Unit #3 Lecture Slides: Introduction to Enterprise Systems and Technologies

What are the two main types of ERP's?

*Cloud ERP* and an *On-Premise ERP*

What is the problem with traditional IS in an organization?

*Functional/Informational silos* are created --> There is no integration between departments/functions and their respective application systems

What does the database connected to the TPS have to be protected against?

- *Inconsistencies* arising from system failure - Errors resulting from overlapping or concurrent updates

What are the advantages of a cloud ERP?

- Cheaper up front - Stable and easy to use - Typically takes less time to implement - No additional hardware investments (e.g. server infrastructure) - Typically takes less time to implement

How does an ERP solve the information silo issues caused by a traditional IS?

- ERP Solves data redundancy brought on by traditional IS - ERP Solves difficulties in consolidating meaningful and accurate reporting that IS's create due to their time consuming, labour intensive, incomplete, and often inaccurate tendencies - ERP Solves time-lag of performance data that impedes effective planning and proactive decision-making often caused by IS

How does an ERP solve the outdated, manual and paper-intensive issues caused by a traditional IS?

- ERP Gets rid of the data entry redundancies and errors often brought on by traditional IS - ERP Gets rid of inefficient use of employee resources often brought on by traditional IS - ERP Gets rid of order-to-delivery and production delay often caused by a traditional IS

How can an ERP solve the global expansion complications due to software integration issues brought on by a traditional IS?

- ERP solves the difficulties in gathering data to track performance of each new location and its impact on the company as a whole - ERP solves the difficulties in managing costs in a complex supply chain - ERP solves language, currency and cultural barriers - ERP Solves the inefficiencies in managing complex international customer and vendor relationships

What types of systems are connected to an organization's database?

- FAIS (Function area information system) - DSS (Decision support system) - BI (Business intelligence) - ES (Expert system)

What are the disadvantages of a cloud ERP?

- Less customizable in general - Data security in the hands of the vendor; while vendors pledge data security, some companies might not be at peace with this arrangement - May end up spending *more* money over the course of a system's life-cycle

What are the advantages of an on-premise ERP?

- More customizable - Offer greater control over data - More control over the implementation process - Reduce initial price of system

What are the disadvantages of an on-premise ERP?

- Upfront investment can be seen as riskier - Implementation process can take significantly longer - Have to pay associated hardware and IT costs - Data security responsibility is in the hands of the organization; some organizations may not know how to properly handle this

What is the *Data definition and ownership issues* challenge to ERP's?

...

What are the 3 ways ERP allows integration amongst different systems/departments (modules)?

1) *Data sharing* among different modules 2) *Joint execution* among different modules 3) *Consolidation* of operational, sales, and financial information across multiple departments, sites and international locations

What are the 5 benefits of an ERP system?

1. Data sharing occurs in real time 2. Implements integrated processes based on industry best practices 3. Managers see more data, leading to better insight 4. Information silo problem is resolved -- all functional areas have an enterprise-wide view rather than only being able to see data from their functional area 5. Better integration with supply chain partners

What are the 6 challenges of implementing ERP systems?

1. ERP vendor selection 2. *Gap analysis* 3. *Customization* 4. Data definition and *ownership* issues 5. Data migration 6. Change management

What 3 problems caused by traditional IS does an ERP system solve?

1. Information silos 2. Outdated, manual and paper-intensive processes 3. Complication of global expansion due to software integration issues

What are the 5 major features of TPS?

1. Performance 2. Availability 3. Data integrity 4. Ease of Use 5. Modular Growth

What are the two ways system performance is measured in a TPS?

1. System *response time* 2. *Number of transactions* the system can process in a given period of time

What is at the heart of all ERP systems?

A *database*

What is an ERP (Enterprise Resource Planning) system?

Adopts a business process view of the *overall* organization

What *NEEDS* to be available from a TPS?

An *audit trail or log* of transaction flow

What is a *transaction?*

Any business event that generates data worth being captured and stored in a database

How does an ERP provide *joint execution* among different modules?

Because inputting data in one module/system/department triggers the execution not only of that module but also all related modules (e.g. create sales order --> auto-invoice --> auto notice to warehouse --> auto-notice to accounting, etc...)

What is the flow of data in a TPS?

