IS in the Enterprise-f PDF

Information System in the Enterprise V. IS in the Enterprise Types of IS and what organizational level can be used Interrelationship among information systems Business Processes and Information Systems Enterprise Applications Inte...

Information System in the Enterprise V. IS in the Enterprise Types of IS and what organizational level can be used Interrelationship among information systems Business Processes and Information Systems Enterprise Applications Interorganizational and International Information Systems  Topics Interrelationship among information systems Enterprise Applications: Business Processes and Information Systems Enterprise Systems: Description, benefits, challenges, Advantages and disadvantages Supply Chain Management Customer Relationship Management Interorganizational and International Information Systems  NOTE Information systems help organizations –Achieve great efficiencies by automating parts of processes –Rethink and streamline processes  Management Challenges 1. Integration: Different systems serve variety of functions, connecting organizational levels is difficult and costly 2. Enlarging scope of management thinking: Huge system investments, long development time must be guided by common objectives Enterprise Applications Business Processes and Information Systems  Business processes Manner in which work is organized, coordinated, and focused to produce a valuable product or service Concrete work flows of material, information, and knowledge—sets of activities Unique ways to coordinate work, information, and knowledge Ways in which management chooses to coordinate work  Example of Business Processes Manufacturing and production: Assembling product, checking quality, producing bills of materials Sales and marketing: Identifying customers, creating customer awareness, selling  Example of Business Processes Finance and accounting: Paying creditors, creating financial statements, managing cash accounts Human Resources: Hiring employees, evaluating performance, enrolling employees in benefits plans  With the business processes in the organization, how can it be utilized to create an Information system?  Cross-Functional Business Processes Transcend boundary between sales, marketing, manufacturing, and research and development Group employees from different functional specialties to a complete piece of work Example: Order Fulfillment Process  Enterprise Applications Enterprise systems Enterprise Resource Planning Supply chain management systems Customer relationship management systems Knowledge management systems  Traditional view of systems Within the business: –There are functions, each having its uses of information systems Outside the organization’s boundaries: –There are customers and suppliers Functions tend to work in isolation  Historical context of Ent.Sys. There were “island of automation” –different systems were created independently or loosely 1970s – vision to have an integrated IS... –But was not possible due to: Capacity of computers Programming languages were not flexible Organization were contented to manage themselves along narrow functional lines  Historical... 1990s, many IS communities started developing integrated systems Many companies tried redeveloping their core transaction systems for client/server architecture – But it was expensive and highly failure prone – Packages as an alternative to in-house development became an appealing option – Packages got a huge boosts 1998 – many implemented ERPS systems – Reasons why annual revenue got its high mark  Historical... ERP vendors took advantage –Focused on smaller firms –SAP, Inc. $3.3 Billion revenue in 1997 for their sales on SAP With this –ERP systems is a clear phenomenon in the IT marketplace  Enterprise System software package that enables the integration of transactions-oriented data and business processes throughout an organization (and perhaps eventually throughout the entire inter- organizational supply chain) A.k.a –Enterprise-wide Information System –Enterprise Integration System  Enterprise System... includes ERP software and related packages –advanced planning and scheduling, –sales force automation, –customer relationship management, and –product configuration.  Enterprise System... provide a technology platform that enables firm to integrate and coordinate their business processes. a single system that is central to the firm and ensure that information can be shared across all functional levels and management hierarchies. are invaluable in eliminating the problem of information fragmentation caused by multiple information systems in an organization, by creating a standard data structure.  Best Practices Evolving  Characteristics of Ent. Sys. Integration “seamless integration” of all the information flowing through a company -—financial and accounting information, human resource information, supply chain information, and customer information” (Davenport, 1998, p. 121). – Integration depends on “configuring” (setting up) the system in particular ways It depends on which modules to install and integrate  Characteristics of Ent. Sys. Packages – Most are commercial packages Purchased or leased from software vendor rather than being developed in-house... – IS has different life cycle Package adopters forgo/curtail the analysis of current information requirement and business processes. Configuring is different from programming. Configuring is selecting a module of the package while programming is more of creating new software functionality. – Organization enter into a long term relationship with the software vendor.  