Chapter 7: Enhancing Business Processes Using Enterprise Information Systems

internally focused system

An information system that supports functional areas, business processes, and decision making within an organization

Success Story: Dell's Use of Dynamics:

-& manufacturing facilites worldwide -Dynamics (one, integrated) has been used to replace 75 other standalone software products -Full business process support: core and support -Reduce IT costs: saved $150 million -Wide range of users: streamlined use with common user interface

Enterprise systems: Benefits & Costs Issues:

-56% of implementation costs over budget, which can be millions of dollars -why are costs under-estimated? 1.) Project scope expanded 2.) Unexpected processes, people issues, technical complexities, unanticipated organizational changes, management issues -many potential cost & benefits make implementation planning complex & uncertain

What if your systems are integrated?

-Oracle is an example of software vendor that provides enterprise software as well as middleware -Oracle's middleware focuses on integrating business processes, as the following points are illustrated in the video:

Common Business Process Categories:

1.) CORE -order-to-cash -Procure-to-pay -Make-to-stock/Make-to-order 2.) Support -administration and infrastructure -Human resources -information technology -procurement

The Rise of Enterprise (Integrated Systems) Provides 3 benefits

1.) provides greater control over the companies operations 2.) Reduces the overall cost. 3.) Enhances performance of a company.

value system

A collection of interlocking company value chains

standalone application

A system that focuses on the specific needs of an individual department and is not designed to communicate with other systems in the organization

Managing in the Digital World: Amazon.com (again)

Amazon has grown from an online bookstore to a complete market place -almost any product can be purchase through Amazon -Other businesses can sell products through Amazon's market-place "affiliates"

inter organizational systems

An Information system that communicates across organizational boundaries

upstream information flow

An information flow consisting of information received from another organization, such as from a supplier

Externally focused system

An information system that coordinates business activities with customers, suppliers, business partners, and others who operate outside an organization's boundaries

enterprise resource planning (ERP)

An information system that integrates business activities across departmental boundaries, including planning, manufacturing, sales, marketing and so on.

Enterprise system

An information system that spans the entire organization and can be used to integrate business processes, activities, and information across all functional areas of a firm

support activites

Business activities that enable the primary activities to take place. Support activities include administration activities, infrastructure, human resources, technology development, and procurement

describe enterprise resource planning systems and how they help to improve internal business processes

ERP systems allow information to be shared throughout the organization through the use of a large database, helping to streamline business processes and improve customer service. When selecting an ERP system, organizations must choose which modules to implementation a subset of the available ERP components. ERP core components support the major internal activities of the organization for producing its products and services while ERP extended components support the primary external activities of the organization for dealing with suppliers and customers.

Describe what enterprise systems are and how they have evolved.

Enterprise systems are information systems that span the entire organization and can be used to integrate business processes, activities, and information across all the functional areas of a firm. Enterprise systems evolved from legacy systems that supported distinct organizational activities by combining data and applications into a single comprehensive system, and can be either prepackaged software or custom made applications. The implementation of enterprise systems often involves business process management, a systematic, structured improvement approach by all or part of an organization that critically examines, rethinks, and redesigns processes in order to achieve dramatic improvements in one or more performance measures, such as quality, cycle time, or cost

Business Process Reengineering (BPR)

Legacy term for business process management (BPM)

Explain core business processes that are common in organizations

Most organizations are organized around distinct functional areas that work together to execute the core business processes order-to-cash, procure-to-pay, and make-to-stock/order. Together, these core business processes enable the creation of value chains that are involved in transforming raw materials into products sold to the end consumer Value chains are composed of both ore activities (inbound logistics, operations and manufacturing, outbound logistics, marketing and sales, and customer service) and support activities (administrative activities infrastructure, human resources, technology development, and procurement.) Companies connect their value chains with suppliers and customers, creating value systems such that information flows from one company's value chain to another company's value chain.

legacy system

Older standalone computer systems within an organization with older versions of applications that are either fast approaching or beyond the end of their useful life within an organization

Key Players: The Titans of ERP:

Oracle: -best know for database software: 50% of DB market in 2015 20% of the ERP Market in 2015 Microsoft -Gained ERP software through acquisition MS Dynamics -15% of the ERP market in 2015 SAP -German Company founded in 1972 -25% of the ERP market in 2015 Others: Peoplesoft, J.D. edwards, netsuite and sage

Improving Business Processes through Enterprise systems: Best Practices:

Packaged Enterprise Software: -Typically designed to operate with industry standard best practices -may not accommodate unique organizational practices that provide a competitive advantage -modifying enterprise software can be a long and costly process depending on the inherent flexibility of a given system

Sources of Enterprise Systems

Packaged Software: -also called "off-the-shelf" -May or may not require significant configuration -enterprise software often divided into modules for each business function: a/p, a/r, h/r, but all integrated under one enterprise system Customer Software: -designed and developed exclusively for a specific organizations

off-the-shelf software

Software designed and used to support general business processes that does not require any specific tailoring to meet an organization's needs

Custom software

Software programs that are designed and developed for a company's specific needs as opposed to being bought off the shelf

ERP core components

The components of an ERP that support the internal activities of an organization for producing products and serivces

ERP extended components

The components of an ERP that support the primary external activities of an organization for dealing with suppliers and customers

vanilla version

The features and modules that a packaged software system comes with out of the box

procure-to-pay process

The set of processes associated with procuring goods from external vendors

make-to-order process

The set of processes associated with producing goods based on customers orders

make-to-stock-process

The set of processes associated with producing goods based on customers orders

order-to-cash process

The set of processes associated with selling a product or service

module

a component of a software application that can be selected and implemented as needed

packaged software

a software program written by a third-party vendor for the needs of many different users and organizations

business process management (BPM)

a systematic, structured improvement approach by all or part of an organization, including a critical examination and redesign of business process in order to achieve dramatic improvements in one or more performance measures such as quality, cycle time, or cost.

Downstream information flow

an information flow that relates to the information that is produce by a company and sent along to another organization, such as a distributor.

understand and utilize the keys to successfully implementing enterprise systems

experience with enterprise system implementations suggests that there are some common problems that can be avoided and/or should be managed carefully. Organizations can avoid common implementation problems by (1) securing executive sponsorship, (2) getting necessary help from outside experts, (3) thoroughly training users, (4) taking a multidisciplinary approach to implementations, and (5) keeping track of evolving ERP trends

Customization

modifying software so that it better suits user needs

Best practices

procedures and processes used by business organizations that are widely accepted as being among the most effective and/or efficient

Core activites

the activities within a alue chain that process inputs and produce outputs, including inbound logistics, operations and manufacturing, outbound logistics, marketing and sales, and customer service