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146 Cards in this Set
- Front
- Back
Enterprise resource planning
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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
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By serving the information requirements of more than one function, ERP systems are considered what in nature?
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cross-functional
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By organizing around processes, ERP systems are considered what?
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process-centered
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Process centered
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refers to ERP systems--the application is built around business processes
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Legacy systems
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standalone, disparate systems (what ERP systems aim to replace within a company)
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What are ERP systems sold in?
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modules
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Modules
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groups of related programs that perform a major function within an ERP system
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Do organizations have to purchase and implement all modules within an ERP system for successful integration?
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No, but more modules leads to greater integration, which in turn, can lead to a greater return on investment
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Core ERP
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financials, human resources and operations modules
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For what three reasons may management oppose conforming to a common data structure for enterprise-wide use?
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1. additional training required
2. process modifications 3. organizational change (all of which inevitably do occur) |
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Application controls
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programmed controls in the ERP software that maintain accuracy, reliability, completeness, security, and privacy of the data
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What additional services to ERP provider firms often offer?
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1. business process analysis
2. software customization 3. maintenance contracts 4. project management 5. hosting services |
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What differentiates one ERP package from others available?
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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
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Vertical solution
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a business system that is targeted to a single, specific industry
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What happens to data once it is entered into an ERP system?
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It is immediately readily available on-line and real-time to users in all departments with authority to view the data
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Business process
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a collection of activities that together add value to the company
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What provides companies with a template to standardize their business processes?
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ERP systems
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One disadvantage of ERP systems is that they impose...
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a standardized way of conducting business processes
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Change agents
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consultants that assist in organizational transformation
(i.e. ERP implementation |
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Change controls
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the controls that govern program changes
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Change management
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the systematic approach to dealing with change, such as an ERP system implementation
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MRP
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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
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MRP II
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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 |
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SaaS
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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. |
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What is the key criterion of SaaS
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multi-tenancy
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Multi-tenancy
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the shared architectural model that allows vendors to serve multiple clients (or tenants) from a single shared instance of the application
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What are the primary concerns regarding SaaS?
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Security, privacy, and its inherent reliance on having internet access
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Open source software
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software that is freely distributed in source code form with little or no copyright protection to restrict its use.
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Who develops open source software and how?
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Loose communities of developers build the software using tools and systems available over the Internet
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What are the key advantages to using open source software?
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the low cost and flexibility that it offers
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What are the three drivers for continued ERP investment among large corporations?
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1. globalization
2. centralization 3. performance management |
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Tier
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a classification of software by the size of the company it fits
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Collectively, the "second and third tiers" are known as...
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small-to-medium sized enterprises (SME)
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Tier 1 market
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software for companies with 1000 or more employees or sales of over $250 million
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Who dominates the tier 1 space?
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SAP and Oracle
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SAP
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Systems, Application, and Products in Data Processing; recognized as the world leader in ERP software
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tier 2 market
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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 |
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tier 3 market
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designed for small, single-site corporations that tend to be family-run
sales under $40 million less than 100 employees |
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tier 4 market
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small companies that can still manage with basic accounting software
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What type of database is an ERP system built on
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A relational database--there is one data store; one "source of the truth"
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What are the four main parties that need to know about the ERP system?
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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 |
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Authoritative Data Source
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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
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EAI
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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 |
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Client/server
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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
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ICT
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Information and communication technology...
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What is the primary consequence/disadvantage of globalization from a business standpoint?
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Increased competition
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Information revolution
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the increased use of information and communication technology to create, deliver, and use information
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"Knowledge worker"
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one who uses ICT to create, acquire, process, synthesize, disseminate, analyze and use information to be more productive
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What are the three fundamental business processes?
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1. procurement
2. production 3. fulfillment |
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Lead times
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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)
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What may increased lead times lead to?
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may cause a company to have an insufficient inventory of material when it is needed
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What may increased cycle times lead to?
