Enterprise Information Systems Dr. Nor Zairah Ab.Rahim & Madam Rasimah ( MCM 2573)

Explain how organizations can be structured according to five functions and three management levels Describe how information flows in an organization Distinguish among a transaction processing system, a management information system, a decision support system, and an executive support system Competencies Competencies (Page 1 of 2) Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Distinguish between office automation systems and knowledge work systems Explain the difference between data workers and knowledge workers Competencies Competencies (Page 2 of 2) Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Enterprise Enterprise commonly describes a business or venture of any size. Refer to as large-scale organizational – corporations, universities, hospitals, research laboratories and government organizations.

Enterprise System Enterprise Systems are large-scale organizational systems (people, processes and IT) built around packaged enterprise system software

Information Systems in the Enterprise An information system is a collection of people, procedures, software, hardware, and data. They all work together to provide information essential to running an organization

An Information System

Supports daily, short-term and long-term activities. Some are used exclusively by only one type of department or functional unit within the enterprise. General purpose IS –used by almost any department. Integrated IS/Enterprise System Software – used by multiple departments and facilitate information sharing and communication. An Information System

Information flows vertically and horizontally throughout an organization Information Systems support the natural flow of information within an organization’s structure 5 Functions Management Levels Information Flow Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Organizational Information Flow

Accounting & Finance Marketing Human Resources Production Research (++ Sales, Distribution, Customer Service, IS Dept) Return Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Functions of an Organizational

Management Level (tactical decision) (strategic decision) (operational decision)

Information Flow Each level of management has different information needs and the information flow supports meeting these needs – Top Management Vertical, horizontal & external – Middle Management Vertical & horizontal – Supervisor Vertical-primarily Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved

Information Flow

General Purpose Information System (Enterprise Wide System)

General Purpose Information Systems (enterprise-wide systems)

TPS is an information system that captures and processes data from day-to-day business activities. A transaction is an individual business activity. Examples of transactions are deposits, payments, orders and reservation. i. Transaction Processing Systems (TPS) Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

When you make a purchase with a credit card, you are using a transaction processing system i. Transaction Processing Systems (TPS)

Tracks operations Creates and records events in databases Also called data processing systems (DPS) One of the most essential uses of a TPS are accounting activities accounting activities i. Transaction Processing Systems (TPS) Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Accounting Activities TPS Sales order processing Accounts receivable Inventory and purchasing Accounts payable Payroll General ledger Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved

Generates accurate, timely and organized information. Used to support middle managers Integrates data across areas Produces predetermined reports – Periodic /detailed reports – Summary report – Exception reports ii. Management Information Systems (MIS) Management information system report Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

List of transactions Consolidates data with totals, tables or Graph for managers to quickly review Data outside normal conditions (reorder etc) Part No DescriptionCustomersQuantity Purchased 93814Dorm RefrigeratorUnion Bookstore University Bookstore Hot PlateEddes Rentals Middleton Furnishings Closet organizerEddes Rentals Lilac Imports 3434 Part No DescriptionQuantity Sold Supplier 93814Dorm refrigerator 7Van Electric 88732Hot Plate9Chen Imports 30021Closet organizer 7Wilson Ent. Part No DescriptionQuantity On Hand Reorder 93814Dorm refrigerator Closet organizer710 Detailed Report Summary ReportException Report

DSS is a flexible tool that helps users to analyze data and make decisions. Enables managers to get answers to problems – Produces reports that do not have a fixed format Has four parts Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. iii. Decision Support System

A variety of DSS – OLAP (online analytical processing), EIS (executive information system) Instead of buying DSS, users can use their productivity software to perform decision support Example, using Microsoft Access to create what-if scenario Query results for SALES < QUOTA Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. iii. Decision Support System

User – Someone who makes decisions System software – Operating system – Easy to use Data – Internal data – External data Decision models 4 Parts of a DSS Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Strategic models - assists top level management and long-range planning Tactical models - assists middle-management, financial and sales promotional planning Operational models - assists lower-level managers Decision Models Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

1-27 Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Ms Chip, our Decision Support System tells Us we have 2,000 shirts to sew by tomorrow. Since that is our sewing machine… Would you like to do some overtime!

