[MU630] 008. Enterprise Information System

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arianto.muditomo@2018
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• Session #1: Information System in Business
• Session #2: IT Strategic Planning
• Session #3: Business Information System
• Session #4: Business Intelligence & Decision Support
• Session #5: Ethics, Privacy and Security
• Session #6: e-Business and e-Commerce
• Session #7: Knowledge Management
• Session #8: Enterprise Information System
Referrences:
1) Baltzan, Paige 2014. Business Driven Information Systems. 4th Edition. New York: McGraw-Hill.
2) Pearlson, Keri E. And Saunders Carol S. 2013. Managing and Using Information Systems: A Strategic Approach. 5th Ed.
Danvers: John Wiley & Sons.
3) Turban, Efraim, Volonino, Linda, and Wood, Gregory 2013. Information Technology for Management. 8th Edition.
Hoboken: John Wiley & Sons.
4) Turban, Efraim, Strauss, Judy, and Lai, Linda 2016. Social Commerce: Marketing and Technology Management. Hidelberg:
Springer.
5) Xu, Jun and Quaddus, Mohammed 2013. Managing Information Systems: Ten Essential Topics. Amsterdam: Atlantis Press.
6) Turban, Rainer: Introduction to Information Systems Enablig and Transforming Business 2nd Ed., John Wiley & Sons.2009
7) Kenneth C. Laudon and Jane P. Laudon, Management Information Systems, Managing The Digital Firm, Pearson: Prentice
Hall 2006
8) Business information systems : technology, development and management for the e-business / Paul Bocij, Andrew
Greasley and Simon Hickie. – Fifth edition., © Pearson Education Limited 2015

LEARNING OUTCOME
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§ Explain the potential executive, managerial, and operational support of enterprise
systems, their success factors, and reasons for failure.
§ Describe enterprise resource planning (ERP) systems and how ERP investments are
justified.
§ Describe supply chain management (SCM) networks and solutions.
§ Explain the collaborative planning, forecasting and replenishment (CPFR) functions related
to SCM.
§ Describe customer relationship management (CRM) systems and their role in customer
acquisition, retention, and customer lifetime value.

§ What is Enterprise System?
§ What is Enterprise Resource Planning System?
§ What flow are managed by Supply Chain Management system?
§ What do you know about CPFR?
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Systems that help managers and companies improve their performance by enabling
them to seamlessly share data among departments and with external business
partners.
Enterprise systems allow workers to access and analyze real-time information and
transaction processes across the entire organization.
4
identifythe
problemsto
besolved,
thegoalsto
beachieved,
thetypeof
supporttheIS
istoprovide.

5
Enterprise System
Type of IS
Goals
Problems
ERP SCM
CRM
CPFR
KM
ERP is the software infrastructure that links an enterprise’s internal
applications and supports its external business processes
ERP systems are commercial software packages that integrate
business processes, including supply chains, manufacturing, finance,
human resources, budgeting, sales, and customer service.
SCM software refers to software that supports the steps in the supply chain—
manufacturing, inventory control, scheduling, and transportation.
SCM improves decision making, forecasting, optimization, and analysis.
CPFR is a set of data-driven business processes
designed to improve the ability to predict and
coordinate with supply chain partners.
With CPFR, suppliers and retailers collaborate in
planning and demand forecasting in order to
ensure that members of the supply chain will
have the right amount of raw materials and
finished goods when they need them.
CRM creates a total view of customers to
maximize share-of-wallet and profitability.
Also, it is a business strategy to segment
and manage customers to optimize their
long-term value.
KM helps organizations identify,
select, organize, disseminate, and
share information and expertise.
Enterprise resource planning - Supply chain management -
Collaborative planning, forecasting, and replenishment -
Customer relationship management - Knowledge management

