Enhancing Business Processes Using Enterprise Information Systems

9/17/12

Learning Objectives

Chapter 7

7-2

Enhancing Business Processes Using Enterprise Information Systems

1. Explain core business processes that are common

7-1

in organizations.

2. Describe what enterprise systems are and how

We have this beautiful, elegant, high-I.Q. part of our business that we have been working hard on for many years.

they have evolved.

3. Describe enterprise resource planning systems and how they help to improve internal business processes.

4. Understand and utilize the keys to successfully

Jeff Bezos, Founder and CEO of Amazon.com IS Today (Valacich & Schneider) 5/e 9/17/12

implementing enterprise systems.

Copyright © 2012 Pearson Education, Inc. Published as Prentice Hall

IS Today (Valacich & Schneider) 5/e 9/17/12

Scenario


Scenario (cont.)

  You work for a mid-sized manufacturer of supplies for

white boards.   Working in groups of 3…each of you will take

responsibility for: ¡  Inbound

  What types of information needs to flow from one team

to the next to make the organization efficient and effective?

Logistics/Procurement

¡  Operations/Manufacturing ¡  Outbound

logistics/Order Fulfillment

  How do we facilitate this flow of information from one

system to the next?

  What information do you need to make your team

efficient and effective?



Scenario (cont.)



Core Business Processes 7-6

  What type of information flows between teams within

your organization & what type of information flows between your organization and your business partners (suppliers & customers)?

  Traditional business functions: ¡  Marketing and sales ¡  Supply chain management ¡  Accounting and finance ¡  Human resources   Not distinct independent silos,

but instead highly interrelated   Business processes cross

boundaries of business functions. IS Today (Valacich & Schneider) 5/e 9/17/12




1

9/17/12

Order-to-Cash Process

Procure-to-Pay Process

7-7

7-8

  The processes associated with selling a product or service



  The processes associated with procuring goods from external

vendors


Make-to-Stock / Make-to-Order Process

Supply Chain

7-9

  The processes associated with producing goods

7-10

  Core business

processes enable the creation of supply chains.   Resembles a river ¡  ¡ 



Value Chain


Start at source Move downstream



Value Chain Framework

7-11

7-12

  Value Chain—The set of business activities that

add value to the end product.   Information flows through a set of business

activities. ¡  Core

activities—functional areas that process inputs and produce outputs. ¡  Support activities—enable core activities to take place.





2

9/17/12

Externally Focused Applications—Value System

Learning Objectives

7-13

7-14

  Coordination of organizational value chains   Information Flows in a Value System ¡  Upstream information flow—information received from another company ¡  Downstream information flow—information produced by a company and

1. Explain core business processes that are common in organizations.

2. Describe what enterprise systems are and how

sent to another organization

they have evolved.


4. Understand and utilize the keys to successfully implementing enterprise systems.





The Rise of Enterprise Systems

Legacy Systems

7-15

7-16

  Stand-alone applications ¡  Not designed to communicate with other system ¡  Variety of computing hardware platforms ¡  Enable departments to conduct daily business activities ¡  Not helpful for other areas in the firm   Proprietary systems ¡  From vendors ¡  Not designed to share with other vendors systems ¡  Problem of knitting together (hodgepodge portfolio of discordant proprietary applications) ¡  Lack of integration IS Today (Valacich & Schneider) 5/e 9/17/12


  Each department has its own system. ¡ 

Infrastructure specific

¡ 

Inefficient processes

¡ 

Potential for inaccuracies

¡ 

Too many rocks in the river



ERP Challenges

Enterprise System Approach 7-17

  Integrated suite of business applications for virtually every

department, process, and industry

  What are some of the challenges with implementing

an ERP?   Why would a company want to do this?   Who might resist? Why?





3

9/17/12

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Index ing

Supporting Business Processes Enterprise Resource Planning

7-22

  Internally focused systems

  Who are the largest and most influential

ERP vendors?





Supporting Business Processes

Modules of Enterprise Systems

7-23

7-24

  Externally focused systems (interorganizational systems)

  Each module in

an enterprise system replaces a stand-alone legacy system.





4

9/17/12

Vanilla Versus Customized Software

Capabilities of SAP s ERP System

7-25

7-26

  Vanilla version ¡  This version contains features and modules that an enterprise system comes with out of the box. ¡  Certain processes might not be supported.   Customization ¡  This version contains additional software or changes to vanilla version. ¡  It always needs to be updated with new versions of vanilla.





Best Practices-Based Software

Learning Objectives

7-27

7-28

  Most ERP vendors build best practices into


their ERP systems.

in organizations.

¡  Identify

business processes in need of change ¡  Future updates are smoother if businesses change their business processes to fit with ERP systems.

2. Describe what enterprise systems are and how they have evolved.

3. Describe enterprise resource planning systems

  Is following the best practices always the best

and how they help to improve internal business processes.

strategy?

4. Understand and utilize the keys to successfully

¡  If

companies have competitive advantage from unique business processes, forcing best practices may actually hurt.



implementing enterprise systems.



Enterprise Resource Planning (ERP) Systems

Integrating Data to Integrate Applications

7-29

7-30

  Enterprise Resource Planning—Applications that integrate

business activities across departmental boundaries.   ERP evolved during the 1990s from material/manufacturing

requirements planning packages.   Emphasis has since shifted from resources and planning to enterprise.   Integrate legacy information on a company-wide basis



  Central information

repository ERP replaces standalone applications ¡  Modules based on ¡ 

÷  Common

database application interfaces

÷  Similar



5

9/17/12

Example ERP Screen

Core and Extended ERP Components

7-31

  An ERP

  Core components—support primary internal activities.

system can provide employees with relevant, up-to-date information.


7-32

  Extended components—support primary external activities.




ERP Core Components

Human Resources Management

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7-34

  Financial Management ¡  accounting, financial reporting, performance management, corporate governance   Operations Management ¡  simplify, standardize, and automate business processes for inbound/outbound logistics, product development, manufacturing, sales and service   Human Resource Management ¡  employee recruitment, assignment tracking, performance reviews, payroll, regulatory requirements






Order-to-Cash

Procure-to-Pay

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7-36




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9/17/12

Production

ERP Installation

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7-38

  Configuration of the ERP systems is performed

during any ERP implementation.   System must be configured to reflect business

processes and associated business rules.   Organizations have to make countless decisions on

how to configure thousands of database tables to fit the business s needs.   Organizations hire experienced business analysts or outside consultants to assist with implementation. IS Today (Valacich & Schneider) 5/e 9/17/12




ERP Limitations

Learning Objectives

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7-40

  ERP falls short in communicating across


organizational boundaries.   They tend to be not well suited for managing value system activities.   Other systems can work with ERP to provide these capabilities.

in organizations.

2. Describe what enterprise systems are and how they have evolved.


4. Understand and utilize the keys to successfully implementing enterprise systems.





The Formula for Enterprise System Success 7-41

1. 

Secure executive sponsorship .

2. 

Get help from outside experts.

¡  Most failures are due to lack of top-level management support. ¡  Consultants are specifically trained. ¡  Implementation tends to happen faster.

3. 

Thoroughly train users. ¡  Training is the most overlooked, underestimated, and poorly budgeted expense. ¡  Training can prevent dissatisfaction.

4. 

Take a multidisciplinary approach to implementations. ¡  Include end users from all functional areas in the implementation.

5. 

Initiate evolving the ERP Architecture.



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