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