Download kroenke_umis8e_inppt07

Chapter 7
Processes, Organizations, and
Information Systems
“How much money does a system own?”
• Who do we sell it to, and how do we induce them to buy?
• Doctors?
– Care about medicine and operations, and some care most
about expensive operations. If they cared about exercise,
they’d own health clubs.
• Insurance companies?
– Exercise doesn’t prevent disease.
– When you get in good shape, you last longer, and their care
expenses increase.
Copyright © 2016 Pearson Education, Inc.
7-2
Who Will Pay?
• Health clubs
• Employers
• Revenue selling ads to health clubs and
manufacturers
• Social media–driven
• Can PRIDE support 10,000 people spinning at
the same time?
Copyright © 2016 Pearson Education, Inc.
7-3
Study Questions
Q1: What are the basic types of processes?
Q2: How can information systems improve process quality?
Q3: How do CRM, ERP, and EAI support enterprise processes?
Q4: How do information systems eliminate problems of information silos?
Q5: What are the elements of an ERP system?
Q6: What are the challenges of implementing and upgrading enterprise
information systems?
Q7: How do inter-enterprise IS solve the problems of enterprise silos?
Q8: 2025?
Copyright © 2016 Pearson Education, Inc.
7-4
Q1: What Are the Basic Types of Processes?
Business Process
with Three Activities
Copyright © 2016 Pearson Education, Inc.
7-5
How Do Structured Processes Differ from Dynamic
Processes?
Copyright © 2016 Pearson Education, Inc.
7-6
How Do
Processes
Vary by
Organizational
Scope?
Copyright © 2016 Pearson Education, Inc.
7-7
Characteristics of Information Systems
Copyright © 2016 Pearson Education, Inc.
7-8
Q2: How Can Information Systems Improve
Process Quality?
• Process efficiency
– Ratio of process outputs to inputs
• Process effectiveness
– How well a process achieves organizational
strategy
• How Can Processes Be Improved?
– Change process structure
– Change process resources
– Change both
Copyright © 2016 Pearson Education, Inc.
7-9
How Can Information Systems Improve Process
Quality?
• Performing an activity
– Partially automated, completely automated
• Augmenting human performing activity
– Common reservation system
• Controlling data quality process flow
– Ensure data complete and correct before
continuing process activities
Copyright © 2016 Pearson Education, Inc.
7-10
Q3: How Do Enterprise Systems Eliminate the Problem of
Information Silos?
• What are the problems of information silos?
– Data are duplicated
– Data inconsistency
– Data isolated
– Business processes disjointed
– Lack of integrated enterprise information
– Inefficiency: decisions are made in isolation
– Increased cost for the organization
Copyright © 2016 Pearson Education, Inc.
7-11
Problems Created by Information Silos
Copyright © 2016 Pearson Education, Inc.
7-12
How Do Organizations Solve the Problems of
Information Silos?
• Integrate data
into single
database
• Revise
applications
• Allow isolation,
manage to
avoid problems
Copyright © 2016 Pearson Education, Inc.
7-13
An Enterprise System for Patient Discharge
Copyright © 2016 Pearson Education, Inc.
7-14
Q4: How Do CRM, ERP, and EAI Support
Enterprise Processes?
• Business Process Reengineering
– Integrated data, enterprise systems create stronger,
faster, more effective linkages in value chains
– Difficult, slow, and exceedingly expensive
– Key personnel determine how best to use new
technology
– Requires high-level and expensive skills and
considerable time
Copyright © 2016 Pearson Education, Inc.
7-15
Emergence of Enterprise Application Solutions
• Inherent processes
– Predesigned procedures for using software
products
– Based on “industry best practices”
• Customer relationship management (CRM)
• Enterprise resource planning (ERP)
• Enterprise application integration (EAI)
Copyright © 2016 Pearson Education, Inc.
