1. Chapter 7
Enterprise-Wide
Information
Systems

2. Enterprise-wide Systems
System Categories
Enterprise-wide Systems
aka Enterprise Systems, are systems that allow companies to integrate information across operations on a company-wide basis
Interorganizational Systems (IOS)
Systems that communicate across organizational boundaries who’s goal is to streamline information flow from one company to another

3. Enterprise Systems – Within the Organization
Example – Order Process and Information Flow

4. Interorganizational Systems – Across Organizations
Example – Order Process and Information Flow

5. The Value Chain –Internally Focused
Used to identify the flow of information through a set of business activities. It identifies two types of activities, primary and support

6. The Value Chain - Primary Activities
Functional areas within an organization that process inputs and produce outputs. These activities may vary widely based on the unique requirements of a company’s industry
Primary Activities include:
Inbound Logistics – receiving and stocking raw materials, parts, products
Operations/Manufacturing – processing orders and raw materials into finished product
Outbound Logistics – distribution of the finished product to customers
Marketing and Sales – creating demand for the product (pre-sales activities)
Customer Service – providing support for the product or customer (post-sales activities)

7. The Value Chain - Support Activities
Support activities are business activities that enable Primary Activities These activities can be unique by industry but are generally more typical across industries
Support Activities include:
Infrastructure – hardware and software that must be implemented to support applications for primary activities
Human Resources – employee management activities: hiring, interview scheduling, and benefits management
Technology Development – the design and development of applications that support the organization
Procurement – purchase of goods or services that are required as inputs to primary activities

8. A Value System – Externally Focused
A connection of value chains across organizations
Allows the flow of information between organizations to support business activities
Upstream flow is information received from another organization (i.e. from company A to Company B above)
Downstream Flow is information sent to another organization (i.e. from Company B to Company C above)

9. Options for Enterprise Systems – Packaged vs. Custom
Packaged Applications
“Off the Shelf” computer applications purchased from a vendor or the company that created the system (i.e. Quicken or MS Money for financial applications)
Packaged Key Characteristics
Best Use - standardized, repetitive tasks
Cost Effectiveness – lower cost because vendors can create once and then sell many copies to others
Organizational Fit – may not be well suited for tasks that are unique to a particular business or industry
Maintenance – the vendor makes the changes and then sends the updates to its customer on a periodic basis. The customer does not control this schedule

10. Options for Enterprise Systems – Packaged vs. Custom
Custom Applications
“Custom-built” computer applications created by the organization or a third party (e.g. a consulting organization)
Custom Key Characteristics
Best Use - unique business process to an organization
Cost Effectiveness – much higher cost due to the one-time creation of the applications
Organizational Fit – excellent as they are designed to fit a specific business process
Maintenance – all changes are created and implemented by the organization using the application

11. Enterprise System Evolution
Standalone Systems
Integrated Systems
(Intraorganizational)
(Interorganizational)
System Types

12. Enterprise Systems – Stand-alone or Legacy
Stand Alone (Legacy) Systems
A single system or groups of systems, designed to each support one or a few business functions (e.g. accounting system or a manufacturing system, etc.)
Stand Alone (Legacy) Systems
Little or no integration with other organizational systems. If integration exists, it is usually in batch (i.e. the accounting system gets updates from manufacturing system once a day or week
Organizational fit may be better than integrated packages due to the focus on one function and that they have been highly modified over time
Customization and the age of these systems make them difficult to support due to the complexity, use of older or obscure languages, etc.

13. Enterprise Systems - Legacy System Example
Legacy (stand-alone) Systems – information is not readily shared between systems (i.e. Inbound Logistics inventory information shared with Operations)

14. Enterprise Resource Planning
Integrated Packages (Enterprise Resource Planning)
Richly functional systems designed to support many organizational functions (e.g. accounting and finance)
ERP Key Characteristics
Internally focused systems designed to support the internal operations of the organization
Highly integrated systems sharing a common data warehouse for information sharing across functions, using real-time updates
Organizational fit may be less for individual departments but the integrated sharing of information usually outweighs these issues
Usually packaged applications supported by the vendor utilizing a common user interface
Customization is discouraged but these systems have the flexibility to support other outside applications using the common data repository and interfaces

15. Enterprise Systems – Integrated System Example
Integrated Systems – Information is stored in a single data repository and can be accessed and updated by all functional systems (e.g. Operations)

16. Choosing an ERP System - Issues
ERP Systems are:
Supplied by multiple vendors including SAP, Baan, Oracle, etc., with each having their own unique features and structures
Packaged systems that are following a one size-fits all strategy which means they may not support all functions as well as a custom system
Similar but are also different. They should be selected based on factors including control, business requirements, and best practices

17. Choosing an ERP System – Selection Factors
Control refers to where the power lies related to computing and decision support systems (centralized vs. decentralized) in selecting systems, developing policies and procedures, etc. (who will decide?)
Business Requirements refers to the system’s capabilities and how they meet organizational needs through the use of software modules or groups of business functionality (what do you need?)
Best Practices refers to the degree to which the software incorporates industry standard methods for doing business which can cause a need for significant business processes reengineering (how much change is required?)

