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SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Enterprise Information Systems for E-Business
Timo Soininen
T-86.300 Lecture1.11.2004
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Enterprise Information System, My Definition
An large-scale information system that supports the
operations and processes of an organization
Operations: manufacturing, financial accounting…
Organization: company, university, bank, ministry, …
Not a single-user, single-task-focused application
(Contrast with Alter, 2002)
Q: What enterprise systems do you encounter in your
daily life?
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Motivation
These are the systems on top of which (e-) business is
implemented
There are ”standard” packages that can be used for this
old, stable ones and new, rising ones
That’s what remains, even after all the hype has crashed
SAP alone is used by more than 60% of the major
firms
However, implementing or taking such a systems into use
is challenging
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Contents
Motivation, challenges
Categories of information systems based on the functions
of a company
Enterprise Systems/Enterprise Resource Planning
Product Design Systems/Product Data Management
Enterprise System Integration
Summary
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Why is it Challenging?
The systems are huge
implementation several years, costs 105 to 106 euros, dozens of people with different backgrounds representing different departments involved
They support the critical operations of a company
Hershey, others,...
The following based on (Sumner, 2000)
case studies of Enterprise Resource Planning-system projects in seven large companies
discuss those that seem the most pertinent or controversial for enterprise systems
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
(Some) Risk Factors in ERP Projects
Organizationno re-design of business processes +/-no enterprise-wide design for integration (process, db,...) +
Skill mixinsufficient user training, internal expertise +/-lack of business analysts +failure to mix internal and external expertise +/-difficulty to recruit and retain experts in ERP +
Management structureno senior management support +no champion +
Software systems designfailure to adhere to standards +/-lack of integration +
User involvementno commitment by customers +/-user resistance +ineffective communication
Technology planning/integration +
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Information System Categories
Based on a functional decomposition of the company
(Alter, 2002)
Sales & Marketing Systems
Supply chain systems
Manufacturing systems
Finance systems
Product design systems
There are also other, important and new systems, also
probably both important and new ones
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Sales & Marketing Systems
PointPoint--ofof--sale (POS) systemssale (POS) systems –
Combined with customization techniques, can be used
in direct marketing
E-commerce platforms
Telemarketing Telemarketing
Sales force automation (SFA)Sales force automation (SFA)
Customer relationship management (CRM)Customer relationship management (CRM)
Product ConfiguratorsProduct Configurators
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Supply Chain Systems
Manage information about
what inventory is available, when previously ordered material
will arrive, and when material will probably be needed based on
manufacturing schedules or sales forecasts
Determine material requirements
Generate new orders
Send orders to suppliers
Obtain commitment dates
Verify that the orders actually arrived
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Supply chain management
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Material requirement planning (MRP)Material requirement planning (MRP)
Integrate purchasing & production activities
Calculate a schedule based on the output requirement
Electronic data interchange (EDI)Electronic data interchange (EDI)
The electronic transfer of business data between the
computerized information systems of two firms
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Supply chain management (SCM)Supply chain management (SCM)
System that allows close coordination with
suppliers
EDI and SCM are part of the general trend
toward integration between suppliers and
their customers
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Manufacturing Systems
Computer integrated manufacturing (CIM)Computer integrated manufacturing (CIM)
Computerized data collection + integrated
data flows between design, manufacturing,
planning, and other business functions
The use of CAD, CIM, and other techniques lead
to an increase in the information content
of products
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Finance Systems
Electronic funds transfer (EFT)
Accounts between companies settled
electronically
Electronic cash
Program trading
Automate buy/sell decisions
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Product Design Systems
CAD systems – accept coded descriptions of
components and processes and graphically
display the resulting product specifications
A major systems in this are is the Product Data
Management System (PDM)
Wide range of applications
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Enterprise Systems
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Enterprise Systems
Enterprise systems = firm-wide systems that serve as a
common information infrastructure for basic business
processes
Enterprise resource planning (ERPEnterprise resource planning (ERP) systems
Controversial
Expensive and very difficult to implement
Business processes may have to be modified to fit the
software, instead of the other way around
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Enterprise Resource Planning (ERP)
Enterprise resource planning (ERP)
ERP is an integrated solution to the problem of how to control all major business processes with a single software architecture in real time. It is a process of planning and managing all resources and their use in the entire organization.
Leading ERP software producers
- SAP, Oracle, J.D. Edwards, Computer Associates, People Soft
Main Objective of ERP
to integrate all departments & functions across a company onto a single computer system.
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
MS
ERPOrder
processingProduct design and engineering
Production planning
Production control
Materials acquisition
Management Administration, financing, etc.
SuppliersProductionCustomers
Marketing and sales
Owners, financing inst., public bodies,
society
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
ERP (Alter, 2002)
Enterprise resource planning (ERP) systems provide an integrated information system that covers broad functions withinan enterprise. The capabilities of a complete ERP system include, among others:
Operations and logistics: inventory management, MRP, production planning, quality management, shipping.
Financials: accounts receivable and payable, cash management, general ledger, profitability analysis.
Sales and marketing: order management, sales management, pricing, sales planning.