7-16
Customer Relationship Management (CRM)
• Suite of applications, a database, and a set of
inherent processes
• Manage all interactions with customer through four
phases of customer life cycle:
– Marketing, customer acquisition, relationship
management, loss/churn
• Intended to support customer-centric organization
Copyright © 2016 Pearson Education, Inc.
7-17
Customer
Life Cycle
Copyright © 2016 Pearson Education, Inc.
7-18
CRM Applications
Copyright © 2016 Pearson Education, Inc.
7-19
ERP
Applications
Copyright © 2016 Pearson Education, Inc.
7-20
Pre-ERP Information System: Bicycle
Manufacturer
Copyright © 2016 Pearson Education, Inc.
7-21
ERP Information Systems
Copyright © 2016 Pearson Education, Inc.
7-22
ERP Enabled Sales Dashboard
Copyright © 2016 Pearson Education, Inc.
7-23
Enterprise Application Integration (EAI)
•
•
•
•
Connects system “islands.”
Enables communicating and sharing data.
Provides integrated information.
Provides integrated layer over the top of existing
systems while leaving functional applications “as is.”
• Enables a gradual move to ERP.
Copyright © 2016 Pearson Education, Inc.
7-24
Design and Implementation for the Five
Components
Virtual
Integrated
Database
Copyright © 2016 Pearson Education, Inc.
7-25
So What? Who Fixes a Workflow Problem?
• A computer programmer? No.
• A network engineer? No.
• Database administrator? No.
• Someone with knowledge of the business and, if
workflow involves an information system,
someone who is knowledgeable and comfortable
working with technical people.
• You, maybe with help of a business analyst.
Copyright © 2016 Pearson Education, Inc.
7-26
Ethics Guide: Dialing for Dollars
• Assume you are a salesperson.
• Been a bad quarter. VP of sales authorized a 20%
discount on new orders if customers take delivery
prior to end of quarter so order can be booked for this
quarter.
• VP says “Start dialing for dollars, and get what you
can. Be creative.”
• You identify your top customers to offer discount deal.
Copyright © 2016 Pearson Education, Inc.
7-27
Q5: What Are the Elements of an ERP System?
•
•
•
•
•
Hardware
ERP Application programs
ERP Databases
Business process procedures
Training and Consulting
Copyright © 2016 Pearson Education, Inc.
7-28
True ERP Have Application that Integrate:
(http://www.erpsoftware360.com/erp-101.htm)
•
•
•
•
•
Supply chain
Manufacturing
CRM
Human resources
Accounting
Copyright © 2016 Pearson Education, Inc.
7-29
ERP Solution Components
• ERP Application Programs
– Configurable vendor applications
• ERP Databases
– Trigger
 Computer program within database to keep
database consistent when certain conditions arise
• Stored Procedure
 Enforces business rules
Copyright © 2016 Pearson Education, Inc.
7-30
ERP Solution Components (Cont’d)
• Business Processes and Procedures
– Adapt to predefined, inherent processes and
procedures, or design new ones?
• Training & Consulting
– Training to implement
– Top management support, preparing for change, dealing
with resistance
– Training to use
• Industry-Specific Solutions
Copyright © 2016 Pearson Education, Inc.
7-31
Example of SAP Ordering Business Process
Blueprint
Copyright © 2016 Pearson Education, Inc.
7-32
Example of SAP Ordering Business Process
Blueprint (cont’d)
Copyright © 2016 Pearson Education, Inc.
7-33
Characteristics
of Top ERP
Vendors
Copyright © 2016 Pearson Education, Inc.
7-34
Q6: What Are the Challenges of Implementing and
Upgrading Enterprise Information Systems?
Copyright © 2016 Pearson Education, Inc.
7-35
Q7: How Do Inter-enterprise IS Solve the
Problems of Enterprise Silos?
Copyright © 2016 Pearson Education, Inc.
7-36
Inter-enterprise
PRIDE System
Copyright © 2016 Pearson Education, Inc.
7-37
Q8: 2025?
