Transcript Hospitality Systems - Washburn University

Chapter 3
Chapter 3
Organizational Information Systems
and Their Impact
Vocabulary and concepts to categorize
different Information Systems
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Course Roadmap
• Part I: Foundations
– Chapter 1: Introduction
– Chapter 2: Information Systems Defined
– Chapter 3: Organizational Information Systems and Their
Impact
• Part II: Competing in the Internet Age
• Part III: The Strategic use of Information Systems
• Part IV: Getting IT Done
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Learning Objectives
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How to categorize systems according to the hierarchical, functional, and process perspectives. You will also learn
the rationale for each perspective and its limitations.
The definition, underlying principles, and applications of business process reengineering (BPR), as well as the
advantages and disadvantages of BPR.
The definition of integration and its role in the modern firm. We will explore the pressures toward integration and
the challenges integration creates. We will also discuss business and systems integration trends and the
relationship between the two.
The genesis of the enterprise systems (ES) trend and why so many companies are employing or introducing them.
You will also learn to articulate the principal benefits and risks associated with these systems.
The definition of the term supply chain management and how to explain the role that supply chain management
applications play in modern organizations.
The definition of the term best of breed and how to describe the benefits and drawbacks of this approach to
systems integration. You will also learn to draw comparisons between the best-of-breed and enterprise systems
approaches.
How to describe what is meant by knowledge management, how to categorize the different types of knowledge
commonly found in organizations, and how to explain why organizations feel the need to employ knowledge
management applications.
The definition of the terms business intelligence (BI) and BI infrastructure. You will also learn how to identify and
describe the role of the technologies that comprise a modern BI infrastructure.
The definition of the term customer relationship management (CRM) and how to articulate both its benefits and
limitations. You will also learn how the CRM and BI trends relate to one another.
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Introduction
• Understanding how I/S is classified and organized
is a prerequisite to becoming a successful
manager and being able to navigate the
infrastructure of the modern firm
• The impetus behind organizational change comes
from the introduction of new IT and the
implementation of information systems
• It is therefore paramount you have a solid
understanding of what classes of software
programs underpin information systems in
modern organizations.
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Categorizing Systems
• The Hierarchical Perspective
• The Functional Perspective
• The Process Perspective
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What is the Hierarchical Perspective?
• Decision making and activities in organizations
occur at different levels.
• Individuals
– have different responsibilities
– make different types of decisions
– carry out different types of activities
• Having the correct information is important
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Hierarchical Perspective
Activity
Time horizon Hierarchical level
Characteristics
Strategic
Long term
General management
Functional management
 Externally focused
 Ad-hoc
 Highly unstructured
Tactical
Mid term
Middle management
 Repeatable
 Semi-structured
 Recurrent
Front line employees
 Low discretion
 Highly structured
 Transaction focused
Operational Short term
Operational Activities
• Concerned with short-term activities, typically
those that occur in the immediate term
• Operational personnel are focused on
performing the day-to-day activities that
deliver the firm’s value proposition
• Decision making at the operational level is
typically highly structured by means of
detailed procedures
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Operation Examples
Transactions are atomic. If one part of the transaction fails, the system must cancel the
transaction. For example, if while withdrawing money at the ATM the cash dispenser
jams, your balance should not be debited.
Consistency Transactions are consistent. In other words, only valid data is committed to long term
memory and stored in the system. For example, if the airline seat assignment system
requires only letters in the first name field, no transaction with numbers in the field is
accepted.
Transactions are non-concurrent. If the system has yet to store the results of a transaction
Isolation
while writing the results of a second transaction, its database may end up holding invalid
data. For example, if you are withdrawing money from and ATM while your sister at home
is moving money electronically, the resulting balance may be invalid unless the system
maintains isolation of the two transactions.
Transactions are durable when they can be recovered in the face of system failure. In
Durability
other words, once the system has successfully processed the transaction, it will no longer
lose it. For example, once the agent has changed your seat, the change is recorded in a
transaction log. If anything were to go wrong with the database, the current state could
be re-created by reprocessing the transactions from the log.
Atomicity
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Tactical Activities
• The activities performed tend to be semi
structured, having both well-known components
and some degree of uncertainty
• Decision making at this level is typically semi
structured, but characterized by repeatable
patterns and established methods
• The objective is to improve the effectiveness of
the organization, or one of its functions, within
the broad strategic guidelines set by the
executive team
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Strategic Activities
• Decision making at this level is highly
unstructured
• Reliant on internal as well as external data
sources
• Focus on making decisions by evaluating
trends
• Little structure and formal methodologies
exist for activities at this level.
