Transcript What is an Enterprise Wide Application?

Business and IS Performance
(IS 6010)
MBS BIS 2010 / 2011
7th October 2010
Fergal Carton ([email protected])
Accounting Finance and Information Systems
Last week
• Organisational goals
• Soft versus hard goals
• Anglo Irish example of hard vs. soft data
• Types of data
• Example of organisational metrics – UCC
• An integration framework
• Class exercise
This week
•
Organisational performance and co-ordination strategies
•
Collaboration / conflict arises
•
Basic flows of information: how can data be shared and virtualisation
•
Basic flows of information – manufacturing
•
An example closer to home of organisational metrics – UCC
•
Types of data
•
Apple reporting example
•
Class exercise
•
How can they be quantified
•
Where is there conflict
•
An integration framework
Organisational performance
• Organisations are organised in a number
of functional areas
• They carry out complementary missions
• They interact and collaborate in managing
the organisation
Co-ordination strategies
• Co-ordination consists of:
– Protocols, tasks and decision mechanisms to achieve concerted
action between interdependent units (Thompson, 1967)
– Decomposing goals to activities (Malone & Crowston, 1990)
– People, resources and systems (Hepp & Roman, 07)
• Two key co-ordination strategies:
– Centralisation of decision making (purpose agenda)
– Standardisation of process (efficiency agenda)
• Inherent tension between individual and organisation
• Strategies impact flexibility of organisation differently
• IT only provides means of co-ordination, not reason
Goals constrained by time and cost
•
Sales
Revenue target achievement within budget
•
Order processing
Booked orders within sales period
•
Production planning
Minimise inventory levels but avoid stock outs
•
Warehouse mgt
Right product available at right time and right place
•
Manufacturing
Fulfil production schedule with available resources
•
Distribution / logistics
Deliver on time / complete with available resources
•
Customer Service
Customer repairs, and on site service within budget
•
Accounting /Finance
Revenue targets within expenditure limits
•
Information Systems
Application and server uptime with resources
•
Human resources
Adequate resources available with right skills
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
Basic flows
• Basic flows of information in business
• Finance – cash
• Sales – orders, customers
• Manufacturing – suppliers, raw materials
Sales vs. Finance views
• Sale concluded, revenue = € x
Discount
level?
Good payer?
Paid in full?
Paid when?
• Cash collected, receipt = € y
How can data be shared
–
–
–
–
–
–
Face to face
Hard copy
Soft copy or email
Interface between applications
Access to a shared database
…
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
Basic flows
Sales
Finance
Manufacturing
Basic flows
Sales
Finance
Manufacturing
Inventory = common denominator
Finance
Sales
Manufacturing
ERP integration: demand & supply
Production
Sales
Distribution
X
X
Student Dashboard
Types of data 1
•
•
•
•
•
•
•
Volume data (production)
consumption data (raw material, packaging…)
personnel data
maintenance data
time related measurements
productivity data
…
• 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:
–
–
–
–
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
Apple sales process
•
An increasing range of channels
–
–
–
–
–
–
•
Apple stores (eg. ATMac, Penrose Wharf)
Apple.com
Major accounts (Dixons, Curry’s, Fnac, HMV, Virgin, …)
Retailer (Tesco, O2 stores, Argos, …)
Indirect distributor (Russian market?)
