SIT final
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Enterprise Systems
-A class of IT applications called enterprise systems is a set of information systems tools that many organizations use to enable this information flow within and between processes across the organization. -These tools help ensure integration and coordination across functions such as accounting, production, customer management, and supplier management. Some are designed to support a particular industry such as health care, retail, and manufacturing. -In the 1980's organizational computing groups faced the challenge of linking and maintaining the patchwork of loosely overlapping, redundant systems. -Following this, integrated software packages were developed from administrative systems (i.e. Finance and human resources), and others evolved from materials resource planning (MRP) in manufacturing. -These comprehensive software packages that incorporate all modules needed to run the operations of a business are called enterprise information systems (EIS) or simply enterprise systems. -Enterprise systems include ERP, supply-chain management (SCM), CRM, and product life cycle management (PLM) systems. *PICTURE IN PHONE OF ENTERPRISE SYSTEMS AND THE PROCESSES THEY AUTOMATE -Some companies develop enterprise systems to support mission-critical processes when they believe these processes give them an advantage. -Other enterprise systems may be developed specifically to integrate organizational processes. *PICTURE IN PHONE DESCRIBES PROCESSES SUPPORTED BY AND ENTERPRISE SYSTEM *SAP and Oracle are used
Profuct life cycle managment
-A less well-known type of enterprise system as a product life cycle management (PLM) system --PLM systems automate the steps to take ideas for products and turn them into actual products -PLM refers to the process that starts with the idea for a product and ends with the end of life of a product includes the innovation activities, new product development, and management design, and product compliance if necessary -PLM systems contain all the information about a product such as design, production, maintenance components, vendors, customers feedback, and marketing.
Business process perspective
-A manager can avoid such sub-optimization or begin to fix it by managing from a business process perspective. -A business process perspective or more simply a process perspective keeps the big picture in view and allows the manager to concentrate on the work that must be done to ensure the optimal creation of value. -A process perspective helps the manager avoid duplicate work, facilitate cross-functional communication, optimize business-processes, and ultimately, best serve the customer and stakeholder. -In business a process is defined as and interrelated, sequential set of activities and tasks that turns inputs into outputs and includes... -A beginning and an end. -Inputs and Outputs. -A set of tasks (subprocesses or activities) that transform the inputs into outputs. -A set of metrics for measuring effectiveness. -Metrics are important because they focus managers on the critical dimensions of the process. -Metrics for a business process are things like throughput, which is how many outputs can be produced per unit time, or cycle time, which is how long it takes for an entire process to execute. -Examples of process measures are the number of handoffs in the process or actual work versus total cycle time. Other metrics are based on the outputs themselves such as customer satisfaction, revenue per output, profit per output, and quality of the output -Examples of business processes include customer order fulfillment, manufacturing, planning and execution, payroll, financial reporting, and procurement. -Focusing on business processes ensures focusing on the businesses goals (the big picture) because each process has an endpoint that is usually a deliverable to a customer, supplier, or other stakeholder. -Business process perspective recognizes that processes are often cross-functional -The vertical bars represent functional departments within a business. -The horizontal bars represent processes that flow across those functional departments. -A business process perspective requires an understanding that processes properly exist to serve the larger goals of the business and that functional departments must work together to optimize processes in regard to these goals. -When managers take a business process perspective they are able to optimize the value that customers and stakeholders received by managing the flow as well as the tasks. -They begin to manage processes by identifying the customers of processes, then identifying these customers requirements, then clarifying the value that each process adds to the overall goals of the organization, then sharing their perspective with other organizational members until the organization itself becomes more process focused.
Radical Change
-Incremental change approaches work well for tweaking exciting processes. However, they tend to be less effective for addressing cross-functional processes. -At the end of the change continuum, radical change enables the organization to attain aggressive improvement goals (again, as defined by a set of metrics). The goal of radical change is to make a rapid, breakthrough impact on key metrics. -Some businesses even have made radical process reconfiguration a core competency so that they can better serve customers whose demands are constantly changing.
