Information Systems 300 CHAPTER 10

Three major DISADVANTAGES of using cloud-based ERP

(1) don't know whether cloud-based ERPs are more secure than on-premise systems (2) adopting cloud-based ERPs sacrifices control over a strategic IT resource (3) direct consquence of the lack of control over IT resources from experiencing problems

Cross-departmental process

(1) originates in one department and ends in a different department, OR (2) originates and ends in the same department but involves other departments

TPS characteristics

- continuous data collection - efficiently handle high volumes of data and large variations in those volumes - avoid errors and downtime - record results accurately and securely - maintain privacy and security - source data automation - batch processing vs. online transaction processing

Major Causes of ERP Implementation Failure

-Failure to involve affected employees in the planning and development phases and in change management processes -Trying to do too much too fast in the conversion process -Insufficient training int he new work tasks required by the ERP system -failure to perform proper data conversion and testing for the new system

IS for Accounting and Finance

-Financial Planning and budgeting -Managing financial transactions -Investment management -Control and auditing

Major Benefits of ERP Systems

-Organizational flexibility and agility -Decision Support -Quality and efficiency

IS for HRM

-Recruitment -HR development -HR Planning and Management: -Payroll & employee's records -Benefits administration -Employee relationship management

Financial Planning and Budgeting

-financial and economic forecasting -budgeting

ERP systems originally...

...were deployed to facilitate internal business processes

Three major ADVANTAGES of using cloud-based ERP

(1) The system can be used from any location that provides Internet access (2) Companies can avoid the initial hardware and software expenses that are typical of on-premise implementations (3) solutions are scalable, it is possible to extend ERP support to new business processes and new business partners (e.g. suppliers) by purchasing new ERP modules

Operational= Tactical= Strategic=

=Operational Managers =Middle Managers =CEO, Executives

Computer-Integrated Manufacturing (CIM)

AKA digital manufacturing a manufacturing approach that integrates several computerized systems, such as computer-assisted design, CAM, MRP, and JIT

Control and Auditing

Budgetary Control - monitoring expenditures and comparing them against the budget Auditing: (1) Monitor how the organization's monies are being spent; (2) Access the organization's financial health Financial ratio analysis

Extended ERP modules

CRM, supplier chain management, business intelligence, and E-business

Figure 10.3

ERP II System

Inter-organizational Processes: ERP with SCM and CRM

ERP SCM (Supply Chain Management) ERP CRM (Customer Relationship Management)

Custom Approach

ERP functions designed specifically for that firm (organization must carefully analyze its ERP system, if the custom ERP does not perfectly match needs, system can be difficult to use. ALSO, must codes written must be updated every time a new version ERP software is released)

ERP Support for Business Processes

ERP systems effectively support a number of standard business processes. Manages end-to-end, cross-departmental processes. 3 examples: Procurement, Fulfillment, Production

Study FIG 10.2

Examples of IS supporting Functional Areas

Study FIG 10.1

How Transaction Processing Systems Manage Data

IS for Production/Operations Management (POM) Characteristics

In-House Logistics and Materials Management Inventory Management Quality Control Planning Production and Operations Computer-Integrated Manufacturing Product Life Cycle Management

Financial Ratio Analysis: Liquidity ratio Activity ratio Debt ratio Profitability Ratio

Liquidity: availability of cash to pay debt Activity: how quickly a firm converts noncash assets to cash assets Debt: measure the firm's ability to repay long-term debt Profitability: measure the firm's use of its assets and control of expenditures to generate an acceptable rate of return

Planning Production and Operations

Material requirement Planning (MRP)--> Material Resource Planning (MRP II)--> ERP

Implementing ERP Systems

On-Premise ERP Implementation: -Vanilla approach -Custom approach -Best of breed approach

ERP software include

SAP, Oracle, PeopleSoft, Mircrosoft

Functional Area Information Systems

are designed to support a functional area by increasing its internal effectiveness and efficiency int he following areas: -Accounting & Finance -Marketing -Production/Operations Management (POM) -Human Resources Management (HRM)

The Major Objectives of ERP Systems

are to tightly integrate the functional areas of the organization by enabling seamless information flows across them, thus eliminate *information silos*

