Organizations and Information Systems Chapter 7 Organizations and Information Systems This chapter explores structured processes and information systems within an organization. It extends discussion of business process (Chapter 3) to investigate three types of processes and scope of information systems they use.

Study Questions Q1: How do information systems vary by scope? Q2: How do enterprise IS solve the problems of departmental silos? Q3: What are the differences among CRM, ERP, SCM and EAI systems? Q4: How do inter-enterprise IS solve the problems of enterprise silos? This chapter explores: Concept of process quality and explains how information systems can be used to increase process quality. Problem of information silos and why silos can be problematic. How three types of enterprise systems can eliminate silo problems. Role enterprise resource planning (ERP) systems play in organizations today, purpose and components of an ERP, and major ERP vendors. Major ERP challenges by showing how service-oriented architecture can benefit enterprise systems.

Q1: How Do Information Systems Vary by Scope? Modern organizations use four types of information systems that vary according to the scope of the organizational unit. Workgroup – SharePoint, Lotus Notes, Web Meeting, Blackboard Learn 9, etc. Enterprise – website of a professional association, company website on the intranet, UHV website Inter-enterprise – E-procurement programs, global supply chain systems, etc.

Q2: How Do Enterprise IS Solve the Problems Of Departmental Silos? Data isolated in separated information systems Created over time as personal and workgroup support applications implemented Silos duplicate data and become serious problems as organizations grow An information silo is a management system incapable of reciprocal operation with other, related management systems.

Fox Lake Country Club Departmental Goals and Silos An information silo is the condition that exists when data are isolated in separated information systems. Silos come into existence as entities at each organizational level create information systems that meet their particular needs only. Each application processes customer, sales, product, and other data, but each uses that data for different purposes and store somewhat different data.

Departmental Information Systems: Islands of Automation

How Do Enterprise Information Systems Eliminate Silos? Fox Lake Country Club Enterprise Reservation System

What Problems Do Information Silos Cause? Some of Departments Involved in Patient Discharge

An Enterprise System for Patient Discharge

How Do Enterprise IS Solve the Problems Of Departmental Silos? Lead management is part of sales force management system which is often combined with customer relationship management system. Leads: new potential business clientele, often takes form of responses to the advertising and business inquiries.

Problems of Silos Created in Isolation

How Do Organizations Solve the Problems of Information Silos?

Business Process Reengineering (BPR) “Analysis and design of workflows and processes within an organization” (wikipedia.org) 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 and Implement To-Be Many early projects stalled when the enormity of the project became apparent. Some organizations partially implemented systems that had disastrous consequences. Personnel didn't know if they were using the new system, the old system, or some hacked-up version of both.

Business Process Reengineering (BPR) (cont’d) Altering and designing business processes to take advantage to enable 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 organization to determine how best to use new technology BPR requires high-level and expensive skills and considerable time

Q3: 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 Inherent processes save money and time in business process reengineering (“industry best practices”) ERP: a system to manage and coordinate all the resources, information, and functions of a business CRM: Customer Relationship Management Eliminate costs of developing complex applications in-house Enterprise Application Integration (EAI)

Vendors PeopleSoft—licensed payroll and limited capability HRM systems, administration to large orgs. Siebel—licensed sales lead tracking and management system (acquired by Oracle) SAP—licensed enterprise resource management for midsize and large organizations in all industries and sectors (Oracle, SAGE, Microsoft) sales lead: the identification of a person or entity that has the interest and authority to purchase a product or service.

Customer Relationship Management (CRM) A suite of applications, a database, and a set of inherent processes for managing all interactions (Vendors: SAP, Oracle, Salesforce.com, Microsoft) through four phases of customer life cycle: Marketing, customer acquisition, relationship management, loss/churn CRM is a suite of applications, a database, and set of inherent processes for managing all interactions with customer from lead generation to customer service. Every contact and transaction with customer is recorded in CRM database. to support customer-centric organization lead generation: to generate consumer interest or inquiry into products or services of a business

Four Phases of 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 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.

Major Components of a CRM Application CRM components exist for each stage of the customer life cycle. All applications process a common customer database. This design eliminates duplicated customer data and removes possibility of inconsistent data. Also means each department knows what has been happening with customer at other departments.

Enterprise Resource Planning (ERP) Suite of applications, database, and set of inherent processes for consolidating business operations into single, consistent, computing platform

Enterprise Application Integration (EAI) Suite of software to integrate existing 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

EAI Automatically Makes Data Conversions Among Different Systems Virtual Integrated Database ERP might not be appropriate for some companies. For them, enterprise application integration (EAI) can help solve silo problems. EAI is a suite of software applications that integrates existing systems by providing layers of software that connect applications. Although there is no centralized database, EAI software keeps files of metadata that describe where data are located. Users can access the EAI system to find needed data. In some cases, EAI system provides services to create a “virtual integrated database”. EAI enables organizations to use existing silo applications while eliminating many of the serious problems of isolated systems. MRP – Manufacturing Resource Planning Metadata - The design and specification of data structures

Supply Chain Management Systems (SCM) Manage firm’s order-related information from supply of raw materials to delivery of finished products. Share information about Orders, production, inventory levels, delivery of products and services Goal: Right volume of products to destination with least amount of time and lowest cost Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption. A SCM tool allows monitoring of supply chain activities.

Example of a Supply Chain Management System Customer orders, shipping notifications, optimized shipping plans, and other supply chain information flow among Haworth’s Warehouse Management System (WMS), Transportation Management System (TMS), and its back-end corporate systems.

Q4: How Do Inter-enterprise IS Solve the Problems of Enterprise Silos? Isolation of data causes problems. Doctors would like to have reports on exercise data stored on patient devices and in health clubs. Patients would like to have prescription data from their providers as well as exercise data from their health clubs. Health clubs would like to have exercise prescriptions and home workout data to integrate with data they have.

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.

Q5: What Are the Challenges When Implementing New Enterprise Systems? Collaborative Management Requirements Gaps Transition Problems Employee Resistance Challenges Difficulty Expense Risk With no single department manager in charge, implementation is a collaborative effort with committees and steering groups. Organization must identify gaps and decide what to do with them. Must change from using isolated departmental systems to using new enterprise system, while continuing to run the business. Managing resistance to change occurs because change requires effort and it engenders fear. Considerable research and literature exists about reasons for change resistance and how organizations can deal with it. Senior-level management needs to communicate the need for change throughout the entire transition process. Employees fear change because it threatens self-efficacy. Employees may need to be given extra inducement to change to the new system.

Collaborative Management Challenges No single manager in charge Committees and steering groups Collaborative Management Licensed products are never perfect fit Features and functions of complex products makes identifying gaps difficult Deciding what to do with gaps. Adapt to application or change application? Requirements Gaps

Challenges (cont’d) Transition problems Employee resistance Careful planning and substantial training critical Transition problems Change requires effort and creates fear Senior level management must communicate need for change to organization, and must re-iterate Train key users ahead of time to create positive buzz about new system Video demonstrations of employees successfully using new system Encourage change with extra inducements Employee resistance