Managing Supply Chains
-Another type of enterprise system in common use is supply chain management (SCM) which manages the integrated supply chain. -With the help of information technologies, many processes are linked across companies with a companion process at a customer or supplier, creating an integrated supply chain. *Linked through a single network that optimizes costs and opportunities for all companies in the supply chain. -By sharing information across network, guesswork about order quantity for raw materials and products can be reduced, and suppliers can make sure they have enough on hand if demand for their products unexpectedly rises. -supply chain typically includes the procurement of materials or components activities to turn these materials into larger subsystems or final products and the distribution of these final products to where houses or customers also with the increase in information system use the supply chain may also include product design product planning contract management logistics in sourcing globalization of business and ubiquity of communication networks in information technology of enable businesses to use supplies from almost anywhere in the world supply chain integration is the process of technically linking supply chains of vendors and customers to streamline the process into increase efficiency and accuracy. -bullwhip affect? -integrated supply chains have several challenges primarily resulting from different degrees of integration and coordination among supply chain members at the most basic level there's an issue of information integration partners must agree on the type of information to share the format of the need for Mason a technological standards they both used to share it and the security they used to ensure that only authorize partners access it At the next level is the issue of synchronize planning at this level the partners must agree on a joint system of planning and forecasting and replenishment the third level can be described as workflow coordination the coordination integration and automation of critical business processes between partners for some supply chains this might mean simply using a third-party to link the procurement process to the preferred vendors or two communities of vendors who compete virtually for the business Demand driven supply networks are the next step for companies with highly evolved supply chain capabilities Key processes in the demand driven supply networks are forecast to stock in order to cash
Incremental Change
-At the end of the continuum, managers use incremental change approaches to improve business processes through small, incremental changes. This improvement method generally involves the following activities... -Choosing a business process to improve -Choosing a metric by which to measure the business process -Enabling personnel to find ways to improve the business process based on the metric. -Personnel often react favorably to incremental change because it gives them control and ownership of improvements and, therefore, renders change less threatening. -TQM is one such approach that incorporates methods of continuous process improvement. At the core of the TQM method is W. Edwards Deming's 14 points, or key principles to transform business processes. The principles outline a set of activities for increasing quality and improving productivity.. -Six Sigma is an incremental and data driven quality management approach for eliminating defects from a process. The term six sigma comes from the idea that if quality of all output from a process were to be mapped on a bell-shaped curve, the tail of the curve, six sigma (standard deviations) from the mean, would represent less than 3.4 defects per million. *The six sigma methodology is carried out by experts known as Green Belts and more experienced experts known as Black Belts, who have taken special Six Sigma training and worked on numerous Six Sigma projects.
Integration vs. Standardization
-Companies make 2 important choices in the design of their operations: (1) how standardized their business processes should be across operational units (business units, region, function, market segment) and (2) how integrated their business processes should be across those units. -The level of process integration and standardization defines the necessary IS capabilities and ultimately the investment the firm will need to make in IS. *LOOK AT PICTURE ON PHONE FOR DIAGRAM OF INTEGRATION VS STANDARIZATION
Managing Customer Relations
-Customer Relationship Management (CRM) is a set of software programs that supports management activities performed to obtain, enhance relationships with, and retain customers. -They include sales, support, and service processes. -CRM creates ways to learn more about customers needs and behaviors with the objective of developing stronger relationships. -CRM consists of technological components as well as many pieces of information about customers, sales, marketing effectiveness, responsiveness, and market trends. -CRM processes can lead to better customer service, more efficient call centers, product cross-selling, simplified sales and marketing efforts, more efficient sales transactions, and increased customer revenues. *SAP, Salesforce.com, Oracle, and Microsoft dynamics -Social IT is increasingly integrated into CRM solutions by providing software or Web applications that extend the brand, engage customers, allow customers to interact with each other and with employees, and provide service options which generate additional touches with customers. *Helps to build customer relationships
Enterprise Resource Planning (ERP)
-Enterprise Resource Planning (ERP) was designed to help large companies manage the fragmentation of information stored in hundreds of individual desktop, department, and business unit computers across the organization. -These modules offered the IS department in many large organizations an option for witching from under-performing, obsolete mainframe systems to client-server environments designed to handle the changing business demands of their operational counterparts. -The next generation of enterprise systems emerged; ERP II systems. Whereas an ERP makes company information immediately available to all departments, throughout the company, ERP II also makes company information immediately available to external stakeholders, such as customers and partners. -ERP II enables e-business by integrating business processes between an enterprise and its trading partners. -Today, ERP systems include all of the ERP II functionality plus social and collaboration features. *non-Western companies turn to local vendors for ERP and have developed systems reflecting their best practices that are not consistent with those in the U.S.
