Concepts in Enterprise Resource Planning

Fourth Edition

Chapter Eight RFID, Business Intelligence (BI), Mobile Computing, and the Cloud

Objectives
After completing this chapter, you will be able to: Define RFID and its role in logistics and sales Define business intelligence (BI), and provide examples of its uses Explain how in-memory computing will change the use of BI Discuss the importance of mobile applications to businesses Describe cloud computing and why it is becoming important for ERP providers
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Objectives (contd.)
Explain how the service-oriented architecture (SOA) concept has changed ERP development Describe Web services, and outline the unique components of NetWeaver Define software as a service (SaaS), and identify the advantages and disadvantages of using this software delivery model

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Introduction
An Enterprise Resource Planning (ERP) system allows a company to accomplish tasks that cannot be done well, if at all, without such a system Traditionally:
ERP systems have been software applications that are run on a companys own computer systems Focus of ERP has been on managing business transactions

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Introduction (contd.)
Technologies, such as radio frequency identification (RFID), are increasing the amount of data that is contained in ERP systems Business intelligence technologies are turning data in ERP systems into valuable information Cloud computing and mobile technologies are changing where ERP data is stored and how it is delivered

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Radio Frequency Identification (RFID) Technology

Radio frequency identification technology
Known commonly as RFID Becoming an increasingly efficient tool for tracking items through a supply chain

RFID device
Can be attached to products A small package (or tag) made up of a microprocessor and an antenna

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Radio Frequency Identification (RFID) Technology (contd.)

RFID reader
Can determine location of an item with an RFID tag Emits radio waves and receives signals back from the tag Sometimes called an interrogator

Advantages of RFID technology:

Does not need a line-of-sight connection Can withstand most environmental stresses

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Radio Frequency Identification (RFID) Technology (contd.)

Walmart is on the leading edge of the move to integrate RFID technology into the supply chain Pharmaceutical firms are evaluating the use of RFID technology RFID technology is being employed to track medical devices
Spectrum Healths Meijer Heart Center is using RFID technology to track stents

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Business Intelligence/Business Analytics

Business intelligence (BI)
Also referred to as business analytics A range of different applications and technologies used to extract and analyze large amounts of data to aid in decision making Includes data-mining tools and querying tools
Often interactive and visual

There has been significant growth in the BI market in recent years

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Figure 8-1 SAP Business Intelligence (BI) framework

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Business Intelligence/Business Analytics (contd.)

Analytic applications and business intelligence
Similar sets of data analysis tools

Analytic applications
Data analysis tools applied to specific industries

Enterprise performance management

Concept of developing strategic goals for the organization Gathering data to evaluate how the organization is performing in relation to those goals

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Business Intelligence/Business Analytics (contd.)

Governance, risk, and compliance category
A group of activities focused on ensuring an organization is functioning ethically and legally

Data warehousing
Technology used to store the large volumes of data used in the analysis

Enterprise information management

Describes the business and technology functions that manage information as a corporate asset

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In-Memory Computing
Data in a data warehouse are structured as multidimensional data cubes
Allow for relationships in the data to be analyzed quickly

Two main challenges with using a multidimensional cube structure

A significant level of technical expertise is needed to construct a cube A multidimensional cube necessarily restricts how the data can be analyzed
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In-Memory Computing (contd.)

Accessing data from memory much faster than accessing data from a hard disk Reason why data warehouses use disk memory: storage capacity
Hard disks can store one thousand times more data than memory for a comparable cost

Data compression provided by column storage

Makes it possible to store large volumes of data in memory without aggregation Multidimensional cubes are not required
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Figure 8-2 Material master data table

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In-Memory Computing (contd.)

Both SAPs and Oracles in-memory solutions are designed to analyze big data Big data
Enormous amount of data that is now available for BI use from all the available sources, including:
ERP systems, Web sites, corporate databases, scientific research, Twitter, and other social networking applications

BI analytics was the top technology priority for CIOs in 2012

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Mobile Computing
Increasing use of smartphones, tablet computers, and other mobile computing devices Mobile applications need to be developed for different kinds of smartphones, with different operating systems Companies need to make many decisions about the use of mobile devices by employees Mobile devices provide users with information and can also be sources of information

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From Internet-Enabled to Cloud Computing

Cloud computing
Delivery of a software product to a user via the Internet The user typically accesses the cloud product through a Web browser or a lightweight (meaning small and simple) application for a computer or mobile device

Cloud computing is not a completely new concept

It represents the latest stage of the development of computing and the Internet
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SAP and the Internet

1996: SAP introduced its joint Internet strategy with Microsoft Internet Transaction Server (ITS)
A server-based software system that enabled efficient communication between an SAP ERP system and the Internet Core of SAPs first effort to integrate the Internet with its products

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SAP and the Internet (contd.)