Characteristics of Ent. Sys. Best Practices –Built to support generic business processes which may differ from the way the firm does business but they are designed to fit the needs of the organization  Characteristics of Ent. Sys. Some Assembly required –What is integrated is the software, not the computing platform where it runs –great difficulty integrating their enterprise software with a package of hardware, operating systems, database management systems software, and telecommunications suited to their particular organizational size, structure, and geographic distribution.  Characteristics of Ent. Sys. Evolving –Rapidly changing, architecturally changing –1980s – enterprise systems were designed for mainframe architecture –Now – designed for client-server architecture and –Having a web-enabled versions of the software  Technical Reasons for adopting Enterprise Systems Integrate applications cross-functionally Replace hard-to-maintain interfaces Reduce software maintenance burden through outsourcing Eliminate redundant data entry and concomitant errors and difficulty analyzing data Improve IT architecture Ease technology capacity constraints Decrease computer operating costs Consolidate multiple different systems of the same type  Business Reasons for adopting Enterprise Systems Accommodate business growth Improve informal and/or inefficient business processes Clean up data and records through standardization Reduce business operating and administrative expenses Reduce inventory carrying costs and stockouts Eliminate delays and errors in filling customers’ orders Provide integrated IT support Standardize procedures Improve companywide decision support  Enterprise Systems... Externally focused systems – coordinate business activities with customers, suppliers, and business partners who operate outside the organizational boundary. – Systems that communicate across organizational boundaries are called interorganizational systems (IOS). Internally focused applications – Systems used in the value chain. Value chain – set of business activities  Value Chain Primary activities and support activities – Primary activities are functional areas within an organization that process inputs and produce outputs. It includes Inbound logistics, Operations and manufacturing, Outbound logistics, Marketing and sales, Customer service – Support activities are those activities that enable primary activities to take place. Infrastructure (hardware & software) Human resources (hiring, interview scheduling, payroll, benefits) Technology development (software selection, Internet, intranet, extranet) Procurement (purchasing of goods and services required as inputs primary services)  Value Chain Everything an enterprise does should create value for its customers (acdg. to Porter) –Creating value has cost i.e. creating cars something of value but must pay various inputs such as materials, supplies, and time of employees  Benefits of Enterprise Systems Firm structure and organization: One organization Management: Firm-wide knowledge-based management processes Technology: Unified platform Business: More efficient operations and customer- driven business processes  Challenges of Enterprise Systems Difficult to build: Require fundamental changes in the way the business operates Technology: Require complex pieces of software and large investments of time, money, and expertise Centralized organizational coordination and decision making: Not the best way for the firms to operate  Types of enterprise systems Packaged applications Custom applications Stand-alone applications Enterprise Resource Planning  ERP aims to integrate business processes through the support of an integrated computer information system (O’Brien, 1999). It has been estimated that businesses around the world have been spending almost $10 billion per year on ERP systems.  ERP Integrated applications Groups of software applications integrated to form enterprise-wide information systems allows the corporate management of a business, and aims to integrate individual functional systems such as manufacturing, finance, procurement and distribution. allow companies to replace their existing ISs and also help to standardize the flow of management information and have been regarded as the next step in the evolution of MRPII (Manufacturing Resource Planning). ERP System  Benefits from ERP Business process automation Timely access to management information Improvement in the supply chain via the use of E-communication and E-commerce. Companies that use ERP can gain a competitive advantage from the way they implement the system and then exploit the resulting data. Many companies that have installed ERP have claimed to be more nimble within the marketplace than their competitors with hard-to- change custom made systems (Latamore, 1999)  ERP Systems ERP Software vendor market had experienced rapid growth in the late 90s Some ERP software – SAP AG – Oracle Corp. – PeopleSoft – J.D. Edwards – Baan Corp Most ERP are based on Client/Server model NOT ring, bus or peer2peer topologies Empty boxes represent third-party add-on modules  Third Party Modules Customer Relationship Management (CRM)—builds and maintains customer related data Customer Self-Service (CSS)—allows customers to complete tasks without assistance Sales Force Automation (SFA)—automates sales tasks such as order processing and tracking Supply Chain Management (SCM)—plans and executes demand planning, inventory acquisition, manufacturing, distributing and selling Product Lifecycle Management (PLM)—manages product data from design through disposal of product  ERP Implementation When successfully implemented – Links all areas of the company including order management, manufacturing, human resources, financial systems, and distribution with external suppliers and customers into a tightly integrated system with shared data and visibility (Chen, 2001). Potential benefits include drastic declines in inventory, breakthrough reductions in working capital, abundant information about customer wants and needs, along with the ability to view and manage the extended enterprise of suppliers, alliances and customers as an integrated whole (Escalle et al., 1999).  