When the system drives the transformation
-First when an organization is just starting out and processes do not yet exist it is appropriate to begin with an enterprise system as a way to structure operational business processes -second when an organization does not rely on its operation of business processes as a source of competitive advantage then using an enterprise system to redesign these processes is appropriate -third it is reasonable when the current systems are in crisis in there is not enough time resources or knowledge in the firm to fix them -Likewise it is sometimes inappropriate to let enterprise system drive business process change -another situation in which it would be inappropriate to let enterprise system drive business process change is when the features of available packages in the needs of the business do not fit -a third situation would result from lack of top management support company growth a desire for strategic flexibility or D-centralized decision-making that render the enterprise system inappropriate
Characteristics of ERP Systems
-Integration: ERP systems are designed to seamlessly integrate information flows throughout the company. ERP systems are configured by installing various modules such as Manufacturing, Accounting, Human resources, and Sales. -Packages: ERP systems are usually commercial packages purchased from software vendors. ERP systems usually require long term relationships with the software vendors because the complex systems must typically be modified on a continuing basis to meet the organizations needs. -Best practices: ERP systems usually reflect industry best practices for generic business processes. -Some assembly required: The ERP system is a software that needs to be integrated with the organizations hardware, operating systems, databases, and network and often legal systems. It often requires middleware (software used to connect processes running in one ore more computers across a network) or bolt-on systems be used to make all the components operational. -Evolving: ERP systems were designed first for mainframe systems, then for client-server architectures, and now for Web-enabled or cloud-based delivery. -Integrating ERP packages with other software in a firm is often a major challenge. Two problems with ERP: 1. Meeting this challenge is to allow companies to be more flexible in sourcing from multiple (or alternative) suppliers while also increasing transparency in tightly coupled supply chains. 2. Integrating ERP's transaction-driven focus into a firm workflow.
Functional (Silo) Perspective
-Many think of businesses by imagining a hierarchical structure organized around a set of functions. -A typical hierarchical structure, organized by function, results in disconnected silos that might look like a (Executive,CEO,President) on top with related function like (operations,marketing,accounting,finance,administration) stemming out beneath it. -When an organization has silos, departments are organized on the basis of their core competencies. Specialized silos allow them to focus on what they do best. -Thus functional structure is widespread and is reinforced by business education curriculum, which generally follow function structures, that is, students take courses in functions (i.e. marketing, management, accounting) and major in functions and then are predisposed to think in terms of those same functions. -These silos become self-contained functional units, which can be useful for several reasons. -First they allow and organization to optimize expertise and training. -Second, the silos allow the organization to avoid redundancy in expertise by hiring one person who can be assigned to projects across functions on as-needed basis instead of hiring an expert in each function. -Third, with a silo organization, it is easier to benchmark outside organizations, utilize bodies of knowledge created for each function, and easily understand the role of each silo. On the other hand silo organizations can experience significant sub-optimization -First individual departments often recreate information maintained by other departments. -Second, communication gaps between departments are often wide. -Third, handoffs between silos are often a source of problems, such as finger-pointing and lost information. -Lastly, silos tend to lose sight of the objective of the overall organization and operate in a way that maximizes their local goals. -In a functionally organized silo business, each group is primarily concerned with its own set of objectives. -The task of executive officers in providing the "big picture" to so many functionally oriented personnel can be extremely challenging. -Losing the big picture means losing business effectiveness. *not full-filling objective of providing value for shareholders, stakeholders, and customers.
