Enterprise Business Processes and Applications (IS 6006) Masters in Business Information Systems 2008 / 2009 Fergal Carton Business Information Systems

Last week Exercise: bank loan process comments –Purpose is communication –There is no right answer –Can over simplify –Doesn’t take into account human error –Can be inflexible: not matching reality –Flags / metrics in place to monitor performance What does integration mean?

This week Feedback on process mapping exercise Basic flows of information Collaboration conflict in an enterprise Information sharing Data integrity issues ERP and integration The zipper Reading on data integrity / integration Monk / wagner hand out Rayport & Sviokla paper

Basic flows of information Organisations are organised in a number of functional areas They carry out complementary missions They interact and collaborate in managing the organisation What are they called? What are their goals?

Examples: Finance: managing the cash flows, providing resources to the firm –sub area: Accounting (books and legal reporting) –sub area: Accounts receivable and payable: deal with suppliers and customers Marketing: promoting the firm and its products Sales: selling the products; dealing with customers –sub area: sales orders –sub area: returns Production: manufacture goods –sub area: purchasing raw material –sub area: quality control

Collaboration / Conflict All areas of the firm must exchange info with the others (just like organisations must interact with the outside) Divergence of viewpoints means opportunities for conflict are great Managing same resources / using the same assets but with radically different goals

Examples: Quality control versus production: –production want to increase volumes and keep productivity at highest levels –QC want to prevent any “faulty” product to come out of the door In an environment where zero defect is only a remote target => conflict is likely in one organisation, QC were referred to as the Sales Prevention department

How can data be shared –Face to face –Hard copy –Soft copy or –Interface between applications –Access to a shared database –…

Production planning and forecast In theory, it’s simple –Sales forecast future demand for products –Production plan to meet forecast sales But, in real life, there are many contingencies: –Sales tend to be optimistic –Most businesses exhibit seasonality –Customers are unpredictable –Forecasts are based on average prices –Yield may be poor due to quality issues –…

How managers do their work What is happening? Actual What should be happening? Plan What therefore would happen if? What-if? Adjust plan and/or change actual Manage

Criteria for information sharing –Integrity –Timing of information exchange –Knowing information is up to date –Ownership of data –Accountability if information is incorrect, incomplete –Decision responsibility

Virtualisation Virtualisation: capturing & storing data relating to changes in the physical environment in an information system A measure of the degree to which information systems can reflect business reality Pre-supposes a structure (database), as data captured is related to a logical entity

Human decisions replaced by data and interfaces –An approved sales order triggers the creation of an invoice (running Accounts Receivable “interface”) –A production schedule triggers the creation of work orders –A batch release from warehouse triggers quality checks –A component quality failure triggers purge on all inventory –An incomplete payment triggers a debit note –An unpaid invoice triggers a reminder letter –… ERP “hardwires” processes Increased focus on data!

Turning raw data into information = value-adding process

Example: Supplier payment * Capture at source eg. match physical goods received to a stock item in the system

But business models evolve High margin to high volume Hardware to software & service Manufacturing becomes logistics Gap opens between ERP & reality

Reality and ERP diverge inevitably Reality Systems ERP Impact of gap? Responsiveness € (FTE and s/w) Stress BI tools Workarounds

Post go-live example “There was an awful lot of resources thrown at go-live, most of those resources were gone after go-live. Trying to get something fixed, it wouldn’t happen.” “In order to actually utilize it in a way that actually improves our lot, took, is still taking, quite a long time, and if you can’t do it yourself, it’s even worse, because you can’t get IS available, at times to do the work.“

ERP is often single instance Single point of data entry (PO’s, SO’s, …) Inventory control Opportunity to re-design processes Single technical platform (support) Common language, common pool of data SalesShippingCollect cashProduction Customer information (ship-to, bill-to, install-at, …)

Integration example: Bank branch What does integration mean in a bank perspective? Products Customer services Transaction processing Data model …

Integration downsides Response times Vulnerability: single point of failure Limitations on expansion Dependence on single vendor Flexibility to change system … Access to basic information is complicated

Who benefits? Finance gain greater visibility Manufacturing? –Demand may be too unstable for MRP –Production planning needs more “nuance” –ERP is too literal –Much planning still done on Spreadsheets Sales: need of integration