ENTERPRISE-WIDE INFORMATION
SYSTEMS
Chapter 7
SYSTEM CATEGORIES
Enterprise-wide Systems
aka Enterprise Systems, are systems that allow
companies to integrate information across operations
on a company-wide basis
Interorganizational Systems (IOS)
Systems that communicate across organizational
boundaries whose goal it is to streamline information
flow from one company to another
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THE VALUE CHAIN – INTERNALLY FOCUSED
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Used to identify the flow of information through a set of business activities. It identifies
two types of activities: primary and support.
THE VALUE CHAIN - PRIMARY ACTIVITIES
Functional areas within an organization that process inputs and produce outputs.
These activities may vary widely based on the unique requirements of a
company’s industry
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Primary Activities include:
• Inbound Logistics – receiving and stocking raw materials,
parts, products
• Operations/Manufacturing – processing orders and raw
materials into finished product
• Outbound Logistics – distribution of the finished product to
customers
• Marketing and Sales – creating demand for the product (presales activities)
• Customer Service – providing support for the product or
customer (post-sales activities)
THE VALUE CHAIN - SUPPORT ACTIVITIES
Support activities are business activities that enable Primary Activities. These
activities can be unique by industry but are generally more typical across industries.
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Support Activities include:
• Infrastructure – hardware and software that must be
implemented to support applications for primary activities
• Human Resources – employee management activities: hiring,
interview scheduling, and benefits management
• Technology Development – the design and development of
applications that support the organization
• Procurement – purchase of goods or services that are required
as inputs to primary activities
A VALUE SYSTEM – EXTERNALLY FOCUSED
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• A connection of value chains across organizations
• Allows the flow of information between organizations to
support business activities
• Upstream flow is information received from another
organization
• Downstream Flow is information sent to another organization
OPTIONS FOR ENTERPRISE SYSTEMS –
PACKAGED VS. CUSTOM
Packaged Key Characteristics
• Best Use –
• Cost Effectiveness –
• Organizational Fit –
• Maintenance –
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Packaged Applications
“Off-the-Shelf” computer applications purchased from a vendor or the company that
created the system (i.e. Quicken or MS Money for financial applications)
OPTIONS FOR ENTERPRISE SYSTEMS –
PACKAGED VS. CUSTOM
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Custom Applications
“Custom-built” computer applications created by the organization or a third party (e.g. a
consulting organization)
Custom Key Characteristics
• Best Use –
• Cost Effectiveness –
• Organizational Fit –
• Maintenance –
ENTERPRISE SYSTEM EVOLUTION
System Types
System Evolution
Standalone Systems
Integrated Systems
(Intraorganizational)
Integrated Systems
(Interorganizational)
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ENTERPRISE SYSTEMS - LEGACY SYSTEM
EXAMPLE
Legacy (stand-alone) Systems – information is not readily shared between
systems (i.e. Inbound Logistics inventory information shared with Operations)
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ENTERPRISE RESOURCE PLANNING
Integrated Packages (Enterprise Resource Planning)
Richly functional systems designed to support many organizational functions (e.g.
accounting and finance)
ERP Key Characteristics
• Internally focused systems designed to support the internal
operations of the organization
• Highly integrated systems sharing a common data warehouse for
information sharing across functions, using real-time updates
• Organizational fit may be less for individual departments but the
integrated sharing of information usually outweighs these issues
• Usually packaged applications supported by the vendor utilizing a
common user interface
• Customization is discouraged but these systems have the
flexibility to support other outside applications using the common
data repository and interfaces
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ENTERPRISE SYSTEMS – INTEGRATED SYSTEM
EXAMPLE
In Tech We trust
Integrated Systems – Information is stored in a single data repository and can
be accessed and updated by all functional systems (e.g. Operations)
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CHOOSING AN ERP SYSTEM - ISSUES
ERP Systems are:
• Supplied by multiple vendors including SAP, Baan,
Oracle, etc., with each having their own unique
features and structures
• Packaged systems that follow a one-size-fits-all
strategy which means they may not support all
functions as well as a custom system does
• Similar but are also different. They should be selected
based on factors including control, business
requirements, and best practices
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CHOOSING AN ERP SYSTEM – SELECTION
FACTORS
Control refers to where the power lies related to computing and decision support
systems (centralized vs. decentralized) in selecting systems, developing policies and
procedures, etc. (Who will decide?)
Business Requirements refers to the system’s capabilities and how they meet
organizational needs through the use of software modules or groups of
business functionality (What do you need?)
Best Practices refers to the degree to which the software incorporates
industry standard methods for doing business which can cause a need for
significant business processes reengineering (How much change is
required?)