Advantages and disadvantages of enterprise systems
-One major benefit of enterprise systems is that they represent a set of industry best practices ---Another major benefit of enterprise system is that all modules of the information system easily communicate with each other offering enormous efficiencies over stand-alone systems -Implementing enterprise system represents enormous mount of work -Even though enterprise systems are flexible and customizable to a point. most also require business processes to be re-designed to achieve optimal performance of the integrated modules -Implementing enterprise systems requires organizations to make changes beyond just the processes but also in their organization structure enterprise systems -Are also risky enterprise systems in the organizational changes they induce -tend to come with the hefty price tag
Incremental vs. Radical Change
-Radical change typically faces greater internal resistance than does incremental change. Therefore, radical change processes should be carefully planned and used only when major change is needed in a short time. -An example of a situation requiring radical change are when the company is in trouble, when it imminently faces a major change in the operating environment, or when it must change significantly to outpace its competition. -Key aspects of radical change approaches include the following... -Need for major change in a short amount of time. -Thinking from a cross-functional process perspective. -Challenge to old assumptions. -Networked (cross-functional) organization. -Empowerment of individuals in the process. -Measurement of success via metrics tied directly to business goals and the effectiveness of new processes. (production cost, cycle time, scrap and rework rates, customer satisfaction, revenues, and quality)
Business process vs Functional silo
-Silo is self-contained functional units such as marketing operations finance and so on -Business process is interrelated sequential set of activities and tasks that turns inputs into outputs -The focus of the silo perspective is on function -The focus of the business process perspective is on cross function -In the silo function goals are optimized for the function which may be sub optimal for the organization -In the business process perspective goals are optimized for the organization or the bigger picture -Benefits of the silo perspective are core competencies highlighted and developed; functional efficiencies -Benefits of the business process perspective is avoidance of work duplication and cross functional communication gaps; organizational effectiveness -Problems with the silo perspective are redundancy of information throughout the organization, cross functional inefficiencies, and communication difficulties -Problems with the business Process perspective are difficulty in finding staff who can be knowledgeable generalists; need for sophisticated software.
Business Process Management (BPM)
-Some claim that to have a truly dynamic or agile business processes requires a well-defined and optimized set of IT processes, tools, and skills called business process management (BPM). -BPM systems go way beyond document management capabilities and include features that manage person-to-person steps, system-to-system steps, and those processes that include a combination of them. -Systems include process modeling, simulation, code generation, process execution, monitoring, and integration capabilities for both company-based and web-based systems. *The tools allow an organization to actively manage and improve its processes from beginning to end. -BPM-based systems provide better management capabilities and create a common platform for rapid change and capacity for future growth. -BPM systems provide a way to build, execute, and monitor automated processes that may go across organizational boundaries. -Some of the functionability of a BPM may be found in enterprise applications such as enterprise resource planning (ERP), customer relations management (CRM), and financial software because these systems also manage processes within a corporation. *BPM systems go outside a specific application to help companies manage across processes. -Some BPM systems manage front office applications that are often person-to-person processes such as sales or ordering. These processes are people centric and incorporate social IT) -Other BPM systems support back-office processes that often are more system-to-system oriented and possibly extend outside the corporation to include Web-based components.
Building Agile and Dynamic Business Processes
-To stay competitive and consistently meet changing customer demands, organizations build dynamic business processes or agile business processes, processes that repeat through a constant renewal cycle of design, deliver, evaluate, redesign, and so on. -Agile business processes are designed to simply redesign and reconfigure. -Flexible and adaptive to change in the business environment with little or no effort -To be agile or dynamic, a process necessitates a high degree of IT use. The more processes that can be done with software, the easier it is to change, and the more likely it can be designed to be agile or dynamic. -With the use of the internet and social technologies, building agility into business processes is increasingly common. -Apps are good examples of software that supports agile processes. -An example of a dynamic process is a network with a changing flow of data. -Another example, with a more physical configuration, would be a call center system. -Dynamic IT applications, a component of software defined architecture, are required for dynamic business processes. -When the underlying IT is not designed with this goal in mind, the business process itself cannot adapt as necessary to changing requirements of the business environment. -The benefits of agile and dynamic business processes are operational efficiency gained by the ease of incrementally improving the process as necessary and the ability to create game-changing innovative processes more quickly.
