1、1Information Systems forBusiness Integration: ERP SystemsBUS3500 - Abdou Illia, Fall 2012(December 3, 2012)2LEARNING GOALSExplain the difference between horizontal and vertical business integration.Describe how Enterprise Resource Planning systems integrate internal business processes.Distinguish be

2、tween core and extended EPR components.3Traditional File System: Integration problemEach system uses its own programs and filesWhen systems are not integratedInability to share dataDifficult to maintaindata duplication (i.e. redundancy)System 1Program 1File 1File 2File 3Program 2File 1File 2File 3Sy

3、stem 2Program 1File 1File 2File 3Program 2File 1File 2File 34Database Systems: A Solution to Integration problemSystems share the same databaseDatabase allows systems integrationSystems share the same dataSystems are easy to maintainNo (or less) redundancySystem 1Program 1 Program 2System 2Program 1

4、 Program 2DBMS5Business Integration?SalesDepartmentLogisticsDepartmentProductionDepartmentHorizontalIntegrationVerticalIntegrationSuppliersCustomers6Why Horizontal Integration?Possible consequences of bad horizontal integration:Delivery personnel not available when neededSold products not delivered

5、on timeEtc.SalesInformation SystemOperation & DeliveryInformation SystemLack of good integration means:- No reliable interface- No effective communicationsQ: What kind of solution can provide business integration in this specific case?7Systems for Horizontal IntegrationEnterprise Resource Planning (

6、ERP) systemsintegrate all the internal processes through a common information system (or an integrated set of info systems) ERP systemSalesDepartmentLogisticsDepartmentProductionDepartmentWarehousingMarketingDepartmentAccountingDepartmentProcess1Process2Process1Process2Process1Process2Process1Proces

7、s2Process1Process2Process1Process2CommonDatabase8Enterprise Resource Planning SystemsERP systems integrate all the functions and departments within an organization through a common information systemAt the heart of ERP systems is a common databaseWhen a user enters or updates information in one modu

8、le, it is immediately and automatically updated throughout the entire system9Enterprise Resource Planning SystemsERP systems automate business processes10ERP Components (or Modules)Two types of componentsCore ERP ComponentsExtended ERP ComponentsCore ERP ComponentsTraditional components found in mos

9、t ERP systemsAre primarily focused on internal operations: Finance, Accounting, manufacturing, HR.CommonDatabaseFinance &AccountingManufacturing* Also called Production & Material Management* Helps from products development to production* Handles demand forecasting, production planning, production s

10、cheduling, quality control, etc.HumanResource11ERP Components (or Modules)Extended ERP ComponentsExtra components that might be includedThey primarily focus on external operations: CRM, SCM, E-Business, Business Intelligence.CommonDatabaseCustomerRelationshipManagementSupplyChainManagementBusinessIn

11、telligence1E-Business2- e-logistics- e-procurement1 Provide information that help users in decision-making1 Collects info used throughout the organization, organize it, and uses analytical tools to help decision-making process2 Includes e-logistics (managing transportation & storage of goods over th

12、e Internet) and e-procurement (B2B purchase & sale of supplies & services over the Internet)12ERP Components (or Modules)ERP mainly used by medium and large businessesAverage lifetime cost: $15 Million (2010 surveys)Implementation process: up to 5 yearsThe largest vendors worldwide in 2012#VendorRev

13、enue(million $)Market share(%)1SAP472628.72Oracle Applications*167410.23The Sage Group12217.44Microsoft Dynamics6163.75SSA Global Technologies4642.8* In January 2005 Oracle bought PeopleSoft, then the 3rd player.13Cost of ERP Systems14Factors in ERP System SuccessActive support of upper managementHa

14、ving the best people on the implementation teamManaging the time line wellUser involvement in the planning and implementing ERP systems15Summary QuestionsBookNotesWhat is the difference between Horizontal integration and Vertical integration? What could be the consequences of a bad horizontal integration?5,62) (a) What kind of information system is typically used by organizations for horizontal integration? 7(a) What are