Human resources: employee time accounting, payroll, travel expenses.
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
mySAP ERP functionality (modules)
R/3R/3Client / ServerClient / Server
ABAP/4ABAP/4
FIFIFinancialFinancial
AccountingAccounting
COCOControllingControlling
TRTRTreasuryTreasury
PSPSProjectProjectSystemSystem
WFWFWorkflowWorkflow
ISISIndustryIndustry
SolutionsSolutions
MMMMMaterialsMaterials
Mgmt.Mgmt.
HRHRHumanHuman
ResourcesResources
SDSDSales &Sales &
DistributionDistribution
PPPPProductionProductionPlanningPlanning
QMQMQualityQuality
ManageManage--mentment PMPM
Plant MainPlant Main--tenancetenance
IMIMInvestmentInvestment
MgmtMgmt
Finance
Logistics
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
SD
Basic dataBasic data• Customers
• Vendors
• Material
• Bill of material, CAD
• Work plan, plant maintenance plan, inspection plan, CAP
• Work center
• Production resources and tools
• Rough-cut planning profile
• Equipment
• Document
• ClassificationShipping, billing, transport
Inspection lotInspection order
SDCustomer orderprocessingCustomer requirements
PPQM
Order:- Creation- Release- Confirmation
Shop floor control Capacity levelingCAP
RepairMaintenance
PM
MM
Inventory managementGoods receiptMaterial valuationInvoice verification
Warehouse management
PlannedordersOpeningperiod
Demand managementMaterials planning
Rough-cut capacityplanning
Direct requisition
NetworkNetworkProjectsProjects
Project systemProject systemProfit planningSOPPlanned requirementsForecasts
Sales planning
Purchasing
(C) Deloitte
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
The Evolution of Integrated Systems
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Business Benefits
Benefit Number of Firms Percent
Personnel Reductions 44 20%
Inventory Reductions 42 19
IT Cost Reduction 27 13
Productivity Improvements 23 11
Order Management Cycle Time 19 9
Cash Management 16 7
Revenue/Profit 15 7
Procurement 12 6
Financial Cycle Close 10 5
Maintenance 8 4
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Product Data Management Systems
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Enter CAD From drawings to 2D and 3D models, i.e. files
easy to change, explosion of number of versions
Hardcopies archived and treated as before as the primary
source
but since changing is so easy, who has time to update
the hard copy?
In practice, use the latest copy of the file in your
workstation
the disciplined processes deteriorate
where is the correct copy? Who has the latest copy?
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Changing business environment
Increased competition
Global markets, aggressive market behavior
Shrinking budgets, lower production costs
Products are becoming more complex, exploiting more
technologies and built in vast number of variants
Quality requirements and customer responsiveness are increasing
Global manufacturing (expanded teaming)
Government and industry standards
Increased automation capabilities
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
R&D Challenge: Concurrent Engineering
Concurrent engineering
provides
Faster product
development with less
cost
Shorter time to market,
early feedback of design
implications
Concurrent engineering requires
Rapid and effective cross-team
communication even when teams
and product data are
geographically spread
Integration of heterogeneous
design environments (software &
hardware)
Supplier and customer participation
Fast decision making based on hard
product data
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Definitions of PDM
Crnkovic, Asklund, Persson Dahlqvist
(2003):
PDM is the discipline of controlling the
evolution of a product and providing other
procedures and tools with the accurate
product information at the right time in the
right format during the entire PLC
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Definition: PDM (CIMdata)
Manages all product type (definition), individual and process related information
Images and hard-copy documents
Digital files
Electronic documents: specifications, configurations, purchasing orders
CAD Drawings, models, parts, assemblies
CAE analysis
Part information, NC programs, and process plans
Database records
Manages the entire product life-time
Product design, release, change and termination
Product engineering, manufacturing, logistics, maintenance, dismantling, recycling
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
PDM: a Broad and Narrow Definition
The broad definition PDM exemplified by the previous ones
The narrow definition of PDM
management of engineering data in the product
development department
providing access to that data to and repository of some
data from systems of other departments
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
R&D: Concurrent Engineering
PDM facilitates
Up to date product document data: always work with right version
Real time and complete product structure management
Improved use of standard parts
Quick and easy access to product data
Real-time tracking and status for management: workflow
management
Early evaluation of manufacturing processes
Many more ...
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
PDM
Order processing
Product design and engineering
Production planning
Production control
Materials acquisition
Management Administration, financing, etc.
SuppliersProductionCustomers
Marketing and sales
Owners, financing inst., public bodies,
society
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
PDM Benefits, exampleExperience of a communication satellite programMetric Standard C.E. Delta (%)
Design Hours 5337 5929 4460 16%/25%
Span Time (months) 21 19 11 48%/42%
Tooling Costs $79,461 $49,993 $42,057 47%/16%
No. Changes (15 mo.) 16 24 6 63%/75%
No. Changes (30 mo.) 22 28 6 73%/79%
No. Quality Reports 23 37 4 83%/89%
No. Waivers 36 40 2 94%/95%Mark Knodle, General DynamicsSpace Systems Division
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
PDM Functions Major focus ofcurrent
developmentsGenerally supported
Some support, independents
establishing market
As PDM becomes implemented across
different industry sectors, functional priorities change.
