activities that together add value to the company
What provides companies with a template to standardize their business processes?
ERP systems
One disadvantage of ERP systems is that they impose...
a standardized way of conducting business processes
Change agents
consultants that assist in organizational transformation
(i.e. ERP implementation
Change controls
the controls that govern program changes
Change management
the systematic approach to dealing with change, such as an ERP system implementation
MRP
Materials requirements planning; calculates and maintains an optimum manufacturing plan based on master production schedules, sales forecasts, inventory status, open orders, and bills of material
MRP II
Manufacturing resource planning; systems that were developed in the 1970s to address issues such as frequent changes in sales forecasts, which require continual readjustments in production.

Where MRP II systems once managed the computing needs of the manufacturing environment, ERP systems no manage the resources of the entire enterprise
SaaS
Software as a Service

when a firm accesses the ERP system at a vendor's site over the Internet; the firm does not need to manage the servers or software because the vendor assumes this responsibility.
What is the key criterion of SaaS
multi-tenancy
Multi-tenancy
the shared architectural model that allows vendors to serve multiple clients (or tenants) from a single shared instance of the application
What are the primary concerns regarding SaaS?
Security, privacy, and its inherent reliance on having internet access
Open source software
software that is freely distributed in source code form with little or no copyright protection to restrict its use.
Who develops open source software and how?
Loose communities of developers build the software using tools and systems available over the Internet
What are the key advantages to using open source software?
the low cost and flexibility that it offers
What are the three drivers for continued ERP investment among large corporations?
1. globalization
2. centralization
3. performance management
Tier
a classification of software by the size of the company it fits
Collectively, the "second and third tiers" are known as...
small-to-medium sized enterprises (SME)
Tier 1 market
software for companies with 1000 or more employees or sales of over $250 million
Who dominates the tier 1 space?
SAP and Oracle
SAP
Systems, Application, and Products in Data Processing; recognized as the world leader in ERP software
tier 2 market
medium-sized companies with just a few localized sites

100-999 employees

$20-$250 million

provides much of the benefits of tier 1 software but at a lower cost; though tier 1 is trying to enter this market
tier 3 market
designed for small, single-site corporations that tend to be family-run

sales under $40 million

less than 100 employees
tier 4 market
small companies that can still manage with basic accounting software
What type of database is an ERP system built on
A relational database--there is one data store; one "source of the truth"
What are the four main parties that need to know about the ERP system?
1. End user (people in the dept. that uses the technology--basically everyone...)
2. Internal/external auditor (verify that the ERP system is secure and maintains privacy over individuals)
3. Consultant (assits in implementation and/or maintenance of the ERP system)
4. Developers (those who customize the system
Authoritative Data Source
this is what an ERP system is; a recognized or official data production source with a designated mission statement to publish reliable and accurate data for subsequent use by users
EAI
Enterprise Application Integration--the process of linking applications of different areas but with a single organization in order to simplify and automate business processes to the greatest extent possible, while at the same time avoiding having to make sweeping changes to the existing applications or data structures

This is how you connect legacy systems. Not as optimal as having an integrated system, common database, and common technical infrastructure
Client/server
describes the relationship between two computer programs in which one program, the client, makes a service request from another program, the server, which fulfills the request
ICT
Information and communication technology...
What is the primary consequence/disadvantage of globalization from a business standpoint?
Increased competition
Information revolution
the increased use of information and communication technology to create, deliver, and use information
"Knowledge worker"
one who uses ICT to create, acquire, process, synthesize, disseminate, analyze and use information to be more productive
What are the three fundamental business processes?
1. procurement
2. production
3. fulfillment
Lead times
how far in advanced a company must plan to obtain raw materials from its suppliers, for example (the prep time for a step in a business process)
What may increased lead times lead to?
may cause a company to have an insufficient inventory of material when it is needed
What may increased cycle times lead to?
may prevent the company from producing goods and filling customer orders in a timely manner
What are weaknesses that evolve from poor coordination across functions in a business?
1. the "silo" effect
2. delays in executing the process
3. lack of visibility across processes
Information systems
computer-based systems that capture, store, and retrieve data associated with process activities
Data
raw facts that, by themselves, have limited value or meaning (i.e. customer names, quantity sold)
Information
data that is organized in a way that it is useful to an organization (sales trends for a product over the course of a year)
Physical flow
the physical activities associated with the process
Data flow
the data that accompanies the product/service/process throughout the process itself
Document flow
physical or electronic documents that flow with a process
Information flow
aggregate data that accompanies/is generated by a process over time
What are the three key roles Enterprise Systems play in a business process?
1. Execute the process
2. Capture and store process data
3. Monitor process performance
Income statement
"profit and loss statement" that records revenue and expenses for a specific period of time
Balance Sheet
indicates the financial condition of a company at a specific point in time (Assets, liabilities, equities)
Mainframe Architecture
something on which a system is built by which all computing intelligence is within a central host computer. Users interact with the host computer through a character-oriented terminal that captures keystrokes and sends that information to the host.
LAN
local area networks; link computers in close proximity to share files among computers. the use file sharing to download files from another computer on the LAN and used the computational power of their PCs to perform jobs
file server
a computer on the network that stores files shared between other computers
Client-server architecture
also known as two-tier architecture; evolved to meet the demands of a greater number of users accessing shared data over the LAN.

