MIS CHAPTER 7

business processes

1 of 2 ways to develop competitive advantage through systems: - use technology to help lock in customers, reduce costs, and create entry barriers for competitors in the market -grand and toy, offers web design and hosting, HR management services

product

1 of 2 ways to develop competitive advantage through systems: -changing the ______________ - By introducing new products or services or enhancing current products or services -changes enable organizations to differentiate themselves

Enterprise Application Integration (EAI)

An approach to combining functional systems, which uses layers of software (applications) as a bridge to connect different functional systems together • Band-Aid solution to address issues with multiple functional systems • Cheaper than the alternative (deploying a new industry standard integrated system) -Main design principle: leaves the functional systems basically intact -Data for each functional system stay within the functional system

solicitation

CRM made up of ____________ -Generate prospects via messages to target market -Email/websites/IS messaging media -Support direct mail, catalogue

lead tracking (pre-sale)

CRM made up of ______________ -Track sales leads -Track customer responses and contacts -Prioritize responses to maximize new customer revenue

relationship management (post sale)

CRM made up of ________________ -Maximize value of existing customer base -Sales management applications (prioritize customers on purchase history, reel in high value customers, win back lost high value customers) -Customer support applications (manage orders, track customers' problems and problem resolutions, gather data for product improvement)

enterprise resource planning (ERP)

One central database is combined with a set of standard business processes built on top of the database to ensure integration between functional areas -Standard processes ensure that the organization integrates data into a single database that can distribute accurate data throughout the organization -Uses prebuilt software so that an organization adopting an ERP system must remove its existing functional systems before adopting the ERP system - current business processes must be changed to fit the structure of the ERP

sales management applications

Relationship management app: -Support the sales of existing customers -Salespeople increase sales to existing customers who already made large purchases -Goal is to ensure that sales management has sufficient information to prioritize and allocate sales time and effort

improvements

Using Technology to Improve Business Processes -Using IT to improve business process requires understanding of where i__________ are possible -consider the underlying activities and/or resources

isolation

__________ problems with function applications -functional systems are inter-related in reality -ex: purchasing influences inventory, which influences production, etc -decisions appropriate for only a single business function may be inefficient for an entire business process -silos can make the overall company less competitive

supply chain

a network of organizations and facilities that transforms raw materials into products delivered to customers § Involves customers, retailers, distributors, manufacturers, suppliers, transportation companies, warehouses, inventories, and some means for transmitting messages and information among the organizations involved

inventory

benefits of ERP -reducing ____________ -Better planning means it's usually not necessary to maintain large buffer stocks -Items remain in inventory for shorter periods

lead time

benefits of ERP -Organizations produce and sell the same products at lower costs because of smaller inventory, reduces ______________ and less expensive customer support -Higher profitability

efficient

benefits of ERP Processes in the business blueprint has been tried and tested - processes are effective and often very __________ Organizations that convert to ERP do not need to reinvent business processes but gain the benefit of processes that have already been proved successful

customer service

benefits of ERP -better _________________ -Data is readily accessible and no inconsistency problems (ERP data stored in an integrated database) -Organizations provide better information about orders, products, customer status

supply chain performance

benefits of IS on _______________ -Reduces costs of buying and selling -Increase supply chain speed Processing more transactions -Reduce size and cost of inventories for suppliers and customers Speed and efficiency, processing small orders quickly -Improve delivery scheduling Suppliers deliver materials and components at the time and in the sequence needed Enables just in time inventory and allows manufacturers to reduce size of raw materials inventory and handling of raw materials

expensive, difficult

challenges of business process design -process design projects are _________ And _________ to implement -Difficulties translate into more hours of labour → higher costs → increased risk of under performance - why business process design is very expensive and outcomes are often uncertain

detailed

challenges of business process design -there is a lot of ________ work to be done to determine what to change and make an effective decision - Departmental managers often focus on the aspects of value chain and are willing to implement changes that may not integrate across the organization -many experts from diff parts of organization are needed to make an effective decision -May purchase point or individual solutions that simply address their specific problem rather than take time and effort to provide a complete solution -Enterprise level systems require that the entire organization adopt a common language and set of specification

worth

challenges of business process design -Convincing the organization that the changes are _______the effort -Understanding and estimating the business value that will emerge from business process changes is risky -Underestimating benefits of change (undersell the impact of changes) the organization might not be convinced to undertake them -Overestimating the benefits of change (oversell the impact of the changes) the organization may be disappointed in the outcome and could be reluctant to implement further changes

change

challenges of business process design -many people like _________ but do not want to -Do not want to work in new ways or see their department reorganized or abolished -Some workers can resist changes

cross functional

characteristics of ERP -ERP takes cross functional, process view of the entire organization -Organization considered a collection of interrelated activities -Single central database for collecting enterprise information

