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FUNCTIONAL AREAS AND BUSINESS PROCESSES M/S functions: formulating advertising and promotions on socials Enterprise Resource Planning (ERP) determining and offer...

FUNCTIONAL AREAS AND BUSINESS PROCESSES M/S functions: formulating advertising and promotions on socials Enterprise Resource Planning (ERP) determining and offer competitive pricing - Core software used by companies to coordinate providing optimum customer service like taking orders information in every area of business. and ensuring waiting time is short Business Process providing discounts repeat customers - Collection of activities that takes some input and providing perfect ambiance for specific customers creates an output that is of value to the customer keep track of your customers and identify repeat Functional Areas of Operation customers 1. Marketing and Sales product development can be done informally a. Marketing a product historical sales records to spot trends and helps create b. Taking Sales Orders a sales forecast to ensure the successful operation c. Customer Support d. Customer Relationship Management Supply Chain Management (SCM) e. Sales Forecasting Supply Chain management - management of the flow f. Advertising of goods and services and includes all processes that 2. Supply Chain Management transform raw materials into final products. a. Purchasing Goods and Raw Materials SCM Functions: b. Receiving Goods and Raw Materials developing production plans c. Transportation and Logistics ordering raw materials from suppliers d. Scheduling Production Runs receiving the raw material into the facility e. Manufacturing Goods manufacturing products f. Plant Maintenance maintaining facilities 3. Accounting and Finance shipping products to customers a. Financial Accounting of Payments from Customers and to Suppliers Accounting and Finance(A/F) b. Cost Allocation and Control Accounting and Finance - performs financial c. Planning and Budgeting accounting to provide summaries of operational data in d. Cash-flow Management managerial reports. 4. Human Resources A/F Functions: a. Recruiting and Hiring recording raw data about sales transactions b. Training raw material purchases c. Payroll payroll d. Benefits receipt of cash from customers. e. Government Compliance Information System (IS) Human Resources (HR) - includes the people, procedures, software, and Human Resources - formal systems devised for the computers that store, organize, analyze, and deliver management of people within an organization information. HR Functions: recruit FUNCTIONAL AREAS AND BUSINESS PROCESSES OF train A VERY SMALL BUSINESS evaluate Marketing and Sales (M/S) compensate employees Sales - include operations and activities involved in promoting and selling goods or services. FUNCTIONAL AREAS AND INFORMATION SYSTEM Marketing - includes the process or technique of - describe potential inputs and outputs for each promoting, selling, and distributing a product or functional area of a business. service. Common Goal = increasing sale - Information systems maintain relationships Human Resources - Tasks related to employee hiring, between all functional areas and processes. benefits, training, and government compliance. HR needs accurate forecasts of personnel needs from all functional units. HR needs to know what skills are Marketing and Sales - Customers communicate orders needed to perform a particular job and how much the to M/S in person or by telephone, e-mail, fax, the Web, company can afford to pay employees. etc. Human Resource Marketing and Sales INPUTS OUTPUTS INPUTS OUTPUTS - Personnel Forecasts - Regulation - Customer data - Sales strategies - Order data - Product pricing - Skills Data Compliance - Sales trend data - Employment needs - Employee Training and - Per-unit cost Certification - Company travel - Skills Database expense policy - Employee evaluation and compensation Supply Chain Management - Production plans based on information about product sales Raw Data - (sometimes called source data or atomic (actual and projected) that comes from Marketing data) is data that has not been processed for use. and Sales. Safety Stock - is an additional quantity of an item held in the inventory to reduce the risk that the item will be out of Supply Chain Management stock. Sales Forecast - the process of estimating future sales. INPUTS OUTPUTS Stockout: or out-of-stock (OOS) event is an event that causes inventory to be exhausted. - Product sales data - Raw material orders - Production plans - Packaging orders FUNCTIONAL SILOS - Inventory levels - Resource expenditure Silos - Layoff and recall data - an airtight pit or tower for preserving products - Production and (Webster) company policy inventory reports - Hiring information - compartmentalized operating units isolated from their environment (Motiwalla and Thompson) Accounting and Finance(A/F) - Record company’s HORIZONTAL SILOS transactions in the books of account. Summarize transaction data to prepare reports about company’s Huber and McDaniel (1986) - found out the complexity financial position and profitability and turbulence in the organization’s environment forces it to break complex tasks into smaller manageable units. Accounting and Finance Fayol (1916) - the first person to divide functionalized organization into five basic areas: planning, organizing, INPUTS OUTPUTS coordinating, commanding, and controlling. Luther Gulick (1930) - functional model of POSDCORB - Payments from customers - Payments to - Accounts receivable data suppliers (planning, organizing, staffing, directing, coordinating, - Accounts payable data - Financial reports reporting, and budgeting) - Sales data - Customer credit - Production and inventory data data - Payroll and expense data  VERTICAL SILOS Cross-Functional Organizational Structure - breaks the functional silos by opening up the informational flows from one department to another. EVOLUTION OF IS IN ORGANIZATIONS Strategic - information