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Unformatted text preview: eep track o f their invento ry,
reco rd sales, manage payments to suppliers, cut emplo yee paychecks, and handle o ther f unctio ns. So me f irms write their o wn enterprise so f tware f ro m scratch, but this can be time co nsuming and
co stly. Since many f irms have similar pro cedures f o r acco unting, f inance, invento ry management,
and human reso urce f unctio ns, it o f ten makes sense to buy a sof t ware package (a so f tware
pro duct o f f ered co mmercially by a third party) to suppo rt so me o f these f unctio ns. So -called
ent erprise resource planning (ERP) so f tware packages serve precisely this purpo se. In the
way that Micro so f t can sell yo u a suite o f deskto p so f tware pro grams that wo rk to gether, many
co mpanies sell ERP so f tware that co o rdinates and integrates many o f the f unctio ns o f a business.
The leading ERP vendo rs include the f irm’s SAP and Oracle, altho ugh there are many f irms that sell
ERP so f tware. A co mpany do esn’t have to install all o f the mo dules o f an ERP suite, but it might
add f unctio ns o ver time—f o r example, to plug in an acco unting pro gram that is able to read data
f ro m the f irm’s previo usly installed invento ry management system. And altho ugh a bit mo re o f a
challenge to integrate, a f irm can also mix and match co mpo nents, linking so f tware the f irm has
written with mo dules purchased f ro m dif f erent enterprise so f tware vendo rs. Figure 9. 4 ERP in Act ionAdap t ed from G. Edmonds on, “Silicon Valley on t he Rhine, ” Bus ines s Week
Int ernat ional, November 3, 1 997. An ERP system with multiple mo dules installed can to uch many f unctio ns o f the business: Sales—A sales rep f ro m Vermo nt-based Sno wbo ardCo . takes an o rder f o r f ive tho usand bo ards
f ro m a French spo rting go o ds chain. The system can verif y credit histo ry, apply disco unts,
calculate price (in euro s), and print the o rder in French.
Inv ento ry—While the sales rep is o n the pho ne with his French custo mer, the system
immediately checks pro duct availability, signaling that o ne tho usand bo ards are ready to be
shipped f ro m the f irm’s Burlingto n wareho use, the o ther f o ur tho usand need to be
manuf actured and can be delivered in two weeks f ro m the f irm’s manuf acturing f acility in
Manufacturing—When the custo mer co nf irms the o rder, the system no tif ies the Guangzho u
f acto ry to ramp up pro ductio n f o r the mo del o rdered.
Human Reso urces—High demand acro ss this week’s o rders triggers a no tice to the Guangzho u hiring manager, no tif ying her that the f irm’s pro ducts are a hit and that the f lo o d o f o rders
co ming in glo bally mean her f acto ry will have to hire mo re wo rkers to keep up.
P urchasing—The system keeps track o f raw material invento ries, to o . New o rders trigger an
auto matic o rder with Sno wbo ardCo .’s suppliers, so that raw materials are o n hand to meet
OrderTracking—The French custo mer can lo g in to track her Sno wbo ardCo . o rder. The system
sho ws her o ther pro ducts that are available, using this as an o ppo rtunity to cro ss-sell
additio nal pro ducts.
Decisio n Suppo rt—Management sees the f irm’s Euro pean business is bo o ming and plans a
marketing blitz f o r the co ntinent, targeting bo ard mo dels and styles that seem to sell better f o r
the Alps cro wd than in the U.S. market. Other catego ries o f enterprise so f tware that managers are likely to enco unter include the f o llo wing: cust omer relat ionsh ip management (CRM) systems used to suppo rt custo mer-related
sales and marketing activities
supply ch ain management (SCM) systems that can help a f irm manage aspects o f its value
chain, f ro m the f lo w o f raw materials into the f irm thro ugh delivery o f f inished pro ducts and
services at the po int-o f -co nsumptio n
business int elligence (BI) syst ems, which use data created by o ther systems to pro vide
repo rting and analysis f o r o rganizatio nal decisio n making Majo r ERP vendo rs are no w pro viding pro ducts that extend into these and o ther catego ries o f
enterprise applicatio n so f tware, as well. Mo st enterprise so f tware wo rks in co njunctio n with a dat abase management syst em
(DBMS), so metimes ref erred to as a “database system.” The database system sto res and retrieves
the data that an applicatio n creates and uses. Think o f this as ano ther additio nal layer in o ur cake
analo gy. Altho ugh the DBMS is itself co nsidered an applicatio n, it’s o f ten usef ul to think o f a f irm’s
database systems as sitting abo ve the o perating system, but under the enterprise applicatio ns.
Many ERP systems and enterprise so f tware pro grams are co nf igured to share the same database
system so that an o rganizatio n’s dif f erent pro grams can use a co mmo n, shared set o f data. This
system can be hugely valuable f o r a co mpany’s ef f iciency. Fo r example, this co uld allo w a separate...
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This document was uploaded on 01/31/2014.
- Winter '14