1. IS 466 ADVANCED TOPICS IN INFORMATION SYSTEMS LECTURER : NOUF ALMUJALLY 10 – 10 – 2011 College Of Computer Science and Information, Information Systems Department

2. Lessons Learnt from Lecture5  The main organisational element of FI - CO - MM – SD  Procurement process  3-Way Match for Payment

3. Objectives SD module Importance of measuring success? Facets of ES success: Cameron and Whetton 7 questions of evaluating ES success What success measurement models are available?

4. Sales and distribution Module

5. Sales and distribution Mechanisms to execute the business process used in the selling, shipping, and billing of products and services. It includes the following information and processes: Customer Master and Material Master data Sales Orders Deliveries Pricing Billing Credit Management

6. Components of Sales and Distribution Sales and Distribution (SD) Sales Support Sales Credit Mgmt. Shipping Transport Billing Foreign Trade Sales Information System Master Data

7. Sales Order Entry Post Goods Issue Invoice Customer Pick Materials Receipt of Customer Payment Pack Materials Check Availability Sales Order Process (Order-to-Cash)

8. Measuring Enterprise Systems Success, Impact and Performance

9. Importance of IT performance measurement 9 “If you cannot measure it – you cannot manage it. Without systematic measurements, managers have very little to guide their actions other than their own experience and judgement”

10. Enterprise Systems – Horror stories 10 Geneva Steel declared bankruptcy after going ‘live’ with a 8 Million SAP system FoxMeyer ‘invested’ USD 65 Million on SAP and declared bankruptcy SAP implementation at HERSHEY (project cost – USD 112 Million, 19% loss of production and delays during the Halloween season). 2000-Q3 profit increased by 23%

11. Importance of measuring IT performance 11 1. It is the most important question for IT executives? 2. It’s a BIG investment  A typical ERP installation has a total cost of approximately USD 15 Million  By 2006 ERP market = USD 70 Billion

12. Importance of measuring IT performance 12 3. Despite the big investments, there are drawbacks of ES Deloitte Consulting (Survey of 100 companies) The study identified that about one third (37%) of the companies reported significant and quantifiable benefits from their ES investments. 15% of the companies studied, believe that they have received ‘nothing’ out of their ES. 25% of the organizations have received modest results of the ES, and they are not positive about gaining higher benefits. The remaining 23% had been unable to report any specific benefits

13. Importance of measuring IT performance 13 4. Allocate future investments in Information Technology (Do you need to upgrade – do you need to reengineer business process) 5. Understand stakeholder needs and perspectives (Way of grouping people in the organisation) 7. Simply to understand the benefits of IT (ES)

14. Measuring ES Success / Performance 14 ES generate Financial (Quantitative) and Non-Financial (Qualitative) results, making it difficult to clearly see the gains of the system, thus a comprehensive measurement method is needed, to evaluate the performance of the ES

15. 15 2 Methods of measuring ES success There are two main methods Objective measures  Mainly based on financial indicators  Examples: Return on Investment, Net present Value Perceptual measures  Based on attitudes, perceptions of individuals  Examples:, Accuracy of Information, Individual performance improvements

16. ES success facets

17. Cameron and Whetton 7 questions of evaluating ES success 17 Cameron and Whetton (1983) identified 7 questions that need to be answered when evaluating ES success and organizational effectivenss. These questions are: 1. What is the perspective? 2. What is the domain of activity? 3. What is the level of analysis? 4. What is the purpose of evaluation? 5. What is the time frame employed? 6. What types of data are to be used? 7. Against what referent is effectiveness to be judged?

18. Q1. From whose perspective is effectiveness being judged? 18 Independent stakeholder Individual user A group of people Project manager IT management Owner/senior management Society

19. Q2. What is ‘the system’ being evaluated? 19 part of an information system (e.g., GUI) one particular system (e.g., the HR module) a type of system (e.g., ERP) all IT applications in an organization an inter-organizational information system an IT implementation process (e.g., ASAP) the IT function in an organization

20. Q3. What is the level of analysis? 20 Organizational level analysis and/or Functional level analysis

21. Q4. What is the purpose of the evaluation? 21 Planning Management Improvement

22. Q5. What is the time frame is employed? 22 Short term (e.g., “on time and within budget” for implementation projects) Long term

23. Q6. What type of data to be used? 23 Objective measures  Tangible figures that can be measured using formulas or calculations  Mainly based on financial indicators  Example: Cost - Reduce errors Subjective measures  intangible measures  They are evaluated through methods such as interviewing staff for their opinions and views of the system.  Example: Staff Dissatisfaction - Customer Satisfaction

24. Q7. Against what referent is effectiveness to be judged? 24 Compared to: some other organization (benchmarking) some ideal level of performance past performance of the organization other desirable characteristics

25. ES Success measurement models

26. 26 Enterprise Systems success models IT Balanced Scorecard Delone and McLean (1992) IS success model Shang and Seddon ERP Benefits framework Organizational performance frameworks Malcolm Baldridge National Quality Award European Foundation for Quality Management Deming Application Prize IT Capital gain using Tobin’s Q

27. 1- Balanced scorecard

28. Balanced Scorecard The Balanced Scorecard (BSC) is a technique developed by Kaplan and Norton (1992). Balanced scorecard – A strategic planning and management system enables organizations to clarify their vision and strategy and translate them into action

29. Balanced Scorecard Balanced scorecard views the organization from four perspectives  Financial  Customer  Internal business process  Learning and growth

30. Balanced Scorecard (General) 30

31. Example of The ERP implementation Balanced Scorecard

32. 2- Delone and McLean’s IS Success Model

33. The Original Delone and McLean’s IS Success Model In 1992, DeLone and McLean proposed a model of IS success as shown below:

34. The Original Delone and McLean’s IS Success Model McLean’s IS success model identified six interrelated dimensions of IS success:  System Quality: measure of the information processing system itself  Information Quality: measure of information system output  Information Use: measure of recipient consumption of the output of an information system  User Satisfaction: measure of recipient response to the use of the output of an information system  Individual Impact: measure of the effect of information on the recipient  Organizational Impact: measure of the effect of information on organizational performance.

35. The Updated Delone and McLean’s IS Success Model As the IS success model that was originally proposed needed further validation, DeLone and McLean also proposed an updated model.

36. The six dimensions of the updated model were 1. System quality 2. Information quality 3. Service quality 4. Intention to use, Use 5. User satisfaction 6. Net benefits The Updated Delone and McLean’s IS Success Model

37. The differences between the two models The primary differences between the original and updated models included: 1. They have added the service quality variable to show the importance of service.  IS move from production function to production & service function => importance of service quality 2. Adding a measure for user attitude, i.e. intention to use 3. Impacts on whom? Individuals, groups, org., industry, economy => Net Benefits dimension with contextual definition

38. Questions ?? 38

39. What should you do this week ? Review the lectures. Do the Tutorial and submit it online: ccis466@gmail.com Due date: Friday. Quiz: Next Monday (17-10-2011) If you have any question related to the assignment please ask me during the tutorial, by email or during the consultation hours. My consultation hours: Wed (10 – 12 )