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Strategic Tools
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Hierarchical Perspective
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Executive Tools
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Today’s Hierarchy
• Adoption of flatter hierarchies between frontline operations and strategic decision-making
– Empowerment
• Limitation:
– Difficult to neatly separate information systems in
clear cut categories
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Functional Perspective
• Functional systems are expressly designed to
support the specific needs of individuals in the
same functional area
• Functional systems are based that information
processing needs are unique and homogeneous
within a functional area
• Optimal systems are tailored to those highly
specific needs and use a language that is familiar
to the professionals in that area.
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Functional Perspective
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Process Perspective
• The functional and hierarchical
perspectives are limited by:
– Lack of integration of separate systems
– Leading to:
• Redundancy
• Inefficiency
• Business Process Reengineering offers
a potential solution
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Business Process Reengineering
• Business processes are inherently
cross-functional
• BPR is a managerial approach that
employs a process view of
organizational activities
• BPR seeks to break down the
organizational silos
• BRP achieves internal business
integration increases performance
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Business Process
• Series of steps that a firm performs in order to
complete an economic activity
– Inputs
– Steps / Activities
– Outputs
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BPR Risks
• BPR requires radical 3rd order
change
• BPR sees that operational
processes are not “glamorous” or
highly valued
• Significant downsizing and layoffs
follow BPR initiatives
• Very expensive to implement
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The Role of IT in BPR
• As organizations and
technology evolve over
time, traditional
business processes may
become obsolete and
need to be reevaluated
• Evaluation takes time
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Integration
• The history of lack of integration
– Coordination costs
– Mergers and acquisitions
• Integration: The process of unifying, or joining
together, some tangible or intangible assets
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The Dimensions of Integration
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Object & Locus
• Locus:
– Internal
– External
• Object:
– The assets the organization seeks to combine
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Business Integration
• The introduction of cohesive, streamlined
business processes that encompass previously
separate activities
• Objective:
– Presenting “one face” to the customer
– Providing solutions
– Achieving global inventory visibility
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Systems Integration
• Unification or tight linkage of IT-enabled
information systems and databases
• Primary focus:
– Technological component of the IS
• Types of systems integration:
– Internal
– External
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The Integration Trade-offs
• Benefits
–
–
–
–
Reduction of duplication and redundancy
Access to information
Speed
Response time
• Drawbacks
– Increased coordinate costs
– Reduced local flexibility
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Enterprise Systems
• Class of standardized
software applications
that would enable and
support integrated
business processes
• Firms typically live and
die by their enterprise
systems
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ERP Vendors
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ERP Models & Functionality
Financials
Accounts receivable and payable
Asset accounting
Cash management and forecasting
Financial consolidation
General ledger
Product-cost accounting
Profit-center accounting
Human Resources
Payroll
Personnel planning
Travel expenses
Operations and Logistics
Inventory management
Material requirements planning
Materials management
Plant maintenance
Production planning
Routing management
Shipping
Sales and Marketing
Order management
Pricing
Sales management
Sales planning
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ERP Pros & Cons
Advantages
• Efficiency
• Responsiveness
• Knowledge infusion
• Adaptability
Disadvantages
• Standardization and
flexibility
• Is the best practice
embedded in the enterprise
system really the best?
• Strategic clash
• High costs and Risks
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ERP Failures
Year
2010
ERP Vendor
JDA Software (i2)
ERP Customer
Dillard's, Inc.
2010
SAP and Deloitte
Consulting
Capgemini and
SAP
Marin County,
California
Dorset County in the
UK
2009
Epicor Software
Corporation
SAP and Axon
Ferazzoli Imports of
New England
City of San Diego
2009
Lawson Software
2008
SAP
Public Health
Foundation Enterprises
Levi Strauss
2008
Oracle
Overstock.com
2008
SAP
City of Portland
2004
PeopleSoft
Cleveland State
University
2003
EDS
2001
Oracle Corporation
and KPMG
SAP (R/3) and
Accenture
J.D. Edwards and
IBM
British Sky
Broadcasting
University of
Cambridge
FoxMeyer Corp.
2010
2009
2001
2000
Evans Industries Inc.
Reason for ERP Failure and/or Lawsuit
Dillard's had alleged i2 failed to meet obligations regarding two softwarelicense agreements for which the department-store operator had paid $8
million.
The lawsuit alleges that Deloitte committed fraud and “misrepresented its
skills and experience.”
A job which previously only took a minute is now alleged to take an hour.
The system has to shut down a few days each month to allow data to be
processed.
Epicor's system never worked as intended or promised. Initial budget:
$184,443, Cost to date: $224,656.
The city of San Diego, CA terminated its software implementation contract
with services provider, Axon. The project was $11 million over budget.
Failed ERP implementation.
The company was forced to take shipping systems at its three massive US
distribution centers off line for a full week with ensuing loss of business.
ERP implementation problems blamed for losses during the 2005
Christmas season and extending into 2006.
Portland’s SAP project, budgeted at $31 million in 2006 for a 2007 go-live
date, is now estimated to be nearly $50 million.
