Managing Information Technology 6 th Edition

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1 Managing Information Technology 6 th Edition CHAPTER 6 ENTERPRISE SYSTEMS Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 1

2 APPLICATION AREAS Interorganizational systems Systems that span organizational boundaries e Business applications B2C link businesses with their end consumers B2B link businesses with other business customers or suppliers Electronic data interchange (EDI) systems Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 2

3 APPLICATION AREAS Intraorganizational systems Enterprise Systems Systems that support all or most of the organization Managerial Support Systems Systems that support a specific manager or group of managers Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 3

4 APPLICATION AREAS Intraorganizational systems (cont d) Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 4

5 CRITICAL CONCEPTS Batch processing A group (or batch) of transactions are accumulated, then processed all at one time Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5

6 CRITICAL CONCEPTS Batch processing (cont d) In the early days of computers, all processes were batched Major problem is the time delay before the master file is updated Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 6

7 CRITICAL CONCEPTS Online processing Each transaction is entered directly into computer when it occurs Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 7

8 CRITICAL CONCEPTS Batch processing vs. Online processing Batch Processing Significant delay before master file is updated (usually 1 day) Much less expensive to operate Some applications naturally suited for batch processing (e.g., payroll) Online Processing Master file updated within a fraction of a second Much more expensive to operate Some applications need to be processed in real time Note: given the tradeoffs, hybrid systems that combine online dataentrywithbatchprocessing arevery common Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 8

9 Online processing CRITICAL CONCEPTS Interactive System A fully implemented online system where user interacts directly with the computer In line System Provides for online data entry, but processing of transactions is deferred for batch processing Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 9

10 CRITICAL CONCEPTS Functional information systems Information systems that support one of an organization s primary business functions Example Business Functions and Subsystems Marketing Accounting Personnel Personnel Engineering Production Planning Production Scheduling Sales Forecasting Etc. Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 10

11 CRITICAL CONCEPTS Vertically integrated information systems Serve more than one vertical level in an organization or industry Example Sales System Top Management Long-term trend analysis Middle Management Weekly ydaaa data analysis ayssto track slow-moving items and productive salespeople Produce invoices Capture initial sales data Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 11

12 CRITICAL CONCEPTS Distributed systems Refers to mode of delivery rather than traditional class of applications Processing power is distributed to multiple sites, which are then tied together via telecommunications lines Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 12

13 CRITICAL CONCEPTS Client/server systems A type of distributed system where processing power is distributed between a central server computer and a number of client computers (usually PCs) Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 13

14 CRITICAL CONCEPTS Client/server systems (cont d) Client Middleware Server Handles user interface Accesses distributed services through a network Software to support clients and server interaction ti Three categories: Server operating systems Transport stack software Service-specific software Runs on bigger machine Handles data storage for applications Databases Web pages Groupware Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 14

15 CRITICAL CONCEPTS Client/server systems (cont d) Two tier system Three tier system Original client/server Became popular in systems the mid 1990 s Client Server Client Application Server Database Server Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 15

16 CRITICAL CONCEPTS Client/server systems Two models: Fat client/thin server: most processing done on the client Thin client/fat server: most processing done on the server In general Web and groupware servers are fat servers Database servers are thin servers Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 16

17 CRITICAL CONCEPTS Service oriented architecture (SOA) Application architecture based on a collection of functions, or services, where these services can communicate (or be connected) with one another Advantages: Once a service is created, it can be used over and over again Services can be created internally or obtained externally Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 17

18 CRITICAL CONCEPTS Web services A particular collection of technologies built around the XML standard of communicating XML is used to tag the data Web Services Description Language (WSDL) describes the services available Other protocols used in web services include: Universal Description, Discovery, and Integration (UDDI) lists the services available SOAP (originally Simple Object Access Protocol, but now just the initials) transfers the data Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 18

19 TRANSACTION PROCESSING SYSTEMS Process thousands of transactions each day in most organizations Examples: sales, payments madeandreceived and received, inventory shipped and received, paying employees Typical outputs: invoices, checks, orders, reports Critical to business operations Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 19

20 TRANSACTION PROCESSING SYSTEMS Payroll system Common system used to produce payroll checks Also contains numerous other subsystems Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 20

21 TRANSACTION PROCESSING SYSTEMS Order entry system Basic idea Orders received and entered into system System updates files and prints invoice Also contains numerous othersubsystems Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 21

22 TRANSACTION PROCESSING SYSTEMS Order entry system (cont d) Transaction begins with an entry of a Sales Sl Order Od or a Query Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 22

23 ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS Set of integrated business applications (modules) that carry out common business functions The same transaction data is accessible to people working in multiple functional units within the organization (sales + accounting + ) ERP modules reflect a process oriented way of doing business Not separate systems for separate functions Support for Order fulfillment, not just Sales Usually purchased from a software vendor First wave of enterprise system packages Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 23

