Transcript What is an Enterprise Wide Application?

Enterprise Business
Processes and Applications
(IS 6006)
Masters in Business Information Systems 2008 / 2009
Fergal Carton
Business Information Systems
Last week
• Feedback on process mapping exercise
– Process map tells you what is being done, by whom, in what
order
– Differentiates between flow of physical goods and virtual
information
– Visual presentation is flexible, allows identification of bottlenecks
• Operational versus informational
– ERP captures transactions (SO, PO) at most granular level
– Managers need aggregated information (MIS) to support
decision making
– Comparing plan to actual is critical to decision making
– Purchase Price Variance example
• ERP hardwires processes
• Ownership of data (as dear to you as your leave days)
This week
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Discussion of Dearden / Vizard
Plan, Buy, Make, Deliver model
ERP is single instance
Who does ERP benefit?
Effect of changes to the business model on process
Reality and ERP diverge
Resources to address the gap are scarce
Integration downsides
Virtualisation (Rayport & Sviokla)
Monk Wagner Ch. 4
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
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”
Process map example
• Planning
Plan
• Procurement
Buy
• Manufacturing
• Order fulfilment
Make
Deliver
Plan, Buy, Make, Deliver
Supplier
Deliver
Plan, buy
Make
Customer
Bill of materials
Raw materials
Finished goods
Why Buy an ERP system?
• Companies must track vital information
to manage their operations.
• They track:
Customers
Money (Cash Flow)
Material
Assets
Labor
Utilization
Etc.
ERP is often single instance
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Single point of data entry (PO’s, SO’s, …)
Inventory control
Opportunity to re-design processes
Single technical platform (support)
Common language, common pool of data
Sales
Production
Shipping
Collect cash
Customer information (ship-to, bill-to, install-at, …)
ERP : it’s about control
• Revenues
Sales Orders
• Costs
Purchase Orders
• Profitability
P&L
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
But business models evolve
• High margin to high volume
• Hardware to software & service
• Manufacturing becomes logistics
• Gap opens between ERP & reality
Reality and ERP diverge inevitably
Impact of gap?
•Responsiveness
•€ (FTE and s/w)
•Stress
•BI tools
•Workarounds
Systems
Reality
ERP
Post go-live example
• “There was an awful lot of resources thrown
at go-live, most of those resources were gone
after go-live. Trying to get something fixed, it
wouldn’t happen.”
• “In order to actually utilize it in a way that
actually improves our lot, took, is still taking,
quite a long time, and if you can’t do it
yourself, it’s even worse, because you can’t
get IS available, at times to do the work.“
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
PCB exercise