MIS Exam 3 | Chapter 9
Tips for avoiding a failed implementation (part 1)
1) Assign a full-time executive to manage the project 2) Appoint an experienced, independent resource to provide project over- sight and to verify and validate system performance 3) Plan to spend considerable time and money training people
International Issues Challenges that must be met by an enterprise system of a multinational company include:
1. Different languages and cultures 2. Disparities in IS infrastructure 3. Varying laws and customs rules 4. Multiple currencies
Tips for avoiding a failed implementation (part 2)
4) Define metrics to assess project progress and to identify project-related risks 5) Keep the scope of the project well defined and contained to essential business processes 6) Be wary of modifying the enterprise system software to conform to your firm's business practices
Transaction processing systems (TPS):
>Capture and process detailed data necessary to update records about fundamental business operations >Include order entry, inventory control, payroll, accounts payable, accounts receivable, general ledger, etc. >Provide valuable input to: -Management information systems (MIS) -Decision support systems (DSS) -Knowledge management systems (KMS)
TPS Expectations Organizations expect their TPSs to:
>Capture, process, and update databases of business data >Ensure that the data is processed accurately and completely >Avoid processing fraudulent transactions >Produce timely user responses and reports >Reduce clerical and other labor requirements >Help improve customer service >Achieve competitive advantage>
Data should be:
>Captured at the source >Captured with minimal manual effort >Captured in digital/electronic form to enter directly into the system >Recorded accurately >Recorded in a timely fashion
Financial accounting:
>Captures and records all transactions that affect a company's financial state >Uses these documented transactions to prepare financial statements to external decision makers
ERP system:
>Captures transactions entered by workers in all functional areas of the business >Creates associated general ledger record to track the financial impact of the transaction
Data Editing
>Checking data for validity and completeness to detect any problems Examples: -Quantity and cost data must be numeric -Names must be alphabetic -Edit codes associated with a transaction against a database of valid codes
Key features of CRM system
>Contact management >Sales management >Customer support >Marketing automation >Analysis >Social networking >Access by smartphones >Import contact data
Data Correction
>Correcting or Reentering data that was not typed or scanned properly >Error messages must specify the problem so proper corrections can be made
ERP Accounting:
>ERP systems do not work directly with production machines, so they need a way to capture information about what was produced >Retailers as well as manufacturers use demand forecasting to match production to consumer demand and to allocate products to stores
What are some disadvantages of ERP?
>Expense and time in implementation >Difficulty implementing change >Difficulty integrating with other systems >Difficulty in loading data into new ERP system >Risks in using one vendor >Risk of implementation failure
Using the hosted software model enables SMEs to:
>Experiment with powerful software capabilities without making a major financial investment >Avoid employing a full-time IT person to maintain key business applications
Business intelligence (BI):
>Gathering enough of the right information to shine a spotlight on the organization's performance >Essential component of an organization's ERP system >BI tools are used to access all the operational data captured in the ERP database, analyze performance on a daily basis and >BI tools are used to highlight areas for improvement, and monitor the results of business strategies
Reporting & Document Production: Data Correction
>Generating output records, documents, and reports: -Hard-copy paper reports -Displays on computer screens >Results from one TPS can be inputs to another system
What are some advantages of ERP?
>Improved access to data for operational decision making >Elimination of inefficient and outdated legacy systems >Improvement of work processes >Upgrade of technology infrastructure & technology standardization
Reasons for customization:
>Integration with other business systems >Need additional data fields and/or different field sizes than what comes with the standard system >Meet regulatory requirements
Disparities in IS Infrastructure
>Lack of a robust or a common information infrastructure can create problems >Many countries' telecommunications services are controlled by a central government or operated as a monopoly >No incentives to provide fast and inexpensive customer service
Data collection can be:
>Manual >Automated via special input devices
Varying laws and customs rules
>Numerous laws can affect collection and dissemination of data >Examples: Labor laws in some countries prohibit recording of worker performance data Some countries have laws limiting the trans-border flow of data linked to individuals
TPS Expectations A TPS typically includes the following types of systems:
>Order processing systems >Accounting systems >Purchasing systems
Data Manipulation
>Performing calculations and other data transformations related to business transactions >Can include: -Classifying data -Sorting data into categories -Performing calculations -Summarizing results -Storing data in the organization's database for further processing
A Supply Chain Management (SCM) system that includes:
>Planning, executing, and controlling all activities involved in raw material sourcing and procurement >Converting raw materials to finished products, and warehousing and delivering finished product to customers
ERP Database(s)
>Production and supply chain management >Customer relationship management and sales ordering >Financial and managerial accounting
What areas might SCM cover?
>Sales forecasting >Sales and operations plan (S&OP) >Demand management >Detailed scheduling >Materials requirement planning (MRP) >Purchasing >Production >Sales ordering
Data Storage
>Updating one or more databases with new transactions >After being updated, this data can be further processed and manipulated by other systems
Hosted Software Model
Describe the hosted software model for enterprise systems and explain why this approach is so appealing to SMEs
ERP systems are central to individuals and organizations of all sizes...
ERPs ensure that information can be shared across all business functions and all levels of management to support the running and managing of a business
ERP Systems
Evolved from materials requirement planning systems (MRP) developed in the 1970s Large organizations were the first to take on the challenge of implementing ERP
Creating an Integrated Set of Systems:
Identify the challenges that multinational corporations face in planning, building, and operating their enterprise systems
Avoiding a Failed Implementation:
Identify tips for avoiding many of the common causes for failed enterprise system implementations
ERP vendors classified by customer type: Tier I
Large multinational firms with multiple geographic locations Annual Revenue: > $1B
General ledger:
Main accounting record of a business
Hosted Software Model for ERPs
Many business application software vendors are pushing the use of the hosted software model for SMEs
ERP vendors classified by customer type: Tier II
Medium-sized firms operating out of one or more locations Annual Revenue: $50M - $1B
Languages and Culture In some cultures, people do not routinely work in teams in a networked environment
Multinational companies: Can establish close connections with their business partners Roll out standard IS applications for all to use
Managerial accounting:
Provides data to enable the firm's managers to make decisions about current and future operations
Business process:
Set of coordinated and related activities that takes one or more kinds of input and creates an output of value to the customer of that process
Enterprise resource planning (ERP):
Set of integrated programs that manage a company's vital business operations for an entire organization
ERP vendors classified by customer type: Tier III
Smaller firms that operate out of a single location Annual Revenue: $10M - $50M
Multiple currencies Enterprise system of multinational companies must conduct transactions in multiple currencies
System must: >Be current with foreign currency exchange rates >Handle reporting and other transactions >Issue vendor payments and customer statements >Record retail store payments >Generate financial reports in the currency of choice
Transaction processing cycle:
The process of ... >data collection >data editing >data correction >data manipulation >data storage, and >document production
Enterprise systems
The ultimate goal is to satisfy customers and provide significant benefits by reducing costs and improving service
Trade agreements between nations:
i.e. North American Free Trade Agreement (NAFTA)
Many Small-Medium Sized Enterprises (SMEs) elect to implement
open-source and cloud ERP systems
An organization that implements an enterprise resource planning system is creating a highly integrated set of systems
which can lead to many business benefits