Enterprise Systems Using MIS 4e Chapter 7

Fox Lake Country Club has a problem Defective business processes could result in unhappy customers Fox Lake’s business processes needs fixing Mike Stone (facilities manager) plans renovation that interferes with scheduled weddings Nobody told Anne Foster, the wedding planner “But Nobody Told Me” Scenario Video Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-2

Q1 How do information systems vary by scope? Q2 When are information silos a problem? Q3 How do enterprise information systems eliminate silos? Q4 How do CRM, ERP, and EAI support enterprise systems? Q5 What are the elements of an ERP system? Q6 How do the major ERP vendors compare? Q7 What are the challenges when implementing new enterprise systems? Q8 2021? Study Questions Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-3

Q1: How Do Information Systems Vary By Scope? Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-4

Data isolated in separated information systems Created over time as personal and workgroup support applications implemented As organizations grow, silos duplicate data and become serious problems Q2: When Are Information Silos a Problem? Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-5

Fox Lake Country Club Departmental Goals Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-6

Islands of Automation Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-7

What Are Common Departmental Applications? DepartmentApplications Sales & Marketing Lead generation Lead tracking Customer management Sales forecasting Product and brand management Operations Order entry Order management Finished-goods inventory mgmt. Manufacturing Inventory (raw materials, goods-in-process) Planning Scheduling Operations Customer Service Order tracking Account tracking Customer support and training Human Resources Recruiting Compensation Assessment HR Planning Accounting General ledger Financial reporting Cost accounting Accounts receivable Accounts payable Cash management Budgeting Treasure management Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-8

Some of the Departments Involved in Patient Discharge Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-9

Problems of Silos Created in Isolation Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-10

Q3: How Do Enterprise Information Systems Eliminate Silos? An Enterprise System at Fox Lake Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-11

An Enterprise System for Patient Discharge Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-12

7-13 Business Process Reengineering “Analysis and design of workflows and processes within an organization.” ( Enterprise systems not feasible until network, data communication, and database technologies reached sufficient level of capability and maturity in late 1980s and early 1990s. Identify Processes Review, Update, Analyze As Is Design To Be Test & Implement To Be Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Enterprise systems enabled the creation of stronger, faster, more effective linkages among value chains. BPR is difficult, slow, and exceedingly expensive. Systems analysts need to interview key personnel throughout the organization to determine how best to use new technology. Require high-level and expensive skills and considerable time. Business Process Reengineering (cont’d) Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-14

Q4: How Do CRM, ERP, and EAI Support Enterprise Systems? Help organizations fundamentally rethink how they do work to dramatically improve customer service, cut operational costs, and become world-class competitors. Complex, in-house developed applications became too costly to build and maintain. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-15

Q4: How Do CRM, ERP, and EAI Support Enterprise Systems? (cont’d) Inherent processes Pre-designed procedures for using software products Saved organizations from expensive and time- consuming business process reengineering Based on industry best practicesindustry best practices Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-16

PeopleSoftPeopleSoft—payroll and limited capability HRM systems SiebelSiebel—sales lead tracking and management system SAPSAP—enterprise resource management Vendors Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-17

Purpose: Managing all the interactions with the customer from lead generation to customer service Phases of customer life cycle Marketing Customer acquisition Relationship management Loss/churn Customer Relationship Management (CRM) Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-18

Four Phases of Customer Life Cycle Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-19

Major Components of a CRM Application Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-20

Suite of applications, database, and set of inherent processes for consolidating business operations into a single, consistent, computing platform. Enterprise Resource Planning (ERP) Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-21

Pre-ERP Information System: Bicycle Manufacturer Does not include accounting Five non-integrated databases Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-22

ERP Information System All activity processed by ERP application programs and consolidated data stored in centralized ERP database. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-23

How does sales department determine that order is large? By dollars? By volume? Who approves customer credit (and how)? Who approves production capacity (and how)? Who approves schedule and terms (and how)? What actions need to be taken if customer modifies order? How does management obtain oversight on sales activity? Many other questions must be answered as well. Some Questions Procedures Need to Answer or Resolve: Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-24

