Management Information Systems Week 3 Major IS Systems

Finding strategic Advantage with IS Systems Review of Competitive Strategic Alternatives

Functional vs Strategic Systems Most information systems are functional – they are necessary to carry out basic business operations, but provide little competitive advantage. Examples: Web sites Email systems Billing systems Inventory systems

Strategic Systems Strategic systems are designed to provide a competitive advantage for the company. Examples: Customer Relationship Management (CRM) Supply Chain Management (SCM) Enterprise Resource Planning (ERP)

Functional vs Strategic A strategic system gives your organization an advantage over competing organizations. For a ministry, a strategic system would give your ministry an advantage over ministries in other countries. Example – Does the Higher Education Ministry have any information systems that give it an advantage over other Gulf countries?

Example Strategic System Customer Relationship Management (CRM) Goals: Identify potential customers Record their connections to the company Record the company’s interactions with them

CRM Finding customers Web search monitoring Email key word searches Customer inquiries Former customer lists Sales person contact – “cold calls”

Recording Customer contacts CRM Recording Customer contacts Warrantee cards Service needs Complaints Repurchases Upgrades

CRM Recording Company contacts Service problems Complaint resolutions Repurchase contacts Customer quality information (income, credit rating) What we need to know – what was the issue, who did they speak with, what was the resolution?

CRM What CRMs exist in Oman?

Example Strategic System Supply Chain Management (SCM) Premises: Inventory is evil Just in time is crucial Supplier “partnerships” improve quality and costs

Supply Chain Management (SCM) Inventory is evil because – It takes up money It takes up space It can be damaged and stolen It can become obsolete/spoiled

Supply Chain Management (SCM) How do you reduce inventory? Production planning -- know what you will product when Improved quality – with fewer defects, fewer extras are needed Better product design – design to use the same parts in multiple products (cars are a good example) Logistics – reliable, timely transportation systems reduce the need for “safety stock”

Supply Chain Management (SCM) Information System support Production planning – ERP systems Improved quality – statistical process control Better product design –Computer aided design (CAD) systems Logistics – scheduling and monitoring systems (where is the truck?)

Supply Chain Management (SCM) Restaurant support Production planning – what sales will you see – and when? Improved quality – control wastage, make preparation simpler Better product design – fewer menu items, or fewer ingredients Logistics – scheduling and monitoring systems - Where should distribution centers be located? Connection to suppliers – guaranteed quality and delivery. Help with inventory monitoring and management

Example Strategic System What is an ERP? Enterprise – wide: Designed to cover every aspect and every location of your business in a single system. "Client-server:" Individual computers (clients) are hooked to a network where much of the data they need and the programs they need are stored on a larger computer (server) and are transferred (downloaded) to the individual computers as needed.

ERP basics What is an ERP? Three-tier: Because of the huge size of enterprise systems, they have a client-server-database architecture, also known as "three-tier." Every action takes three steps -- client to server to database (and back). “Real – time connectivity:” A network is required to move this data between these three places, and to each of the clients in your company (and to each location around the US or around the world). speed out of an ERP. “Real – time data” The orders you type in are immediately sent to the database and known to everyone in the company (production, accounting, etc). The minute production updates the completion of an order, billing and accounting know what has happened.

ERP basics Why an ERP? The old system was dying anyway (common reason given in 1999) Systems built locally are getting harder and harder to keep current (especially as old IT people retire or leave) Information is too hard to find in the current system Information is out of date in the current system Information is in multiple forms and multiple places and cannot be reconciled (e.g. Vanilla at Nabisco) You need to share data across the organization A purchased system will be better quality than a locally made system Most other companies in your industry have moved to an ERP, so you feel you need to keep up.

ERP Sample screens

ERP Sample screens

ERP Sample screens

ERP Sample screens

ERP Sample screens

ERP Sample screens

ERP Sample screens

ERP Sample screens

ERP Implementation Issues ERP Problems ERP Implementation Issues “Phased implementation” – new software is not given to the entire company at once, but is given to one department at a time, one location at a time, or delivered with one feature at a time. Alternatives are “parallel implementation” where both the old software and new software are used together until it is clear the new software works well, and “Cut over” or “big bang” where the new system is readied and used all at once. “Customization” – modifications are made to the purchased software, usually to give it additional features, or to make it look and function more like an older system with which employees are already familiar. The opposite of customized is “vanilla,” meaning no changes are permitted and the company learns to use the software as delivered from the software vendor. Implications of this decision come in updates, initial costs, training costs, and product support.

ERP Implementation Issues ERP Problems ERP Implementation Issues “Configuration” -- off-the-shelf software usually has ways of setting various aspects of the software. These include things like which screens will be visible to which employees, will your unit of measure be pounds or kilos, will currencies be in dollars or Euros, will billing cycles be 30 or 60 days, etc. “Data conversion” – data sitting in existing databases usually has a particular form. For example, part numbers may take the form W3-46-sku433 (warehouse 3, bin 46, stock keeping unit 433). Often when an ERP is installed, it is meant to combine multiple operations and multiple databases which might have stored data items in different forms. So all the existing numbers would have to be converted – either manually, or automatically.

Ongoing Competition A strategic system becomes a functional system when it no longer provides any competitive advantage. For example, if every company has an ERP, then there is no advantage to having one – unless – your system runs better or is used more effectively. Question – how might you use a CRM better than other companies?

What are 5 ideas from today’s class worth remembering? Class summary What are 5 ideas from today’s class worth remembering?

Next Week Hardware Basics