May 1999: SAP announced mySAP.com
A new strategy designed to completely realign the company and its product portfolio Goal: combine e-commerce solutions with SAPs existing ERP applications, using cutting-edge Web technology

2000: SAP began building on the mySAP.com vision

Added the capability for electronic marketplaces and corporate portals
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NetWeaver
2004: SAP introduced its first version of SAP NetWeaver
A collection of components that support business transactions over the Internet Provide seamless connectivity of diverse applications

SAPs enterprise service-oriented architecture (enterprise SOA)

Goal of making all of its business applications service based
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NetWeaver (contd.)
Web services
Combination of software tools that enables an organizations various systems and applications to communicate with other applications

SAPs NetWeaver
A Web services platform that allows various vendor applications to share data over the Internet

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NetWeaver (contd.)
One benefit of adopting SOA
Ability to quickly add new applications, making the organization more responsive Use of open standards

Implementing SOA is not easy Return on an SOA investment is often difficult to determine

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NetWeaver Tools and Capabilities

SAPs NetWeaver platform is a collection of modules, including:
Enterprise Portal Mobile Infrastructure Business Intelligence Master Data Management Exchange Infrastructure

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NetWeaver Tools and Capabilities (contd.)

SAP Enterprise Portal gives users complete access to all their work on a single screen
All information is available through the Web services provided by NetWeaver

NetWeavers Mobile Infrastructure module allows users to access and work with data through mobile devices such as smartphones and pagers

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NetWeaver Tools and Capabilities (contd.)

Business Intelligence (BI) works with any database management software and any operating system that is running NetWeaver Master Data Management provides data consistency within a companys SAP system NetWeavers Exchange Infrastructure module allows different applications to share data

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NetWeaver at Work for Fitter

Examining how NetWeaver can help Fitter Fitter has an SAP ERP system Fitters two top salespeople, Amy Sanchez and Donald Brown, are busy selling NRG bars directly to customers and to distributors

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SaaS: Software As A Service

A software delivery model A software product is hosted by a companysuch as SAPon its servers and is accessed by customers via a Web browser Sometimes described as a utility A subset of cloud computing

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SAP Business ByDesign

An example of SaaS for the ERP market First released in 2007 A full ERP system delivered to customers via the cloud For small to medium-sized companies:
Lowers the total cost of ownership of the software Enables a rapid and smooth implementation

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Figure 8-4 SAP Business ByDesign main screen

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SAP Business ByDesign (contd.)

PlaNet Finance
A small organization that offers microloans to customers in 30 international offices Finds Business ByDesign is a good fit for its needs

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FIGURE 8-5 SAP Business ByDesigns key capabilities

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Advantages of Using SaaS

Initial affordability
Lower cost to implement software provided through SaaS

Shorter implementation time

Implementation time usually shorter as the user does not have to worry about technical issues

Lower support costs and complexity

Do not need to hire additional IT personnel to implement new systems and applications

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Disadvantages of Using SaaS

Security Bandwidth/response time Flexibility No frills Technical, not business focus Exercise 8.2
Fitter has made the decision to acquire an ERP system

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FIGURE 8-7 Arguments for purchasing ERP system and software versus using SaaS

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Option 1: Buying Computers and Software Rights for an ERP System

Estimated costs to set up its own ERP system:
Database server Application server PCs Computer maintenance Licensing rights Installation User training Ongoing consulting Network and database administrator
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Option 2: Using an SaaS Provider to Deliver ERP Software

Estimated costs for using an SaaS provider to deliver ERP software:
PCs Computer maintenance Software through the SaaS provider User training

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Calculate the NPV and Make a Recommendation

You will set up a spreadsheet to total all the costs of each option In each scenario, you must deal with the net present value (NPV) of money NPV
A way to figure out whether an investment is profitable In this case, to compare outlay of funds from one method to another Addresses the time value of money
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Calculate the NPV and Make a Recommendation (contd.)

When calculating two different investment options, NPV calculation allows:
Different future expenses or earnings to be calculated as an equivalent amount in the present time

NPV can be calculated over a number of years

In example: we need a five-year outlay of funds for the ERP project

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Calculate the NPV and Make a Recommendation (contd.)

In an Excel spreadsheet, the syntax of NPV calculation: =NPV (hurdle rate percentage, range of values)
Values in range can be positive or negative numbers Hurdle rate
Rate of discount over the period Minimum acceptable rate of return on a project that a company will accept

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Figure 8-8 Cost comparisons: buying versus SaaS

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Calculate the NPV and Make a Recommendation (contd.)

Perform the following steps:
Calculate the cost of the two methods of implementing an ERP system for five years Consider using different hurdle rates for each option
Why might varying hurdle rates be applicable for this decision?

Write a memo, with your spreadsheet attached, to the CIO

Answer this question: Which method should Fitter choose, and why?

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Summary
Technologies such as radio frequency identification (RFID) and smartphones are fueling explosive growth in the amount of data available for businesses to process Business intelligence (BI) tools are growing in sophistication and power
Technologies such as in-memory computing will provide greater speed and flexibility to BI users

Mobile computing technology is increasing the use of ERP and BI data

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Summary (contd.)
Cloud computing is the delivery of a software product to a user via the Internet Web services and service-oriented architecture offer a combination of software tools that enables various programs within an organization to communicate with other applications SAPs Web services platform is NetWeaver
A collection of components that support business transactions over the Internet by providing seamless connectivity of diverse applications through the Internet
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Summary (contd.)
Software as a service (SaaS) is a software delivery model in which a software product is hosted by a companysuch as SAPon its servers and is accessed by customers via a Web browser
SaaS model allows companies to use ERP without a large initial investment SaaS solutions allow for more rapid improvements in the software through user communities There are some risks associated with using an SaaS provider
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