Transcript Chp 1 Managing the Digital Firm

Enterprise Resource Planning Systems
ERP Systems
1.1
Enterprise Resource Planning Systems
Instructor:
Muhammad Asjad Saleem
Contact:
Phone: (051) 9047 589
E-mail: [email protected]
Text:
Laudon and Laudon, Essentials of Management
Information Systems - Managing the Digital Firm, 8th
Edition .
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Enterprise Resource Planning Systems
• Information System:
Interrelated components working together to
collect, process, store and disseminate
information to support decision making,
coordination, control, analysis, and visualization
in any organization.
e.g.
Management Information System (MIS):
The study of information systems focusing on
their use in business and management.
e.g.
Enterprise Resource Planning System (ERPS):
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Enterprise Resource Planning Systems
• Enterprise resource planning (ERP) System:
Enterprise resource planning (ERP) is the industry term used
to describe a broad set of activities supported by multi-module
application software that helps a manufacturer or other
business manage the important parts of its business.
These parts can include product planning, parts purchasing,
maintaining inventories, interacting with suppliers, providing
customer service, and tracking orders. ERP can also include
application modules for the finance and human resources
aspects of a business.
• Some of the bigger players in the ERP outsourcing market are
SAP, Peoplesoft, and J. D. Edwards. New comers include
Oracle, IBM, and Microsoft.
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Enterprise Resource Planning Systems
• The growth of the internet, the globalization of
trade, and the rise of information economies have
recast the role of information systems (IS) in
business and management.
• Internet technology is supplying the foundation
for new business models, new business
processes, and new ways of distributing
knowledge.
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• Companies are using internet technology to drive
their businesses. Companies are relying on
internet and networking technology to conduct
more of their work electronically, seamlessly
linking factories, offices, and sales forces around
the globe.
Enterprise Resource Planning Systems
• Leading-edge firms, such as Cisco Systems, Dell
Computers, and Procter & Gamble, are extending
these networks to suppliers, customers, and
other groups outside the organization so they can
react instantly to customer demands and market
shifts.
• Cisco Systems corporate managers can use IS to
generate financial statements based on up-to-the
–minute figures on orders, discounts, revenue,
product margins, and staffing expenses.
• Executives can constantly analyze performance
at all levels of the organization. This digital
integration is changing how we organize and
manage a business firm.
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Enterprise Resource Planning Systems
• Ultimately, these changes are leading to
fully digital firms where all internal
business processes and relationships
with customers and suppliers are digitally
enabled.
• In digital firms, information to support
business decisions is available any time
and anywhere in the organization.
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Enterprise Resource Planning Systems
MANAGING THE
DIGITAL FIRM
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Enterprise Resource Planning Systems
OBJECTIVES
• What is the role of information systems in
today’s competitive business environment?
• What exactly is an information system?
What do managers need to know about
information systems?
• How are information systems transforming
organizations and management?
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Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Enterprise
Resource Planning Systems
OBJECTIVES
• How has the Internet and Internet technology
transformed business?
• What are the major management challenges
to building and using information systems?
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Enterprise Resource Planning Systems
MANAGEMENT CHALLENGES
1. Design competitive and effective systems
2. Understand system requirements of
global business environment
3. Create information architecture that
supports organization’s goal
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Enterprise Resource Planning Systems
MANAGEMENT CHALLENGES
4. Determine business value of information
systems
5. Design systems people can control,
understand and use in a socially, ethically
responsible manner
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
The Competitive Business Environment and the Emerging Digital Firm
Four powerful worldwide changes that
have altered the business environment:
1.
2.
3.
4.
