MIS 304 Chapter 7
What are legacy systems?
(type of stand alone) -Each department has its own system -Infrastructure specific -Inefficient processes -Potential for inaccuracies With multiple information systems, People either have to take the time to access multiple systems OR The information is duplicated and updated (this has the potential for plenty of errors). *For example, if a customer moves and informs their sales contact. The sales contact changes the data in their system, but forgets to pass on the data to the shipping department or accounting. You can imagine products or bills being sent to the wrong address and the additional cost and frustration that would result. This lack of continuous data-flow created large inefficiencies. Accounting had to manually import from sales the list of closed orders, then import a separate list of returns, and then figure out how much a customer owed us. These older stand-alone systems are now typically referred to as legacy systems, reflecting their advancing age and lack of upgradability.
Explain connecting multiple organizational value chains in value systems
*Companies purchase goods and services from other companies, *and often sell to other companies as well. *When you take these Multiple organizations (each with their internal value chain) working together, you form a value system. *When companies in a "value system" tie their information systems together, they can send and receive information with other companies up and down the value system ( They key take-away is: it is necessary for information to flow between companies for the smooth and efficient operation of the value system.)
What standard business processes does ERP support
*ERP systems often have versions tailored to individual industries, with customizations already integrated to support the core business processes as practiced in that specific industry. ERP systems will support standard business process models such as "order to cash", "procure to pay", "make to stock" or "make to order". *However, in each industry the steps involved will be different. For example, the "order to cash" process of Amazon will be different from that of a bricks and mortar local grocer or a car dealership.
Explain Enterprise Resource Planning (ERP)
*Software and business processes they support need to go hand-in-hand. For example, if a salesperson makes a sale, the software must be capable of entering all the aspects of the sale including customer data, discounts, delivery dates, special handling instructions and so on. *One of the characteristics of the Enterprise scale systems built by the major vendors, is they include best practices into their ERP software. The "best practices" refer to standardized ways of carrying out a business process such as a sale. One advantage to using ERP software is it pushed you in the direction of using best practices. *If your strategic advantage, however, is "doing things differently", or NOT using the standard business processes, this could hurt you. So you want to keep the trade-offs in mind.
Explain make to stock and make to order process
*The make-to-stock and make-to-order processes both involve the production of goods, *but the make-to-order process is more complex, as it includes additional steps involving taking the order and then doing any design and engineering work required, as well as getting the product to the client. Typically you use make-to-stock for standard or commodity products. The make-to-stock process is based on forecast or budgeted sales figures. The make-to-order is usually for custom designed or specialized products.
How are the functional areas related?
*These areas are highly interrelated, for example, to sell a car, you need to first build it. As complex as the manufacturing itself is, you also need to coordinate with your supply chain to procure raw materials. Accounting and finance is involved anytime an exchange of goods and services occurs or money needs to be managed. And human resources takes care of your employees.
What is packaged software
-Also called "off-the-shelf" -May or may not require significant configuration -Enterprise software often divided into modules -Special functionality may require customizing the packaged (or vanilla) version Packaged software is software that has already been written to meet standard business needs. We all use some packaged software, for example, you may use Word or Excel or PowerPoint. At an enterprise management scale, it's not a simple matter of installing Excel and using it.
What are the ERP Core and Extended Components?
-Core: .include finance, operations and human resource management. *Financial management components support accounting, financial reporting, performance management, and corporate governance. *Operations management components simplify, standardize, and automate business processes related to inbound and outbound logistics, product development, manufacturing, and sales and service. *Human resource management components support employee recruitment, assignment tracking, performance reviews, payroll, and regulatory requirements. -Extended ERP components are externally focused, dealing with interactions with vendors in your supply chain, and managing customer relationships.
What are the ERP limitations
-ERP systems often require organizations to change their business processes -Once implemented, a company is locked in -Difficult and costly to make future changes -Modifications require extra and costly programming Another point to keep in mind is that many traditional ERP systems tend to be focused internally, and external components such as customer relationship management modules may need to be separately implemented.