A faulty installation of the company's ERP applications. The lawsuit
charges PeopleSoft with breach of contract and negligent
misrepresentation.
Late delivery of the project and lost benefits that amount to estimated
£709m.
ERP project considered “faulty” after spending $13 million in the
implementation.
The company claimed that a botched SAP R/3 implementation in the mid1990s ruined them, driving them to bankruptcy.
The suit alleged that OneWorld was "defective and failed to operate and
function as promised by the defendants."
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Supply Chain Management
• is the set of logistical
and financial processes
associated with the
planning, executing,
and monitoring of
supply chain
operations.
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Knowledge Management (kM)
• Set of activities and processes used to create,
codify, gather, and disseminate knowledge within
the organization
– Creating Knowledge
• employees generate new information, devise novel solutions
to handle existing problems, and identify new explanations
for recurrent events.
– Capturing and Storing Knowledge
• enables the organization to codify new knowledge and
maintain an organizational memory
– Disseminating Knowledge
• investments made in knowledge creation and storage pay off
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Business Intelligence
• Ability to gather and make sense of
information about your business
• Encompasses the set of techniques, processes,
and technologies designed to enable
managers to gain superior insight and
understanding of their business and thus
make better decisions
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The Information Systems Cycle
• Models the progression
of data
• From its inception in
transaction processing
systems
• To its storage in data
repositories
• To its use in analytical
tools
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Components of BI
• Data Warehouse
– Data repository that collects and consolidates data from
multiple source systems with the purpose of enabling analysis
• Data Mart
– Scaled-down version of a data warehouse that focuses on the
needs of a specific audience
• Online Analytical Processing (OLAP)
– Class of software programs that enable a knowledge worker to
easily and selectively extract and view data from analytical
database
• Data Mining
– Process of automatically discovering non-obvious relationships
in large databases
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BI Tools
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Customer Relationship
Management (CRM)
• CRM is a strategic initiative, not a technology.
Information technology is an essential enabler of
all but the smallest CRM initiatives
• CRM relies on customer personal and
transactional data, and is designed to help the
firm learn about them
• The ultimate objective of a CRM initiative is to
help the firm use customer data to make
inferences about customer behaviors, needs, and
value to the firm so as to increase its profitability
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CRM Infrastructure
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Limitations of CRM
• CRM Is Firm Centric
– a firm’s CRM strategy only relies on transactional
and behavioral customer data pertaining to the
interactions of the customer with the firm
• CRM Has Limited Predictive Ability
– Some events are unforeseeable and only the
customer knows about their occurrence or future
plans about them
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Enterprise Application Integration
(EAI)
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The Recap
• Different organizational information systems can
be characterized through a hierarchical
perspective or functional perspective
• BPR is as a managerial approach calling for a
process view of organizational activities
• Enterprise systems are modular, integrated
software applications that span (all)
organizational functions and rely on one database
at the core
• Enterprise systems have traditionally focused on
internal organizational processes
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The Recap
• Knowledge management is the set of activities and processes that
an organization enacts to manage the wealth of knowledge it
possesses and ensure that such knowledge is properly safeguarded
and put to use to help the firm achieve its objectives
• Business intelligence encompasses the set of techniques, processes,
and technologies designed to enable managers to gain superior
insight and understanding of their business and thus make better
decisions.
• Customer relationship management (CRM)is strategic orientation
that calls for iterative processes designed to turn customer data
into customer relationships through an active use of, and learning
from, the information collected
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What we Learned
1.
2.
3.
4.
5.
6.
7.
8.
9.
How to categorize systems according to the hierarchical, functional, and process perspectives. You will also
learn the rationale for each perspective and its limitations.
The definition, underlying principles, and applications of business process reengineering (BPR), as well as
the advantages and disadvantages of BPR.
The definition of integration and its role in the modern firm. We will explore the pressures toward
integration and the challenges integration creates. We will also discuss business and systems integration
trends and the relationship between the two.
The genesis of the enterprise systems (ES) trend and why so many companies are employing or
introducing them. You will also learn to articulate the principal benefits and risks associated with these
systems.
The definition of the term supply chain management and how to explain the role that supply chain
management applications play in modern organizations.
The definition of the term best of breed and how to describe the benefits and drawbacks of this approach
to systems integration. You will also learn to draw comparisons between the best-of-breed and enterprise
systems approaches.
How to describe what is meant by knowledge management, how to categorize the different types of
knowledge commonly found in organizations, and how to explain why organizations feel the need to
employ knowledge management applications.
The definition of the terms business intelligence (BI) and BI infrastructure. You will also learn how to
identify and describe the role of the technologies that comprise a modern BI infrastructure.
The definition of the term customer relationship management (CRM) and how to articulate both its
benefits and limitations. You will also learn how the CRM and BI trends relate to one another.
46