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Processes, Organizations, and Information Systems

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1 Processes, Organizations, and Information Systems
Chapter 7 Processes, Organizations, and Information Systems

2 Copyright © 2015 Pearson Education, Inc.
“Every Morning, I Get A Report About the Exercise Your Mother's Getting So I Can See How She's Doing.” A cardiac surgeon, Dr. Romero Flores, is driving to develop a prototype of the health care and patient portion of the PRIDE system. He is focused on a prototype to learn whether patients will achieve expected benefits. Once they have answered those questions, they will determine how to proceed to an operational system that involves other organizations. Copyright © 2015 Pearson Education, Inc.

3 Copyright © 2015 Pearson Education, Inc.
Study Questions Q1: What are the basic types of processes? Q2: How can information systems improve process quality? Q3: How do CRM, ERP, and EAI support enterprise processes? Q4: How do information systems eliminate the problems of information silos? Q5: What are the elements of an ERP system? Q6: What are the challenges of implementing and upgrading enterprise information systems? Q7: How do inter-enterprise IS solve the problems of enterprise silos? Q8: 2024? This chapter explores processes and their supporting information systems within the levels of an organization. Investigate three types of processes and the scope of information systems that they use; investigate the concept of process quality and explain how information systems can be used to increase it; discuss how the use of information systems at one level of organization leads to information silos, explain the problems of such silos, and show how those problems can be solved by information systems at the next level of organization; discuss how enterprise systems such as CRM, ERP, and EAI; wrap up by showing how inter-enterprise IS can solve problems of enterprise-level silos. Finally, in 2024, discuss the implications of mobility and the cloud on future enterprise and inter-enterprise IS. Copyright © 2015 Pearson Education, Inc.

4 Q1: What Are the Basic Types of Processes?
Business Process with Three Activities This is a simplified view of a three-activity process for approving customer orders. Copyright © 2015 Pearson Education, Inc.

5 How Do Structured Processes Differ from Dynamic Processes?
Copyright © 2015 Pearson Education, Inc.

6 How Do Processes Vary by Organizational Scope?
Copyright © 2015 Pearson Education, Inc.

7 Characteristics of Information Systems
Characteristics of departmental information systems are summarized in top row. Often, procedures are formalized in documentation, and users frequently receive formal training in use of those procedures. Copyright © 2015 Pearson Education, Inc.

8 Q2: How Can Information Systems Improve Process Quality?
Process efficiency: Ratio of process outputs to inputs. Process effectiveness: How well a process achieves organizational strategy. How Can Processes Be Improved? Change process structure Change process resources Change both Processes are means people use to organize an activity to achieve organization’s goals. Two dimensions of process quality are efficiency and effectiveness. Process efficiency – a measure of the ratio of process outputs to inputs. Process effectiveness – a measure of how well a process achieves organizational strategy. Copyright © 2015 Pearson Education, Inc.

9 Information Systems Can Be Used to Improve Process Quality By:
Performing an activity Partially automated, completely automated Augmenting human performing activity Common reservation system Controlling process flow Order approval process Copyright © 2015 Pearson Education, Inc.

10 Copyright © 2015 Pearson Education, Inc.
Q3: How Do Enterprise Systems Eliminate the Problem of Information Silos? How Do Information System Silos Arise? Data isolated in islands of automation Different department goals Different personal and workgroup needs Duplicate data as organization grows An information silo exists when data is isolated in separated information systems. Information system silos arise when: IS supports departmental processes rather than enterprise-level processes. Personal and workgroup support applications are created over time. Organizations grow, especially by merger and acquisitions. Copyright © 2015 Pearson Education, Inc.

11 Problems Created by Information Silos
This table summarizes problems of information silos. Duplicated and inconsistent data. Separated supporting applications; difficult for two activities to reconcile their data, getting approvals will be slow and possibly erroneous. Lack of integrated enterprise data as a consequence of disjointed systems. Inefficiency results from making decisions in isolation. Information silos increase costs — duplicated data, disjointed systems, limited information, and inefficiencies all mean higher costs. Copyright © 2015 Pearson Education, Inc.