What are Proprietary systems (the rise of enterprise systems note)
-From vendors -Not designed to share with other vendors' systems -Problem of knitting together (hodgepodge portfolio of discordant proprietary applications) -Lack of integration
List the 3 standard business processes
-Order to cash -Procure to Pay -Make to stock/Make to order
How do ERP systems effect the whole organization
-The entire organization is a stakeholder -The entire organization needs involvement -Failure to have representatives can result in unmet critical needs -The project team can't be experts in every aspect of user needs -Departments may become hostile if left out of the implementation and needs assessment
what are stand alone applications (the rise of enterprise systems note)
-Variety of computing hardware platforms (enabled individual departments to conduct daily business activities) -Not designed to communicate with other systems -Not helpful for other areas in the firm
What are the functional areas that businesses are traditionally organized around
-marketing and sales, -supply chain management, -manufacturing, -accounting and finance - and human resources.
What are the ERP recommendations
1. Secure executive sponsorship 2. Get help from outside experts 3. Thoroughly train users 4. Take a multidisciplinary approach to implementations 5. Evolve the implementation
Explain Business Process Management (BPM)
Business process management (or BPM) involves actively managing a company's business processes. This typically includes functions such as process modeling, redesign, and improvement. BPM evolved from the concept of "business process reengineering." When properly supported by management with realistic expectations and clear goals, BPM can be very beneficial. The gains can include reduced costs and cycle times, better production and service quality, improved customer interaction, better information sharing and visibility and more.
explain the procure to pay
Instead of selling, the company is buying. It includes every step necessary to acquire the goods and materials for the business to operate. It also involves multiple business functions with a need to communicate throughout the process. Once again, Information systems provide the tools for the entire process to function efficiently and effectively.
Explain internally focused systems
Internally focused systems integrate and automate information flows between departments and processes, streamlining operations and facilitating smooth business operations. *As soon as an order is placed on your website, the warehouse or shipping department gets to know. If there is a delay or temporary stock issue in the warehouse, *the data is pumped back into the system and the customer knows when to expect it. Assuming payment is only collected once the product has shipped, the same data is updated with the billing department.
Explain the modules of enterprise systems
Since an enterprise system must satisfy the needs of different departments, it will have multiple modules, e.g., finance, sales, marketing, operations, etc. This naturally adds to its complexity. As we studied earlier, the whole idea behind enterprise software is that all these modules must work together and be able to seamlessly share information.
Explain the basic steps of BPM
The basic steps of BPM include developing a vision, identifying the critical processes that are to be redesigned, understanding and measuring the existing processes, identifying ways that information systems can be used to improve processes, and designing and implementing the new processes. Effective use of information systems is usually key to successful BPM efforts.
What is Make to Stock or Make to Order?
The previous models only looked at selling or buying a product. What about the actual design and manufacture of the product? The production process is involved in the "Make to order" or "Make to stock" process. (The process of manufacturing goods, either based on forecasts or based on orders)
Explain the organizational activities along the value chain (Explain "core" and "support" activities)
The value chain figure on the slide refers to the list of "core" and "support" business activities. You've probably noticed that the main elements are variations of the standard business process models we've discussed so far. *To elaborate further: "Core" activities focus on the actual value-creation processes within the organization. *Support activities are those activities that enable the core activities (and the other support activities) to function efficiently and effectively, but don't directly create value for the customer. Different industries can have significant variance in their core activities. The idea behind the value chain framework is that a successful company will do better than its competitors along one or more key business processes in the value chain.
Explain the innovation of cloud based ERP systems
This can help overcome some of the challenges of large-scale ERP implementations which can be complex, expensive, and difficult to install and maintain. Cloud-systems can further provide the benefits of scalability and flexibility.
What is procure to pay?