18. ERP Capabilities – SAP Example

19. ERP and Business Process Reengineering
A systematic, structured improvement approach by all or part of an organization whereby people critically examine, rethink, and redesign business processes in order to achieve dramatic improvements in one or more performance measures (e.g. quality, cycle time, cost)
Hammer and Champy, (“Reenginerring the Corporation”)
“The radical redesign of an organization was sometimes necessary in order to lower costs and increase quality and that the information technology was the key enabler for that radical change”

20. Business Process Reengineering
Steps in Business Process Reengineering
Develop a vision for the organization that specifies business objectives (e.g. reduced costs, shortend time to market, improved quality, etc.)
Identify critical processes that are to be redesigned
Understand and measure the existing processes as a baseline for future improvements
Identify ways that information technology can be used to improve processes
Design and implement a prototype of the new process(es)

21. BPR Today – Observations and Research
Many large failures exist in large scale Business Process Reengineering implementations. To be successful and organizations must have:
Senior management support
A shared organizational vision
Realistic expectations of outcomes
Participants empowered to reengineer
The right people participating
Sound management practices
Appropriate funding
BPR failures can be tracked back to the lack of one or more of these factors in implementation!

22. BPR Today – Observations and Research
Large bodies of research are available on the role of BRP and BPR implementations. Some of this research has come to the following conclusions:
Reengineering and related organizational issues are as important as the technical implementation issues (Kumar and Van Hellersberg, 2000; Markus and Tanis, 2000)
Managers in many cases must choose between making the ERP system fit the organization or the organization fit the ERP system (Soh, Sia, Tay-Yoh, 2000)
For an ERP system to help transform the organization and gain new competitive capabilities, a full organizational and operational change is required (Willcocks and Sykes, 2000)
In order to be successful, manager must first transform the organization and then implement the ERP system

23. Enterprise Systems – Integrated (Interorganizational)
Integrated Packages
Richly functional systems designed to support externally focused functions (Upstream – Supply Chain Management and Downstream – Customer Relationship Management)
Integrated Packages
Highly integrated with internal systems (ERP) through the use of interfaces and specialty software
Organizational fit for these systems is very high as they are highly specific to the function they support
These are usually packaged applications that are supplied and supported by the ERP vendor or other third party system integrators
Customization or modifications are also discouraged to minimize support cost but the applications are highly tailorable with configuration options

24. Customer Relationship Management
Objective
Applications that help organizations attract new business and attract and encourage repeat business
Functions
There are two primary functions in CRM systems:
Sales – tools designed to assist in presales activities such as marketing and prospecting (e.g. Sales Force Automation)
Service – tools that help with the post-sales aspects of the business (e.g. call center technology, analytics)
Sources
There are two primary sources of CRM systems:
CRM Software Vendors – Siebel, FirePond, Onyx, E.Piphany
ERP Vendors – SAP, Baan, Oracle, etc.

25. Sales Support – Sales Force Automation (SFA)
Sales Force Automation provides salespeople and sales managers with computerized support tools to assist in daily routines
Example: Siebel SFA displays multiple functions including: sales, quota & forecast by sales person; messages; appointments

26. Supply Chain Management
Objective
Applications that accelerate product development and reduce cost associated with procuring raw materials, components, and services from its suppliers
Supply Chain – the suppliers that an organization purchases from directly
Supply Network – the suppliers that an organization purchases from directly and its suppliers
Sources
There are two primary sources of SCM systems. These systems are built to tightly integrate with ERP systems
SCM Software Vendors – Agile, Ariba, I2, Manugistics, Commerce One, etc.
ERP Vendors – SAP, Baan, Oracle, etc

27. SCM – Example of a Supply Network

28. SCM Application Functions

29. SCM Application Functions 2nd Half

30. Supply Chain Management Benefits
Supply Chain Management applications can help organizations to gain competitive advantage and provide substantial payback in several ways by:
Streamlining workflow and increasing employee productivity (i.e. efficiently managing business travel, time, and expenses by collaborating with suppliers in realtime)
Accelerating product development (i.e. enabled by the ability of organizations to swiftly react to market conditions)
Streamlining cost and creating efficiencies across the supply network (i.e., supporting contract negotiation and measuring effectiveness of those agreements)

