In as long as mation Systems Within Organizations Chapter 7 Learning Objectives Understan
Bahar, Elena, Midday Host has reference to this Academic Journal, PHwiki organized this Journal In as long as mation Systems Within Organizations Chapter 7 Learning Objectives Underst in addition to the differences between functional applications in addition to integrated cross-departmental process-based systems. Know the features in addition to purposes of functional in as long as mation systems as long as human resources, accounting, sales in addition to marketing, operations, in addition to manufacturing. Underst in addition to the problems caused by the isolation of functional systems. Underst in addition to how value chains in addition to business process redesign led to the development of integrated applications. Know the features in addition to functions of three types of integrated systems: customer relationship management (CRM), enterprise resource planning (ERP), in addition to enterprise application integration (EAI). History of IS Within Organizations
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Calculation Systems The first in as long as mation system was the calculation system. Its purpose was to relieve workers of tedious, repetitive calculations. The first systems computed payroll; applied debits in addition to credits to general ledger, balanced accounting records, in addition to kept track of inventory quantities. These systems produced very little in as long as mation. Functional Systems Functional systems facilitated the work of a single department or function. These systems grew as a natural expansion of the capabilities of systems of the first era. Payroll exp in addition to ed to become human resources. General ledger became financial reporting. Inventory was merged into operations or manufacturing. These new functional areas added features in addition to functions to encompass more activities in addition to to provide more value in addition to assistance. The problem with functional applications is their isolation. Functional applications are sometimes called isl in addition to s of automation. Integrated, Cross-Functional Systems In this era, systems are designed not to facilitate the work of a single department or function. The objective is to integrate the activities in an entire business process. Since these business activities cross department boundaries, they are referred to as cross-departmental or cross-functional systems. The transition from functional systems to integrated systems is difficult. Integrated processing requires many departments to coordinate their activities. Most organizations today are a mixture of functional in addition to integrated systems. To successfully compete internationally, organizations must achieve the efficiencies of integrated cross-department process-based systems
Typical Functional Systems Human Resources Systems Accounting in addition to Finance Systems
Sales in addition to Marketing System Operations Systems Manufacturing Activities Supported by In as long as mation Systems
Inventory Systems In as long as mation systems facilitate inventory control, management, in addition to policy. Inventory applications track goods in addition to materials into, out of, in addition to between inventories. Today most systems use UPC bar codes to scan product numbers as items move in in addition to out of inventories. In the future, radio frequency identification tags (RFID) will be in widespread use. An RFID is a computer chip that transmits data about the container or product to which it is attached. Inventory management applications use past data to compute stocking levels, reorder levels, in addition to reorder quantities in accordance with inventory policy. Just-in-time (JIT) inventory policy seeks to have production inputs (both raw materials in addition to work in process) delivered to the manufacturing site just as they are needed. By using JIT policy, companies are able to reduce inventories to a minimum. The Problems of Functional Systems Functional systems provide tremendous benefits to the departments that use them; however, they are limited due to operating in isolation. With isolated systems: Data are duplicated because each application has its own database Business processes are disjointed Lack of integrated enterprise data Inefficiency Competitive Strategy in addition to Value Chains When Michael Porter wrote the now-classic Competitive Advantage in the mid-1980s his ideas laid the groundwork as long as solving the problems of isolated in as long as mation systems. Porter defined in addition to described value chains, which are networks of business activity that exist within an organization. Porter also developed a model of competitive strategies that helps organizations choose which in as long as mation systems to develop.
The Value Chain Value in the Porter model is the total revenue that a customer is willing to spend as long as a product or service. Value is stressed rather than cost because an organization that has a differentiation strategy may intentionally raise costs in order to create value. Margin is the difference between cost in addition to value. Value Chain ModelPrimary Activities Each stage of the generic chain primary activities accumulates costs in addition to adds value to the product. The net result is the total margin of the chain that is the difference between the total value added in addition to the total costs incurred. The generic value chain must be adopted to specific business ( as long as example, your university or place where you work). Value Chain ModelSupport Activities The support activities in the generic value chain contribute indirectly to production, sale, in addition to service of the product which includes: Procurement Technology Research Firm infrastructure
Linkages in the Value Chain Linkages are interactions across value activities. Linkages are important sources of efficiencies in addition to are readily supported by in as long as mation systems. MRP in addition to MRP II are functional systems that use linkages to reduce inventory costs. Business Process Design The idea of the value chain as a network of value-creating activities became the foundation of a movement called business process design, or sometimes business process redesign. The central idea is that organizations should not automate or improve existing functional systems. Rather they should create new, more efficient, business processes that integrate the activities of all departments involved in a value chain. The goal was to take advantage of as many activities of all departments involved in a value chain. Challenges of a Business Process Design Process design projects are expensive in addition to difficult. Highly trained systems analysts interview key personnel from many departments in addition to document the existing system as well as one or more systems alternatives. Managers review the results of the analysts activity, usually many times, in addition to attempt to develop new, improved processes. The new in as long as mation systems are developed to implement those new business processes. Changes in process design may have to take place be as long as e the new system (project) is completed. Greater challenges can occur such as employees resistance to change. An organization that embarks on a business process design project does not know ahead of time how effective the ultimate outcome will be. Some businesses were successful in their process design activities, but many others failed.