Organization must assess itself, if it is ready for ERP – careful planning, assessing, implementation and management The organization must also be organized before ERP is implemented The key factor of an ERP implementation is the way in which the software is configured. The most important issue to identify before an implementation is the ‘core’ of the business, which can be identified by the use of the business model (Chung and Snyder, 2000).  ERP software best features Peoplesoft best meets its human resource information needs Oracle Applications is best suited for its financial information needs SAP is ideal for tracking information in its manufacturing processes.  Reasons why companies use ERP Integrate financial information Integrate customer order information Standardize and speed up manufacturing processes Reduce inventory Standardize HR information  ERM Manages all ways used by firms to deal with existing and potential new customers Uses information system to coordinate entire business processes of a firm Provides end-to-end customer care Provides a unified view of customer across the company Consolidates customer data from multiple sources and provides analytical tools for answering questions  CRM model managing a company’s interactions with current and future customers. involves using technology to organize, automate, and synchronize sales, marketing, customer service, and technical support  CRM Types & Variations Sales Force Automation (SFA) – uses software to streamline the sales process Marketing – systems for marketing track and measure campaigns over multiple channels Customer service and support – create, assign and manage requests made by customers Appointments – Appointment CRMs automatically provide suitable appointment times to customers  CRM... New opportunities for competitive advantage CRM vendors SAP AG, Oracle, Salesforce.com, Microsoft CRM, Amdocs Some companies using CRM: – MGM – American Airlines – Marriott International  CRM... CRM vendors offer... –Subscription-based web tools (cloud computing) –Software as a Service (SaaS) –Salesforce.com – first to provide enterprise applications through a web browser Supply Chain Management  SCM Supply network management of a network of interconnected businesses involved in the provision of product and service packages required by the end customers in a supply chain Close linkage and coordination of activities involved in buying, making, and moving a product Integrates supplier, manufacturer, distributor, and customer logistics time Reduces time, redundant effort, and inventory costs  SCM Network of organizations and business processes Helps in procurement of materials, transformation of raw materials into intermediate and finished products Supply chain – the producers of supplies that a company uses – What if supply chain does not collaborate? Two objectives of upstream information flow: – Accelerate product development – Reduce costs associated with suppliers  SCM Limitations: Inefficiencies can waste as much as 25% of company’s operating costs Bullwhip Effect: Information about the demand for the product gets distorted as it passes from one entity to next  Some SCM SOFTWARE Accellos Epicor CoreIMS Geneva Business Management Systems 3PL Central  SCM Helps in distribution of the finished products to customers Includes reverse logistics - returned items flow in the reverse direction from the buyer back to the seller  How I.S. Facilitate SCM Decide when, what to produce, store, move Rapidly communicate orders Communicate orders, track order status Check inventory availability, monitor levels Track shipments Plan production based on actual demand Rapidly communicate product design change Provide product specifications Share information about defect rates, returns  SCM Supply chain planning system: Enables firm to generate forecasts for a product and to develop sourcing and a manufacturing plan for the product Supply chain execution system: Manages flow of products through distribution centers and warehouses Knowledge Management System  KMS Creating knowledge Discovering and codifying knowledge Sharing knowledge Distributing knowledge  Interorganizational Systems (IOS) Are systems shared by two or more organizations to transfer data electronically key purpose: to streamline the flow of information from one company’s operations to another provides electronic transmission of information to another company.  IOS... Competitive advantage can be accomplished by integrating multiple business processes to meet a wide range of unique customer needs. Sharing information between organizations helps companies to adapt more quickly to changing market conditions.  IOS Vertical Information interchange –Output of an organization is used in the processes of another organization –Example: Kmart, Wal-Mart, Toys R Us allow their suppliers to connect to their inventory system – thereby saving time and money because suppliers do much of inventory control and monitoring  IOS... Electronic Data Interchange (EDI) –An interorganizational IS that utilize telecommunications to exchange data. –It is also a set of hardware, software, and standards that accommodates interorganizational exchanges of data –Has been used in some industries over the past 3 decades The Formula for Enterprise System Success Secure executive sponsorship Get help from outside experts Thoroughly train users Take a multidisciplinary approach to implementation