Chapter

7
Electronic Business Systems

McGraw-Hill/Irwin

Copyright 2008, The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives
Identify the following cross-functional enterprise
systems, and give examples of how they can
provide significant business value to a company
Enterprise application integration
Transaction processing systems
Enterprise collaboration systems

1-2

Learning Objectives
Give examples of how Internet and other
information technologies support business
processes within the business functions of
Accounting
Finance
Human resource management
Marketing
Production
Operations management
1-3

Enterprise Business Systems

E-business means using the Internet, other
networks, and IT to support
Electronic commerce
Enterprise communications and collaboration
Web-enabled business processes

E-commerce is the buying, selling, and

marketing of products, services, and information
over the Internet and other networks

1-4

Cross-Functional Systems
Cross the boundaries of traditional business
functions
Used to reengineer and improve vital business
processes all across the enterprise

1-5

Enterprise Application Architecture

1-6

Enterprise Application Architecture

Provides a conceptual framework
Helps visualize the basic components, processes,
and interfaces of major e-business applications

Focuses on accomplishing fundamental

business processes in concert with

Customers
Suppliers
Partners
Employees

1-7

Enterprise Application Architecture

Enterprise Resource Planning (ERP)
Concentrates on the efficiency of internal
production, distribution, and financial processes

Customer Relationship Management (CRM)

Focuses on acquiring and retaining profitable
customers via marketing, sales, and services

Partner Relationship Management (PRM)

Aims at acquiring and retaining partners who
can enhance the selling and distribution of
products and services
1-8

Enterprise Application Architecture

Supply Chain Management (SCM)
Focuses on developing the most efficient and
effective sourcing and procurement processes

Knowledge Management (KM)

Focuses on facilitating internal group
collaboration and decision support

1-9

Enterprise Application Integration

EAI software connects cross-functional systems
Serves as middleware to provide
Data conversion
Communication between systems
Access to system interfaces

1-10

How EAI Works

1-11

What is EAI?

12

Extend your business processes

throughout your enterprise
and beyond...

CRM
Trading
Partners

Data
Warehouse
ERP

Legacy
Enterprise Application
Integration

Supply
Chain
13

The road to EAI

1980s: Legacy systems
Departmental

focus
Highly fragmented, after-the-fact view of the
business
1990s: ERP
Enterprise

focus
Partially integrated, after-the-fact view of the
business
Replaces much of existing IT investment
2000+: Enterprise Application Integration (EAI)
Extended

enterprise focus
Fully integrated, up-to-the-second visibility
& control of the business
Complete preservation of existing IT
investment
Integrate packaged, custom, & legacy

14

What is Enterprise Application Integration?

Enterprise Application Integration (EAI) products are an emerging

class of software applications and tools enabling companies to define
and manage business processes spanning multiple internal and
external software applications and data sources. These products are
comprised of process management, application interface,
transformation, and messaging services necessary to facilitate end-toend application integration both internally and externally to the
enterprise.

Benefits of Enterprise Application Integration include:

Extended enterprise focus

Fully integrated, up-to-the-second visibility and control of the business
Complete preservation of existing IT investment
Integrate packaged, custom and legacy applications
Enable integration of heterogeneous infrastructures, hardware and
networks
15

Business Drivers for EAI

Mergers and acquisitions

Supply chain / value chain integration
Customer service chain
Customer relationship management
Business to business eCommerce
Internet self-service applications
Business intelligence applications

16

Demands for Integration

Large and complex organizations desire to:

Integrate companies resulting from merger and acquisition activity

Integrate an environment composed of disparate, best of breed applications

including a large number of legacy or custom apps that have evolved in
silos over time

Improve and better manage customer-facing processes

New entrants and emerging organizations desire to:

Minimize the time to market with new products and services, enabled by a
flexible, integrated architecture

Grow the enterprise aggressively and quickly, and want to avoid the future
development of legacy system silos
17

Product Industry Scenario Traditional Approach

Studies show that the

average large company
has upward of 50
different applications
running. And it costs
companies an estimated
$16 billion a year trying
to keep them all working
smoothly together, along
with applications used
by their suppliers and
clients. --The Wall
Street Journal

18

Enterprise Application Integration Value

Early adopters of EAI technologies are experiencing unparalleled agility in the

management of integrated business processes across multiple disparate systems both
within and between enterprises. Specific benefits achieved through EAI include:
Increased quality of decisions/reduce time to think and react
Increased ability and speed to adapt to
change
Increased speed to market with new
products and services
Enhanced customer service and self
Data Marts
Data
CRM
Marketing
Warehouse
service
Data Marts Data MartsManagement
Traditional Partner
Expanded capabilities to deliver new
Sales
Vendor
Customer
products and services
Relations
Legacy
Forwarding/
Increased utilization of critical assets
Customer
Transportation
EAI
Service
Work Centers
Decreased operating costs
TraditionalManagement
Partner
Customer

