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370 Part Three Key System Applications for the Digital Age

FIGURE 9.1 HOW ENTERPRISE SYSTEMS WORK

Enterprise systems feature a set of integrated software modules and a central database that enables
data to be shared by many different business processes and functional areas throughout the
enterprise.

activities. When new information is entered by one process, the information is
made immediately available to other business processes (see Figure 9.1).
If a sales representative places an order for tire rims, for example, the system
verifies the customer’s credit limit, schedules the shipment, identifies the best
shipping route, and reserves the necessary items from inventory. If inventory
stock were insufficient to fill the order, the system schedules the manufacture
of more rims, ordering the needed materials and components from suppliers.
Sales and production forecasts are immediately updated. General ledger and
corporate cash levels are automatically updated with the revenue and cost infor-
mation from the order. Users could tap into the system and find out where that
particular order was at any minute. Management could obtain information at
any point in time about how the business was operating. The system could also
generate enterprise-wide data for management analyses of product cost and
profitability.

ENTERPRISE SOFTWARE

Enterprise software is built around thousands of predefined business pro-
cesses that reflect best practices. Table 9.1 describes some of the major business
processes supported by enterprise software.
Companies implementing this software would have to first select the
functions of the system they wished to use and then map their business
processes to the predefined business processes in the software. (One of our
Learning Tracks shows how SAP enterprise software handles the procure-
ment process for a new piece of equipment.) A firm would use configuration
tables provided by the software manufacturer to tailor a particular aspect of

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