EnterpriseWide

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Chapter 7 Enterprise-Wide Information Systems
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Learning Objectives

• 1. Explain how organizations support business
  activities by using information technologies
• 2. Describe what enterprise systems are how they
  have evolved
• Explain the difference between internally and
  externally focused software applications
• Understand and utilize the keys to successfully
  implementing enterprise systems.

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System Categories
Enterprise-wide Systems aka Enterprise Systems,
are systems that allow companies to integrate
information across operations on a company-wide
basis
Interorganizational Systems (IOS) Systems that
communicate across organizational boundaries
whos goal is to streamline information flow from
one company to another
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Enterprise Systems Within the Organization
Example Order Process and Information Flow
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Interorganizational Systems Across Organizations
Example Order Process and Information Flow
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The Value Chain Internally Focused
Used to identify the flow of information through
a set of business activities. It identifies two
types of activities, primary and support
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The Value Chain - Primary Activities
Functional areas within an organization that
process inputs and produce outputs. These
activities may vary widely based on the unique
requirements of a companys industry

• Primary Activities include
• Inbound Logistics receiving and stocking raw
  materials, parts, products
• Operations/Manufacturing processing orders and
  raw materials into finished product
• Outbound Logistics distribution of the finished
  product to customers
• Marketing and Sales creating demand for the
  product (pre-sales activities)
• Customer Service providing support for the
  product or customer (post-sales activities)

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The Value Chain - Support Activities
Support activities are business activities that
enable Primary Activities These activities can be
unique by industry but are generally more typical
across industries

• Support Activities include
• Infrastructure hardware and software that must
  be implemented to support applications for
  primary activities
• Human Resources employee management activities
  hiring, interview scheduling, and benefits
  management
• Technology Development the design and
  development of applications that support the
  organization
• Procurement purchase of goods or services that
  are required as inputs to primary activities

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A Value System Externally Focused

• A connection of value chains across organizations
• Allows the flow of information between
  organizations to support business activities
• Upstream flow is information received from
  another organization (i.e. from company A to
  Company B above)
• Downstream Flow is information sent to another
  organization (i.e. from Company B to Company C
  above)

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Options for Enterprise Systems Packaged vs.
Custom
Packaged Applications Off the Shelf computer
applications purchased from a vendor or the
company that created the system (i.e. Quicken or
MS Money for financial applications)

• Packaged Key Characteristics
• Best Use - standardized, repetitive tasks
• Cost Effectiveness lower cost because vendors
  can create once and then sell many copies to
  others
• Organizational Fit may not be well suited for
  tasks that are unique to a particular business or
  industry
• Maintenance the vendor makes the changes and
  then sends the updates to its customer on a
  periodic basis. The customer does not control
  this schedule

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Options for Enterprise Systems Packaged vs.
Custom
Custom Applications Custom-built computer
applications created by the organization or a
third party (e.g. a consulting organization)

• Custom Key Characteristics
• Best Use - unique business process to an
  organization
• Cost Effectiveness much higher cost due to the
  one-time creation of the applications
• Organizational Fit excellent as they are
  designed to fit a specific business process
• Maintenance all changes are created and
  implemented by the organization using the
  application

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Enterprise System Evolution
System Types
System Evolution Standalone Systems Integrated
Systems (Intraorganizational) Integrated
Systems (Interorganizational)
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Enterprise Systems Stand-alone or Legacy
Stand Alone (Legacy) Systems A single system or
groups of systems, designed to each support one
or a few business functions (e.g. accounting
system or a manufacturing system, etc.)

• Stand Alone (Legacy) Systems
• Little or no integration with other
  organizational systems. If integration exists, it
  is usually in batch (i.e. the accounting system
  gets updates from manufacturing system once a day
  or week
• Organizational fit may be better than integrated
  packages due to the focus on one function and
  that they have been highly modified over time
• Customization and the age of these systems make
  them difficult to support due to the complexity,
  use of older or obscure languages, etc.

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Enterprise Systems - Legacy System Example
Legacy (stand-alone) Systems information is not
readily shared between systems (i.e. Inbound
Logistics inventory information shared with
Operations)
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Enterprise Resource Planning
Integrated Packages (Enterprise Resource
Planning) Richly functional systems designed to
support many organizational functions (e.g.
accounting and finance)

• ERP Key Characteristics
• Internally focused systems designed to support
  the internal operations of the organization
• Highly integrated systems sharing a common data
  warehouse for information sharing across
  functions, using real-time updates
• Organizational fit may be less for individual
  departments but the integrated sharing of
  information usually outweighs these issues
• Usually packaged applications supported by the
  vendor utilizing a common user interface
• Customization is discouraged but these systems
  have the flexibility to support other outside
  applications using the common data repository and
  interfaces

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Enterprise Systems Integrated System Example
Integrated Systems Information is stored in a
single data repository and can be accessed and
updated by all functional systems (e.g.
Operations)
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Choosing an ERP System - Issues

• ERP Systems are
• Supplied by multiple vendors including SAP, Baan,
  Oracle, etc., with each having their own unique
  features and structures
• Packaged systems that are following a one
  size-fits all strategy which means they may not
  support all functions as well as a custom system
• Similar but are also different. They should be
  selected based on factors including control,
  business requirements, and best practices