…
An increasing range of products
–
–
–
–
–
–
–
–
–
–
–
iTunes
iTunes gift cards
iPods
iTouch
Accessories for all media players and phones
Notebooks
Desktops
iPhones
Service
Software
…
Model names (sales)
Model
iPod touch (8 GB or 16 GB)
iPod classic (80 GB or 160 GB)
iPod nano (3rd generation)
iPod shuffle (2nd generation) (1 GB)
iPod (5th generation late 2006) (30 GB or 80 GB)
iPod nano (Second Generation) (2 GB, 4 GB, or 8 GB)
iPod nano (1 GB)
iPod (5th generation)
iPod (5th generation )
iPod nano (4 GB)
iPod nano (2 GB)
iPod with color display (60 GB)
iPod with color display (20 GB)
iPod photo (30 GB)
iPod mini (4 GB Second Generation)
iPod mini (6 GB Second Generation)
iPod shuffle (512 MB)
iPod shuffle (1 GB)
iPod photo (40 GB)
iPod photo (60 GB)
iPod (20 GB Click Wheel)
iPod (40 GB Click Wheel)
iPod mini
Year-Month
2007-09
2007-09
2007-09
2006-09
2006-09
2006-09
2006-02
2005-10
2005-10
2005-09
2005-09
2005-06
2005-06
2005-02
2005-02
2005-02
2005-01
2005-01
2004-10
2004-10
2004-07
2004-07
2004-01
Scrolling device
multi-touch display
Click Wheel
Click Wheel
n/a
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
n/a
n/a
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Click Wheel
Capacity
8 GB or 16 GB
80 GB or 160 GB
4 GB or 8 GB
1 GB
30 GB or 80 GB
2 GB, 4 GB, or 8 GB
1 GB
60 GB
30 GB
4 GB
2 GB
60 GB
20 GB
30 GB
4 GB
6 GB
512 MB
1 GB
40 GB
60 GB
20 GB
40 GB
4 GB
Ver
1.1.1
1.0.2
1.0.2
1.0.3
1.2.1
1.1.3
1.3.1
1.2.1
1.2.1
1.3.1
1.3.1
1.2.1
1.2.1
1.2.1
1.4.1
1.4.1
1.1.5
1.1.5
1.2.1
1.2.1
3.1.1
3.1.1
1.4.1
Model numbers (manufacturing)
Model
Model #
Model # Model #
10GB
M8709LL/A
M8737LL/A
10GB
M8976LL/A
15GB
M8946LL/A
1GB Black
MA352
1GB White
MA350
1st Generation iPod mini Models
M9160LL/A
M9436LL/A
20GB
M8738LL/A
M8741LL/A
20GB
MA079LL/A
20GB
M9244LL/A
20GB
M9282LL/A
2GB Black
MA099
2GB Silver
MA477
2GB White
MA004
2nd Generation iPod mini Models
M9801LL/A
30GB
M9829LL/A
30GB
M8948LL/A
30GB Black
MA146LL/A
30GB U2 iPod
MA452LL/A
30GB White
MA002LL/A
40GB
M9585LL/A
40GB
M9245LL/A
40GB
M9268LL/A
M8740LL//A
M9460LL/A
M9435LL/A
M9282CH/A
M9282FE/A
M9803LL/A
M9805LL/A
MA002B/A
M9268CH/A
M9268KH/A
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
Why is “one truth” so hard?
•
Eg. Up to date picture of revenue?
–
Easy bit:
•
–
Hard bit:
•
•
•
•
•
•
•
–
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 …
…
Revenue recognition “rules”
What does integration mean?
•
Dearden 72
–
–
–
–
–
–
•
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
–
–
–
–
–
–
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
•
•
•
•
•
•
•
•
Response times
Vulnerability: single point of failure
Limitations on expansion
Dependence on single vendor
Flexibility to change system
…
…
Access to basic information is
complicated
Co-ordination strategies
• Co-ordination consists of:
– Protocols, tasks and decision mechanisms to achieve concerted
action between interdependent units (Thompson, 1967)
– Decomposing goals to activities (Malone & Crowston, 1990)
– People, resources and systems (Hepp & Roman, 07)
• Two key co-ordination strategies:
– Centralisation of decision making (purpose agenda)
– Standardisation of process (efficiency agenda)
• Inherent tension between individual and organisation
• Strategies impact flexibility of organisation differently
• IT only provides means of co-ordination, not reason
Fig 7.2 Control objectives of ERP
undermined (p. 398)
Control
Centralisation
Co-ordination
More analysis potential
Integration
Granularity
Accuracy / consistency
Inflexibility
Deteriorating data integrity
Technical skills required for reporting
Latency
Manual
Fig 7.3 Integration framework (p.400)
Virtual
Measure
Plan
Plan
Plan
Resource
visibility
Physical
Execute
Schedule
Supply
Demand
Performance control