ERP
SCA
Inventory
Purchasing
Management
Returns
Production
Planning

Order
Management
Plant
Warehouses
Maintenance
Shipping

Finance Accounts Billing

Receivable

Finance Accounts
Payable

19

Product Industry Scenario Traditional Approach

Traditional
Partner

Traditional Partner

SCA

CRM

Inventory
Management

Marketing

Purchasing

Vendor

ERP

Customer

Sales

Order
Management

Customer
Relations
Customer
Service
Management

Production
Planning

Shipping

ERP
Legacy
Forwarding/
Transportation

Returns

Finance Accounts
Receivable

Plant
Maintenance

Warehouses

Billing

Work Centers

Finance Accounts
Payable

Legacy
Data
Warehouse

Data Marts

Management

Data Marts
Data Marts20

EAI
New Approach
CRM

Data
Warehouse

Data Marts
Marketing
Data Marts

Data Marts

Management

Traditional Partner

Sales

Vendor

Customer
Relations

Traditional
Partner

Legacy
Forwarding/
Transportation

EAI

Customer
Service
Management

Work Centers

Customer

Inventory
Management

Order
Management

ERP

SCA
Purchasing

Warehouses
Returns

Plant
Maintenance

Shipping
Production
Planning

Finance Accounts
Receivable

Billing

Finance Accounts
Payable

21

EAI Scenario Existing System Enhancement

Build a Near-Zero-Latency Enterprise

Customer

ERP

CRM

SCA

DW

Vendor

22

EAI Scenario Existing System Enhancement

Build a Near-Zero-Latency Enterprise

ERP

CRM

Vendor

EAI
Customer

SCA

DW
23

EAI Scenario - Merger

Company A
ERP

Company B
CRM

ERP

CRM

EAI

DW

SCA

DW

Legacy

SCA

Legacy
24

EAI Scenario - Merger

Company A
ERP

Company B
CRM

ERP

CRM

EAI

DW

SCA

DW

Legacy

SCA

Legacy
25

How does EAI help Delivery?

Lower T.C.O.

Effort (Days)

Less Development
Effort
Lower Support
Costs

Faster Build

Build

Design

Run
Build
Run

Traditional
Approach
EAI

Lifecycle (Time)

26

EAI Technical Components

An EAI Solution is comprised of the following services:
Business Process
Management

Business process-level integration and management

Application Connectivity

Pre-built adapters to packaged

applications and custom
adapter development kits

Translation & Formatting

Message and data

transformation and formatting

Communications Middleware

Communications middleware
and message routing
27

Business Process Management

Centralized visibility and control of
multi-step business process traversing
multiple applications

EAI Solution

Real-time analysis capabilities

Workflow-like coordination of multistep processes
Transactional control

Data
Warehouse
ERP

Custom

Process state information maintained to

support rollback processes
Graphical tools and metadata to define
processes and rules
28

Application Connectivity

Pre-built application
adapters to ERP and
packaged systems

EAI Solution

Custom adapter
development kits
BAPI
Call

COM
Event

SQL
Call

Data
Warehouse
ERP

Custom

Connection managed to and

from source application
Connectors to common
technologies such as orbs,
support for CORBA, EJB,
etc.

29

Transformation & Formatting

Order
#BA4583

Message protocol transformation

Order
#0K00765

Syntactic translation of one data set

into another.
Example: translation of date
formats

EAI Solution

Corporate Order # ->

SAP Order #

ERP
Order
#BA4583

SAP Order # ->

DW Order #

Semantic translation of data based

on underlying data definitions or
meaning.
Example: conversion from the
English system to the metric system

Data
Warehouse
Order
#0K00765
30
*From MessageQ.com

Communications Middleware
Directs the flow of messages among
applications

New Msg

Supports both synchronous and

asynchronous communications

EAI Solution
Message Broker

Synch. Msg

Synch. Msg

Routes messages to applications

based on message subject and/or
content
Asynch. Msg

Provides services via message

brokers, orbs or message queues

Data
Warehouse
ERP

May support publish/subscribe

messaging

Custom
31

Enterprise Application Architecture

1-32

Enterprise Application Architecture

Provides a conceptual framework
Helps visualize the basic components, processes,
and interfaces of major e-business applications

Focuses on accomplishing fundamental

business processes in concert with

Customers
Suppliers
Partners
Employees

1-33

Enterprise Application Architecture

Enterprise Resource Planning (ERP)
Concentrates on the efficiency of internal
production, distribution, and financial processes

