Introduction to Business Processes and Enterprise

Resource Planning (ERP)

Book: Integrated business

processes with ERP systems

Author: Simha, Jeffrey

 Business Processes
Business processes such as procurement and fulfillment
processes are cross-functional, meaning no single functional
department is responsible for their execution.

The Silo Effect (Chapter 1, Page 2)

 “Silo Effect” means employees complete tasks in functional
silos without knowing the consequences for the other
components in the process.
 Example: Company X wants to place an order of 100 sedan
cars with the fulfillment department of company Y. But, the
department “IMMEDIATELY” does not know if the company has
enough stock to deliver or the days it will take to deliver the
order. Thus, the fulfillment processes loses efficiency in
completing an order.
 Business Processes in ERP
Enterprise Resource Planning (ERP) systems allow functional
areas to integrate. This results in immediate process execution
without waiting for manual requests.

A procurement process using SAP ERP (Chapter 1, Page 7)

 Business Processes in ERP
Enterprise Resource Planning (ERP) systems allow functional
areas to integrate. This results in immediate process execution
without waiting for manual requests.

A production process using SAP ERP (Chapter 1, Page 8)

 Business Processes in ERP
Enterprise Resource Planning (ERP) systems allow functional
areas to integrate. This results in immediate process execution
without waiting for manual requests.

A fulfillment process using SAP ERP (Chapter 1, Page 9)

 ERP Systems (Chapter 2, Page 25)
• ERP systems primarily focus on intra-company processes.
• SAP ERP systems have following modules-
 Architecture of ERP (Chapter 2, Page 24)
• The architecture of an enterprise systems refers to the technical
structure of
– the software (the capabilities)
– the ways the users interact with the software (user interface)
– the ways the software is physically managed on computer
hardware
• Most modern ERP follows a three tier client-server architecture
SAP ERP Client/Server Architecture (Chapter 2, Page 24)
 SAP ERP Client/Server Architecture
• Presentation Layer
 The SAP GUI is installed on Individual machines which act as
presentation layer.
 SAP ERP Client/Server Architecture
• Application Layer
 In this layer business logic is executed.
 The application layer can be installed on one machine, or it can be
distributed among more than one system.
• Database Layer
 The database layer holds the data. SAP supports any relational
database. The database layer must be installed on one machine or
system.
 Major databases which are being used in SAP implementations are
Oracle, DB2.
Support for Inter-Company Processes (Chapter 2, Page 27)

• ERP systems support processes that take place between and

among companies.

• SAP ERP comes with application suite to support inter-company

processes.

• Besides, SAP NetWeaver supports integration with non-SAP

systems.
Data in SAP ERP Systems (Chapter 2, Page 29)
• Database is a central component of any ERP systems. The DB
stores all information related to all business processes.

• There are three types of data in any ERP systems as follows:

– Organizational data
– Master data
– Transaction data
Organization Data (Chapter 2, Page 29, 30,31)

CLIENT

COMPANY
CODE

PLANT

Before master data can be created, organizational structure data must

be configured following the organization’s structure. Examples:
companies, subsidiaries, factories, warehouses, and sales areas.
Master Data: Material master (Chapter 2, Page 31, 32)
Master data is the core data that is essential for operations in a
specific business or business unit.
Example: Buying materials from vendors and selling materials
to customers need master data on materials, vendors, and
customers.
Transaction Data (Chapter 2, Page 36, 37)
Processes are executed at the plant level involving master data, and
resulting in transaction data.
Transaction data: Dates, quantities, price, payments etc.

Transaction documents: Purchase orders, sales orders, invoices, financial

accounting documents etc.