12 Information Silos as Drivers
Copyright © 2015 Pearson Education, Inc.

13 Q4: How Do CRM, ERP, and EAI Support Enterprise Processes?
Business Process Reengineering Integrated data, enterprise systems create stronger, faster, more effective linkages in value chains. Difficult, slow, and exceedingly expensive. Key personnel determine how best to use new technology. Requires high-level and expensive skills and considerable time. Hospital needed to determine how best to change its processes to take advantage of new capability. Copyright © 2015 Pearson Education, Inc.

14 Example Enterprise Process and Information System
Hospital uses an enterprise-wide information system to support this process. IS provides data entry forms, reports, and notifications to human actors in this process. It also controls the flow of process activity as shown by dotted red arrow. To use new system, staff needs to transition from a paper-based system to computer-based one. Copyright © 2015 Pearson Education, Inc.

15 Emergence of Enterprise Application Solutions
Inherent processes Predesigned procedures for using software products Based on “industry best practices” Customer relationship management (CRM) Enterprise resource planning (ERP) Enterprise application integration (EAI) Organizations can license software and obtain prebuilt procedures. Over time, three categories of enterprise applications emerged: customer relationship management, enterprise resource planning and enterprise application integration. Copyright © 2015 Pearson Education, Inc.

16 Customer Relationship Management (CRM)
Suite of applications, a database, and a set of inherent processes. Manage all interactions with customer through four phases of customer life cycle: Marketing, customer acquisition, relationship management, loss/churn. Intended to support customer-centric organization. CRM is a suite of applications, a database, and a set of inherent processes for managing all interactions with a customer from lead generation to customer service. Every contact and transaction with customer is recorded in CRM database. Copyright © 2015 Pearson Education, Inc.

17 Copyright © 2015 Pearson Education, Inc.
Customer Life Cycle Marketing sends messages to target market to attract customer prospects. When prospects order, they become customers who need to be supported. Additionally, relationship management processes increase the value of existing customers by selling them more products. Over time, organization loses some customers. When this occurs, win-back processes categorize customers according to their value and attempt to win back and turn them into high-value customers. Copyright © 2015 Pearson Education, Inc.

18 Copyright © 2015 Pearson Education, Inc.
CRM Applications CRM components exist for each stage of the customer life cycle. As shown, all applications process a common customer database. This design eliminates duplicated customer data and removes the possibility of inconsistent data. It also means that each department knows what has been happening with the customer at other departments. Copyright © 2015 Pearson Education, Inc.

19 Copyright © 2015 Pearson Education, Inc.
ERP Applications ERP is a suite of applications (modules), a database and a set of inherent processes for consolidating business operations into a single, consistent, computing platform. ERP systems are an IS based on ERP technology. Copyright © 2015 Pearson Education, Inc.

20 Pre-ERP Information System: Bicycle Manufacturer
This diagram represents processes used by a bicycle manufacturer. There are five non-integrated databases. Assume that the company has a separate accounting system (not shown) that is not integrated. With such a pre-ERP system, financial statements are always outdated and weeks late. Copyright © 2015 Pearson Education, Inc.

21 ERP Information Systems
All activity processed by ERP applications and consolidated data are stored in a centralized ERP database. Copyright © 2015 Pearson Education, Inc.

22 ERP Enabled Sales Dashboard
With integration, ERP systems can display current status of critical business factors to managers and executives. Copyright © 2015 Pearson Education, Inc.

23 Enterprise Application Integration (EAI)
Connects system “islands.” Enables communicating and sharing data. Provides integrated information. Provides integrated layer over the top of existing systems while leaving functional applications “as is.” Enables a gradual move to ERP. EAI is a suite of software applications that integrates existing systems by providing layers of software that connect applications. Copyright © 2015 Pearson Education, Inc.

24 Design and Implementation for the Five Components
Virtual Integrated Database EAI enables organizations to use existing silo applications while eliminating many serious problems of isolated systems. Copyright © 2015 Pearson Education, Inc.

25 Using MIS In-Class Exercise 7: Choosing a CRM Product
1. Act! and GoldMine Learn about Act (http://na.sage.com/sage-act/) and Goldmine (www.frontrange.com/goldmine.aspx). Search the Web for “Act vs. Goldmine.” Read several comparisons. Summarize your findings in a 2-minute presentation. Include intended market, costs, and relative strengths and weaknesses. This exercise is designed to give students a sense of the challenges involved when choosing a CRM product. Form teams, have teams use the Web to address the exercise. Copyright © 2015 Pearson Education, Inc.