The user's PC is known as the client, since it accesses data stored on another computer. The client contains the business logic for the application and provides the graphical user interface (GUI). Uses a database server instead of a file server.

The client communicates over the network to the database server, specifying the data to be retrieved. The database server is responsible for finding the right data, formatting it, and returning the results to the user
GUI
Graphical User Interface; a highly interactive user interface with a windowing metaphor that presents information using text and images on the computer's display
Database server
a program, typically running on a dedicated computer, which provides a standardized way to store and retrieve data
Why could client-server applications not meet the increasing demands for access to information?
In a two-tier sysetm, each client requires a dedicated connection to the database server. The overhead of maintaining the connections limits the number of clinets that can access a particular database server. In additoin, since the business logic is contained on every client machine, it is critical that all client computers run exactly the same version of the business logic
multi-tier architecture
a structure in which additional servers are placed between the client and the database server. Most commonly, one or more application server is placed between the client and the database server
Application server
a server that is responsible for executing all of the business logic and interacting with the client applications.
Does an application server need to keep a constant connection with each client?
No--so it is capable of servicing large numbers of clients
Fat clients
these run as applications directly on users' PCs, offering the richest interfaces and taking advantage of all of the capabilities of the PC's GUI
Thin clients
these offer a simpler interface and do not require any additional software to be installed on the client
Web browsers
programs used to display the contents of web pages and images; frequently used for thin clients because they are widely available and work identically on many different computers
Presentation tier
the presentation tier of a multi-tier architecture uses a GUI to request information from the application server
Intranet
a private network with a company
dashboard
a graphical display that presents information from applications in any number of configurable visual presentations; also can serve as a portal or homepage
Application Tier
this is the ERP software/business logic, which is typically sold in modules
SOA
Service oriented architecture--the next generation of developing systems in which business functionalities are implemented as a set of shared, reusable services. It is based on providing reusable domain-centric services that easily automate business processes, like charging a credit card.
EAI
enterprise application integration; also called "middleware"; denotes using software that facilitates sharing data and business logic across systems
referential integrity
a database constraint that ensures that relationships between tables remain valid and consistent
database normalization
the process of efficiently organizing data in a database
Data asymmetry
results from the same data being entered into more than one information system which can result in incorrect or dissimilar values and formats
What is the difference between a simple and update query?
A simple query returns a response without changing the database, an update query changes records in the database
Configuration
the process of selecting "switches" that lead the software down one path or the other (i.e. disallowing entries to be made in closed accounting periods)

configuration changes the way the software behaves (geographic configuration, etc.)
User control
a users ability to create, read, update, and/or delete data
What may a dashboard include?
1. business process activity info
2. tasks, reminders, notifications
3. calendaring and scheduling
4. messaging (email, phone, IM)
5. official communication from designated sources
Back-office software
known as "Core ERP"
HR, Financials and Operations
Front-Office Software
integrates with customers and suppliers--SCM, CRM
What are bolt-ons used for?
these are used to integrate more functionality across Core ERP
Customization
changing the software code so it is specific to the company's need
What are the three components of an Enterprise System?
1. hardware
2. software
3. database
Scalability
a concept related to the number of users or the volume of operations that a given hardware/software combination can manage
How was scalability in the mainframe architecture?
very low--only a handful of employees could use the system at any one time
Packaged applications
emerged in the 1970s; generic software that can be used by many companies
What are the three layers in the three-tier architecture (with brief description of each)?
1. Presentation layer (how you interact with the application)
2. Application layer (what the application allows you to do
3. Data layer (where the application stores your work)
Mashup/composite applications
these rely on web services to send and receive data between and among an enterprise system; they execute newer and more specific process than are found in the standard ES

(i.e. mashup with your customer data and Google Maps)
ERP
Enterprise resource planning--ERP systems are the world's largest and most complex ES's. They focus primarily on the internal operations of an organization, and they integrate functional and cross-functional business processes
PLM
Product life cycle management--these systems help companies administer the processes of research, design and product management
What are the three stages of evolution in Enterprise Systems
1. Stand-alone mainframe systems
2. Client-server architecture
3. Service-Oriented architecture
What are the three types of data in ES?
Organizational, Master and Transaction
Organizational Data
defines the organizational structure of the enterprise; includes definitions of companies, divisions, sales organizations

organizational data rarely changes
Master Data
defines key entities in an organization such as customers' basic information, financial info, sales info, employee payroll/tax data