systems that work independently Tactical and are grouped by the various functions and Management departments, or both, are known as silos. - Silo systems focus on individual tasks or Functional Operations functions, or both, rather than on a process and team. Hierarchical Model of Organization - Evolution of IS, when observed from its hardware and software architectures to the various system Strategic – CEOs and Presidents (long term strategy) generations, suggests that its role has generally Tactical Management - focuses on tactical issues and been to support the organizations evolving on the execution of organizational policy information needs. Functional Operations - focus on the day-to-day - Information Systems as we know them today operations of the company have been used in business since 1960s. - The introduction of computers into business BUSINESS PROCESS AND SILOS organizations by such vendors as IBM and UNISYS started to change how computer systems were used. Business Process Reengineering (BPR) – due to - IS evolution - often viewed as a sociotechnical functional Silo in late 1980s and early 1990s change process in which technologies, human Functional grouping / Functional Silos factors, organizational relationships, and tasks - leads to a shortsighted view of improving the division change continuously. or department rather than the entire organization. - causes intra-organizational friction and is IS ARCHITECTURES counterproductive toward an organization’s overall goals. Information System Architectures Business Process - provides an alternative view of - a formal definition of the business processes and rules, grouping people and resources focusing on an systems structure, technical framework, and product technologies for a business or organizational organization’s activity, even if it means cutting across the information system traditional functional areas - consists of four layers: business process architecture, systems architecture, technical architecture, and product delivery architecture. Distributed Architecture - allows the sharing of applications and data resources between the client and the server computers - It combines features from the centralized and Matrix Structure of Organization decentralized architectures. Cross-functional business process - can involve people and resources from various functional departments working together, sharing information at any Centralized Network level of the organization. - all users are connected to a central server that stores complete network data and user information. Benefits of Centralized - Lower Your Hardware Expenses - Improve Productivity of IT Staff - Increase your purchasing power - Help meet Industry regulations - Improve the flow of information - Decentralized Network - has several peer-to-peer user groups wherein each group has its separate server that stores data IS as Categorized by Functional and Hierarchical Models and information relevant to only that particular group. Transaction processing systems (TPS) Decentralized System - the workhorses of the organization - an interconnected information system where no - support the organization’s operations and single entity is the sole authority (Ex: Internet) record every transaction, whether it is a sale, Benefits and costs - include failure tolerance and a purchase, or a payment. redundancy, at the cost of additional management complexity Management information systems (MIS) - reporting systems that categorize and Decentralization - a practical approach when organize information as required by the different departments in a company have different midlevel managers. IT needs and strategies. - These reports can be sales by product for a Decentralized Structure Benefits quarterly period, or they can be production - The ability to tailor IT selection and schedules by manufacturing plants. configuration - More fail-safes and organizational Decision support systems (DSS) redundancy - analytical systems that use mathematical - Faster response to new IT trends equations to process data from TPS to assistant managers in conducting what-if Decentralized vs. distributed systems - analyses, in identifying trends, and in decentralized system generally has multiple generally assisting in making data-driven authoritative nodes, each of which serves a subset of decisions. the total end users. In a distributed system, however, - using spreadsheet software or something there are no end users, because every node on the more sophisticated such as online analytical network communicates with every other to behave processing (OLAP) software. as a single unit. Expert systems also assist managers in their decision making using qualitative analysis that IS FUNCTIONALIZATION captures problem-solving heuristics to identify solutions - IS also supports such major business functions as manufacturing, marketing, accounting, finance, Executive support systems (ESS) and HR - provide a visual dashboard of strategic - Each functional area similarly has different information to top-level management in real information needs and report requirements. time  LOGICAL VS. PHYSICAL SYSTEM INTEGRATION BENEFITS AND LIMITATIONS OF SYSTEM INTEGRATION Logical Benefits and Limitations of Systems Integration - Develop information systems that allow Benefits of System Limitations of Systems organizations to share data with all of its Integration Integration stakeholders based on need and Increased revenue and High initial setup costs authorization. Management needs to change growth organizational structures, processes, and Leveling the competitive Power and environment interdepartmental employee roles and responsibilities. conflicts Physical Enhanced information Long-term and - Provide seamless connectivity between visibility intangible ROIs heterogeneous systems. Increased Creativity limitations standardization STEPS IN INTEGRATING SYSTEMS ERP’s ROLE IN LOGICAL INTEGRATION Step1: Resource Categorization - Take an inventory of the various hardware and - ERP systems require organizations to focus on software resources business process rather than on functions. Step 2: Compliance and Standards - ERP system implements the best practices via - JDBC/ODBC compliance for databases. specific built-in steps Step 3: Legacy System Support - Develop a policy in support of older legacy ERP’s ROLE IN PHYSICAL INTEGRATION applications. Step 4: Middleware Tools - Before installing the ERP system, an organization may - Middleware tools are essential for integration in have to upgrade or install middleware and plan for the the short term—if existing applications must be removal of their legacy system’s hardware and used by the organization. software. Step 5: Authentication and Authorization Policies - ERP systems do not work well with the centralized - Develop a single sign-on policy for application architecture on legacy platforms. and data access - layered systems architecture must be adopted to Step 6: Centralized IT Services and Help Desk integrate the systems into a common enterprise Support platform. - Instituting IT support for an integrated systems environment is necessary to avoid support and IMPLICATIONS FOR MANAGEMENT maintenance problems with the integrated system Robert Tucker - author of the book Driving Growth through Step 7: Backup, Recovery, and Security Policies Innovation - Planning data and disaster recovery for - Silos do not work organization’s data in an integrated system IT is - System integration has many hidden benefits crucial for building the trust and confidence for - System integration has many challenges the new system. - Systems integration raises many new ethical issues Step 8: Hardware and Software Standardization Policies Functional Silos - categorize an organization’s tasks and - acquisition of new hardware and software which activities into groups to improve efficiency and are aligned with organization IT strategy. responsibility of work in the organization. Business functions - Activities specific to a functional area of operation Information system (IS) - Computers, people, data in the BW system procedures, and software that store, organize, and - SAP HANA (High-performance ANalytical deliver information Appliance), a technology which will likely revolutionize Business Intelligence. ERP FOR MIDSIZED AND SMALLER COMPANIES - Customer Relationship Management (CRM), has extended customer service capabilities - 1998 - most of the Fortune 500 companies had already installed ERP systems CHOOSING CONSULTANTS AND VENDORS - SAP developed SAP Business All-in-One, a single package containing specific, preconfigured bundles - Before choosing a software vendor, most of SAP ERP tailored for particular industries, such as companies study their needs and then hire an external team of software consultants to help automotive, banking, chemicals, and oil and gas. choose the right software vendor(s) and the best - Smaller companies – less than 500 employees approach to implementing ERP. Working as a team - 2002 - SAP purchased the ERP system of Israeli- with the customer, the consultants apply their based TopManage Financial Systems and renamed expertise to selecting an ERP vendor (or vendors) to SAP Business One that will best meet their customer’s needs. - July 2011 - SAP announced that SAP Business One - After recommending a vendor, the consultants will would be available in a new subscription-based, typically recommend the software modules best hosted offering through SAP partners. suited to the company’s operations, along with the - SAP has developed its BusinessByDesign product, configurations within those modules that are most which is an ERP product hosted by SAP and appropriate accessed through a Web browser. - This preplanning should involve not only the - Software-as-a-service (SaaS) - eliminates the need consultants and a company’s IT department, but for a company to buy and maintain the software and the management of all functional business areas hardware to run an ERP application. as well. - SAP and Oracle have significant competition for small-business customers from a number of smaller CHOOSING CONSULTANTS AND VENDORS ERP software companies such as Sage Business Solutions, Exact, Infor, and Epicor. - ERP allows easier global integration - 2000 - software giant Microsoft acquired Great - ERP integrates people and data while eliminating Plains, a provider of ERP software, as an entry into the need to update and repair many separate the small-business ERP market. computer systems - Microsoft currently has five ERP products offered - ERP allows management to actually manage under the Microsoft Dynamics label. operations, not just monitor them RESPONSES OF THE SOFTWARE TO THE CHANGING ADDS MARKET - integrated ERP system - complex hardware and - Mid-1990s, many companies complained about software system that was not feasible until the the difficulty of implementing the SAP R/3 system 1990s - Accelerated SAP (ASAP) - a framework for - Current ERP systems evolved as a result of three implementing systems, to ease the implementation things: o the advancement of the hardware and process. software technology (computing power, - Solution Manager – latest version, designed to memory, and communications) needed to greatly speed the implementation process support the system, - SAP’s Business Warehouse (BW) product is an o the development of a vision of integrated example of one such solution information systems - Business Intelligence (BI) - tools used to analyze  o the reengineering of companies to shift from a functional focus to a business- process focus. - Speed and power of computing hardware increased exponentially, while cost and size decreased - Early client-server architecture provided the conceptual framework for multiple users sharing common data - SAP AG produced a complex, modular ERP program called R/3 - ERP software is expensive to purchase and time- consuming to implement, and it requires significant employee training—but the payoffs can be spectacular