26 Using MIS In-Class Exercise 7: Choosing a CRM Product (cont’d)
2. Salesforce.com and Sugar Learn about these products, visit and Search the Web for “Salesforce vs. Sugar CRM.” Read several comparisons. Summarize your findings in a 2-minute presentation. Include intended market for these products, costs, and relative strengths and weaknesses. Salesforce.com and Sugar are CRM products that are intended for use by larger organizations than Act! and GoldMine. Copyright © 2015 Pearson Education, Inc.

27 Ethics Guide: Dialing for Dollars
Assume you are a salesperson. It has been a bad quarter. VP of sales authorized a 20% discount on new orders if customers take delivery prior to end of quarter so order can be booked for this quarter. VP says “Start dialing for dollars, and get what you can. Be creative.” You identify your top customers to offer discount deal. Goals Understand how business pressures motivate people to act unethically and sometimes illegally. Discuss ethical principles among three different aggressive sales techniques. Illustrate how deception in the use of an interdepartmental information system may cause unintended consequences. Software industry has used all three techniques in this guide, especially during the 1990s and early 2000s. These techniques, when applied to distributor customers, are often referred to as “stuffing the channel.” It’s a risky strategy because the company is pushing this quarter’s problem into next quarter. Unless there is a substantial increase in sales demand, problem will grow worse. Managers do it to delay stock price slaughter for at least one quarter. The techniques presented are all unethical. First and third violate SEC rules and regulations, while second is criminally fraudulent. 1. Side letter 2. Delayed discount 3. Fictitious account Copyright © 2015 Pearson Education, Inc.

28 Q5: What Are the Elements of an ERP Solution?
ERP Application programs ERP Business process procedures ERP Databases ERP Training and Consulting Copyright © 2015 Pearson Education, Inc.

29 Copyright © 2015 Pearson Education, Inc.
True ERP Have Application that Integrate: (http://www.erpsoftware360.com/erp-101.htm) Supply chain Manufacturing CRM Human resources Accounting Supply chain (procurement, sales order processing, inventory management, supplier management, and related activities). Manufacturing (scheduling, capacity planning, quality control, bill of materials, and related activities). CRM (sales prospecting, customer management, marketing, customer support, call center support). Human resources (payroll, time and attendance, HR management, commission calculations, benefits administration, and related activities). Accounting (general ledger, accounts receivable, accounts payable, cash management, fixed asset accounting). Copyright © 2015 Pearson Education, Inc.

30 ERP Solution Components
ERP Application Programs Configurable vendor applications. ERP Databases Trigger Computer program within the database that keeps database consistent when certain conditions arise. Stored Procedure Enforces business rules. Vendor applications: Configurable, can be altered without changing program code. Set configuration parameters specifying how ERP application programs will operate: Hourly payroll application configured to specify number of hours in standard workweek, hourly wages for different job categories, wage adjustments for overtime and holiday work, etc. ERP Databases: - Trigger: Database program to keep database consistent when certain conditions arise. - Stored procedure: Database program to enforce business rules. Copyright © 2015 Pearson Education, Inc.

31 ERP Solution Components (Cont’d)
ERP Business Processes and Procedures Adapt to predefined, inherent processes and procedures, or design new ones? ERP Training & Consulting Training to implement. Top management support, preparing for change, dealing with resistance. Training to use. Super Users become in-house trainers; train the trainers. Vendor and third-party consultants. Copyright © 2015 Pearson Education, Inc.

32 Example of SAP Ordering Business Process Blueprint
Top half of Figure CE 9-4 Copyright © 2015 Pearson Education, Inc.

33 Example of SAP Ordering Business Process Blueprint (cont’d)
Bottom half of Figure CE 9-4 Copyright © 2015 Pearson Education, Inc.

34 SAP Characteristics of Top ERP Vendors
Copyright © 2015 Pearson Education, Inc.

35 Copyright © 2015 Pearson Education, Inc.
Q6: What Are the Challenges of Implementing and Upgrading Enterprise Information Systems? Copyright © 2015 Pearson Education, Inc.