Benefits of Inherent Processes When an organization acquires, say, a business application from Siebel Systems, the processes as long as using the software are built-in or inherent processes. In most cases, the organization must con as long as m its activities to those processes. If the software is designed well, the inherent processes will save the organization the substantial, sometimes staggering, cost of designing new processes itself. Licenses To some, when business licenses cross-departmental software, the primary benefit is not the software, but the inherent processes in the software. Licensing an integrated application not only saves the organization the time, expense, in addition to agony of process design, it also enables the organization to benefit immediately from the tried in addition to tested cross-departmental processes. Disadvantage The inherent processes may be very different from existing processes in addition to thus require the organization to change substantially. Such change will be disruptive to ongoing operations in addition to very disturbing to employees. Customer Relationship Management Customer relationship management (CRM) is the set of business processes as long as attracting, selling, managing, in addition to supporting customers. The difference between CRM systems in addition to traditional functional applications is that CRM addresses all activities in addition to events that touch the customer in addition to provides a single repository as long as data about all customer interactions. CRM systems store all customer data in one place in addition to thus make it possible to access all data about the customer. Some CRM systems include activities that occur at the customers site. The components as long as each stage of the customer life cycle are: Solicitation Lead Tracking (presale) Relationship management (postsale) In as long as mation systems that support solicitation include email applications in addition to organizational Web sites. Additionally, some in as long as mation systems support traditional direct mail, catalog, in addition to other solicitations. The Customer Life Cycles Source: Douglas MacLachlan, University of Washington.
Organizational Web Site in CRM Organizational Web site is an increasingly important solicitation tool. Web addresses are easy to promote in addition to remember. Once a target prospect is on the Web site, product descriptions, use cases, success stories, in addition to other solicitation materials can be provided easily. The cost of distributing these materials via the Web is substantially less than the cost of creating in addition to distributing printed materials. Many Web sites require customer name in addition to contact in as long as mation be as long as e releasing high-value promotional material. CRM Centered on Integrated Customer Database Enterprise Resource Planning Enterprise resource planning (ERP) integrates all of the organizations principal processes. ERP is an outgrowth of MRP II manufacturing systems, in addition to the primary ERP users are manufacturing companies. The first in addition to most successful vendor of ERP software is SAP (SAP AG Corp., headquartered in Germany).
ERP Characteristics ERP takes a cross-functional, process view of the entire organization. With ERP, the entire organization is considered a collection of interrelated activities. ERP is a as long as mal approach that is based on documented, tested business models. ERP applications include a comprehensive set of inherent processes as long as all organizational activities. SAP defines this set as the process blueprint in addition to documents each process with diagrams that use a set of st in addition to ardized symbols. ERP is based on as long as mally defined procedures, organizations must adapt their processing to the ERP blueprint. If they do not, the system cannot operate effectively, or even correctly. With ERP systems, organizational data are processed in a centralized database. The process of moving from separated, functional applications to an ERP system is difficult, fraught with challenge, in addition to can be slow. The switch to an ERP system is very costly, not only because of the need as long as new hardware in addition to software, but also due to the costs of: Developing new procedures Training employees Converting data Other developmental expenses ERP Benefits The processes in the business blueprint have been tried in addition to tested over hundreds of organizations. The processes are always effective in addition to often very efficient. Organizations that convert to ERP do not need to reinvent business processes. By taking an organization-wide view, many organizations find they can reduce their inventory dramatically. With better planning, it is not necessary to maintain large buffer stocks. Items remain in inventory as long as shorter periods of time, sometimes no longer than a few hours or a day. ERP helps organizations reduce lead times. Data inconsistency problems are not an issue because all ERP data are stored in an integrated database. ERP-based organizations often find that they can produce in addition to sell the same products at lower costs due to: Smaller inventories Reduced lead times Cheaper customer support Implementing an ERP System The first task is to model the current business processes. Managers in addition to analysts compare these processes to the ERP blueprint processes in addition to note the differences. The company must then find ways to eliminate the differences by either: Changing the existing business process to match the ERP process Altering the ERP system SAP blueprint contains over a thous in addition to process models. Organizations that are adopting ERP must review those models in addition to determine which ones are appropriate to them. The organizations compare the ERP models to the models developed based on their current practices. Once the differences between the as-is processes in addition to the blueprint have been reconciled, the next step is to implement the system. Be as long as e implementation starts, users must be trained on the new processes, procedures, in addition to use of the ERP system features in addition to functions. The company needs to conduct a simulation test of the new system to identify problems. The organization must convert its data, procedures, in addition to personnel to the new ERP system. Because so much organizational change is required, all ERP projects must have full support of the CEO in addition to executive staff.
Reflections GuideERP in addition to the St in addition to ard, St in addition to ard Blueprint Designing business processes is difficult, time consuming, in addition to very expensive. Highly trained experts conduct seemingly countless interviews with users in addition to domain experts to determine business requirements. ERP vendors such as SAP have invested millions of labor hours into business blueprints that underlie their ERP solutions. These blueprints consist of hundreds or thous in addition to s of different business processes. Example, processes as long as hiring employees, acquiring consumable goods, etc. ERP vendors have developed software solutions that fit their business-process blueprints. In theory, no software development is required at all if the organization can adapt to the st in addition to ard blueprint of the ERP vendor. Most organizations choose to modify their processes to meet the blueprint, rather than the other way around. From a st in addition to point of cost, ef as long as t, risk, in addition to avoidance of future problems, there is a huge incentive as long as organizations to adapt to the st in addition to ard ERP blueprint. SAP was the only true ERP vendor, but other companies have developed in addition to acquired ERP solutions as well. Because of the competitive pressure across the software industry, all of these products are beginning to have the same sets of features in addition to functions. All of this is fine as far as it goes, but it introduces a nagging question: If, over time, every organization tends to implement the st in addition to ard ERP blueprint, in addition to if, over time, every software company develops essentially the same ERP features in addition to functions, then wont every business come to look just like the other business How will organizations gain a competitive advantage if they all use the same business processes How will a company distinguish itself Does the use of commoditized st in addition to ard blueprints mean that no company can sustain a competitive advantage
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