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Choosing an ERP System Selection Factors
Control refers to where the power lies related to
computing and decision support systems
(centralized vs. decentralized) in selecting
systems, developing policies and procedures, etc.
(who will decide?)
Business Requirements refers to the systems
capabilities and how they meet organizational
needs through the use of software modules or
groups of business functionality (what do you
need?)
Best Practices refers to the degree to which the
software incorporates industry standard methods
for doing business which can cause a need for
significant business processes reengineering (how
much change is required?)
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ERP Capabilities SAP Example
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ERP and Business Process Reengineering
Business Process Reengineering A systematic,
structured improvement approach by all or part of
an organization whereby people critically
examine, rethink, and redesign business processes
in order to achieve dramatic improvements in one
or more performance measures (e.g. quality, cycle
time, cost)
Hammer and Champy, (Reenginerring the
Corporation) The radical redesign of an
organization was sometimes necessary in order to
lower costs and increase quality and that the
information technology was the key enabler for
that radical change
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Business Process Reengineering

• Steps in Business Process Reengineering
• Develop a vision for the organization that
  specifies business objectives (e.g. reduced
  costs, shortend time to market, improved quality,
  etc.)
• Identify critical processes that are to be
  redesigned
• Understand and measure the existing processes as
  a baseline for future improvements
• Identify ways that information technology can be
  used to improve processes
• Design and implement a prototype of the new
  process(es)

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BPR Today Observations and Research

• Many large failures exist in large scale Business
  Process Reengineering implementations. To be
  successful and organizations must have
• Senior management support
• A shared organizational vision
• Realistic expectations of outcomes
• Participants empowered to reengineer
• The right people participating
• Sound management practices
• Appropriate funding
• BPR failures can be tracked back to the lack of
  one or more of these factors in implementation!

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BPR Today Observations and Research

• Large bodies of research are available on the
  role of BRP and BPR implementations. Some of this
  research has come to the following conclusions
• Reengineering and related organizational issues
  are as important as the technical implementation
  issues (Kumar and Van Hellersberg, 2000 Markus
  and Tanis, 2000)
• Managers in many cases must choose between making
  the ERP system fit the organization or the
  organization fit the ERP system (Soh, Sia,
  Tay-Yoh, 2000)
• For an ERP system to help transform the
  organization and gain new competitive
  capabilities, a full organizational and
  operational change is required (Willcocks and
  Sykes, 2000)
• In order to be successful, manager must first
  transform the organization and then implement the
  ERP system

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Enterprise Systems Integrated
(Interorganizational)
Integrated Packages Richly functional systems
designed to support externally focused functions
(Upstream Supply Chain Management and
Downstream Customer Relationship Management)

• Integrated Packages
• Highly integrated with internal systems (ERP)
  through the use of interfaces and specialty
  software
• Organizational fit for these systems is very high
  as they are highly specific to the function they
  support
• These are usually packaged applications that are
  supplied and supported by the ERP vendor or other
  third party system integrators
• Customization or modifications are also
  discouraged to minimize support cost but the
  applications are highly tailorable with
  configuration options

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Customer Relationship Management
Objective Applications that help organizations
attract new business and attract and encourage
repeat business

• Functions
• There are two primary functions in CRM systems
• Sales tools designed to assist in presales
  activities such as marketing and prospecting
  (e.g. Sales Force Automation)
• Service tools that help with the post-sales
  aspects of the business (e.g. call center
  technology, analytics)

• Sources
• There are two primary sources of CRM systems
• CRM Software Vendors Siebel, FirePond, Onyx,
  E.Piphany
• ERP Vendors SAP, Baan, Oracle, etc.

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Sales Support Sales Force Automation (SFA)
Sales Force Automation provides salespeople and
sales managers with computerized support tools to
assist in daily routines Example Siebel SFA
displays multiple functions including sales,
quota forecast by sales person messages
appointments
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Supply Chain Management

• Objective
• Applications that accelerate product development
  and reduce cost associated with procuring raw
  materials, components, and services from its
  suppliers
• Supply Chain the suppliers that an organization
  purchases from directly
• Supply Network the suppliers that an
  organization purchases from directly and its
  suppliers

• Sources
• There are two primary sources of SCM systems.
  These systems are built to tightly integrate with
  ERP systems
• SCM Software Vendors Agile, Ariba, I2,
  Manugistics, Commerce One, etc.
• ERP Vendors SAP, Baan, Oracle, etc

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SCM Example of a Supply Network
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SCM Application Functions
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SCM Application Functions 2nd Half
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Supply Chain Management Benefits

• Supply Chain Management applications can help
  organizations to gain competitive advantage and
  provide substantial payback in several ways by
• Streamlining workflow and increasing employee
  productivity (i.e. efficiently managing business
  travel, time, and expenses by collaborating with
  suppliers in realtime)
• Accelerating product development (i.e. enabled by
  the ability of organizations to swiftly react to
  market conditions)
• Streamlining cost and creating efficiencies
  across the supply network (i.e., supporting
  contract negotiation and measuring effectiveness
  of those agreements)

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SCM Example of SAP SCM Offering
SAP is the ERP market leader. They also offer
SCM applications whose capabilities including the
following
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Recommendations for Enterprise System Success
Secure Executive Sponsorship The highest level
support is required to obtain resources and make
and support difficult reengineering decisions
Get Help from Outside Experts Implementation
success is enabled by deep application experience
and access to supporting tools and methods
Thoroughly Train Users Training in organization,
business process, and application functions is
critical to success and must be reinforced
Take a Multidisciplinary Approach to
Implementations Enterprise systems span the
entire organization and as such require input and
participation from all functions