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High maintenance costs.
•Maintaining and upgrading legacy systems are some of the most difficult challenges facing
CIOs (chief information officers) and IT departments.
Business value deterioration.
•Technological change weakens the business value of legacy systems that have been
implemented over many years and at huge cost.
Inflexibility.
•Monolithic legacy architectures are inflexible. That is, these huge systems cannot be
easily redesigned to share data with newer systems, unlike modern architectures.
Integration obstacles.
•Legacy systems execute business processes that are hard- wired by rigid, predefined
process flows. Their hardwiring makes integration with other systems such as CRM and
Internet-based applications difficult and sometimes impossible.
Lack of staff.
•IT departments find it increasingly difficult to hire staff who are qualified to work on
applications written in languages no longer used in modern technologies.

IMPLEMENTATION CHALLENGES
AND BEST PRACTICES
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Implementing an enterprise system is challenging because it
requires extensive changes in processes, people, and
existing systems.
Three required changes are:
1. Redesign of business processes.
2. Changes in how people perform their jobs.
3. Integration of many types of information systems.

From a technology perspective, ERP is the software infrastructure that links an
enterprise’s internal applications and supports its external business processes
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• Bring silos of information together to enable managers to
really understand what is going on
• Expand a company’s reach beyond its internal networks
to its suppliers, customers, and partners
• Provide the information access, integrated business processes,
and modern technology platform necessary to become and
remain competitive
• Support all, or a great majority, of a company’s business
functions and processes

KEY OF ERP SUCCESS DATA INTEGRATION
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v Implementing an enterprise system may be a competitive necessity for
companies with data management problems.
v The greater the number of applications and databases, the greater the
complexity of data management because of the numerous interfaces needed
to exchange data
Database #A Database #B
Database #C
Integrated Db
Processing
System

10
FROM STAND-ALONE
DATA SILOS TO AN
INTEGRATED
ENTERPRISE SYSTEM
Source: [3] p.292

INTERFACES WITH
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Enterprise Resource Planning (ERP)
Layer.
The core ERP functions are integrated
with other systems or modules that are
bolted-on, including SCM, PLM, CRM,
and BI.
The ERP interfaces with legacy
applications through an enterprise
application integration (EAI) layer and
with external business partners through
a B2B gateway
Enterprise Application
Integration Layer.
The ERP interfaces with legacy
applications through an enterprise
application integration (EAI)
layer. EAI is middleware that
connects and acts as a go-between
for applications and their business
processes.
B2B Gateway Layer. Business-to-
business integration (B2Bi) is vital
to ensure the efficient, accurate,
and timely flow of data across
internal ISs and external business
partners.

The journey that a product travels, starting with raw material suppliers, then to
manufacturers or assemblers, then forward to distributors and retail sales
shelves, and ultimately to customers, is its supply chain.
Supply chains vary significantly depending on the type, complexity, and
perishability of the product
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Procurement of
materials
Transformation of
materials into
intermediate or
finished products
Distribution of
finished products
to retailers or
customers
Recycling or
disposal in a
landfill

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Supplier & Sub
Supplier
Upstream
Distributor;
Customer
DownstreamInternal Chain
Information Flow
Supply chains involve the flow of materials, data, and money

MATERIALS DATA MONEY
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Material or
product
flow
Information
flow
Financial
flow
This is the movement
of materials and
goods from a
supplier to its
consumer.
For example,
chipmaker Intel
supplies computer
chips to its customer
Dell. Dell supplies its
computers to end
users.
This is the movement of
detailed data among
members of the supply
chain, for example, order
information, customer
information, order
fulfillment, delivery
status, and proof-of-
delivery confirmation.
This is the transfer
of payments and
financial
arrangements; for
example, billing
payment schedules,
credit terms, and
payment via
electronic funds
transfer (EFT).

is the efficient management of the flows of material, data, and
money in the supply chain
SCM software refers to software that supports the steps in the supply
chain—manufacturing, inventory control, scheduling, and
transportation.
SCM software concentrates on improving decision making, forecasting,
optimization, and analysis.
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§ There is a lot of uncertainty in product demand.
§ The most common solution to supply chain uncertainties is to build inventories, or safety stock,
as insurance. High levels of safety stock increase the costs of holding inventory.
§ The concepts of continuous replenishment,VMI, and collaboration evolved into the more
comprehensive model known as collaborative planning, forecasting, and replenishment (CPFR).
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CPFR is a set of data-driven business processes designed to improve
the ability to predict and coordinate with supply chain partners.

