Page 662 - Introduction to Business

636 PART 6 Managing Business Operations, Management Information Systems, and the Digital Enterprise

intranet is an internal network in a business organization phased strategy, modules are implemented one at a
that is used by employees to collaborate, share time, and for companies with multiple locations,
information, and access internal websites. An extranet is a modules are implemented one location at a time. In the
network that links the intranet resources of a company big-bang strategy, all required modules are
with other organizations. A virtual private network is a implemented at once, and for firms with multiple
secure network that uses the Internet as its main locations, modules are implemented at all locations
backbone network and relies on a network firewall. A at once.
client/server network is a telecommunications network
where some computers are “clients” and some computers LEARNING OBJECTIVE 6
are “servers.” Client/server networks, virtual private Illustrate supply chain management.
networks, and extranets have become the predominant
information architecture for the digital enterprise. Supply chain management is the management of all
activities in the supply chain, in order to minimize the
total costs of the chain and to maximize the value to the
LEARNING OBJECTIVE 3
end users of the chain. Using ERP systems as a
Define enterprise resource planning.
backbone, supply chain management fosters the
Enterprise resource planning refers to computer soft- integration of business processes across the different
ware that integrates the majority of a firm’s business firms that constitute the supply chain. Supply chain
processes, executes all transactions related to the inte- management has had a significant business impact and
grated business processes, stores each piece of data only has led to several strategies, such as optimizing the
once in an enterprise-wide database, allows access to number of suppliers, vertical integration, virtual
data and information in real time, and operates in a tra- collaboration, and bypassing.
ditional or Web-based client/server environment.
Twenty years of experience with ERP systems demon- LEARNING OBJECTIVE 7
strates that these systems produce benefits such as Outline the roles that ERP systems, supply chain
improved financial management, better managerial management, and e-business play in the emergence
decision making, improved inventory and asset manage- of the digital enterprise.
ment, and faster, more accurate business transactions. E-business is the process of buying and selling goods
ERP systems are useful for the globalization trends in and services electronically. E-business transactions use
businesses by offering multilanguage, multicurrency, computer networks, the Internet, and other digital
and multinational capabilities. ERP systems have been technologies. E-business transactions can be business-
implemented in more than 100 countries, in most major to-consumer (B2C), business-to-business (B2B), and
industries, and in companies of all sizes. consumer-to-consumer (C2C). E-business transactions
typically take place over wired networks, but lately
LEARNING OBJECTIVE 4
these transactions are also taking place via wireless
Compare the five major vendors of enterprise devices in what is called mobile commerce. E-business
resource planning software.
uses electronic payment systems such as digital credit
The five largest ERP software vendors in increasing order cards, digital cash, digital wallets, and digital checks. It
of market share are Baan, J.D. Edwards, PeopleSoft, offers to companies unprecedented business
Oracle, and SAP. Baan and SAP are based in Europe, while opportunities and, at the same time, challenges related
the other three vendors are based in the United States. to unproven business models, far-reaching
Baan became well known when it sold its software to the organizational changes, legal issues, and security.
Boeing Company in 1994. J.D. Edwards’ market niche ERP systems provide a digital link among functions
has been midsized companies. PeopleSoft’s strength is within a firm. Relying for the most part on ERP systems,
in human resources. Oracle’s reputation in ERP systems supply chain management provides a link among the
has been built around developing a product that can be firms that are members of a supply chain. E-business
easily interfaced with modules of other ERP systems. provides the digital link between the end users and the
SAP is currently the major player in ERP systems, with a supply chain, and between a firm and the firms with
market share estimated around 40 to 60 percent. SAP is which it does business. The synergy among ERP
known for spending about 20 percent of its sales income systems, supply chain management, and e-business has
on research and development. made possible the emergence of the digital enterprise.

LEARNING OBJECTIVE 5
Evaluate the two major strategies for implementing
enterprise resource planning systems.
The two major strategies for implementing ERP systems
are the phased strategy and the big-bang strategy. In the
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