Sales Dashboard Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-25

Almost no organization develops its own ERP software Multi-year project involves millions of dollars and hundreds of employees, consultants, and vendor personnel ERP Projects Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-26

Suite of software to integrate existing systems by providing layers of software that connect applications together Connects system “islands” via new software layer Enables existing applications to communicate and share data Provides integrated information Leverages existing systems—leaving functional applications as is, but providing integration top layer Enables a gradual move to ERP Enterprise Application Integration (EAI) Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-27

EAI Automatically Makes Data Conversions Among Different Systems Virtual Integrated Database Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-28

ERP Application Programs ERP Databases ERP Business Process Procedures ERP Training and Consulting Q5:What Are the Elements of an ERP Solution? CE12-29 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall ERP

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) ERP Include Applications that Integrate: ( Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-30

Inherent Processes: SAP Ordering Business Process Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-31

Inherent Processes: SAP Ordering Business Process (cont’d) Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-32

Q6:How Do the Major ERP Vendors Compare? Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-33

Epicore MS DynamicsInforOracleSAP Revenue (2009) $410M+$1.3B~$2B>$2B+$11.9B Market Share (2005) 1%4%2%20%42% ERP Vendor Market Ranking Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-34

ERP Products Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-35

Collaborative Management Requirements Gaps Transition Problems Employee Resistance Q7: What Are the Challenges When Implementing New Enterprise Systems? Challenges Difficulty Expense Risk Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-36 Four Prime Factors

No single manager in charge Committees and steering groups Collaborative Management Licensed products never perfect fit Features and functions of complex products like CRM or ERP not easy to identify Change to adapt to new application, or change application Requirements Gaps Challenges Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-37

Careful planning and substantial training Transition problems Change requires effort and it engenders fear Senior level management needs to communicate need for change to organization, and must re-iterate Key users trained ahead of time to create positive buzz about new system Video demonstrations of employees successfully using new system Give extra inducements to change Employee resistance Challenges (cont’d) Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-38

Likely that all new systems and business processes will be developed using SOA principles Service-oriented architecture (SOA) Design philosophy in which every activity is modeled as an encapsulated service and exchanges among those services are governed by standards Q8: 2021? Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-39

A repeatable task that a business needs to perform Reserve a tee time (start time) on a golf course Reserve facilities for a wedding Bill a member’s account Cancel a wedding event Service Q8: 2021 (cont’d) Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-40

Non-SOA Account Status Checking 7-41 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

SOA Account Status Checking Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-42

Places the logic in one place Makes service implementations easily adapted to new requirements, technologies, or methodologies Encapsulation Data/messages are exchanged among services using standardized formats and techniques SOA standards Q8: 2021 (cont’d) Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-43

SOA will open up existing CRM and ERP functionality to new applications Many CRM and ERP functions will be performed in the cloud, and may be companies will assemble their own, individualized versions of CRM, ERP, and even EAI by repackaging SOA services hosted in the cloud Enterprise products will run as thin-client applications on any computing device and will access data and programs using virtualized servers in the cloud Q8: 2021 (cont’d) Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-44

Management programs introduced into organizations Kick-off meetings Change management experts explain programs HR amends annual review to include changes Senior management seems to forget about programs Program loses support and new one is introduced Employees grow more cynical with each failed program Employees want change from bottom up Guide: The Flavor-of-the-Month Club Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-45

Software contains inherent processes that integrate hundreds or thousands business processes Customized to particular industries ERP packages Saves time identifying needed processes Saves money—no software development needed if firm adapts to standard blueprint of ERP package Benefits Organizations adapt its processes to standard blueprint Guide: ERP and the Standard, Standard Blueprints Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-46

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? Issues: Guide: ERP and the Standard, Standard Blueprints Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-47

Active Review Q1 How do information systems vary by scope? Q2 When are information silos a problem? Q3 How do enterprise information systems eliminate silos? Q4 How do CRM, ERP, and EAI support enterprise systems? Q5 What are the elements of an ERP system? Q6 How do the major ERP vendors compare? Q7 What are the challenges when implementing new enterprise systems? Q8 2021? Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7-48