24 ERP SYSTEMS SAP and other vendors designed suites of integrated modules for back-office transaction processing that eliminated the need for custom-developed interfaces. 3 Modules for Value-Chain Activities S U P P L I E R S Materials Management modules Procurement Production/ Operations modules Production Financials/Accounting modules Human Resources modules Sales/ Distribution modules Distribution 2 Modules for Enterprise Support Activities C U S T O M E R S Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 24

25 ERP SYSTEMS Choosing the right software is important From one vendor or multiple vendors ( best of breed ) Implementingmultiplemodules multiple modules at once is difficult Requires large investment of money and people resources Source: Gartner Dataquest Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 25

26 ERP SYSTEMS Today s vendors offer modules beyond the back-office modules Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 26

27 ENTERPRISE RESOURCE PLANNING SYSTEMS Benefits for Business Operations and Decision Making Support for Cross Functional processes Modules were designed to support business processes that involved multiple business functions and multiple geographic locations Access to Integrated Data via a unified platform Data entered into one module could be accessed in real time by other modules, by employees in dispersed business units, if a single centralized database is implemented. Support for Global Transactions National currencies are automatically converted to the parent firm s currency Employees in different countries can see the same screen in theirown languages Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 27

28 ENTERPRISE RESOURCE PLANNING SYSTEMS Benefits for Managing the IT Infrastructure Centralized Database on Client/Server Architecture Many early adopters replaced legacy system applications (with separate databases) written for mainframe computers Software updates with increased functionality from the vendor on a regular basis Companies can avoid high costs of customized system enhancements Standard IT platform for external transactions and regulatory compliance Enablestransactions withexternal suppliers andcustomers Costs avoided for updating legacy systems (e.g., Y2K and Euro compliance) Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 28

29 DATA WAREHOUSING Is the eestablishment s e t and maintenance a ceof a large age data storage facility containing data on all (or at least many) aspects of the enterprise Provides users data access and analysis capabilities without endangering operational systems Designed for analysis of data, not efficient operational performance Summary reports may be automatically generated on periodic basis Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 29

30 DATA WAREHOUSING Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 30

31 DATA WAREHOUSING Key characteristics of data in a data warehouse Subject oriented Data stored by business subject, rather than by application Customer, Claims vs. Order Billing, Claims Processing Integrated Data stored once in a single integrated location Time variant Data tagged with some element of time Data available for long periods of time Nonvolatile Data warehouse is read only : existing data is not overwritten or updated Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 31

32 DATA WAREHOUSING Establishing a data warehouse: Is time consuming and expensive Requires software tools to: Construct warehouse Operate warehouse Access and analyze data from the warehouse Average project costs based on study of 33 DW projects (from Journal of Data Warehousing) Average 1 st year costs $1,560,371 Data extraction and transformation 200,000 DBMS software 105,000 DW Administration 588,000 System staff and system integration 222,000 EIS, DSS, and Data mining software 272,000 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 32

33 CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS Customer relationship management (CRM) A business strategy directed at customer relationships that involves new business processes for execution and communication Customer interactions focused on customer needs Integrated approach to customer channels for marketing, sales, and support Cross functional vs. single functional view Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 33

34 CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS CRM systems A new way to compete using IT: service based differentiation Single face to the customer, no matter which channel customer uses Traditional Channels Call centers Field reps Retail dealer networks/ business partners New Electronic Channels E mail Web sites for consumers and partners Communications via wireless devices Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 34

35 CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS CRM systems (cont d) Many players in the CRM systems marketplace Most of the top CRM enterprise vendors offer: Traditional out of the box CRM Traditional CRM with templates for specific vertical industries Major ERP software vendors also offer CRM modules (e.g., SAP and Oracle) Salesforce.com offers an on demand solution Vendor is also the software host Recently Copyright purchased 2009 Pearson by Education, Oracle Inc. Publishing as Prentice Hall 35

36 CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS Types of purchased CRM systems CRM Suites Ex. Siebel, Clarify e CRM Ex. NetPerceptions (automated customer interactions) ERP Extensions Ex. mysap, PeopleSoft/Vantive Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 36

37 CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS CRM Implementations: 4 Perils to Avoid* 1: Implementing CRM before creating a business strategy for how data will be used 2: Rolling out a CRM system before changing internal processes to support the data collection and usage 3: Assuming that more [CRM technology] is better 4: Stalking, not wooing, Customers *Rigby et al., Avoid the Four Perils of CRM, Harvard Business Review, Feb. 2002, Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 37

38 DATA WAREHOUSE & CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS CRM system supported by a data warehouse CRM systems often pull data that is stored in a data warehouse Example: Harrah s Entertainment Total Rewards system captures all guest transactions (including slot machines andgame tables) Harrah s can track who plays what games, where, when, and how often and then offer special deals aimed at generating repeat business Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 38

39 OFFICE AUTOMATION A set of office related applications that might or might not be integrated into a single system Most Common Office Applications Word processing Desktop publishing Electronic mail Electronic calendaring Telephony Document imaging Vi Voice mail Document preparation, storage, and sharing Copying Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 39

40 OFFICE AUTOMATION Word processing and application suites Many word processing applications available Market leader is Microsoft Word Some others are free: OpenOffice (free office suite) Zoho (free online office suite) Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 40