CPFR MAIN COLLABORATION ACTIVITIES
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Analysis
Monitoring outcomes of
planning and execution,
assessing results and key
performance metrics,
sharing insights with
partners, and adjusting
plans to improve results
Strategy & Planning
Setting the ground rules
for the collaborative
relationship and
specifying the product mix
Demand & Supply Mgt
Forecasting consumer demand
and order and shipment
requirements over the planning
horizon
Execution
Performing activities, such
as placing orders,
shipping and delivery,
receiving, stocking,
tracking sales transactions,
and making payments
Strategy &
Planning
Demand &
Supply
Management
Execution
Analysis

CUSTOMER RELATIONSHIP MANAGEMENT (CRM) SYSTEMS
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Every company depends on customers for revenues and
growth.
Marketing managers run campaigns, promotions,
commercials, and advertisements to attract new customers,
or to increase sales to existing customers, or to do both.
Attracting new customers is expensive;
Newly acquired customers are unprofitable until they
have purchased enough products or services to exceed
the cost to acquire and service them.

§ Build greater customer loyalty and
therefore greater profitability per customer
§ Deter customer attrition (loss of a customer)
§ Acquire new customers who are most likely to
become profitable
§ Up-sell(sell more profitable products/services) or
cross-sell (sell additional products/ services) to
unprofitable customers to move them to a profit
position
§ Reduce inefficiencies that waste advertising dollars
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“Those companies who know their customers, understand their needs, and communicate
intelligently with them will always have a competitive advantage over those that don’t.”
~ Peter F. Drucker ~

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Figure 10.11 CRM. Source: [3] p.308

SOME OF THE MAJOR ISSUES RELATING TO
CRM FAILURES
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v Difficulty in measuring and valuing
intangible benefits.There are only a few
tangible benefits to CRM.
v Failure to identify and focus on specific
business problems that the CRM can
solve.
v Lack of active senior management (non-
IT) sponsorship.
v Poor user acceptance.This can occur for a
variety of reasons, such as unclear
benefits—that is, CRM is a tool for
management, but it may not help a rep
sell more effectively—and usability
problems.
v An attempt to automate a poorly defined
business process in the CRM
implementation.

END OF SEASON #8
POST LEARNING OUTCOME
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§ What is Enterprise System?
Enterprise systems are information systems that support several departments and/or the
entire enterprise.The most notable are ERP, which supports supply chains, and CRM
§ What is Enterprise Resource Planning System?
ERP is the software infrastructure that links an enterprise’s internal applications and supports
its external business processes
§ What flow are managed by Supply Chain Management system?
Supply chains involve the flow of materials, data, and money
§ What do you know about CPFR?
CPFR is a set of data-driven business processes designed to improve the ability to predict
and coordinate with supply chain partners.

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✓done
Contact
Perbanas Institute Jakarta
Jl. Perbanas, Karet Kuningan
Setiabudi, Jakarta, 12940
Telp: 021 525 2533 / 522 2501-4
Fax: 021 522 8460 / 522 3064
email: contact@perbanas.id
• Session #1: Information System in Business
• Session #2: IT Strategic Planning
• Session #3: Business Information System
• Session #4: Business Intelligence & Decision Support
• Session #5: Ethics, Privacy and Security
• Session #6: e-Business and e-Commerce
• Session #7: Knowledge Management
• Session #8: Enterprise Information System

[MU630] 008. Enterprise Information System

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[MU630] 008. Enterprise Information System