CISB113 Fundamentals of Information Systems Cross Functional Enterprise Systems

Recap Porter’s Five Forces Assess your business or potential business from the perspectives of the 5 forces Buyers (bargaining power) Suppliers (bargaining power) Competitors Substitutes New Entrants

Discussing Porter’s Five Forces (on a private college) Explanation Impact of the forces Buyers The buyers do have choices from so many private colleges that offer similar courses at competitive rates High Suppliers Suppliers for services such as facilities, food, books, manpower are many. The private college have many options and should not have any issues in settling for the best and most suitable choice. Low Competitors There many privates colleges offering similar courses at highly competitive rates as well as extra benefits such as industry certifications, better campus environment etc

Discussing Porter’s Five Forces (on a private college) Explanation Impact of the forces Substitutes Is it possible for people to substitute the type of service and product offered by this private college? People will continue to pursue their education, therefore replacing a degree programme with something else is not very likely to happen. Low New Entrants To open a new private college requires a big investment, license and preparation for the infrastructure. Hence it is not easy for new private colleges to break into the market. So what can we do based on this knowledge ? Identify focus area for improvement Help identify opportunities for strategic IT

The Porter’s Value Chain Support processes Primary Another concept to help identify opportunities for strategic IT Value chain is a network of value-creating processes One activity may affect the cost or performance of others E.g. product design change reduces manufacturing costs & improves reliability, service costs decrease.

Summary of Types of IS Types of IS Description Transaction Processing Systems Automates routine and repetitive tasks that are critical to the operation of the organization e.g. payroll system, customer billing, Point-of-Sale Office Automation Systems Used by data workers for clerical type of works and basic communication e.g. email, word-processing, presentation, desktop publishing Knowledge Management Systems Supports knowledge workers who are responsible for finding or developing new knowledge for the organization and integrating it with existing knowledge e.g. web-based computer aided information seeking, learning management systems

Summary of Types of IS Types of IS Description Management Information Systems These systems access, organize, summarize, and displayed information for producing periodic reports e.g. daily list of employees and the hours they work, or a monthly report of expenses as compared to a budget Decision Support Systems Used by managers to support complex non-routine decisions. e.g . Answering query such as ‘which female permanent employee sells the most product in the last quarter?’ Executives Support Systems Enterprise-wide DSS that help top-level executives (senior management) analyze, compare, and highlight trends in important variables so that they can monitor performance and identify opportunities and problems. Emphasizes graphical displays and easy-to-use user interfaces

Now back to today’s lecture…..

Learning Outcomes At the end of this lesson, you should be able to: Discuss Business Process Re-engineering Describe Cross Functional Enterprise Systems

Cross Functional Business Process Processes that span across several different departments of one business. Advancement in IT results in conversion from functional processes to cross functional processes Many companies today are using IT to develop integrated cross functional enterprise systems Purpose : Reengineer and improve important business process across the enterprise

Business Process Re-engineering Rethinking and redesign of business process Goals : Efficient, Effective, Customer Satisfaction High potential payback vs. high risk Taco Bell created the K-Minus program (Kitchenless restaurant) based on their belief that they are a retail service company, not a manufacturing company. In the new process, meat, beans, corn shells, lettuce, tomatoes and cheese for their products are prepared outside of the restaurant in central commissaries. At the Taco Bell restaurants, the food ingredients that had been prepared will be put together when ordered for customer consumption. Taco Bell cites the following results: greater quality control, better employee morale, fewer employee accidents and injuries (due to preparation task off-site), big savings and more time to focus on the customer business processes. (Hammer and Champy 1993, p 178-179).

Cross Functional Enterprise Systems The above diagram is an example of a business process that must be supported by cross-functional enterprise Information Systems Scenario : A new product development process in a manufacturing company.

Cross Functional Enterprise Systems Enterprise systems focused on accomplishing fundamental business process with involvement of company’s customer, supplier, partner, employees from different departments and stakeholders The key term is “enterprise-wide”

Cross Functional Enterprise Systems (CRM) Customer Relationship Management (CRM) Focuses on acquiring and retaining profitable customers via marketing, sales, and services CRM application integrates all of the primary business activities in the Porter’s Value Chain. Tracks all interactions with the customer from prospect through follow up service and support Customer centric

Cross Functional Enterprise Systems (CRM) Looking from the 4 phases of customer life cycle Marketing : Marketing sends messages to prospect customers, attracting them to buy Customer Acquisition : Selling and buying takes place Relationship management : When prospect customers made order, they become customers who need to be supported Supporting and reselling Loss/Churn : Analyze and Categorize customer, win back high value customer Kroenke, D,M. (2010) Experiencing MIS, 2nd Edition Pearson

Cross Functional Enterprise Systems (CRM) Benefits of CRM Identify and target the best customers Real-time customization and personalization of products and services Track when and how a customer contacts the company Provide a consistent customer experience

Cross Functional Enterprise Systems (CRM) Business benefits of CRM are not guaranteed 50 percent of CRM projects did not produce promised results 20 percent damaged customer relationships Reasons for CRM failure Lack of understanding and preparation Not solving business process problems first No participation on part of business stakeholders involved

Cross Functional Enterprise Systems (SCM) What is Supply Chain? A supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials, and components into a finished product that is delivered to the end customer. Wikipedia.com Comprises of all the businesses and individual contributors involved in creating a product from raw materials to finished merchandise About.com

Cross Functional Enterprise Systems (SCM) Supply Chain Management (SCM) Focuses on developing the most efficient and effective sourcing and procurement processes Fundamentally, supply chain management helps a company Get the right products To the right place At the right time In the proper quantity At an acceptable cost The goal of SCM is to efficiently forecast demand, control inventory, enhance relationships with customers, suppliers, distributors, and receive feedback on the status of every link in the supply chain

Cross Functional Enterprise Systems (SCM) Key Challenges Lack of demand planning knowledge, tools, and guidelines Inaccurate data provided by other information systems Lack of collaboration among marketing, production, and inventory management SCM tools are immature, incomplete, and hard to implement

Cross Functional Enterprise Systems (ERP) Enterprise Resource Planning (ERP) A cross functional enterprise system that integrates the primary value chain activities with human resources and accounting/infrastructure Allows an organization to use a system of integrated applications to manage the business Truly enterprise wide Track customers, process orders, manage inventory, pay employees, and other accounting functions SAP and ORACLE are the major vendors

Cross Functional Enterprise Systems (ERP) ERP Characteristics Provides cross-functional, process view of organization Maintains data in centralized database Offers large benefit but very challenging to implement VERY expensive Scriptcase.net

Cross Functional Enterprise Systems (ERP) Typical Cost of Implementing a New ERP

Cross Functional Enterprise Systems (ERP) The biggest challenge of ERP is Costs and risks Most common causes of ERP failure Under-estimating the complexity of planning, development, training Failure to involve affected employees in planning and development Trying to do too much too fast Insufficient training Insufficient data conversion and testing Over-reliance on ERP vendor or consultants

Test your knowledge Describe Business Process Re-engineering Describe enterprise systems. Describe CRM Describe SCM Describe ERP

Learning Outcomes At the end of this lesson, you should be able to: Discuss Business Process Re-engineering Describe Cross Functional Enterprise Applications

Questions?