1. Enterprise Information Summer I 2005-2006 LECTURE 5

2. Agenda Enterprise Planning
Enterprise Resource Planning (ERP) & Enterprise Systems
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3. Enterprise Planning Stimulating the Future
Enhancing the value of information done at the level of the people doing the work — not at the executive level
A form of “gap analysis”
What information do we have?
What information would we like?
What alternative do we have for getting the information that we don’t have?
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4. Assessing the Gap Alternatives
EASE: Is the alternative easy to realize?
POPULAR: Is it likely that the people involved will accept it?
CHEAP: Are the costs for implementing the alternative reasonable?
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5. How do we start?
Modeling the information that is deemed most important used now
Is there additional information that would be useful?
How would it be useful?
Then ask the Ease/Popular/Cheap questions
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6. Hospital Information Model
Current important Information Assets
runs
has
has
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7. Focus on Patient Care (Scenario 1)
Coordinating care of repeat visitors
Key – finding relationships between visits
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8. Possible Information Assets: Patient Care
GOAL – Providing educational info to patients for self-managing conditions
MEANS – Finding patterns in frequency of conditions/treatments
??? – ease / popular / cheap
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9. Focus on Department & Facilities (Scenario 2)
Looking at how well space is used and cost effectiveness
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10. Possible Information Assets: Department and Facilities
GOAL – Better space utilization and cost effectiveness
MEANS --
Revenues from visits
Expenses from running facilities
??? –
ease / popular / cheap
Net revenues
leases
janitorial
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11. Possible Information Assets: Grants and Research (Scenario 3)
Goal – Expanding the role of research
Means – Gathering information on grants, funding agencies
??? – ease / popular / cheap
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12. University Information Model
Problem: Demand not known after class closed
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13. Possible Information Assets: Enrollment Activity (Scenario 1)
Goal – Determining Demand
Means – Tracking Requests
??? – ease / popular / cheap
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14. Possible Information Assets: Larger Scope (Scenario 2)
Expansion to information about Degree Programs for Course Demand
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15. Increased Information Value Planning
Prioritization Tiers
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16. Prioritizing Potential Benefit
Info easy to access?
Info accurate?
People trained to use?
Policies encourage effective use?
Positive results for users?
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17. Measuring the Effect Assumptions: Types of measures
Goals are better than no goals
Specific goals are better than vague goals
What gets measured tends to get done
Types of measures
Quantitative – ROI – usually contrived
Qualitative – Power of info assets to add value
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18. Measuring the Effect Lagging Indicators what has happened
appears precise
c/be inappropriate, when?
Leading Indicators match direction sought helps keep ship on course
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19. Areas to measure for Balanced Picture
Customer – what is our relationship
Internal business processes (3 basics)
Getting and paying for the inputs
Converting inputs to salable product
Delivering product/receiving payment
Learning and growth areas (R&D)
Financial stakeholders
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20. Exercise (next week)
You are the IT steering committee that will decide which hospital project to fund.
From last weeks readings and lecture detail the steps that you would take in determining which hospital project to do.
Based on the previous session readings and lecture (Session 6) 1. What two questions would you ask to find out which one should be implemented? 2. How would you use the prioritization tiers decision tree? 3.  How would you use the Prioritizing Potential Benefit tree? 4.  What is the major problem with lagging indicators when developing new software?
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21. Enterprise Resource Planning (ERP) and Enterprise Systems
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22. Enterprise Resource Planning
A structured approach to optimizing a company’s internal value chain.
Packaged, application software (modules) designed to address common business functions (across industries)
Evolved, in part, from MRP concepts
Typically, vendors assume some customization and integration will be required
Vendors also assume system infrastructure exists (including: RDB, client, servers, browsers, network, etc.)
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23. Evolution of ERP
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24. Common Features On-line system with no traditional batch interfaces
One database for all data
Clear definition of every data items
Efficient support of back-office transaction processing; weak in decision support and analytical support
Templates for processes of best practices
Client/server computing, network infrastructure, RDB, GUI, Web Enablement
Proprietary and tools (e.g. ABAP/4 for SAP R/3)
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25. Components of Traditional ERP
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26. Advantages Tight integration among all modules
Single view of the business -- same db, consistent reporting and analysis
Process orientation: streamline processes
Rich functionality : templates & reference model
Flexibility: current and new environment
Scalability: small group vs. enterprise
Expandability: modular vs. total systems
Interoperability with 3rd party solutions
Rapid implementation: “vanilla” version
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28. Business Engineering (BE) vs. Process Engineering (BPR)
BPR -- Process driven, use IT to automate existing or redesigned process. Difficult to find/build software for new process.
BE -- utilizes IT for designing/redesigning processes, or entire value chains.
Describe, simulate, or model organization.
BE / Enterprise software impose its logic on organization
Templates of best practices, e.g., SAP R/3 Reference Model
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29. The ERP Market: Key Decisions and Drivers
Build vs. buy
Single vendor vs. best of breed
Drivers
Year 2000 & EMU (Euro)
The promise (integration, flexibility, etc.)
Control maintenance costs (infrastructure, application)
Re-engineering, shared services
Competition
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30. Rapid ERP Deployments Advantages Disadvantages
Up and running on ERP quickly
Less staff time spent on project
Less business disruption
Can be lower cost over time
Disadvantages
Difficult to customize software to match business needs
Small core group involved in implementation
Insufficient understanding of business context and process
Require more up-front preparation costs
Limited support from IT staff
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31. Hidden Costs of ERP
Training --software, process, roles, skills, 10-15% of total project budget
Integration and Testing--process oriented
Data Conversion -- data cleansing, outsourcing?
Data Analysis--Warehousing?
Consultants -- disengagement, knowledge transfer
Total Cost of Ownership 3x-10x, cost per user?
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32. Post-ERP Activities First Stage (3-9 months)
Productivity decline, redefining jobs, establishing new procedures, fine-tuning ERP software
Second Stage (6-18 months)
Skills development, structural changes, process integration, and add-on apps
Third Stage (1-2 years)
transformation
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33. ERP Business Benefits (expected)
Operational
Cost reduction, cycle time reduction, productivity improvement, quality improvement, customer services improvement
Managerial
Better resource management, improved decision making and planning, performance improvement
Strategic (?)
Support business growth, support business alliance, build cost leadership, General product differentiation, build external linkage, Worldwide expansion, enabling e-commerce
Infrastructure -- enterprise data backbone
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34. More on Business Benefits
IT Infrastructure
Build business flexibility for current and future changes
IT cost reduction
Increased IT infrastructure capability
Organizational
Support organizational changes
Facilitate business learning
Empowerment
Build common visions
Change employee behavior
Better employee morale and satisfaction
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35. ERP Value: Gap between Expected vs. Actual vs. Potential
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36. Traditional ERP vs. Extended Enterprise Systems
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