Littlesupport
ProgramManagement
Product StructureManagement
Classification& Retrieval
partno Length
Screw
axy1234 10 mm
zvy3245 20 mm
dgf2345 30 mm
Workflow and ProcessManagement
ECOECO
Data Vault and DocumentManagement
Drawings/Documents
NC
3D
SPEC
+ Support utilities
25/11/2003 Copyright © 2001 Timo Soininen & Asko Martio 25
PDM Functions Major focus ofcurrent
developmentsGenerally supported
Some support, independents
establishing market
As PDM becomes implemented across
different industry sectors, functional priorities change.
Littlesupport
ProgramManagement
Product StructureManagement
Classification& Retrieval
partno Length
Screw
axy1234 10 mm
zvy3245 20 mm
dgf2345 30 mm
Workflow and ProcessManagement
ECOECO
Data Vault and DocumentManagement
Drawings/Documents
NC
3D
SPEC
+ Support utilities
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Data vault
PDM Server
Meta-Database
data
Managed referenced files
Object: DocumentDate: 1/1/95Project: MotorPart #: 8893-0ARevision: 2.3ADocument #: 4569-29File: A:\PDM\doc\motor\...Application: MS-Word 6.0
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
1 Quality2 Attributes3 Materials4 Process
1 Quality2 Attributes3 Materials4 Process
Assembly drawing and BOM
Test Data
Analysis Report
Marketing Definition
Phone Receiver
Revision A
Revision B
Revision A
Revision B
Revision A
Revision B
Revision A
Revision ARevision A
Revision A
Revision A
Revisions
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
ECOECO
DesignEngineeringSupervisor
Purchasing
Manufacturing
Customer Service
Project Management
ECO
ECO
ECO
ECO
FYI
ECO approval process, example
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Islands of automation: past development in companies
Unstructured and random:
a quick fix applied to a local problem
Local ”standard” systems start to appear, e.g.:
production, finance since 1960’s
design since 1980’s
Improvements targeted at one bottleneck at a time, unaware of possible new problems created
Orderprocessing
Product designand engineering
Productionplanning
Productioncontrol
Materialsacquisition
Management Administration,financing, etc.
SuppliersProductionCustomers
Marketing andsales
Owners,financing inst.,public bodies,
society
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Enterprise Systems Integration
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Islands of automation: result of the development
CAD
CAMProductionmanagement
Order entry
Materialsmanagement
Shipping
Separate systems which
cannot exchange information
Large amount of manual
work is required to prepare
input for the various systems
and to process the outputs,
leading to errors.
Q: What islands of
automation do you
encounter?
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Islands of automation: need for a strategy
Integration strategy for bridging the “islands”
CAD
CAMProductionmanagement
Order entry
Materialsmanagement
Shipping
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
PDM system
CRM solution
Supply Chain Mgmt
Enterprise Resource Planning system
Legacy application
Point-to-point integration
eCommerce
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Pitfalls in point-to-point integration
Complexity
Custom Interfaces
Manual re-keying
Stove piped processes
Data migration & consistency
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Enterprise Systems IntegrationWebster’s New Collegiate Dictionary:
in·te·grate \’int-e-,grat\ vb [L integratus, pp. ofintegrare, fr. integr., integer] vt 1 : to form into a whole 2 a : to unite with something else 2 b : to incorporate in a larger unit
Both “top-down” and “bottom-up” meanings are listed!
Design and manage an enterprise wide “compound”information system that support the operations of the enterprise
Integrate enterprise systems to each other to perform tasks jointly
Q: Which integrated systems do you encounter in you daily life?
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
EAI– “Hub and Spoke” architectureEnterprise Resource Planning system
EAI services
Supply Chain Mgmt
eCommerce
PDM system
CRM solution
Siebel
WWW
I2eMatrix
SAP R/3
Pakki
Legacy application
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
EAI services include
Platform, protocol management..
Asynchronous,Synchronous messaging support..
Security services, encryption,non-repudiation..etc
Routing services, publish/subscribe..
Directory services..
Metadata management & repository services..
Event management, topology & synchronization..
Data mapping & transformation services..
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
B2Bi picture
Application
Application
Application
ApplicationEAI
Company A
B2BMiddleware
Company B
Company C
Appli-cation
Appli-cation
Appli-cation
Appli-cation
Appli-cation
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Summary
There are stable enterprise systems on which to implement e-businesses
enterprise resource planning
product design/PDM
supply chain management
point of sales
manufacturing
However, applying them is not easy
BPR, organizational issues, complexity,...
And, they must be integrated
EAI, B2B integration
09/11/2004
SoberITSoftware Business and Engineering Institute
HELSINKI UNIVERSITY OF TECHNOLOGY
Commercials
T-86.141 Enterprise Systems Integration 3 cr autumn
T-86.165 Seminar on Product Data Technology 2-6 cr P V
spring
T-86.161 Special Topics in Information Technology for
Production II 2-6 cr P V spring / T-86.301 Project course
on ICT Enabled Commerce 4 cr P V spring