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may prevent the company from producing goods and filling customer orders in a timely manner
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What are weaknesses that evolve from poor coordination across functions in a business?
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1. the "silo" effect
2. delays in executing the process 3. lack of visibility across processes |
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Information systems
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computer-based systems that capture, store, and retrieve data associated with process activities
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Data
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raw facts that, by themselves, have limited value or meaning (i.e. customer names, quantity sold)
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Information
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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)
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Physical flow
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the physical activities associated with the process
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Data flow
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the data that accompanies the product/service/process throughout the process itself
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Document flow
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physical or electronic documents that flow with a process
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Information flow
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aggregate data that accompanies/is generated by a process over time
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What are the three key roles Enterprise Systems play in a business process?
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1. Execute the process
2. Capture and store process data 3. Monitor process performance |
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Income statement
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"profit and loss statement" that records revenue and expenses for a specific period of time
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Balance Sheet
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indicates the financial condition of a company at a specific point in time (Assets, liabilities, equities)
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Mainframe Architecture
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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.
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LAN
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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
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file server
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a computer on the network that stores files shared between other computers
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Client-server architecture
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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 |
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GUI
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Graphical User Interface; a highly interactive user interface with a windowing metaphor that presents information using text and images on the computer's display
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Database server
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a program, typically running on a dedicated computer, which provides a standardized way to store and retrieve data
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Why could client-server applications not meet the increasing demands for access to information?
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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
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multi-tier architecture
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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
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Application server
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a server that is responsible for executing all of the business logic and interacting with the client applications.
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Does an application server need to keep a constant connection with each client?
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No--so it is capable of servicing large numbers of clients
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Fat clients
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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
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Thin clients
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these offer a simpler interface and do not require any additional software to be installed on the client
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Web browsers
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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
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Presentation tier
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the presentation tier of a multi-tier architecture uses a GUI to request information from the application server
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Intranet
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a private network with a company
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dashboard
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a graphical display that presents information from applications in any number of configurable visual presentations; also can serve as a portal or homepage
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Application Tier
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this is the ERP software/business logic, which is typically sold in modules
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SOA
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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.
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EAI
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enterprise application integration; also called "middleware"; denotes using software that facilitates sharing data and business logic across systems
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referential integrity
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a database constraint that ensures that relationships between tables remain valid and consistent
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database normalization
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the process of efficiently organizing data in a database
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Data asymmetry
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results from the same data being entered into more than one information system which can result in incorrect or dissimilar values and formats
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What is the difference between a simple and update query?
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A simple query returns a response without changing the database, an update query changes records in the database
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Configuration
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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.) |
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User control
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a users ability to create, read, update, and/or delete data
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What may a dashboard include?
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1. business process activity info
2. tasks, reminders, notifications 3. calendaring and scheduling 4. messaging (email, phone, IM) 5. official communication from designated sources |
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Back-office software
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known as "Core ERP"
HR, Financials and Operations |
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Front-Office Software
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integrates with customers and suppliers--SCM, CRM
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What are bolt-ons used for?
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these are used to integrate more functionality across Core ERP
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Customization
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changing the software code so it is specific to the company's need
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What are the three components of an Enterprise System?
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1. hardware
2. software 3. database |
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Scalability
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a concept related to the number of users or the volume of operations that a given hardware/software combination can manage
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How was scalability in the mainframe architecture?
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very low--only a handful of employees could use the system at any one time
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Packaged applications
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emerged in the 1970s; generic software that can be used by many companies
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What are the three layers in the three-tier architecture (with brief description of each)?
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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) |
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Mashup/composite applications
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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) |
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ERP
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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
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PLM
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Product life cycle management--these systems help companies administer the processes of research, design and product management
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What are the three stages of evolution in Enterprise Systems
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1. Stand-alone mainframe systems
2. Client-server architecture 3. Service-Oriented architecture |
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What are the three types of data in ES?