31. ESSENTIALS OF ENTERPRISE SYSTEMS AND SUPPLY CHAINS
ERP and Supply Chains
ERP or enterprise systems control all major business processes with a single software architecture in real time.
It is comprised of a set of applications that automate routine back-end operations:
such as financial management
inventory management
Scheduling
order fulfillment
cost control
accounts payable and receivable,
It includes front-end operations such as:
POS
Field Sales
Service
It also increases efficiency, improves quality, productivity, and profitability.

32. ESSENTIALS OF ENTERPRISE SYSTEMS AND SUPPLY CHAINS

33. Supply Chain
Supply chain refers to the flow of materials, information, payments, and services from raw material suppliers, through factories and warehouses (Value Chain), to the final consumer (Demand Chain). It includes tasks such as purchasing, payment flow, materials handling, production planning & control, logistics & warehousing, inventory control, and distribution. When it is managed electronically it is referred to as an e-supply chain.
Supply Chain Flows
Materials flows are all physical products, new materials, and supplies that flow along the chain.
Information flows relates to all data associated with demand, shipments, orders, returns and schedules.
Financial flows include all transfers of money, payments, credit card information, payment schedules, e-payments and credit-related data.
Supply Chains contribute to increased profitability and competitiveness

34. Supply Chain
Automotive Supply Chain

35. Supply Chains Components
The supply chain involves three segments:
Upstream, where sourcing or procurement from external suppliers occur
Internal, where packaging, assembly, or manufacturing take place
Downstream, where distribution or dispersal take place, frequently by external distributors.
It also includes the movement of information and money and the procedures that support the movement of a product or a service.
Organizations and individuals are also part of the chain.

36. Supply Chains Classifications
There are several major types of supply chain
Integrated make-to-stock
Continuous replenishment
Build-to-order
Channel assembly.
“Supply” Chain
Value Chain
Demand Chain

37. Supply Chain Problems
Adding value along the chain is essential for competitiveness, however problems exist especially in complex or long chains and in cases where many business partners are involved. These problems are due to uncertainties and the need to coordinate several activities, internal units, and business partners.
Demand forecasts are a major source of uncertainties
Competition
Prices
Weather conditions
Technological development
Customer confidence
Uncertainties exist in delivery times
Machine failures
Road conditions
Shipments
Quality problems may also create production delays

38. Supply Chain Problems continued
The bullwhip effect refers to erratic shifts in orders up and down the supply chain because of poor demand forecasting,
price fluctuation, order batching, and rationing within the chain.
Even slight demand uncertainties and variability become magnified if each distinct entity, on the chain, makes ordering and inventory decisions with respect to its own interest above those of the chain. Distorted information can lead to tremendous inefficiencies, excessive inventories, poor customer service, lost revenues, ineffective shipments, and missed production schedules.
A common way to solve the bullwhip problem is by sharing information along the supply chain through EDI, extranets, and groupware technologies. For example employing a vendor-managed inventory (VMI) strategy, the vendor monitors inventory levels and when it falls below the threshold for each product this automatically triggers an immediate shipment.

39. Supply Chain Solutions
Information sharing among supply chain partners (c-commerce) sometimes referred to as the collaboration supply chain is one method to overcome problems in the flow. Others are:
Optimal Inventory Levels
Supply Chain Coordination and Collaboration
Supply Chain Teams
Performance Measurement and Metrics
Various IT-Assisted Solutions
wireless technology
optimal shipping plans
strategic partnerships with suppliers
just-in-time

40. Supply Chain Solutions

41. Supply Chain Collaboration Management
Every company that has business partners has to manage the relationships with them. Information needs to flow between the firms and constantly updated and shared.
Manual methods include; phone, fax, and mail
EDI is typically used by large corporations
EC PRM functions include:
partner profiles
partner communications
lead management (of clients)
targeted information distribution
connecting the extended enterprise
partner planning
centralized forecasting
group planning
price lists

42. Supply Chain Management

43. Global Supply Chains
Supply chains that involve suppliers and/or customers in other countries are referred to as global supply chains.
Companies go global (disperse the value chain) for a variety of reasons.
lower costs of materials, products, services and labor
availability of products that are unavailable domestically
the firm's global strategy
technology available in other countries
high quality of products
intensification of global competition
the need to develop a foreign presence to increase sales
fulfillment of counter trade.
Global supply chains are usually longer than domestic ones, and more complex. Therefore, additional uncertainties are likely.