Master data changes occasional
BPR
business process reengineering; the fundamental, radical, redesign in business processes to achieve dramatic improvements in key measures of performance such as cost, quality, speed, and service.
What often serves as the catalyst for a BPR effort?
implementation--because ERP systems are based on best practices
Core Competencies
the capabilities critical to a business achieving competitive advantage
Non-value-added cost
a cost that does not add value to the consumer (i.e. holding inventory)
What are the three levels of change in business processes
1. Radical -- 60%+ improvement
2. Major -- 30-60% improvement
3. Incremental -- 30% improvement
Restructuring
reorganizing the legal, ownership, or operational structures in a company, which has a different meaning than BPR
BPI
business process improvement; refers to more of a slow and steady approach to optimizing business processes versus an aggressive, radical approach (six sigma, lean manufacturing, and total quality management)
What are four aims of BPR?
1. cost reductions
2. improved customer satisfaction
3. improved agility
4. increased profitability and reputation
Clean slate reengineering
involves starting over from scratch, and overhauling a process design (i.e. software development)
technology-enabled reengineering
a type of BPR in which technology is used (i.e. implementing an ERP system)
Constrained reengineering
also known as technology-enabled reengineering, because the technology inherently imposes restraint on the company integrating the process
What is the central philosophy shared by BPR and ERP?
both aim to reduce costs and improve customer satisfaction while increasing profits and stakeholder value.
Common BPR principles
1. Have those who use the output of the process, perform the process
2. Empower workers
3. Treat geographically dispersed resources as though they were centralized
4. Link parallel activities instead of integrating their results
5. Organize around processes not tasks or functional area
6. Self service
7. Put the decision point where the work is performed and build controls into the process
8. Capture information once and at the source
What is the primary focus of a reengineering effort?
Customer value
When selecting a process to reengineer, organizations should consider its impact on what?
customer-perceived value
KPI's
key performance indicators; allow the company to compare its performance to industry best practices and standards
Benchmarking
a continuous improvement tool and process that an enterprise uses to measure and compare all its functions, systems, and practices against strong competitors, identifying quality gaps in the organization, and striving to achieve competitive advandage locally and globally.

With these measurements, a company can determine which processes and practices it can change in order to realize the greatest return
What are high volume, low margin activities are usually a syptom of?
Operating in a highly competitive market with substantial price pressure
How are suppliers differentiated in a market of high volume and low margin?
They are poorly differentiated, offering a commodity product
Quality controls
controls that are implemented to reduce error rate
Because quality is such a major driver of revenue and expense, a major BPR effort should consider opportunities to make quality controls...
more cost effective
How does BPR seek to alleviate high skill, time intensive activities?
1. reengineer to empower the same people to perform the job faster
2. reengineer to allow lower paid workers to perform the activity or part of the activity
What should BPR focus on in regards to complexity?
Replacing complex processes/activities with simplistic ones where possible (and as long as it doesn't detract from the output of the process)
The focus of BPR is ____ a process is done
the focus of BPR is WHY a process is done (not how)
What is the primary difference between financial accounting and management accounting?
The target audience

financial audience meets the needs of external stakeholders, while management accounting meets the needs of internal users
GAAP
Generally Accepted Accounting Principles, which are the standards and conventions US-based companies follow in recording and summarizing transactions and preparing financial statements
Chart of Accounts
the listing of all accounts (balance sheet and income statement) that will be tracked by the accounting system
General Ledger
The GL generates monthly, quarterly and yearly financial statements
Parallel Accounting
enables a company to keep several GLs simultaneously according to different accounting principles to ensure that local and international reporting requirements are met
Consolidation
enables the combining of financial statements for multiple entities
Accounts Payable
Subledger that identifies the balances owed to every vendor calculated from purchases, returns and allowances, purchase discounts, payments and other adjustments
Three-way match
payment should be authorized using a three-way match whereby the ERP system, instructed by a configured application control, will attempt to "match" every incoming invoice to a valid purchase order and an approved packing slip or receiver

The most common method for recognizing a valid financial obligation
AP aging report
for cash management purposes, the AP aging report is used to group vouchers by due date in 30-day increments, providing focus on those payable items that may be past due
Accounts Receivable
Accounts Receivable subledger records all account postings generated as a result of customer sales activity
Credit management
supports alarm reports for various issues including over credit limit and non-payment the automatic update of AR balances
AR aging report
groups receivables into 30 day increments, supporting cash flow projections and providing focus on those balances that are oldest
Cash management
functionality related to investments, cash flow, and the accounting requirements these cycles generate
Cash journal
a journal of cash that can be kept in separate currencies and separate company codes
Liquidity forecast
integrates anticipated cash inflows and outflows from financial accounting, purchasing and sales in order to show mid- to long-term liquidity trends
Cost centers
units in the organization in which the manager is responsible only for controlling costs because the unit it is not revenue-generating (i.e. accounting, IT or HR departments)
Profit Center
units for which the manager is responsible for both revenues and costs of the center (i.e. manufacturing units that produce products for sale to consumers)