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The Development of Enterprise Resource Planning Systems
• The Financial Accounting (FI) module records transactions in the general
ledger accounts. This module generates financial statements for external
reporting purposes. 31
• The Controlling (CO) module serves internal management purposes,
assigning manufacturing costs to products and to cost centers so the
profitability of the company’s activities can be analyzed. The CO module
supports managerial decision making.
The Workflow (WF) module is not a module that automates a specific business
function. Rather, it is a set of tools that can be used to automate any of the activities in
SAP ERP. It can perform task-flow analysis and prompt employees (by email) if they need
to take action. The Workflow module works well for business processes that are not daily
activities but that occur frequently enough to be worth the effort to implement the
workflow module—such as preparing customer invoices.
In summary, ERP integrates business functional areas with one another. Before
ERP, each functional area operated independently, using its own information systems
and methods for recording transactions. ERP software also makes management
reporting and decision making faster and more uniform throughout an organization. In
addition, ERP promotes thinking about corporate goals, as opposed to focusing only on
the goals of a single department or functional area. When top management is queried
on the reasons for implementing ERP systems, the overriding answer is control.With
the capability to see integrated data on their entire company’s operation, managers
use ERP systems for the control they provide, allowing managers to set corporate goals
correctly.

SAP ERP Software Implementation
A truly integrated information system requires integrating all functional areas, but for
various reasons, not all companies that adopt SAP software use all of the SAP ERP
modules. For example, a company without factories wouldn’t select the manufacturing-
related modules. Another company might consider its Human Resources Department’s
operations to be so separate from its other operations that it would decide not integrate
its Human Resources functional area. And another company might believe that its
internally developed production and logistics software gives it a competitive advantage.
So it might implement the SAP ERP Financial Accounting and Human Resources
modules, and then integrate its internally developed production and logistics system into
the SAP ERP system.
Generally, a company’s level of data integration is highest when the company uses
one vendor to supply all its ERP modules. When a company uses modules from
different vendors, additional software must be created to get the modules to work
together. Frequently, companies integrate different systems using batch data transfer
processes that are performed periodically. In those cases, however, the company no
longer has accurate data available in real time across the enterprise. Thus, a company
must be sure the decision to use multiple vendors—or to maintain a legacy system—is
based on sound business analysis, not on a resistance to change. Software upgrades of
nonintegrated systems are made more problematic because further work must be
done to get software from different vendors to interact. SAP’s NetWeaver development
platform (discussed in Chapter 8) eases the integration of SAP ERP with other
software products.

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