Transcript Chapter 7 Enterprise-Wide Information Systems

Chapter 7
Enterprise-Wide
Information Systems
Chapter 7 Objectives
• Understand how information technology
supports business activities
• Understand enterprise systems and how
they evolved
• Understand software applications that are
internally or externally focused
• Understand how to implement enterprise
systems
Enterprise Systems
• Enterprise systems
– Info. Sys. supports various business activities for
internal operations (manufacturing, order processing,
human resource management) as well as external
interactions with customers, suppliers, and business
partners.
– However, the problem is they were built on different
platforms (mainframe/minicomputer).
– Enterprise systems are information systems that
allow companies to integrate information across
operations on a company-wide basis
– Also known as enterprise-wide information systems
Enterprise Systems
• Enterprise systems
– Rather than storing information in separate
places throughout the organization, enterprise
systems provide a central repository common
to all corporate users.
– It provides a common interface and allows
personnel to share information seamlessly no
matter where the data is located.
Enterprise Systems
• Enterprise systems
– The emergence of Internet and the Web has resulted
in the globalization of customer and supplier networks
and opened up a new opportunities and methods to
conduct business.
– New business needs/expectations:
• Higher levels of customer services, faster and efficient product
development to compete in global market.
• Internally focused systems support functional areas,
processes within the organization. These activities can be
viewed as a series of links in a chain along which information
flows within the organization. At each stage in the process,
value is added in the form of the work performed by people
associated that process.
Enterprise Systems
Information flow for an order
Information begins to accumulate at the point of entry when a customer sends
an order to the company and flows through the various links.
Enterprise Systems
Information flow for an order
• When a customer places an order, the order is entered
into an order-entry application.
• The information containing the order is sent to the
fulfillment department.
• Fulfillment department picks the items from inventory,
packages them for distribution, and produces packing
list.
• The package, along with the packing list, is forwarded to
the shipping department.
• Shipping department coordinates the shipment,
produces invoice, and sends the package and invoice to
the customer.
Enterprise Systems
• Externally focused systems coordinate
business activities with customers,
suppliers, and business partners who
operate outside the organizational
boundary.
• Systems that communicate across
organizational boundaries are called
interorganizational systems (IOS).
Enterprise Systems
– Interorganizational systems (IOS)
• The key purpose of an IOS is to streamline the
flow of information from one company’s operations
to another’s
• It provides electronic transmission of information to
another company.
• Competitive advantage can be accomplished here
by integrating multiple business processes to meet
a wide range of unique customer needs.
• Sharing information between organizations helps
companies to adapt more quickly to changing
market conditions.
Information flow across
organizational boundaries
Information flow across
organizational boundaries
• When a company places an order for
components, the supplier performs the shipping
activity. The supplier delivers a physical package
and electronic invoice to the customer.
• The customer’s receiving department takes the
delivery and verifies the invoice. Then the
receiving department stocks the items in the
inventory and updates the inventory level.
Value chain framework
Enterprise Systems
• Internally Focused Applications
– Value chain – the set of business activities
– Functional areas can be broken down into
primary and support activities.
– Primary activities are functional areas within
an organization that process inputs and
produce outputs.
– Support activities are those activities that
enable primary activities to take place.
Enterprise Systems
• Internally Focused Applications
– Primary activities include:
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Inbound logistics
Operations and manufacturing
Outbound logistics
Marketing and sales
Customer service
Enterprise Systems
• Internally Focused Applications
– Support activities include:
• Infrastructure (hardware & software)
• Human resources (hiring, interview scheduling, payroll,
benefits)
• Technology development (software selection, Internet,
intranet, extranet)
• Procurement (purchasing of goods and services required as
inputs primary services)
Enterprise Systems
• Externally Focused Applications
– Integrate internal applications with those outside:
suppliers, partners, customers
– Upstream information
• Information received from another organization
– Downstream information
• Information sent to another organization
Value system framework
Types of Enterprise Systems
• Packaged applications
• Custom applications
• Stand-alone applications
Types of Enterprise Systems
• Legacy Systems
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Older systems
Tend to be infrastructure-specific
Usually linked to a specific business need
Not integrated
Types of Enterprise Systems
• Enterprise Resource Planning
– Integrated applications
– ERP systems
• Baan
• Oracle
• PeopleSoft
• SAP
• J.D. Edwards
Types of Enterprise Systems
• ERP Implementation
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Modules
“Vanilla” version
Customizations
Best practices
Business process reengineering (BPR)
Types of Enterprise Systems
• Customer Relationship Management
(CRM)
– Sales Force Automation (SFA)
– New opportunities for competitive advantage
– Examples:
• MGM
• American Airlines
• Marriott International
Types of Enterprise Systems
• Supply Chain Management (SCM)
– Supply chain – the producers of supplies that a
company uses
– Supply network
– What if supply chain does not collaborate?
– Two objectives of upstream information flow:
• Accelerate product development
• Reduce costs associated with suppliers
The Formula for Enterprise
System Success
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Secure executive sponsorship
Get help from outside experts
Thoroughly train users
Take a multidisciplinary approach to
implementation