iv. Executive Support Systems (ESS) (ESS) is a reporting tool (software) that allows you to turn your organization's data into useful summarized reports. These reports are generally used by top management level. Quick access to reports coming from all company levels and departments such as billing, cost accounting, staffing, scheduling, and more. Provides immediate access to a company's performance Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved

iv. Executive Support Systems (ESS) Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved

Summary of Information System

Other Information Systems Information workers – Data workers Secretaries Clerks – Knowledge workers Engineers Scientist Office automation systems (OASs) – Project managers – Videoconferencing systems Knowledge work systems (KWSs) – Use specialized systems – CAD/CAM Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved

A Look to the Future Oftentimes, More Information is Too Much Information? Information overload – Could have a negative effect on getting work done – According to recent studies is the major source of information overload How to handle – Be selective – Remove – Protect – Be brief – Stop spam – Don't respond Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved

Name and discuss the five common functions of most organizations. Discuss the roles of the three kinds of management in a corporation. What are the four most common computer-based information systems? Describe the different reports and their roles in managerial decision making. What is the difference between an office automation system and a knowledge work system? Discussion Questions Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Enterprise System Software (Integrated System Software)

Packaged application software that integrates data, processes and IT Include deep knowledge of business practices, influence process design within client companies Are generic products that must be configured, customised and integrated with other IS to meet business needs Enterprise-system Software

Enterprise System Software Process Integration Overview Software Integration Worksheet Integrated processes Integrated Software

ERP Enterprise Resource Planning CRM Customer Relationship Management SCM Supply Chain Management EAI) Enterprise Application Integration DW Data Warehousing Enterprise System Software

i. Enterprise Resource Planning Systems MCM Automates and integrates business processes Shares common data and practices across the entire enterprise Produces and accesses information in a real-time environment Represents an expanded effort to integrate standardized record-keeping that will permit information sharing among different areas of an organization in order to manage the system more effectively (Deloitte Consulting 1999)

Integrates all data and processes of an organization into a unified system. A typical ERP system will use multiple components of computer software and hardware to achieve this objective. A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules. ERP systems typically attempt to cover all basic functions of an organization, regardless of the organization's business or charter. i. ERP Systems (cont..)

Standard Modules : Financial Management Production Management Stores (Inventory) Management Sales and Marketing Management Human Resource Management Fixed Asset Management Customer Relationship Management Maintenance and Repair Management i. ERP Systems (cont..)

ERP

 Sales and Distribution  Human Resources  Product Configuration  New Product Engineering  Cost Management  Quality Management  Supply Management  Product Planning and Classification  Hours Expense and Control  Project Requirements Planning  Sales Quotations  Distribution Requirements Planning MCM  Transportation Fleet Management  Electronic Data Interchange  Sales and Marketing Information  Inventory Location Control  Invoicing  Project Estimation  Packing Control  Sales and Purchase Control  Capacity Requirements Planning  Sales Contracts  Project Budget ERP in the Real World

MCM Organizations today confront new markets, new competition and increasing customer expectations. Along with those scenarios, organizations have moved into a time of slow growth and smaller profit margins. This has put a tremendous demand on organizations to: Lower total costs in the complete supply chain Shorten throughput times Reduce stock to a minimum Improve Product quality Provide more reliable and better service to the customer Efficiently coordinate demand, supply and production Why ERP System?

Reduced redundancy in entering data Allow everyone to share same source of info Allow everyone to access same source info Allow everyone to see and update instantly Identify problem more quickly Create single version about financial, revenue and sales numbers to CEO and BOD Allow standardization of business processes Allow standardization of enterprise's info MCM Advantages of ERP

Takes a lot of effort and time Difficult to implement the system Very expensive Requires a lot of training MCM Disadvantages of ERP

How ERP can improve a company’s business performance? How long will an ERP project takes? What will ERP fix in my business? Will ERP fit the way I do business? What does ERP really cost? When will I get payback from ERP? What are the unforeseen cost of ERP? How do you configure ERP software? How do companies organize their ERP projects? MCM Common Questions of ERP