This is a standard purchasing model. The company negotiates a purchase of goods, and pays the vendor. (ordering goods or services and paying for them)
What is Order to cash
This is the traditional sales model for a company. A product is sold, and money is collected. (Selling goods and collecting revenue from them)
Why is it important to train users of ERP
Users need training before and after the implementation to ensure they can use it when deployed, and then as they become proficient can learn advanced features specific to their job functions. Proper training not only shows users what to do, but can prepare them for expected hurdles like a temporary drop in productivity as they get up to speed and become proficient with the system
Explain how ERP Systems replace standalone applications
by providing a centralized database store that different functional modules for sales, operations and accounting can access. Since it's a single software platform, the different modules have the advantage of a consistent application interface. This gives users an advantage when accessing data across modules.
explain the importance of information systems in value chain
for information to flow within a company or between companies in a value system, we need Information Systems or IS. So even though "IS" is a support function it is critical to the smooth operation of the business. A good information system allows for better decision-making and leads to greater time savings and monetary benefits across the value system. We have core activities that directly support the business - and it is easier to see where these add value, then we have support activities. Where is IT in all this? IT is a support function or cost center. Is it important? Yes, very. But we have to really work to make our contribution obvious.
Explain the order to cash process
includes every aspect of receiving an order, fulfilling it, and receiving payment for the same. It involves multiple steps as well as multiple business functions to be completed successfully. Naturally, the coordination or flow of data between the customer and the company, or within the company between marketing and operations means you need a good Information System in place.
How do you choose an ERP System
needs to take into account business needs, system functionality and management practices. The products made by vendors are often targeted towards different industries and functional areas. The ERP system selected should met all the standard business needs, and should also be particularly good at meeting the most critical business functions. ERP modules include core components that are internally focused, dealing with activities and processes such as Operations or Finance. There are also modules that focus on external needs such as customer relationship management.
How can ERP Systems help businesses
E R P systems have built-in control systems!!! -Mirror organizational processes -Support segregation of duties -Monitor business activities -E R P systems don't solve all compliance problems, but they help a lot ERP Systems can also help businesses comply with government regulations and reporting requirements. Most modern ERP systems are built with the functionality necessary to support the implementation and documentation of internal controls, procedures, and policies. While they don't automatically solve compliance problems, they can help organizations when it comes to reporting, auditing and implementing a variety of controls.
Explain Secure Executive Sponsorship
ERP system installation is a complex and involved process. It needs top-level support in the form of active executive sponsorship. Large implementations can cost hundreds of thousands or even millions of dollars, and without top-management support, an enterprise software implementation cannot proceed. -Primary reason for ERP failure -Critical for buy-in -Dictates resource availability -Necessary to authorize business improvements -Key to removing obstacles Also, such software changes will need to be complemented with changes in how tactical managers and operational staff do their jobs. For this to happen, there needs to be support from top-level executives. Lack of executive support is believed to be the primary reason ERP installations fail. While executive sponsorship is necessary, it is not sufficient to guarantee success.
What is custom software
Enterprise software is complex and requires configuring. When configuring alone won't meet a business's unique needs, * either custom software can be written from scratch or an existing module can be customized by the software vendor.
Explain the integrated enterprise system approach
Enterprise systems perform all the functions legacy systems used to perform, but with the added benefit of being * integrated across the value chain with a consolidated database. This ensures all departments and processes have access to both their internal information and the information of upstream and downstream processes and functions. This integrated approach streamlines operations across the entire value chain, improving efficiency and effectiveness. You can now share information across your company's departments as well as with your vendors and your clients.
Explain externally focused systems
Externally focused systems improve communication and coordination with other businesses in the overall value system. These externally focused systems include supply chain management and customer relationship management systems. Integrating information across vendors and customers provides some valuable advantages. EXAMPLE: For example, if Amazon notices a rise in sales of a textbook, it can notify the publisher. The printing of additional book copies can begin well before stocks run out completely. Similarly, when the publisher sends the shipment, it can inform Amazon electronically, so their systems are updated with likely arrival dates. This can then be used for informing Amazon's customers when to expect their book in the mail.
