Informa.on Systems in Organiza.ons MIS 2101 Week 7 / Chapter 7 Enhancing Business Processes Using Enterprise Informa.on Systems Photo: Objet Mathema+que by Man Ray, 1934
Chapter 7 Learning Objec.ves Core Business Processes and Organiza2onal Value Chains Explain core business processes that are common in organiza.ons. Enterprise Systems Describe what enterprise systems are and how they have evolved. Enterprise Resource Planning Describe enterprise resource planning systems and how they help to improve internal business processes. The Formula for Enterprise System Success Understand and u.lize the keys to successfully implemen.ng enterprise systems.
Core Business Processes and Organiza.onal Value Chains Core Business Processes and Organiza2onal Value Chains Explain core business processes that are common in organiza.ons. Enterprise Systems Describe what enterprise systems are and how they have evolved. Enterprise Resource Planning Describe enterprise resource planning systems and how they help to improve internal business processes. The Formula for Enterprise System Success Understand and u.lize the keys to successfully implemen.ng enterprise systems.
Scenario You work for a mid- sized manufacturer of supplies for white boards. Working in groups of 3 each of you will take responsibility for: Inbound Logis.cs/Procurement Opera.ons/Manufacturing Outbound logis.cs/order Fulfillment What informa.on do you need to make your team efficient and effec.ve?
Scenario (cont.) What types of informa.on needs to flow from one team to the next to make the organiza.on efficient and effec.ve? How do we facilitate this flow of informa.on from one system to the next?
Scenario (cont.) What type of informa.on flows between teams within your organiza.on & what type of informa.on flows between your organiza.on and your business partners (suppliers & customers)?
Core Business Processes 7-7
? Core Business Processes Order- to- Cash Procure- to- Pay Make- to- Stock/Make- to- Order
Order- to- Cash Process The processes associated with selling a product or service 7-9
Procure- to- Pay Process The processes associated with procuring goods from external vendors 7-10
Make- to- Stock / Make- to- Order Process The processes associated with producing goods Who has worked at a place that used Make-to-Stock? Who has worked at a place that used Make-to-Order? 7-11
? What is a SUPPLY CHAIN
Supply Chain 7-13
What is a VALUE CHAIN? 7-14
Value Chain Framework 7-15
What is a VALUE SYSTEM? 7-16
Value Systems: Connec.ng Mul.ple Organiza.onal Value Chains 7-17
Enterprise Systems Core Business Processes and Organiza2onal Value Chains Explain core business processes that are common in organiza.ons. Enterprise Systems Describe what enterprise systems are and how they have evolved. Enterprise Resource Planning Describe enterprise resource planning systems and how they help to improve internal business processes. The Formula for Enterprise System Success Understand and u.lize the keys to successfully implemen.ng enterprise systems.
THE RISE OF ENTERPRISE SYSTEMS
? What are LEGACY SYSTEMS
Legacy Systems Each department has its own system. Infrastructure specific Inefficient processes Potential for inaccuracies Too many rocks in the river 7-21
? What are ENTERPRISE SYSTEMS
Enterprise System Approach 7-23
? ERP Challenges What are some of the challenges with implemen.ng an ERP? Why would a company want to do this? Who might resist? Why?
