Lecture 6: Enterprise Systems

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Study Questions 2

Q1 What is legacy system approach and

the problems of information silos?
Q2 What is enterprise system approach?
How to improve business processes
through Enterprise Systems?
Q3 What is ERP?
Q4 What is CRM?
Q5 What is SCM?
Q6 What are the challenges when
implementing new enterprise systems?
 3

Q1 What is legacy system

approach and the problems of
information silos?
Information Systems in Enterprises 4

Source: textbook[2], page 280

Legacy System Approach 5

Source: textbook[2], page 290

Information Silos 6

 An information silo exists when data is

isolated in separated information
systems
How Do Information Silos Arise?
 Data isolated in islands of automation
 Different department goals
 Different personal and workgroup
needs
 Duplicate data as organization grows
 7
Problems Created by
Information Silos

Source: textbook[1], page 212

 8

Q2 What is enterprise system

approach? How to improve
business processes through
Enterprise Systems?
Enterprise System Approach 9

Source: textbook[2], page 289

Supporting Business Processes 10

 Internally focused systems

 Support functional areas, business processes,
and decision making within an organization
 New information (value) is added at every step

Source:
textbook[2],
page 290
Supporting Business Processes 11

 Externally focused systems (interorganizational systems)

 Coordinate business activities with customers, suppliers,
business partners, and others who operate outside the
organization
 Streamline the flow of information between companies

Source:
textbook[2], page
291
Internally Focused Applications: 12

Value Chain
 Flow of information through a set of business
activities
 Core activities: functional areas that process inputs
and produce outputs
 Support activities: enable core activities to take place

Source: textbook[2],
page 283
Value chain - Core Activities 13

 Inbound logistics activities

 Receiving and stocking raw materials, parts, and products
 Operations and manufacturing activities
 Order processing and/or manufacturing of end products
 Outbound logistics activities
 Distribution of end products
 Marketing and Sales activities
 Presale marketing activities
 Customer service activities
 Post-sale activities
Value chain - Support Activities 14

 Administrative activities
 Support of day-to-day operations (for all functional
areas)
 Infrastructure activities
 Implement hardware and software needed
 Human resource activities
 Employee management
 Technology development activities
 Design and development of applications to support the
primary activities
 Procurement activities
 Purchasing of goods and services (inputs into the
primary activities)
Externally Focused Applications— 15

Value System
 Coordination of multiple value chains

Source: textbook[2], page 285

Externally Focused Applications— 16

Value System
 Information Flows in a Value System
 Upstream information flow: information
received from another company
 Downstream information flow: information
produced by a company and sent to another
organization
 17

Q4 What is CRM?
Customer Relationship Management 18

(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.
 19

Customer Life Cycle

Source: textbook[1], page 218

CRM Applications 20

 components exist for each stage of the

customer life cycle

Source: textbook[1], page 219

 21

Q3 What is ERP?
Enterprise resource planning (ERP) 22

 ERP: a suite of applications called

modules, a database, and a set of
inherent processes for consolidating
business operations into a single,
consistent, computing platform.
 An ERP system is an information system
based on ERP technology
 primary purpose: integration
Enterprise resource planning (ERP) 23

 An ERP system integrate:

 Supply chain (procurement, sales order processing,
inventory management, supplier management, and
related activities)
 Manufacturing (scheduling, capacity planning, quality
control, bill of materials, and related activities)
 CRM (sales prospecting, customer management,
marketing, customer support, call center support)
 Human resources (payroll, time and attendance, HR
management, commission calculations, benefits
administration, and related activities)
 Accounting (general ledger, accounts receivable,
accounts payable, cash management, fixed asset
accounting)
 See more: ERP Guide
 24
Pre-ERP Information System:
Bicycle Manufacturer

Source: textbook[1], page 221

 25

ERP Information Systems

Source: textbook[1], page 222

ERP Enabled Sales Dashboard 26

Source: textbook[1], page 223

What Are the Elements of an ERP 27

Solution?
ERP Application programs
ERP Business process procedures
ERP Databases
ERP Training and Consulting
ERP Solution Components 28