Continuous 'real-time' data collection TPS

as soon as the data are generated--and it provides the input data for the corporate databases

Product Life Cycle (PLC) Mangement

business strategy that enables manufacturers to collaborate on product design and development efforts, using the Web business strategy that enables manufacturers to share product-related data that support design & development and supply chain operations

Best of Breed Approach

combines vanilla + custom

Comparative Reports

compares for example, the performances of different business units or of a single unit during different times

Quality Control

controlling for defects in incoming material and defects in goods produced

In-House Logs. & Materials Managment

deals wit ordering, purchasing, inbound logistics (receiving), and outbound logistics (shipping) activities

Vanilla Approach

deviates only minimally from the package's standardized settings; in other words, implements a standard ERP package

Drill-down Reports

display a greater level of detail focusing specifically on sales by store and then by sales person, for example

Source Data Automation

example) barcode scanner; QR code process of collecting data at the point of origin in digital form.

Core ERP modules

financial management, operations management, HRM Management

*information silos*

functional areas with: -poor exchange of information -duplication of effort -factual inconsistencies -no common standards

Exception Reports

include only information that falls outside certain threshold standards; management by exception.

Enterprise Application Integration (EAI) system

integrates existing systems by providing software, called middleware, that connects multiple applications. supports "best of breed" ERP by connecting software modules from different vendors

Manufacturing Resource Planning (MRP II)

integrates firm production, inventory management, purchasing, financing, and labor activities. (Adds to MRP) later evolves into ERP

ERP II Systems

interorganizational ERP systems that provide Web-based links between a company's key business systems and its customers, suppliers, disturbers, and others these links integrate internal-facing ERP applications with the external focused-application of Supply Chain Management & CRM

Investment Management

managing organizational investments in stocks, bonds, real estate, and other investment vehicles tools: (1) Internet search engines and (2) BI & DSS

Transaction Processing Systems (TPS)

monitors, collects, stores and processes data generated from all business transactions example) grocery clerk using barcode scanner that produces data captured by a transaction using TPS

Bill of Materals (BOM)

must maintain BOM for each product w/out ERP, you may not have the latest BOM--not the latest BOM means you do not have the right materials and supply information

Managing Financial Transactions

of: -global stock exchanges -managing multiple currencies -virtual close -expense management automation

Production (figure 10.6)

originates and ends in the warehouse department (NEED TO PRODUCE and RECEPTION of FINISHED GOODS) but involves the production department, too. not all companies produce physical goods follows two different stages: -make-to-stock (created for inventory) -make-to-order (created custom for customer)

Fulfillment (figure 10.5)

originates in the sales department (CUSTOMER REQUEST TO BUY) and ends in the accounting department (RECEIVE PAYMENT) AKA order-to-cash process, the company sells goods to a customer

Procurement (figure 10.4)

originates in the warehouse department (NEED TO BUY) and ends in the accounting department (SEND PAYMENT) when a company needs to acquire goods or services from external sources, and concludes when the company receives and pays for them.

ad-hoc (on-demand) reports

out-of-the routine reports consisting of: drill-down reports, Key-indicator reports, and Comparative reports.

Material Requirement Planning (MRP)

planning process that integrates production, purchasing, and inventory management of interdependent items (Production scheduling & inventories)

Routine Reports

produced at scheduled intervals

Software-as-a-Service ERP Implementation

renting software from an ERP vendor who offers its products over the Internet using the SaaS model: Cloud-based ERP System

Problems with information silos*

silo approach cannot enable demand-driven supply networks

Key-indicator reports

summarize the performance of critical activities example) CFO might want to monitor cash flow and cash on hand.

Enterprise Resource Planning (ERP) Systems

take a business process view of the overall organization to integrate the planning, Management and use of all an organization's resources employing a common software platform and databse

Virtual Close

the ability to close the books at any time on short notice (real-time)

Expense Management Automation (EMA)

web based application systems that automate the data entry and processing of travel and entertainment expenses

Online Transaction Processing (OLTP)

when business transactions are processed online as soon as they occur

Batch Processing

when the firm collects data from transactions as they occur, placing them in groups or batches, then prepares and processes the batches periodically example) process checks

inventory managment

when to order new inventory, how much to order, and how much to keep in stock