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Emergence of the Global Economy
Transformation of Industrial Economies
Transformation of the Business Enterprise
The Emerging Digital Firm
Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
The Competitive Business Environment and the Emerging Digital Firm
Emergence of the Global Economy
•
•
•
•
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Management and control in a global
marketplace
Competition in world markets
Global work groups
Global delivery systems
Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
The Competitive Business Environment and the Emerging Digital Firm
Transformation of Industrial Economies
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•
Knowledge- and information-based
economies
•
Productivity
•
New products and services
•
Knowledge: a central productive and
strategic asset
Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
The Competitive Business Environment and the Emerging Digital Firm
Transformation of Industrial Economies
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•
Time-based competition
•
Shorter product life
•
Turbulent environment
•
Limited employee knowledge base
Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Labor Force Composition 1900-2000
Labor Force Composition 1900-2000
70%
60%
50%
40%
30%
20%
10%
0%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1997 2000
Year
Figure 1-1
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
The Competitive Business Environment and the Emerging Digital Firm
Transformation of the Business Enterprise
•
•
•
•
•
•
•
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Flattening
Decentralization
Flexibility
Location independence
Low transaction and coordination costs
Empowerment
Collaborative work and teamwork
Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
The Competitive Business Environment and the Emerging Digital Firm
Emergence of the Digital Firm
•
•
•
•
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Digitally-enabled relationships with
customers, suppliers, and employees
Core business processes accomplished
via digital networks
Digital management of key corporate
assets
Rapid sensing and responding to
environmental changes
Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
The Competitive Business Environment and the Emerging Digital Firm
4 Major Systems Defining the Digital Firm
• Supply chain management systems
• Customer relationship management
systems
• Enterprise systems
• Knowledge management systems
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
What Is an Information System?
A set of interrelated components that collect
(or retrieve), process, store, and distribute
information to support decision making and
control in an organization
-IS operate on information about significant
people, places, and things within the org
or in the environment surrounding it.
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
What Is an Information System?
• Data: Streams of raw facts representing
events such as business transactions
• Information: Clusters of facts that are
meaningful and useful to human beings in
the processes such as making decisions
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
What Is an Information System?
Data and Information
Figure 1-2
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Activities in an Information System
INPUT
PROCESS
FEEDBACK
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OUTPUT
Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Functions of an Information System
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Figure 1-3
Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
• Our interest will remain limited to
formal, organizational computerbased information systems (CBIS)
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Computer-Based Information System (CBIS)
• Rely on computer hardware and
software
• Processing and disseminating
information
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Formal Systems
• Fixed definitions of data, procedures
• Collecting, storing, processing,
disseminating, using data
• May be computer-based or manual
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
A Business Perspective on Information Systems
• An organizational and management
solution based on information
technology to a challenge posed by the
environment
• An important instrument for creating
value for the organization
• Stages in the business information
value chain add value to information
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Business Processes
Supply
Enterprise
Customer
Knowledge
Chain
Management Management Management
Management
Data
Collection
and
Storage
Transformation Dissemination
Into
Business
Systems
Planning
Information Processing Activities
Coordinating Controlling
Management Activities
Business Value
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Modeling and
Decision Making
Figure 1-4
Firm
Profitability
and
Strategic
Position
Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Information Systems
ORGANIZATIONS
TECHNOLOGY
INFORMATION
SYSTEMS
MANAGEMENT
Figure 1-5
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
A Business Perspective on Information Systems
• Information systems literacy: Broadbased understanding of information systems
that includes behavioral knowledge about
organizations and individuals using
information systems and technical
knowledge about computers.
• Computer literacy: Knowledge about
information technology, focusing on
understanding how computer-based
technologies work
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Major Business Functions
• Sales and marketing
• Manufacturing and production
• Finance
• Accounting
• Human resources
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Major Business Functions
• Sales and marketing
• Manufacturing and production
• Finance: Managing the org’s financial assets (cash,
stocks, bonds, etc. )
• Accounting: Maintaining the org’s financial records
(receipts, disbursements, paychecks, etc.)
• Human resources: Attracting, developing, and
maintaining the org’s labor force; maintaining employee
records.
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Organizations
Key Elements:
• People: Managers, knowledge workers,
data workers, production or service
workers
• Structure: Organization chart , groups of
specialists, products, geography
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Organizations
• Operating procedures: Standard operating
procedures (SOP, rules for action)
• Politics: Different levels and specialties in an org
create different interests and viewpoints. These views
often conflict. Conflict is the basis for org politics.
• Culture: Each org has a unique culture, or
fundamental set of assumptions, values, and ways of
doing things, that has been accepted by most of its
members.
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Management
Levels:
• Senior managers: make long-range
strategic decisions about products and
services – people occupying the top most
hierarchy in an org.