 ERP Application Programs

 Configurable vendor applications.
 ERP Databases
 Trigger
 Computer program within the database that keeps
database consistent when certain conditions arise.
 Stored Procedure
 Enforces business rules.
ERP Solution Components 29

 ERP Business Processes and

Procedures
 Adapt to predefined, inherent processes and procedures,
or design new ones?
 ERP Training & Consulting
 Training to implement.
 Top management support, preparing for change, dealing
with resistance.
 Training to use.
Top ERP vendors 30

Source: textbook[1], page 228

Top ERP Vendors and Customer Size 31

Source: textbook[1], page 228

 32

Q5 What is SCM?
Supply Chain Management 33

 Upstream activities
 Improvement of business processes spanning
organizational boundaries
 Focus on upstream information flows
 Acceleration of product development
 Reduction of costs of raw materials procurement
 Collaboration with suppliers (supply network)
 Ability to compete more effectively in the market
place
 Cost reduction
 Increased responsiveness to market demands
Supply Chain Management 34

 Supply chain: the producers of supplies that a

company uses
 Suppliers work with additional suppliers
 Supply network
 Problems with not collaborating effectively
 Information gets distorted
 Forecast errors add up, leading to degradation of
profitability and poor customer service
 “Bullwhip effect”
 Goals of improving upstream information flows
 Accelerate product development
 Reduce costs associated with procuring raw materials
Supply Network 35

Source: textbook[2],
page 315
Developing an SCM Strategy 36

 SCM efficiency and effectiveness need to be

balanced
 Efficiency—cost minimization

 Effectiveness—customer service maximization

 Tradeoffs—Supply chain strategy should

match overall competitive strategy

Source: textbook[2],
page 321
Emerging SCM Trends 37

 Enterprise portals—B2B marketplace

 Access point to proprietary information
 Productivity gains and cost savings

 Distribution portals
 Products from single
supplier to many buyers
 Procurement portals
 Procurement of products
between single buyer
and multiple suppliers
Source: textbook [2]
Example: Distribution Portal 38

 Automation of business processes between

supplier and multiple customers
 Before transaction
 During transaction
 After transaction
 Trading exchanges
 Equilibrium between
buyers and sellers
 Vertical markets

Source: http://www.dell.com
Procurement Portal 39

 Automation of business processes between a

buyer and multiple suppliers
Trading Exchanges 40

 Small companies don’t have funds for SCM

 Trading exchanges provide a solution
 Operated by third-party vendors
 Revenue model
 Commission for each transaction
 Usage and association fees
 Advertising
 Many buyers and many sellers can come
together
 Popular trading exchanges:
 www.scrapsite.com (steel)
 www.paperspace.com (paper)
 www.sciquest.com (medical equipment)
Key Technologies for Enhancing SCM 41

 Extensible Markup Language (XML)

 Specifies rules for tagging elements
 Specifies how information should be used and
interpreted
 <UPC>…. </UPC>
 Useful for sharing data across applications over
the web
 Possible replacement for EDI
 Customizable
 XML variations
 Extensible Business Reporting Language (XBRL)
 Publishing of financial information
Radio Frequency Identification 42

(RFID)
 Replacement for standard bar codes
 Transceiver and antenna
 Line-of-sight reading not necessary
 RFID tags can contain more information than bar
codes
 Diverse usage opportunities
 Scanning can be done from greater distance
 Passive tags—range of few feet
 Active tags—range of hundreds of feet

Source: METRO AG.

Use of RFID in Supply Chain 43

Management
Pallet of inventory processed through an RFID
gate

Source: METRO AG.

 44

Q6 What are the challenges

when implementing new
enterprise systems?
What Are the Challenges of 45

Implementing and Upgrading

Enterprise Information Systems?

Source: textbook[1], page 230

Summary 46

Q1 What is legacy system approach and

the problems of information silos?
Q2 What is enterprise system approach?
How to improve business processes
through Enterprise Systems?
Q3 What is ERP?
Q4 What is CRM?
Q5 What is SCM?
Q6 What are the challenges when
implementing new enterprise systems?
Additional Resources 47

 What is ERP
 What is CRM
 Salesforce CMR
 What is Supply chain management?
 Coca Cola Supply chain
 RFID
 XBRL