Transcript What is an Enterprise Wide Application?

Business and IS Performance
(IS 6010)
MBS BIS 2010 / 2011
28th October 2010
Fergal Carton ([email protected])
Accounting Finance and Information Systems
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Information sharing
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Latency issues with technical infrastructure
Basic flows of information
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Last week
Finance focused on revenue (sales) and costs (mfg)
Integration of demand and supply
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ERP systems came from MRP: focus on materials and inventory
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IT is used to provide visibility and control of demand and supply
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Does integration model only work for manufacturing?
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Can this model be applied to iTunes / Gift cards?
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Closed loop pre-paid cards
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Business model for Apple gift card
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Need to include recognition rules regarding sold, shipped, …)
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Apple contract out fulfilment processing
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Returns policy (unused, lost, …)
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Registration process with card leads to account creation
This week
• Latency
• Apple questions
• Types of data
• Production planning
• How do managers do their work
• Virtualisation
• Integration framework
• “One version of the truth”
• Integration benefits and downsides
• Control objective is undermined by lack of flexibility
Latency in performance reporting
• Refresh rates can create latency across four levels
– ERP to DW eg. every 8 hours DW updated with fresh sales transactions
– The time it takes for the refresh to execute can lengthen eg. 2/3 hours
– Running a query on the DW can take some time to complete eg. 10
mins
– Report display on user machine can slow down eg. 10 minutes
– Total latency of 11/12 hours can be critical at quarter end
– Decision making not supported in information cannot be trusted
Business model for Apple gift card
• Need to include recognition rules regarding
– sold
– shipped
– returned (unused, lost, …
– redeemed
– float
• Apple contract out fulfilment processing
– Stored values per card, packaging, logistics
– Where are cards delivered to?
• Registration process with card leads to account creation
– Cards obsolescent once account created
Cards as promotional tool only?
• Access customers not normally accessible via on-line
store
• Carry promotional message?
• Cards used to increase brand awareness or loyalty?
• Pay retailer to stock card?
• Retailer gains % of sales?
What level of performance detail is
required?
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Sales of gift cards by denomination for HMV Cork?
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Sales of gift cards by denomination for HMV Ireland?
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Sales of gift cards by denomination for HMV UK and Ireland?
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Sales of gift cards by denomination for HMV versus other music stores (Virgin,
Tower, …)?
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Unit sales or total revenue?
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Redeemed value and float?
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Apple Store sales from gift card redemption by region?
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Apple Store sales from gift card redemption by product?
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What level of integration is
required?
• Should Apple have access to
HMV point of sale data?
• Do they simply want to access
more customers?
Possible exam questions
• Latency issues in reporting
• Case study: Apple revenue reporting for gift cards
– Performance reporting relies on a detailed understanding of business
objectives and business models. Using the Apple case, discuss how the
complexity of the real world demand and supply models influences
reporting mechanisms.
– Suggest a suitable reporting mechanism for the Apple case
Apple exam question 08
• The Apple plant in Holyhill Cork is the only remaining in-house
manufacturing facility in the corporation, the other facilities being
operated by third parties. SAP is used by Apple to centralise the
burgeoning demand for new products such as the iPhone, as well as
existing desktop and software products. Using Apple as an example,
desribe the main elements of the sales order and fulfillment
processes for a manufacturing business. In your answer, comment
on the role of ERP systems such as SAP in supporting these
processes.
Apple exam question 09
• Increasingly, demand for Apple products is derived from a wide
range of channels (for example, Apple Stores, Distributors,
Retailers, Apple.com, …). Furthermore, pressure from the financial
markets means management have to produce sales figures quickly
and consistently. Describe a framework for representing the diversity
of this business, and use this framework to describe the sales order
fulfillment process for Apple. Discuss the role of Enterprise
Resource Planning (ERP) systems in facilitating revenue reporting
for Apple.
Types of data 1
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Volume data (production)
consumption data (raw material, packaging…)
personnel data
maintenance data
time related measurements
productivity data
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• All form the basis of the calculations used to
monitor manufacturing activities
Type of data 2
• Primary data:
– taken straight from the floor (input and output)
– e.g. production, consumption, labour,
maintenance
– ad-hoc reports - e.g. accidents, defects
• Secondary data or calculated data:
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allocated costs
productivity
pay bonuses
variances
• High level data:
– investigations of variances
– soft information about staff morale etc...
Type of data: soft information
• Data collection – Grapevine
– factory tours (talking and observing)
• Data storage – managers’ minds
– special reports
• Data usage:
– ad-hoc basis
– decision making
Production planning and forecast
In theory, it’s simple
– Sales forecast future demand for products
– Production plan to meet forecast sales
But, in real life, there are many contingencies:
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Sales tend to be optimistic
Most businesses exhibit seasonality
Customers are unpredictable
Forecasts are based on average prices
Yield may be poor due to quality issues
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How managers do their work
• What is happening?
• What should be happening?
Actual
Plan
• What therefore would happen if?
What-if?
• Adjust plan and/or change actual
Manage
Virtualisation
• Virtualisation: capturing & storing data
relating to changes in the physical
environment in an information system
• A measure of the degree to which
information systems can reflect business
reality
• Pre-supposes a structure (database), as
data captured is related to a logical entity
Integration framework
Virtual
Measure
Plan
Plan
Plan
Resource
visibility
Physical
Execute
Schedule
Supply
Demand
Performance control
Why is “one truth” so hard?
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Eg. Up to date picture of revenue?
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Easy bit:
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Hard bit:
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all product shipped to date
Spares, loaners, replacement machines, …
Deduct any current credit notes
Add any outstanding debts from previous invoices
Apportion revenue from service contract (12 months)
Allow for discount to be applied if paid on time
Currency exchange rate fluctuations …
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Revenue recognition “rules”
What does integration mean?
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Dearden 72
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As computer use expands, control is vital
Single group of experts design a completely integrated
supersystem = absurd
Specialist expertise is functional by nature
Finance, logistics, sales = different expertise
Centralisation of control of systems = dangerous
Examine the interfaces
Vizard 06
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Data used to be in disparate databases
Data now in databases, file systems, applications, …
“One truth” concerning the state of a business process
Interdependent business processes (eg. sales & service)
Meta-data structures
Enterprise Application Integration vs. BI tools
Who benefits?
• Finance gain greater visibility
• Manufacturing?
– Demand may be too unstable for MRP
– Production planning needs more “nuance”
– ERP is too literal
– Much planning still done on Spreadsheets
• Sales: need of integration
Integration downsides
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Response times
Vulnerability: single point of failure
Limitations on expansion
Dependence on single vendor
Flexibility to change system
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Access to basic information is
complicated
Control objectives of integration undermined
Control
Centralisation
Co-ordination
More analysis potential
Integration
Granularity
Accuracy / consistency
Inflexibility
Deteriorating data integrity
Technical skills required for reporting
Latency
Manual