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Organizational, Master and Transaction
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Organizational Data
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defines the organizational structure of the enterprise; includes definitions of companies, divisions, sales organizations
organizational data rarely changes |
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Master Data
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defines key entities in an organization such as customers' basic information, financial info, sales info, employee payroll/tax data
Master data changes occasional |
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BPR
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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.
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What often serves as the catalyst for a BPR effort?
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implementation--because ERP systems are based on best practices
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Core Competencies
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the capabilities critical to a business achieving competitive advantage
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Non-value-added cost
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a cost that does not add value to the consumer (i.e. holding inventory)
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What are the three levels of change in business processes
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1. Radical -- 60%+ improvement
2. Major -- 30-60% improvement 3. Incremental -- 30% improvement |
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Restructuring
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reorganizing the legal, ownership, or operational structures in a company, which has a different meaning than BPR
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BPI
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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)
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What are four aims of BPR?
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1. cost reductions
2. improved customer satisfaction 3. improved agility 4. increased profitability and reputation |
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Clean slate reengineering
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involves starting over from scratch, and overhauling a process design (i.e. software development)
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technology-enabled reengineering
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a type of BPR in which technology is used (i.e. implementing an ERP system)
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Constrained reengineering
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also known as technology-enabled reengineering, because the technology inherently imposes restraint on the company integrating the process
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What is the central philosophy shared by BPR and ERP?
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both aim to reduce costs and improve customer satisfaction while increasing profits and stakeholder value.
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Common BPR principles
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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 |
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What is the primary focus of a reengineering effort?
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Customer value
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When selecting a process to reengineer, organizations should consider its impact on what?
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customer-perceived value
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KPI's
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key performance indicators; allow the company to compare its performance to industry best practices and standards
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Benchmarking
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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 |
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What are high volume, low margin activities are usually a syptom of?
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Operating in a highly competitive market with substantial price pressure
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How are suppliers differentiated in a market of high volume and low margin?
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They are poorly differentiated, offering a commodity product
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Quality controls
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controls that are implemented to reduce error rate
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Because quality is such a major driver of revenue and expense, a major BPR effort should consider opportunities to make quality controls...
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more cost effective
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How does BPR seek to alleviate high skill, time intensive activities?
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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 |
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What should BPR focus on in regards to complexity?
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Replacing complex processes/activities with simplistic ones where possible (and as long as it doesn't detract from the output of the process)
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The focus of BPR is ____ a process is done
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the focus of BPR is WHY a process is done (not how)
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What is the primary difference between financial accounting and management accounting?
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The target audience
financial audience meets the needs of external stakeholders, while management accounting meets the needs of internal users |
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GAAP
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Generally Accepted Accounting Principles, which are the standards and conventions US-based companies follow in recording and summarizing transactions and preparing financial statements
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Chart of Accounts
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the listing of all accounts (balance sheet and income statement) that will be tracked by the accounting system
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General Ledger
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The GL generates monthly, quarterly and yearly financial statements
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Parallel Accounting
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enables a company to keep several GLs simultaneously according to different accounting principles to ensure that local and international reporting requirements are met
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Consolidation
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enables the combining of financial statements for multiple entities
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Accounts Payable
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Subledger that identifies the balances owed to every vendor calculated from purchases, returns and allowances, purchase discounts, payments and other adjustments
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Three-way match
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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 |
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AP aging report
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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
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Accounts Receivable
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Accounts Receivable subledger records all account postings generated as a result of customer sales activity
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Credit management
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supports alarm reports for various issues including over credit limit and non-payment the automatic update of AR balances
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AR aging report
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groups receivables into 30 day increments, supporting cash flow projections and providing focus on those balances that are oldest
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Cash management
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functionality related to investments, cash flow, and the accounting requirements these cycles generate
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Cash journal
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a journal of cash that can be kept in separate currencies and separate company codes
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Liquidity forecast
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integrates anticipated cash inflows and outflows from financial accounting, purchasing and sales in order to show mid- to long-term liquidity trends
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Cost centers
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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)
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Profit Center
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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)
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