Sep 17, 2012 ... Describe what enterprise systems are and how they have ... What types of
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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.
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Scenario
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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?
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Scenario (cont.)
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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
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Order-to-Cash Process
Procure-to-Pay Process
7-7
7-8
The processes associated with selling a product or service
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The processes associated with procuring goods from external
vendors
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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 ¡ ¡
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Value Chain
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Start at source Move downstream
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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.
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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.
3. Describe enterprise resource planning systems and how they help to improve internal business processes.
4. Understand and utilize the keys to successfully implementing enterprise systems.
IS Today (Valacich & Schneider) 5/e 9/17/12
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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
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Each department has its own system. ¡
Infrastructure specific
¡
Inefficient processes
¡
Potential for inaccuracies
¡
Too many rocks in the river
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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?
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3
9/17/12
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IS Today (Valacich & Schneider) 5/e 9/17/12 CDRO M
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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?
IS Today (Valacich & Schneider) 5/e 9/17/12
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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.
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Vanilla Versus Customized Software
Capabilities of SAP s ERP System
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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.
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Best Practices-Based Software
Learning Objectives
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Most ERP vendors build best practices into
1. Explain core business processes that are common
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.
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implementing enterprise systems.
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Enterprise Resource Planning (ERP) Systems
Integrating Data to Integrate Applications
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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
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Central information
repository ERP replaces standalone applications ¡ Modules based on ¡
÷ Common
database application interfaces
÷ Similar
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Example ERP Screen
Core and Extended ERP Components
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An ERP
Core components—support primary internal activities.
system can provide employees with relevant, up-to-date information.
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7-32
Extended components—support primary external activities.
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ERP Core Components
Human Resources Management
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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
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Order-to-Cash
Procure-to-Pay
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7-36
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Production
ERP Installation
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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
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ERP Limitations
Learning Objectives
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ERP falls short in communicating across
1. Explain core business processes that are common
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.
3. Describe enterprise resource planning systems and how they help to improve internal business processes.
4. Understand and utilize the keys to successfully implementing enterprise systems.
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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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