41 OFFICE AUTOMATION Word processing and application suites (cont d) Word processors typically sold as part of an application (office) suite Microsoft Word is part of MS Office Includes spreadsheet, presentation, database, e mail, collaboration, and publishing applications Microsoft Office 2008 for Mac recently released Advantage is the ability to copy and paste from one application to another in the same suite Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 41

42 OFFICE AUTOMATION Future developments Internet (VoIP) telephony: Allows users to make telephone calls using their workstations Increasing interdependence between telephone and computer networks because both are now using the same lines Faxes/copies will be sent over office network Businessdocumentswill bestored digitally Videoconferencing between individuals and teams will become more common Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 42

43 OFFICE AUTOMATION Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 43

44 GROUPWARE Industry term that refers to software designed to support groups by facilitating: Collaboration Communication Coordination Also called collaboration or collaborative environment Products vary in the features they provide Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 44

45 GROUPWARE Common Groupware Features Electronic mail Electronic bulletin boards Meeting support systems Workflow routing Computer conferencing Electronic forms Electronic calendaring Internet telephony Group scheduling Sharing documents Desktop videoconferencing Electronic whiteboards Shared workspace Learning management systems Instant messaging Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 45

46 GROUPWARE Microsoft Exchange Lotus Notes Oracle Collaboration Suite Novell GroupWise Microsoft Office Communications Server Web Crossing Groupware Products EMC Documentum eroom Microsoft Office Groove Microsoft SharePoint Server Thruport Technologies HotOffice IBM Workplace Collaboration Services Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 46

47 GROUPWARE Lotus Notes was purchased by IBM in 1995 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 47

48 GROUPWARE Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 48

49 INTRANETS AND PORTALS Intranet: a network operating within an organization that employs the same TCP/IP protocol used on the Internet Advantages: Implementation is relatively easy (Web technologies) Web browser acts as universal client that works with heterogeneous platforms Little, if any, user training required E mail and document sharing available to all in the organization Low cost due to common technologies and little training Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 49

50 INTRANETS AND PORTALS Portals: software that provides intranets with a structure and easier access to internal information via a Web browser Initial intranets had lots of documents, but little structure to help users find them Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 50

51 FACTORY AUTOMATION Traditional a factory automation: at o Numerically controlled machines, which use a computer program or a tape with punched holes to control movement of tools on machines Material requirements planning (MRP) uses data input to produce a production schedule for the factory and a schedule of needed raw materials Computer integrated manufacturing (CIM) Combines MRP with the ability to carry out schedules through computer controlled machines Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 51

52 FACTORY AUTOMATION Threemajor categories of CIM systems 1. Engineering systems 2. Manufacturing administration 3. Factory operations Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 52

53 FACTORY AUTOMATION Engineering systems Computer aided design (CAD) use of two and threedimensional computer graphics to create and modify engineering designs Computer aided engineering (CAE) system that analyzes functional characteristics of a design and simulates the product performance under various conditions Group technology (GT) systems that logically group parts according to physical characteristics, machine routings, and other machine operations Computer aided process planning (CAPP) systems that plan the sequence of processes that produce or assemble a part Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 53

54 FACTORY AUTOMATION Manufacturing administration Manufacturing resources planning (MRP II) A system that usually has three components: 1. Master production schedule 2. Material requirements planning 3. Shop floor control Attempts to implement just in time (JIT) production Does not directly control machines on the shop floor An information system that tries to minimize inventory and employ machines efficiently and effectively Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 54

55 FACTORY AUTOMATION Manufacturing administration (cont d) Supply chain management (SCM) Systems to deal with distribution and transportation of raw materials and finished products throughout the supply chain Are often interorganizational systems that communicate with suppliers and/or distributors Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 55

56 SUPPLY CHAIN MANAGEMENT (SCM) SYSTEMS Designed to deal with the procurement of components needed to make a product or service and movement and distribution of finished products through the supply chain Fivebasiccomponents components of SCMsystem: 1. Plan: developing strategy for managing resources 2. Source: choosing suppliers 3. Make: manufacturing the product 4. Deliver: logistics of getting product to the customer 5. Return: procedure for handling defective products Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 56

57 FACTORY AUTOMATION Factory operations Computer aided manufacturing (CAM) use of computers to control manufacturing processes Series of programs to control automated equipment on shop floor Includes guiding gvehicles to move raw materials and finished products Requires a lot of input from other systems Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 57

58 FACTORY AUTOMATION Factory operations (cont d) Manufacturing automation protocol (MAP) communications protocol to ensure an open manufacturing system Pioneered by General Motors and now accepted by nearly all manufacturers and vendors Allows for seamless communication between all equipment on the factory floor Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 58

59 FACTORY AUTOMATION Robotics A branch of artificial intelligence (AI) where scientists and engineers build machines to accomplish coordinated d physical tasks like humans do Advantages: Perform repetitive tasks tirelessly Produceconsistent consistent high quality output Avoid putting humans at risk (subject to dangers such as paint inhalation or retinal damage) Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 59

60 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 60

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