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
• Exercise: bank loan process comments
– Purpose is communication
– There is no right answer
– Can over simplify
– Doesn’t take into account human error
– Can be inflexible: not matching reality
– Flags / metrics in place to monitor
performance
• What does integration mean?
This week
•
•
•
•
•
•
•
Feedback on process mapping exercise
Basic flows of information
Collaboration conflict in an enterprise
Information sharing
Data integrity issues
ERP and integration
The zipper
• Reading on data integrity / integration
• Monk / wagner hand out
• Rayport & Sviokla paper
Basic flows of information
• Organisations are organised in a number
of functional areas
• They carry out complementary missions
• They interact and collaborate in managing
the organisation
• What are they called?
• What are their goals?
Examples:
• Finance: managing the cash flows, providing
resources to the firm
– sub area: Accounting (books and legal reporting)
– sub area: Accounts receivable and payable: deal with
suppliers and customers
• Marketing: promoting the firm and its products
• Sales: selling the products; dealing with customers
– sub area: sales orders
– sub area: returns
• Production: manufacture goods
– sub area: purchasing raw material
– sub area: quality control
Collaboration / Conflict
• All areas of the firm must exchange info
with the others (just like organisations
must interact with the outside)
• Divergence of viewpoints means
opportunities for conflict are great
• Managing same resources / using the
same assets but with radically different
goals
Examples:
• Quality control versus production:
– production want to increase volumes and keep
productivity at highest levels
– QC want to prevent any “faulty” product to come
out of the door
• In an environment where zero defect is only a
remote target => conflict is likely
• in one organisation, QC were referred to as
the Sales Prevention department
How can data be shared
–
–
–
–
–
–
Face to face
Hard copy
Soft copy or email
Interface between applications
Access to a shared database
…
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:
–
–
–
–
–
–
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
…
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
Criteria for information sharing
–
–
–
–
–
–
Integrity
Timing of information exchange
Knowing information is up to date
Ownership of data
Accountability if information is incorrect, incomplete
Decision responsibility
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
ERP “hardwires” processes
• Human decisions replaced by data and interfaces
– An approved sales order triggers the creation of an invoice
(running Accounts Receivable “interface”)
– A production schedule triggers the creation of work orders
– A batch release from warehouse triggers quality checks
– A component quality failure triggers purge on all inventory
– An incomplete payment triggers a debit note
– An unpaid invoice triggers a reminder letter
– …
Increased focus on data!
Turning raw data into information
= value-adding process
Level
Value-add
Management
Decisions
Rules
Process
Transaction
Information aggregation
Information visibility
Driving administration
Data drives workflow
Data integrity
Example: Supplier payment
Level
Management
Decisions
Rules
Process
Transaction
Value-add
Information aggregation
Information visibility
Driving administration
Data drives workflow
Data integrity*
Physical
Supplier relationship
PPV control
Approve for payment
Receipt to PO match
Supplier delivery
* Capture at source eg. match physical goods received to a stock item in the system
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.“
ERP is often single instance
•
•
•
•
•
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, …)
Integration example: Bank branch
• What does integration mean in a bank
perspective?
• Products
• Customer services
• Transaction processing
• Data model
•…
Integration downsides
•
•
•
•
•
•
•
•
Response times
Vulnerability: single point of failure
Limitations on expansion
Dependence on single vendor
Flexibility to change system
…
…
Access to basic information is
complicated
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