1. Chapter 7
Enterprise-Wide
Information
Systems

2. Learning Objectives
1. Explain how organizations support business activities by using information technologies
2. Describe what enterprise systems are how they have evolved
Explain the difference between internally and externally focused software applications
Understand and utilize the keys to successfully implementing enterprise systems.

3. 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

4. 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

5. 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)

6. 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

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

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. SAP or Ms Dynamics)
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. 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

20. 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.

21. 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

22. SCM – Example of a Supply Network

23. 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)

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

25. Recommendations for Enterprise System Implementation 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

26. Recommendations for Enterprise System Implementation Success (Contd.)
Several ERP implementation failures have been reported. To be successful and organizations must also have:
A shared organizational vision
Participants empowered to reengineer
Sound management practices
A project champion
An understanding of BPR and accept minimum customization
Monitoring and evaluation of performance
ERP failures can be tracked back to the lack of one or more of these factors in implementation!