Business event or transaction --> Transaction processing System (TPS) --> Detailed reports --> Organizations Database

How does an ERP provide *Consolidation* of operational, sales, and financial information across multiple departments, sites and international locations?

By providing real-time visibility into business performance spanning the entire organization

How does an ERP provide analytics and reporting?

By taking data from across the enterprise, consolidating and correlating the data, and generating enterprise-wide organizational reports

What is the ERP vendor selection challenge?

Choosing between a cloud ERP or an on-premise ERP

What does data integrity aim to prevent in terms of changes to information?

Data integrity aims to prevent *unintentional* changes to information

What does ERP allow amongst different systems/departments (modules)?

ERP allows *integration* amongst different systems (modules)

What is *Customization* challenge to ERP's?

ERP systems are based on industry best practices, and the vendors intend that organizations deploy them *as is*. As a result, users may need to change their existing business processes to fit the predefined business processes of the software

What are traditional information systems in an organization?

Each business function (e.g. accounting, finance, marketing and sales, etc.) have their *own* independent business processes and information systems

What does *GIGO* stand for?

Garbage in, garbage out; inputs must be of quality if outputs are to be of quality

What must transaction processing system (TPS) be able to do?

Handle high volumes of data, avoid errors, and provide a highly secure ands table environment

What is the *Change management* challenge of ERP's?

Implementing ERP typically requires changes in existing business processes. Underestimating the complexity of the transition or cutover and training required to implement a new ERP system is typically on of the main reasons for project failure

How does an ERP system adopt a business process view of the *overall* organization?

It integrates all departments and functions throughout an organization into a single information system so that employees can make enterprise-wide decisions by viewing *enterprise-wide information* on all business operations (all departmental IS systems are merged into one)

What happens when a user enters or updates information in one module of an ERP?

It is immediately and automatically updated throughout the entire system

What happens to the cost of a TPS (or any system) that is available almost all of the time?

Its cost increases as its availability increases

What is an example of an audit trail report?

Quickbooks' report that shows you *who* modified/deleted a transaction and *when* they did it

What must a transaction be in a TPS?

Reversible

Is the audit trail separate or apart of the database?

Separate

What are examples of transactions?

Student registration, sales order processing, flight booking, funds transfer, etc... *Not just giving a sales clerk your money*

What does the *modular growth* feature of a TPS refer to?

That the system should be capable of growth at incremental costs, rather than requiring a complete replacement; it should be possible to add, replace or update hardware and software components without shutting down the system

What does the *ease of use* feature of a TPS refer to?

That the system should be simply for users to understand, protect them from data-entry errors as much of possible, and allow them to easily correct their errors

What is *system response* time in a TPS?

The amount of time it takes for an information system to respond to a request or input from a user (e.g. buying a product online)

What does the *availability* feature of a TPS refer to?

The availability feature of a TPS refers to the system being available whenever it is needed

What does the cost of an ERP system include?

The new hardware required to run the system, the consultant and business analyst fees, the time required for implementation (disruption of business), and training costs (costs to develop and deploy training plus employees time away from their job)

What does the *data integrity* feature of a TPS refer to?

The overall completeness, accuracy and consistency of data

What is the *data migration* challenge of ERP's?

The process of moving, copying and restructuring data from an existing system to the ERP system. Often, data is incomplete because some of the data in the existing system is either incompatible or not needed in the new system

What does the cost of an ERP system depend on?

The size and complexity of the software package, which is a function of the size of the firm

How are ERP systems and TPS similar?

They are business-wide systems

What is the main way that system availability of an information system is evaluated?

Through the *percentage of time* that a given system is active and working

What is the hierarchy of information systems, starting from bottom to top?

Transaction Processing System (TPS) --> Management Information System (MIS) --> Decision Support System (DSS) --> Executive Information System (EIS) --> Expert System (ES)

What negative effect did TPS have on organizations and how?

What: Information silos How: They were typically developed *independently* to support a particular functional area within an organization, resulting in *information silos*

What is the *Gap analysis* challenge to ERP's?

When you have to identify the differences between the business requirements and the capabilities of chosen ERP system -- 80/20 rule sates that if a software can satisfy 80% of your requirement, its good, and the other 20% can be modifies by a consulting firm