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ERP CAPABILITIES – SAP EXAMPLE
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ERP AND BUSINESS PROCESS REENGINEERING
Hammer and Champy, (“Reenginerring the Corporation”)
“The radical redesign of an organization was sometimes necessary in order to
lower costs and increase quality and information technology was the key enabler
for that radical change.”
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Business Process Reengineering
A systematic, structured improvement approach by all or part of an
organization whereby people critically examine, rethink, and redesign business
processes in order to achieve dramatic improvements in one or more performance
measures (e.g. quality, cycle time, cost)
EXAMPLE OF BPR
Taco Bell created the K-Minus program
a retail service company
, not a manufacturing company
new process, meat, beans, corn shells, lettuce,
tomatoes and cheese for their products are prepared
outside of the restaurant in central commissaries
greater quality control, better employee morale,
fewer employee accidents and injuries (due to preparation task off-site),
big savings and more time to focus on the customer business processes
from a $500 million regional company to a $3 billion national company
Elle Mae Mortgage
BUSINESS PROCESS REENGINEERING
• Develop a vision for the organization that specifies business objectives (e.g.
reduced costs, shorter time to market, improved quality, etc.)
• Identify critical processes that are to be redesigned
• Understand and measure the existing processes as a baseline for future
improvements
• Identify ways that information technology can be used to improve processes
• Design and implement a prototype of the new process(es)
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Steps in Business Process Reengineering
BPR TODAY – OBSERVATIONS AND
RESEARCH
Large bodies of research are available on the role of ERP and BPR implementations.
Some of this research has come to the following conclusions:
• Reengineering and related organizational issues are as
important as the technical implementation issues
• Managers in many cases must choose between making the
ERP system fit the organization or the organization fit the
ERP system
• For an ERP system to help transform the organization and
gain new competitive capabilities, a full organizational and
operational change is required
• To be successful, manager must first transform the
organization and then implement the ERP system
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ENTERPRISE SYSTEMS – INTEGRATED
(INTERORGANIZATIONAL)
Integrated Packages
Richly functional systems designed to support externally focused
functions
Upstream – Supply Chain Management
Downstream – Customer Relationship Management)
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CUSTOMER RELATIONSHIP MANAGEMENT
Objective
Applications that help organizations attract new business and attract and encourage
repeat business
Functions
There are two primary functions in CRM systems:
• Sales – tools designed to assist in presales activities such as marketing and
prospecting (e.g. Sales Force Automation)
• Service – tools that help with the post-sales aspects of the business (e.g. call center
technology, analytics)
Sources
There are two primary sources of CRM systems:
• CRM Software Vendors – Siebel, FirePond, Onyx, E.Piphany
• ERP Vendors – SAP, Baan, Oracle, etc.
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SALES SUPPORT – SALES FORCE
AUTOMATION (SFA)
Sales Force Automation provides salespeople and sales
managers with computerized support tools to assist in daily
routines
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SUPPLY CHAIN MANAGEMENT
Objective
Applications that accelerate product development and reduce cost associated
with procuring raw materials, components, and services from its suppliers
• Supply Chain – the suppliers that an organization purchases from
directly
• Supply Network – the suppliers that an organization purchases from
directly and its suppliers
Sources
There are two primary sources of SCM systems. These systems
are built to tightly integrate with ERP systems
• SCM Software Vendors – Agile, Ariba, I2, Manugistics,
Commerce One, etc.
• ERP Vendors – SAP, Baan, Oracle, etc
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SCM – EXAMPLE OF A SUPPLY NETWORK
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Amazon.com
SCM APPLICATION FUNCTIONS
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SCM APPLICATION FUNCTIONS 2ND HALF
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SUPPLY CHAIN MANAGEMENT BENEFITS
Supply Chain Management applications can help
organizations to gain competitive advantage and provide
substantial payback in several ways by:
• Streamlining workflow and increasing employee
productivity (i.e. efficiently managing business travel, time,
and expenses by collaborating with suppliers in real time)
• Accelerating product development (i.e. enabled by the
ability of organizations to swiftly react to market conditions)
• Streamlining cost and creating efficiencies across the supply
network (i.e., supporting contract negotiation and measuring
effectiveness of those agreements)
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RECOMMENDATIONS FOR ENTERPRISE SYSTEM
SUCCESS
google
Secure Executive Sponsorship
The highest level support is required to obtain resources and make and support difficult
reengineering decisions
Get Help from Outside Experts
Implementation success is enabled by deep application experience and access to
supporting tools and methods
Thoroughly Train Users
Training in organization, business process, and application functions is critical to
success and must be reinforced
Take a Multidisciplinary Approach to Implementations
Enterprise systems span the entire organization and as such require input and
participation from all functions
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Information Systems for Competitive Advantage