Customer Relationship Management (CRM)

Focuses on acquiring and retaining profitable
customers via marketing, sales, and services

Partner Relationship Management (PRM)

Aims at acquiring and retaining partners who
can enhance the selling and distribution of
products and services
1-34

Enterprise Application Architecture

Supply Chain Management (SCM)
Focuses on developing the most efficient and
effective sourcing and procurement processes

Knowledge Management (KM)

Focuses on facilitating internal group
collaboration and decision support

1-35

Enterprise Application Integration

EAI software connects cross-functional systems
Serves as middleware to provide
Data conversion
Communication between systems
Access to system interfaces

1-36

How EAI Works

1-37

Transaction Processing Systems

Cross-functional information systems that
process data resulting from the occurrence of
business transactions
Transactions include sales, purchases, deposits,
withdrawals, refunds, and payments
Online transaction processing (OLTP) is a realtime system that captures transactions
immediately

1-38

Transaction Processing Systems

1-39

The Transaction Processing Cycle

1-40

Enterprise Collaboration Systems (ECS)

EC systems are cross-functional information
systems that enhance team and workgroup
Communication
Coordination
Collaboration

Systems may include

Networked PC workstations
Servers
Databases
Groupware and application packages
1-41

ECS Tools

1-42

Functional Business Systems

A variety of types of information systems
that support the business functions of

Accounting
Finance
Marketing
Operations management
Human resource management

1-43

IT in Business

1-44

Marketing Systems
Marketing systems are concerned with
Planning, promotion, and sale of existing
products in existing markets
Development of new products and new markets
Better attracting and serving present and
potential customers

1-45

Marketing Information Systems

1-46

Interactive Marketing
Interactive Marketing
A customer-focused marketing process
Uses the Internet, intranets, and extranets
Establishes two-way transactions between a
business and its customers or potential customers

Goal
Profitably use networks to attract and keep
customers
Get customers to help create, purchase, and
improve products and services
1-47

Targeted Marketing
An advertising and promotion management
concept with five targeting components

1-48

Targeted Marketing Components

Community: customized ads to appeal to specific
virtual communities
Content: ads placed on a variety of selected
websites, aimed at a specific audience
Context: ads placed on web pages that are
relevant to a product or service
Demographic/Psychographic: web marketing
aimed at specific types or classes of people
Online behavior: promotions tailored to each
visit to a site by an individual
1-49

Sales Force Automation

Outfit sales force with notebook computers,
web browsers, and sales contact software
Connect them to marketing websites and the
company intranet

Goals
Increase personal productivity
Speed up capture and analysis of sales data
Gain strategic advantage

1-50

Manufacturing Information Systems

Supports the production/operations functions
Includes all activities concerned with planning
and control of the processes producing goods
or services

1-51

Computer-Integrated Manufacturing

1-52

CIM Objectives
Simplify production processes, product designs,
and factory organization
Automate production processes and the
business functions that support them
Integrate all production and support
processes using
Networks
Cross-functional business software
Other information technologies
1-53

CIM Systems
Computer-aided manufacturing (CAM)
Automate the production process

Manufacturing execution systems (MES)

Performance monitoring information systems
for factory floor operations

Process control
Control ongoing physical processes

Machine control
Controls the actions of machines
1-54

Human Resource Management (HRM)

Information systems designed to support
Planning to meet personnel needs
Development of employees to their full potential
Control of all personnel policies and programs

1-55

HRM Systems

1-56

HRM and the Internet

Recruiting employees using the corporate
website and commercial recruiting services
Posting messages in selected Internet
newsgroups
Communicating with job applicants via e-mail

1-57

HRM and Corporate Intranets

Corporate intranet uses
Process common HRM transactions
Allow around-the-clock HRM services
Disseminate information faster than through
previous company channels
Collect information from employees online
Allow HRM tasks to be performed with little
HRM department intervention
Training
1-58

Employee Self-Service
Intranet applications can allow employees to
View benefits
Enter travel and expense reports
Verify employment and salary information
Access and update personal information
Enter time-sensitive data

1-59

Accounting Information Systems

The oldest and most widely used information
system in business
Records and reports business transactions and
economic events
Produces financial statements
Forecasts future conditions

1-60

Accounting Information Systems

Typically consists of
Order processing
Inventory control
Accounts receivable
Accounts payable
Payroll
General ledger systems

1-61

Accounting Information Systems

1-62

Financial Management Systems

Supports business managers and professionals
making decisions concerning
The financing of a business
The allocation and control of financial
resources within a business

1-63

Financial Management System Example

1-64