44. Computerized Supply Chains
The supply chain process is intertwined with the computerization of its activities. People have wanted to automate the processes along the chain to reduce cost, expedite processing, and reduce errors.
Material requirements planning (MRP) essentially integrates production, purchasing, and inventory management of interrelated products.
Manufacturing resource planning (MRP II), enhanced MRP methodology by adding labor requirements and financial planning.
Enterprise resource planning (ERP) further integrates the transaction processing as well as other routine activities in the entire enterprise.
Integrations continues along several paths
functional areas
Combining transaction processing and decision support
Business intelligence
CRM software

45. Computerized Supply Chains
Continued

46. E-Commerce and Supply Chains
E-commerce is emerging as a superb tool for providing solutions to problems along the supply chain. Many supply chain activities, from taking customers' orders to procurement, can be conducted electronically.
E-commerce
can digitize some products
can replace all paper documents
can replace faxes and telephone calls with electronic messaging
Enhances collaboration and information sharing
typically shortens the supply chain and minimizes inventories
facilitates customer service
introduces efficiencies into buying and selling
enables faster, cheaper, and better communication, collaboration, and discovery of information

47. E-Commerce and Supply Chains
A major role of EC is to facilitate buying and selling along all segments of the supply chain.
Upstream Activities improve the upstream supply chain through e-procurement
Internal Supply Activities from entering purchase orders, to recording sales, to order fulfillment, to tracking shipments, are usually conducted over a corporate intranet
Downstream Activities enhance the activity downstream activities by providing online ordering
Vertical exchanges combine upstream and downstream EC supply chain activities. These B2B exchanges, provide a medium where buyers and sellers can meet.

48. E-Commerce and Supply Chains
Continued

49. Supply Chains Benefits
There are many benefits to integrating functional systems.
Tangible benefits:
Inventory reduction
Personnel reduction
Productivity improvement
Order management improvement
Financial-close cycle improvements
IT cost reduction
Procurement cost reduction
Cash management improvements
Revenue/profit increases
Transportation logistics cost reduction
Maintenance reduction
On-time delivery improvement.

50. Supply Chains Benefits Continued
Intangible benefits:
Information visibility
New/improved processes
Customer responsiveness
Standardization
Flexibility
Globalization
Business performance
Reduction in duplication of entries
controls and reconciliation are enhanced
rapid assimilation of data into the organization
Systems can be integrated internally and externally. Internal integration refers to integration between applications inside a company, whereas external integration refers to integration of applications among business partners.

51. Customer Relationship Management (CRM)
CRM recognizes that customers are the core of a business and that a company’s success depends on effectively managing relationships with them. It focuses on building long–term and sustainable customer relationships that add value both for the customer and the company.
Types of CRM
Operational CRM
Analytical CRM
Collaborative CRM

52. SCM – Example of SAP SCM Offering
SAP is the ERP market leader. They also offer SCM applications whose capabilities including the following:

53. Recommendations for Enterprise System Success
Secure Executive Sponsorship
The highest level support is required to obtain resources and make and support difficult reengineering decisions
Get Help from Outside Experts
Implementation success is enabled by deep application experience and access to supporting tools and methods
Thoroughly Train Users
Training in organization, business process, and application functions is critical to success and must be reinforced
Take a Multidisciplinary Approach to Implementations
Enterprise systems span the entire organization and as such require input and participation from all functions

54. Customer Relationship Management (CRM)

55. Customer Relationship Management (eCRM)
CRM has been practiced manually by corporations for generations. However, Ecrm (electronic CRM) started in the mid-1990’s ,when customers began using Web browsers, the Internet and other electronic touchpoints.
THE SCOPE OF E-CRM. We can differentiate three levels of e-CRM:
Foundational service. This includes the minimum necessary services such as Web site responsiveness (e.g., how quickly and accurately the service is provided), site effectiveness, and order fulfillment.
Customer-centered services. These services include order tracking, product configuration and customization, and security/trust. These are the services that matter the most to customers.
Value-added services. These are extra services such as online auctions and online training and education.

56. Customer Relationship Management CRM Activities
Customer Service on the Web
Search and Comparison Capabilities
Free Products and Services
Technical and Other Information and Service
Allowing Customers to Order Products and Services Online
Letting Customers Track Accounts or Order Status
Tools for Customer Service
Personalized Web Pages
FAQs
Chat Rooms
and Automated Response
Call Centers
Troubleshooting Tools
Wireless CRM

57. Evolution Is Continuing