? Who are the largest and most influen.al ERP VENDORS
Suppor.ng Business Processes: Internally Focused Systems 7-28
Suppor.ng Business Processes: Externally Focused Systems 7-29
Improving Business Processes Through Enterprise Systems: SoMware Types Packaged Soeware Also called off- the- shelf May or may not require significant configura.on Enterprise soeware oeen divided into modules Special func.onality may require customizing the packaged (or vanilla) version Custom Soeware Designed and developed exclusively for a specific organiza.on (Chapter 9)
What is the difference? 7-31 between VANILLA AND CUSTOMIZED SOFTWARE
What are MODULES? 7-32
Modules of Enterprise Systems Each module in an enterprise system replaces a stand- alone legacy system. 7-33
Best Prac.ces- Based Soeware Most ERP vendors build best prac.ces into their ERP systems. Iden.fy business processes in need of change Future updates are smoother if businesses change their business processes to fit with ERP systems. Is following the best prac.ces always the best strategy? If companies have compe..ve advantage from unique business processes, forcing best prac.ces may actually hurt. 7-34
Improving Business Processes Through Enterprise Systems: BPM Business Process Management Ac.vely managing business processes Using a structured approach May be ongoing May include radical process reengineering
What are the basic steps of BUSINESS PROCESS MANAGEMENT? 7-36
Improving Business Processes Through Enterprise Systems: Benefits & Costs 56% of Implementa.on costs over budget Average cost + $10 million Average over budget is by US$2Million Typically costs underes.mated Scope expanded Unexpected technical & organiza.onal change management issues Many poten.al Costs & Benefits make implementa.on planning complex & uncertain
Enterprise Resource Planning Core Business Processes and Organiza2onal Value Chains Explain core business processes that are common in organiza.ons. Enterprise Systems Describe what enterprise systems are and how they have evolved. Enterprise Resource Planning Describe enterprise resource planning systems and how they help to improve internal business processes. The Formula for Enterprise System Success Understand and u.lize the keys to successfully implemen.ng enterprise systems.
What is ENTERPRISE RESOURCE PLANNING (ERP)? 7-39
Integra2ng Data to Integrate Applica.ons 7-40
Example ERP Screen An ERP system can provide employees with relevant, up- to- date informa.on. 7-41
Core and Extended ERP Components Core components support primary internal ac.vi.es. Extended components support primary external ac.vi.es. 7-42
ERP Core Components Financial Management accoun.ng, financial repor.ng, performance management, corporate governance Opera2ons Management simplify, standardize, and automate business processes for inbound/outbound logis.cs, product development, manufacturing, sales and service Human Resource Management employee recruitment, assignment tracking, performance reviews, payroll, regulatory requirements 7-43
Human Resources Management 7-44
Order- to- Cash 7-45
Procure- to- Pay 7-46
Produc.on 7-47
ERP Installa2on Configura.on of the ERP systems is performed during any ERP implementa.on. System must be configured to reflect business processes and associated business rules. Organiza.ons have to make countless decisions on how to configure thousands of database tables to fit the business s needs. Organiza.ons hire experienced business analysts or outside consultants to assist with implementa.on. 7-48
ERP Limita2ons ERP falls short in communica.ng across organiza.onal boundaries. They tend to be not well suited for managing value system ac.vi.es. Other systems can work with ERP to provide these capabili.es. 7-49
The Formula for Enterprise System Success Core Business Processes and Organiza2onal Value Chains Explain core business processes that are common in organiza.ons. Enterprise Systems Describe what enterprise systems are and how they have evolved. Enterprise Resource Planning Describe enterprise resource planning systems and how they help to improve internal business processes. The Formula for Enterprise System Success Understand and u.lize the keys to successfully implemen.ng enterprise systems.
The Formula for Enterprise System Success 1. Secure execu.ve sponsorship. 2. Get help from outside experts. 3. Thoroughly train users. 4. Take a mul.disciplinary approach to implementa.ons. 5. Ini.ate evolving the ERP Architecture. 7-51
Secure Execu2ve Sponsorship Execu.ve Sponsorship is Cri.cal Primary reason for ERP failure Cri.cal for buy- in Dictates resource availability Necessary to authorize business improvements Key to removing obstacles
Get Help from Outside Experts ERP systems are very complex Typically IS departments aren t familiar with new systems Experts can help Specify needs Select a suitable vendor Manage the implementa.on project Provide technical exper.se
Thoroughly Train Users ERP systems are complex from the user perspec.ve as well Training costs are oeen poorly judged When systems go live it takes employees.me to regain produc.vity Proper training can alleviate concerns Proper training can mi.gate produc.vity loss Proper training can set expecta.ons
Take a Mul2disciplinary Approach to Implementa.ons ERP systems oeen affect the en.re organiza.on The en.re organiza.on is a stakeholder The en.re organiza.on needs involvement Failure to have representa.ves can result in unmet cri.cal needs The project team can t be experts in every aspect of user needs Departments may become hos.le if lee out of the implementa.on and needs assessment
Evolving the ERP Architecture