36 Q7: How Do Inter-enterprise IS Solve the Problems of Enterprise Silos?
Isolation of data causes problems. Doctors want reports on exercise data stored on patient devices and in health clubs. Patients want prescription data from their providers as well as exercise data from their health clubs. Health clubs want exercise prescriptions and home workout data to integrate with data they have. Copyright © 2015 Pearson Education, Inc.

37 Inter-enterprise PRIDE System
PRIDE is a distributed system because processing is distributed across multiple computing devices. Standards such as http, https, html5, CSS3, JavaScript, and others enable programs on varied and disparate devices to flexibly communicate with cloud servers and database, and indirectly communicate with each other. Copyright © 2015 Pearson Education, Inc.

38 Copyright © 2015 Pearson Education, Inc.
Q8: 2024? Expect many acquisitions by the major players such as Oracle and SAP. ERP vendors and customers seek application and systems migration strategies to maintain quality service, using the cloud. Allowing access via mobile devices. Operations and information systems, mobile-cloud- CRM/ERP a great opportunity for future employment. Companies want to move to lower costs of the cloud, but cannot plunge into new cloud-based solutions without causing considerable organizational turmoil, if not failure Cloud-based SaaS now applications enable organizations to keep their core SAP installation and data, while adding mobile-enabled cloud applications to that data. Copyright © 2015 Pearson Education, Inc.

39 Using the Security Guide: One-Stop Shopping
Information systems design involves constant trade-offs. Trade-off of eliminating problems of information silos against security threat of having all data in one repository. Under what circumstances is an enterprise system considered the solution? Under what circumstances are enterprise systems a source of information silos? When machine side of IS has limits and flaws, it’s the human side that picks up the slack. Goals Understand potential security problems of integrating data into a single database, whether within an enterprise or inter-enterprise systems. Realize security and privacy issues when inter-enterprise systems integrate competitors (as PRIDE must do to accomplish its purpose). Underline some of the management challenges inherent in inter-enterprise systems. Introduce caution about cloud security. Remind students, again, of the need for using strong passwords. Copyright © 2015 Pearson Education, Inc.

40 Using the Guide: ERP and the Standard, Standard Blueprint
Organization adapts its processes to standard blueprints. If all firms in an industry use same business processes, how can a firm gain competitive advantage? How will innovation occur? Does “commoditized” standard blueprint prevent sustaining a competitive advantage? GOALS Reinforce importance of inherent processes in ERP, and other licensed software, and expense and challenges of variances from those processes. Introduce possible longer-range consequences of adapting to vendors’ inherent processes. Demonstrate an example of long-range thinking. Copyright © 2015 Pearson Education, Inc.

41 Copyright © 2015 Pearson Education, Inc.
Active Review Q1: What are the basic types of processes? Q2: How can information systems improve process quality? Q3: How do information systems eliminate the problems of information silos? Q4: How do CRM, ERP, and EAI support enterprise processes? Q5: What are the elements of an ERP system? Q6: What are the challenges of implementing and upgrading enterprise information systems? Q7: How do inter-enterprise IS solve the problems of enterprise silos? Q8: 2024? This chapter explores processes and their supporting information systems within levels of an organization. Investigate three types of processes and the scope of information systems that they use; investigate the concept of process quality and explain how information systems can be used to increase it; discuss how the use of information systems at one level of organization leads to information silos, explain the problems of such silos, and show how those problems can be solved by information systems at the next level of organization; discuss how enterprise systems such as CRM, ERP, and EAI; wrap up by showing how interenterprise IS can solve problems of enterprise-level silos. Finally, in 2024, discuss the implications of mobility and the cloud on future enterprise and interenterprise IS. Copyright © 2015 Pearson Education, Inc.

42 Case Study 7: Using the PRIDE Database
Goal Have students to create a process diagram similar to Figure 7-27. See the questions at the end of the case for exercises to assign to students. Copyright © 2015 Pearson Education, Inc.

43 Defining the Workout Table with SQL
Copyright © 2015 Pearson Education, Inc.

44 PRIDE, Person, Workout, and Performance Tables
Copyright © 2015 Pearson Education, Inc.

45 Tables Relating to Exercise Prescriptions
Copyright © 2015 Pearson Education, Inc.

46 PRIDE All Database Tables
Copyright © 2015 Pearson Education, Inc.

47


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