The Hidden Costs of ERP Training Integration and Testing Data conversion Consultants Replacing Your Best and Brightest Implementation Teams Can Never Stop Post-ERP Depression MCM

MCM ERP System in Information Processing Space

Issues with ERP Systems  Implementation  Critical success factors  Variations in process models  Achieving benefits  Knowledge transfer  Cultural issues  Future scenarios for ERP system s MCM

How and Why of 'ERP Failure‘

Cost overrun while implementing Schedule go haywire Quality is falling short of user expectations Lack of preparation ERP requires massive efforts in short span of time Consultants from implementation partners arrived to start “as is” study of existing business process and the company cannot spare the key users to spend adequate time with the consultant. Needs good planning and scheduling Ensure that right person is available at the right time Senior – experience – person should spend time to spell out the business processes and requirements If the ERP implementation is initiated without proper planning, trouble is inevitable How & Why of ERP Failure

Lack of top management commitment Faulty selection process Ignorance of the human aspect A negative attitude or a negative mind-set in the user community can adversely affect the success rate of the ERP package » Training and education to create the right mind-set and a positive attitude towards ERP is required » Fully integrated systems demand change in the work pattern How & Why of ERP Failure

Too high expectation Unrealistic expectation will create problem » Find out what ERP will NOT do » User who actually have to key-in business transactions often complain about slow response for screen updates and longer time to enter the data » Check infrastructure – RAM, CPU speed, etc. Too much customization ERP packages are tightly integrated Making change in source code at one location may result in snowballing effect in other modules within ERP. New version comes with new features – but if too much changes are done, you can not accept new version….. Keep the customization minimum – do only ‘essential customization’ How & Why of ERP Failure

Improper implementation Most cases the software package is OK Wrong implementation is responsible for unsatisfactory results Mistakes in implementing a good ERP package turns dreams into nightmare and results in considerable investment and efforts going down the drain How & Why of ERP Failure

SAP Maximo MIMS Peoplesoft Baan ERP module 6 Page 57 ERP Products Evaluation

Length of ERP vendor in business Proven manufacturing expertise Functional fit with the Company's business processes Degree of integration between the various components of the ERP system Flexibility and scalability Complexity; user friendliness Quick implementation; shortened ROI period Ability to support multi-site planning and control Technology; client/server capabilities, database independence, security Availability of regular upgrades ERP module 6 Page 58 Attributes for ERP Software Evaluation

Amount of customization required Local support infrastructure Availability of reference sites Total costs, including cost of license, training, implementation, maintenance, customisations Hardware requirements ERP module 6 Page 59 Attributes for ERP Software Evaluation

ii. Customer Relationship Management MCM –CRM system manages information about customers, interaction with customers, past purchases, and interest. –Customer relationship management mainly is used across sales, marketing, and customer service department.

iii. Supply Chain Management MCM All facilities, functions, activities, associated with flow and transformation of goods and services from raw materials to customer, as well as the associated information flows All facilities, functions, activities, associated with flow and transformation of goods and services from raw materials to customer, as well as the associated information flows An integrated group of processes to “source,” “make,” and “deliver” products An integrated group of processes to “source,” “make,” and “deliver” products

Copyright 2006 John Wiley & Sons, Inc. Supply Chain Illustration

Copyright 2006 John Wiley & Sons, Inc Supply Chain for Denim Jeans

Copyright 2006 John Wiley & Sons, Inc Supply Chain for Denim Jeans (cont.)

iv. Enterprise Application Integration MCM –EAI is the use of software and computer systems architectural principles to integrate a set of enterprise computer applications. –SCM, CRM and other applications typically cannot communicate with one another in order to share data or business rules. –EAI is the process of linking such applications within a single organization together in order to simplify and automate business processes to the greatest extent possible, while at the same time avoiding having to make sweeping changes to the existing applications or data structures.

v. Data Warehousing MCM –A huge database that stores and manages the data required to analyze historical and current transactions. –Software such as ERP and Manufacturing Resource Planning store and access data in the data warehouse.

A data warehouse receive data from a variety of sources, including company transactions, The Internet and web site visitor click streams