Changing business processes
-Transforming a business today means redesigning business processes. -2 techniques used to transform a static business process are... (1) radical process redesign, which is sometimes called business process reengineering (BPR) or simply reeingineering and (2) incremental, continuous process improvement, which includes total quality management (TQM) and Six Sigma. -Radical and incremental improvement concepts are important; they continue to be different tools a manager can use to effect change in the way his or her organization does business. -The basis of both approaches is viewing the business as a set of business processes rather than using a silo perspective.
Silo perspective vs Business process perspective
-When effectively linked with improvments to business processes, advances in IS enable changes that make it possible to do business in a new way, one that is better and fare more competative than before. -IS can also inhibit chage which occurs when managers fail to adapt business processes because they rely on inflexible systems to support those procesess. -Success depends on the managers ability to adapt. -Transformation require discontinuous thinking — recognizing and shedding outdated rules and fundamental assumptions that underlie operations that caused the business to underperform in the first place. *Unless we change these rules we are merely rearranging the deck chairs on the Titanic.
Challenges for integrating enterprise systems between companies
-With the widespread use of enterprise systems the issue of linking the supplier and customer systems to the business systems brings many challenges -as with integrated supply chains their issues of deciding what to share how to share it and what to do with it -when the sharing takes place there also issues of security in agreement on encryption or other measures to protect data integrity as well as to ensure that only authorize parties have access -some companies have tried to reduce the complexity of this integration by insisting on standards either at the industry level or at the system level
Workflow and Mapping Processes
-Workflow in its most basic meaning is the series of connected tasks and activities performed by people and computers that together form a business process. *Consideration of workflow is a way to assess a cross-functional process. -But the term workflow has come also to mean software products that document and automate processes. *Workflow software facilitates the design of business processes and creates a digital workflow diagram. -Workflow software lets the manager diagram answers to questions such as how a process will work, who will do what, what the information system will do, and what decisions will be made and by whom. *When combined with business process management modules, processes can be managed, monitored, and modified. -The tool used to understand business process is a workflow diagram which shows a picture, or map, of the sequence and detail of each process step. -The objective of process mapping is to understand and communicate the dimensions of the current process. -Typically process engineers begin the process mapping procedure by defining the scope, mission, and boundaries of the business process. -Next, engineers develop a high level overview flowchart of the process and a detailed flow diagram of everything that happens in the process. *The diagram uses active verbs to describe activities and identifies all process actors, inputs, and outputs. *The engineers verify the detailed diagram for accuracy with the actors in the process and adjust it accordingly.
From vision to implementation
And IT architecture provides a blueprint for translating business strategy into a plan for iOS and IT infrastructure is everything that supports the flow and processing of information in an organization including hardware software data network components that consists of components chosen and assembled in a manner that best suits the plants in there for best enables the overarching business strategy. Infrastructure in an organization is similar to the beams plumbing and wiring in a house it is the actual hardware software network and data used to create the information system.
The managers role
Managers must understand what to expect from IT architecture and infrastructure to be able to make for a realistic use of them the manager most affectively communicate his or her business vision to IT architects and implementers and if necessary modify the plans if IT cannot realistically create or support those plans Without the involvement of the manager IT architects could inadvertently make decisions that limit the managers business options in the future
The leap from strategy to architecture to infrastructure
The huge number of IT choices available coupled with the incredible speed of technology advances makes the managers task of designing an IT infrastructure seem nearly impossible the task is broken down into two major steps first translating strategy and architecture and second translating architecture into infrastructure this framework stresses the need to consider business strategy when defining an organization's IT building blocks
From Strategy to Architecture
The manager must start out with a strategy and then use the strategy to develop more specific goals then detailed business requirements are derived from each goal the manager must work with the IT architect to translate his business requirements into a more detailed view of the systems requirements and standards and processes that shape and IGR in addition the more detailed view the architectural requirements includes Consideration of such things as data and process the Mant's as well as security objectives these are the architectural requirements IT architect takes the architectural requirements and designs the IT architecture