slow

characteristics of ERP -Can achieve significant benefits after implementing an ERP system Process of moving from separated functional applicatiosn to an ERP system can be ___________ and has challenges -Changing organizational procedures can be a pitfall

formal

characteristics of ERP -True ERP is a ___________ approach that is based on documented, tested business models -Comprehensive sets of inherent processes for all organizational activities - process blueprint -Documents each process with diagrams that use a set of standardized symbols -Must adapt processing to the ERP blueprint - if you don't the system cannot operate effectively or correctly -Adaptation is expensive and often problematic if you can adapt ERP software to procedures different from the blueprint

centralized

characteristics of ERP -maintains data in _________ database

costly

characteristics of ERP -switch to ERP is very __________ -Need for new hardware and software and costs of developing new procedures, training employees, converting data, etc

business process design

creation of new, usually cross departmental business practices during information systems development - organizations do not create new information systems to automate existing business practices, but they use technology to enable new, more efficient business processes -Idea is that organizations should not simply automate or improve existing functional systems "Paving the cowpath" = process of making efficient what already exists because while it makes things easier it doesn't fundamentally change how things are done - about making significant changes by integrating functional systems

interorganizational systems

cross-functional systems used by two or more related companies § involve selling and purchasing § integrate multiple-company operations -types: supply chain management (SCM) systems and e-commerce

primary activities

deal with the main or core parts of the good or service that the organization produces or provides • Inbound logistics • Operations and manufacturing • Outbound logistics • Marketing and sales • Service and support Facilitated by support activities • secondary or ancillary to the main goods or services produced - Human resource - Accounting and infrastructure - Procurement (i.e., purchasing) - Technology

disruptive

disadvantages to industry standard processes Change scan be ________ to operations and employees

competition

disadvantages to industry standard processes Using enterprise systems can make it difficult for organization to differentiate themselves so they can radically alter the basis for the _______________

different

disadvantages to industry standard processes -may be very ___________ from existing processes and require the organization to change substantially

disintermediation

elimination of one or more middle layers in the supply chain -not every supply chain has all these organizations -Ex: dell sells directly to the customer and does manufacturing after the order is received (retailer and distributor are omitted)

functional systems

facilitate the work of a single department or business function such as: Marketing and Sales • Operations and Manufacturing (Production) • Human Resources • Accounting and Finance -has features and capabilities to information systems to support more functional area activity -Each closely allied with activity it supports, little crossover

information

four major factors (drivers) affecting supply chain performance -facilities, inventory, transportation and ____________ -_______________ influences supply chain performance by affecting the ways in which organizations in the supply chain request from, respond to and inform one another -factors: -Purpose Can be transactional (orders, order returns) Can be information (sharing of inventory, customer order data) -Availability: the ways in which organization share their information Which organizations have access to which information and when -Means: the methods by which the information is transmitted

silos

functional systems provide benefits but are limited because they are designed to work independently of one another - as a "______" -each business area is isolated and operates as its own business, actively competing against other areas in the same organization for resources -interactions between areas is minimized

separately

in EAI, the functional systems still exist _________ And store actual data -Customized interfaces allow a central EAI server to pull whatever data are necessary from each of the functional systems -EAI server acts to centrally integrate the necessary enterprise information from the functional system

avoid

information systems developed to support business processes -need to ________ creating systems that are unrelated to organization's strategy -With a limited budget which information system would you invest more in and which would contribute the most to competitive advantage

primary, support

information systems developed to support business processes -help organizations achieve competitive advantage by making _______ And __________ activities more productive than those of competitors

effective, efficient

information systems developed to support business processes -increased productive is realized when business processes within the organization become more ___________ and ___________

marketing and sales systems

information systems that support marketing and sales efforts § Product Management • assess product marketing efforts • Sales forecasting to assess customer demand and plan marketing strategies § Customer Relationship Management (CRM) • generate follow-on business • Lead tracking to manage potential and existing customers § Sales forecasting § Lead tracking

Supply Chain Management (SCM) systems

interorganizational systems that enable companies to efficiently handle the flow of goods from suppliers to customers 3 systems -supplier relationship management (SRM) -inventory -customer relationship management)

value chain

mostly made up of primary and support activities -information systems play an important supporting role to all components -starts with marketing and sales, inbound logistics, operations or manufacturing, outbound logistics and service/support -Greater attention paid to primary activities because these undertakings most often directly impact the customer

customer relationship management (CRM)

one type of cross functional system for customer relationship management: supports the business processes of attracting, selling, managing, delivering and supporting customers -CRM systems address all activities and events that touch the customer and provide a single repository for data about all customer interactions -store all customer data in one place and make it possible to easily access all data about the customer vs data about some customer in databases all over the organization in functional systems -Integrates four phases of the customer life cycle: marketing, customer acquisition, relationship management, and loss/churn • Provides single repository for data about customer interactions

cross-functional systems

operate across departmental boundaries, designed to reduce isolation systems caused by functional systems -Transition from functional systems to integrated cross-functional systems is difficult • Integrated processing needs many departments to coordinate activities -developed to overcome problems of functional silos but not all cross functional systems go as far as ERP in integrating enterprise information - Enterprise Resource Planning (ERP) • Customer Relationship Management (CRM)