• Middle managers: Carry out the programs
and plans of senior management- middle of
org hierarchy.
• Operational managers: monitor the firm’s
daily activities.
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Computer Technology
Tools managers use to cope with change
• Hardware: Physical equipment
• Software: Detailed preprogrammed
instructions
• Storage: Physical media for
storing data and the software
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Enterprise Resource Planning Systems
WHY INFORMATION SYSTEMS?
Computer Technology
• Communications Technology:
transfers data from one physical location
to another
• Networks: link computers to share data
or resources
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Enterprise Resource Planning Systems
CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS
Technical
Approaches
Computer
Science
Management
Science
Operations
Research
Sociology
Psychology
Economics
Behavioral
Approaches
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Figure 1-6
Enterprise Resource Planning Systems
CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS
Socio-Technical Systems
Optimize systems performance:
• Technology and organization
• Organizations mutually adjust to one
another until fit is satisfactory
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Enterprise Resource Planning Systems
CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS
Socio-technical Systems
Figure 1-7
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SOURCE: Liker, et al, 1987
Enterprise Resource Planning Systems
TOWARD THE DIGITAL FIRM
The Interdependence Between Organizations and Information Systems
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Figure 1-8
Enterprise Resource Planning Systems
TOWARD THE DIGITAL FIRM
The Widening Scope of Information Systems
• 1950s: Technical changes
• 1960s-70s: Managerial controls
• 1980s-90s: Institutional core activities
• Today: Digital information webs
extending beyond the enterprise
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Enterprise Resource Planning Systems
TOWARD THE DIGITAL FIRM
The Widening Scope of Information Systems
Figure 1-9
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Enterprise Resource Planning Systems
TOWARD THE DIGITAL FIRM
The Internet
• International network of networks
• Universal technology platform: Any
computer can communicate with any other
computer
• World Wide Web and Web sites
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Enterprise Resource Planning Systems
TOWARD THE DIGITAL FIRM
What You Can Do on the Internet?
• Communicate and collaborate
• Access information
• Participate in discussions
• Supply information
• Find entertainment
• Exchange business transactions
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Enterprise Resource Planning Systems
TOWARD THE DIGITAL FIRM
New Options for Organizational Design
• Flattening organizations
• Separating work from location
• Reorganizing work-flows
• Increasing flexibility
• Redefining organizational boundaries
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Enterprise Resource Planning Systems
TOWARD THE DIGITAL FIRM
Flattening Organizations & Information Systems
Figure 1-10
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Enterprise Resource Planning Systems
TOWARD THE DIGITAL FIRM
Redesigned Work Flow For Insurance Underwriting
Figure 1-11
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Enterprise Resource Planning Systems
TOWARD THE DIGITAL FIRM
The Digital Firm
• Electronic commerce
• Electronic business
• Digital market: Information systems links,
buyers and sellers to exchange
information, products, services, payments
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Enterprise Resource Planning Systems
TOWARD THE DIGITAL FIRM
THE EMERGING DIGITAL FIRM
ELECTRONIC BUSINESS
Electronic Commerce
Factories
• Just-in-time production
• Continuous inventory
replenishment
• Production planning
Customers
• On-line marketing
• On-line sales
• Built-to-order products
• Customer service
• Sales force automation
Remote offices and work groups
• Communicate plans and policies
• Group collaboration
• Electronic communication
• Scheduling
Suppliers
• Procurement
• Supply chain management
Business partners
• Joint design
• Outsourcing
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Figure 1-12
Enterprise Resource Planning Systems
TOWARD THE DIGITAL FIRM
Electronic Commerce
• Internet links buyers, sellers
• Lower transaction costs
• Goods and services advertised, bought,
exchanged worldwide
• Business-to-business transactions
increasing
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Enterprise Resource Planning Systems
TOWARD THE DIGITAL FIRM
Electronic Business
• Electronic Business: Executing all the
firm’s business processes with Internet
technology
• Intranet: Business builds private, secure
network based on Internet technology
• Extranet: Extension of intranet to
authorized external users
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Enterprise Resource Planning Systems
TOWARD THE DIGITAL FIRM
Information Architecture and Information Technology Infrastructure
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Figure 1-13