Enterprise Business Processes and Applications (IS 6006)

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Enterprise Business Processes and
Applications(IS 6006)

• Masters in Business Information Systems 2008 /
  2009

Fergal Carton Business Information Systems
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Last week

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

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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

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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?

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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

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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

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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 gt conflict is likely
• in one organisation, QC were referred to as the
  Sales Prevention department

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How can data be shared

• Face to face
• Hard copy
• Soft copy or email
• Interface between applications
• Access to a shared database

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Production planning and forecast

• In theory, its 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

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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

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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

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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

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ERP hardwires processes

• 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

Increased focus on data!
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Turning raw data into information value-adding
process
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Example Supplier payment
Capture at source eg. match physical goods
received to a stock item in the system
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But business models evolve

• High margin to high volume
• Hardware to software service
• Manufacturing becomes logistics
• Gap opens between ERP reality

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Reality and ERP diverge inevitably

• Impact of gap?
• Responsiveness
• (FTE and s/w)
• Stress
• BI tools
• Workarounds

ERP
Systems
Reality
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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
  wouldnt 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 cant do it
  yourself, its even worse, because you cant get
  IS available, at times to do the work.

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ERP is often single instance

• Single point of data entry (POs, SOs, )
• Inventory control
• Opportunity to re-design processes
• Single technical platform (support)
• Common language, common pool of data

Sales
Shipping
Collect cash
Production
Customer information (ship-to, bill-to,
install-at, )
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Integration example Bank branch

• What does integration mean in a bank
  perspective?
• Products
• Customer services
• Transaction processing
• Data model

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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

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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