ERP modules

people in functional areas use ERP to send and receive data directly from the central database -no functional systems exist - they were replaced by the ______________

marketing

phase of customer life cycle -Sends messages to the target market to attract customer prospects

relationship management

phase of customer life cycle -When prospects order they become customers who need to be supported and resell processes increase the value of the existing customers

loss/churn

phase of customer life cycle -Inevitably over time the organization loses customers -Categorize customers according to value and attempt to win back high value customers -Categorize low value customers (out of the cycle) and high value customers (win back and they go back to customer acquisition for "sell")

customer acquisition

phase of customer life cycle -sell

business functions

primary and support activities often referred to as _________ And almost always present in organizations -Basic business functions (accounting, finance, HR, marketing, etc) are almost always present -Activities are supported by functional systems

customer support applications

prioritize customers to avoid and has an important linkage to product marketing and development -Knows what customers are doing with the product and what problems they have with it

inefficient

problem of isolated functional systems -________________(operational, tactical and strategic) decisions based on limited knowledge

disjointed

problem of isolated functional systems -business processes ___________ across functions (silos)

duplication

problem of isolated functional systems -data ______________ results from each application having own databse -potential lack of data integrity

costs

problem of isolated functional systems -increased overall __________ and lost opportunities to organizations

limited

problem of isolated functional systems -produces lack of integrated enterprise information because of __________ information available at any one source

industry standard processes

processes built into business applications from companies such as Oracle or SAP -When an organization acquires a business application from large companies (oracle, salesforce.com, microsoft) the processes for using the software are built in § Integrate activities across departments If the software is designed well § Save costs of tailor-made process design (Organization usually has to conform its activities to these processes )

relationship management applications

purpose of _____________ - to maximize the value of the existing customer base -sales management applications -integrated CRM applications

integrated CRM applications

relationship management app: - store data in a single database - CRM processes can be linked to one another -ex: customer service activities linked with customer purchase records so sales and marketing know the status of customer satisfaction

support activities

secondary or ancillary to the good or service that is produced

human resources systems

systems supporting HR are designed to manage: • Payroll and compensation • Recruiting • Assessing employee performance • Development and training • Human resources planning

supplier relationship management (SRM)

the business process for managing all contacts between an organization and its suppliers an integrated system like CRM and MRP -Supplier is any organization that sells something to the organization that has the SRM application -supports inbound logistics primary activity and procurement support activities -applications support three basic processes 1. Source Organization needs to find possible vendors of needed supplies, materials, services Assess the vendors capabilities Negotiate terms and conditions Formalize the terms and conditions in a procurement contract SRM software is relevant to finding and assessing vendors 2. Purchase Request information, quotation, proposal Approve purchase Create an order Use SRM to manage the approval workflow in order to approve the purchase and issue the order 3. Settle Receive goods Resolve receivables to order Pay according to terms and policy Reconciles the receipt of goods against the purchase documents and schedules the vendor payment Payment portion of SRM connects to cash management subsystem in the financial management application

enterprise resource planning (ERP) systems

the integration of all the organization's principal processes An outgrowth of MRP II manufacturing systems and more ERP users are manufacturing companies -support many or all of the primary business processes as well as HR and accounting support processes -SAP, oracle, microsoft for medium size businesses -Represented the ultimate in cross-departmental process systems -Integrate sales, order, inventory, manufacturing, customer service, HR, accounting and all other activities -Provide software, pre designed databases, industry standard procedures and job description for organization-wide process integration

customer life cycle

the processes of marketing, customer acquisition, relationship management and loss/churn that must be managed by CRM systems -marketing, customer acquisition, relationship management, and loss/churn

manufacturing systems

used by companies that transform materials into products -supports production and planning Push production planning • organization creates schedule and pushes goods through manufacturing and sales § Pull production planning • responds to customer demand • reduction in inventory triggers production § "One-off" producers fall into neither category • Manufacturing scheduling and operations -inventory, planning, scheduling, manufacturing operations

operations systems

used by non-manufacturing companies § Order entry § Order management § Inventory management § Customer service

EAI interface

with enterprise application integration, the data stay in the functional system and the manager accesses the data through the ______________, seeing a single database

query

with functional silos, the manager must _________ separate functional systems and integrate the data manually

productive change

you get more done with the same resources or can accomplish the same activities with less resource cost

accounting and finance systems

• Support organization's accounting activities, including: § General ledger (recording transactions) § Financial reporting § Accounts receivable § Accounts payable § Cost accounting § Budgeting § Cash management § Treasury management