• ERP vendors and customers provide application and systems
using the cloud
• Warehouse worker on loading dock and shipping department carry
mobile devices to process ERP and other enterprise applications
• Managers, decision makers, and other knowledge workers have
similar applications on their own phones, or other mobile devices
• Exercise equipment, machines, robots, and other forms of factory
automation will generate and consume data
• ERP vendors adapt software to particular requirements of 3D
manufacturing
Copyright © 2016 Pearson Education, Inc.
7-38
Security Guide: One-Stop Shopping
• Information systems design involves constant trade-offs
– Trade-off eliminating problems of information silos against
security threat of having all data in one repository
• Under what circumstances is an enterprise system considered
the solution?
• Under what circumstances are enterprise systems a source of
information silos?
• When machine side of IS has limits and flaws, human side
picks up the slack
Copyright © 2016 Pearson Education, Inc.
7-39
Using the Guide: ERP and the Standard, Standard
Blueprint
• Organization adapts processes to standard blueprints
• If all firms in an industry use same business processes,
how can a firm gain competitive advantage?
• How will innovation occur?
• Does “commoditized” standard blueprint prevent
sustaining a competitive advantage?
Copyright © 2016 Pearson Education, Inc.
7-40
Active Review
Q1: What are the basic types of processes?
Q2: How can information systems improve process quality?
Q3: How do CRM, ERP, and EAI support enterprise processes?
Q4: How do information systems eliminate the problems of information silos?
Q5: What are the elements of an ERP system?
Q6: What are the challenges of implementing and upgrading enterprise
information systems?
Q7: How do inter-enterprise IS solve the problems of enterprise silos?
Q8: 2025?
Copyright © 2016 Pearson Education, Inc.
7-41
Case Study 7: A Tale of Two Inter-organizational IS
• Access CT
– Enrolled 208,301 and was a model for state-run
exchanges
• Cover Oregon
– Spent $250 million, clearly inoperable and
exchange’s board of directors decided to stop
development and utilize the federal exchange
Copyright © 2016 Pearson Education, Inc.
7-42
Healthcare Exchange
Interorganizational IS
Copyright © 2016 Pearson Education, Inc.
7-43
Access CT
• Only 12 months until Exchange went live
• Counihan more than 30 years of experience working
in insurance industry, key player in development of
Massachusetts healthcare system
• Hire senior staff with deep experience in insurance
Copyright © 2016 Pearson Education, Inc.
7-44
Access CT (cont'd)
• Wadleigh director of application development for
CIGNA, a health services organization
• Primary assignment—hire and manage an outside
contractor to develop exchange website and
supporting backend code and manage implementation
of exchange information system
• Created a project plan and began search for contractor
to develop the site
Copyright © 2016 Pearson Education, Inc.
7-45
Cover Oregon
• Did not hire a supervising contractor for project,
instead took an active role in software’s development
• Agency suffered high employee turnover, and had
difficulty hiring and keeping qualified personnel
Copyright © 2016 Pearson Education, Inc.
7-46
Cover Oregon (cont'd)
• OHA hired software development company to create major
software components
– Two of three finalists dropped out at last minute, leaving
Oracle Corporation a sole source vendor.
– Oracle negotiated time and materials contracts instead of
contract for specific deliverables at specific prices.
– When problems developed, Oracle was paid tens of millions
of additional money for change orders on same time and
materials basis.
Copyright © 2016 Pearson Education, Inc.
7-47
Cover Oregon (cont'd)
• Oregon legislature required state to hire a quality assurance
contractor, Maximus Corporation, to oversee project
• Maximus reported significant problems involving divided control,
lack of clear requirements, inappropriate contracting
methodology, lack of project planning, and lack of progress
• Unclear who got those reports or what was done with them
• Head of OHA project threatened to withhold Maximus’ payment
• End result: Exchange development failed
Copyright © 2016 Pearson Education, Inc.
7-48
Copyright © 2016 Pearson Education, Inc.
7-49