COMM 205 Introduction to Management Information Systems

Transcription

1 COMM 205 Introduction to Management Information Systems Introduction to Enterprise Systems and Technologies Winter 2017 Term 1 Learning Objectives For discussion 1. Explain the purposes of Transaction Processing Systems (TPS) and its relationship with other information systems. 2. Describe Enterprise Resource Planning (ERP) systems and their associated benefits and challenges. (Source: What are the advantages and disadvantages of self-service kiosks? Are there any other improvements you would suggest for McDonald s or other restaurants? 2017 Y.M. Cheung Y.M. Cheung 4

2 Learning Objective 1 Explain the purposes of Transaction Processing Systems (TPS) and its relationship with other information systems. What are Transaction Processing Systems A transaction is any business event that generates data worth being captured and stored in a database. Student registration, sales order processing, flight booking, funds transfer, etc. Transaction processing system (TPS) supports the monitoring, collection, storage and processing of data generated by each of the organization s basic business transactions. The data is input to the organization s database Y.M. Cheung Y.M. Cheung 6 How TPS Manage Data TPS must handle high volumes of data, avoid errors and provide a highly secure and stable environment. How TPS Manage Data (cont d) The database has to be protected from errors resulting from overlapping or concurrent updates. The database has to be protected against inconsistencies arising from system failure. A transaction must be reversible. An audit trail of transaction flow must be available Y.M. Cheung Y.M. Cheung 8

3 Performance Major Features of TPS System response time is critical in TPS. System performance is usually measured by the number of transactions they can process in a given period of time. Availability The system must be available whenever it is needed. System availability is the percentage of time that a given system is active and working. Acceptable Uptime (%) Average Downtime / Month 95.0 % 36 hours 99.0 % 7 hours 99.9 % 43 minutes % 4 minutes % 26 seconds Data Integrity Major Features of TPS (cont d) Data integrity refers to the overall completeness, accuracy and consistency of data. It aims to prevent unintentional changes to information. Ease of Use The system should be simple for users to understand, protect them from data-entry errors as much as possible, and allow them to easily correct their errors. Modular Growth The system should be capable of growth at incremental costs, rather than requiring a complete replacement. It should be possible to add, replace or update hardware and software components without shutting down the system Y.M. Cheung Y.M. Cheung 10 TPS and Other Types of Information Systems Learning Objective 2 Expert System (ES) Executive Information System (EIS) Decision Support System (DSS) Describe Enterprise Resource Planning (ERP) systems and their associated benefits and challenges. Management Information System (MIS) Transaction Processing System (TPS) 2017 Y.M. Cheung Y.M. Cheung 12

4 Traditional IS in an Organization The World before ERP for a Manufacturing Firm Functional / Information Silos Fulfillment Manufacturing No Integration among application systems! Order Entry Payroll Credit Accounts Receivable 2017 Y.M. Cheung Y.M. Cheung 14 What Problems Does an ERP System Solve? An information silo is isolated data stored in separated information systems. Data redundancy. Difficulties in consolidating meaningful and accurate reporting. Time consuming, labor intensive, incomplete and often inaccurate. Time-lag of performance data that impedes effective planning and proactive decision-making. Outdated, manual and paper-intensive processes Data entry redundancies and errors. Inefficient use of employee resources. Order-to-delivery and production delay. What Problems Does an ERP System Solve? (cont d) Global expansion complicated due to software integration issues Difficulties gathering data to track performance of each new location and its impact on the company as a whole. Inefficiencies managing complex international customer and vendor relationships Y.M. Cheung Y.M. Cheung 16

5 What is ERP? Enterprise Resource Planning (ERP) Often called enterprise system. Adopts a business process view of the overall organization. Integrates all departments and functions throughout an organization into a single information system so that employees can make enterprise-wide decisions by viewing enterprisewide information on all business operations. ERP in an Organization ERP evolved to include administrative, sales, marketing, human resources processes Y.M. Cheung Y.M. Cheung 18 Accounting/Financials A/R and A/P Asset accounting Cash management General ledger Profitability analysis Financial consolidation Sales & Distribution Order management Pricing Sales management Sales planning Traditional ERP Modules (e.g. SAP ERP) Operations & Logistics Inventory management Material req t planning Materials Management Production planning Purchasing Shipping Human Resources Human-resource time accounting Payroll Personnel planning Travel Expense Source: Davenport, T. H. Putting the Enterprise into Enterprise Systems, Harvard Business Review, July-August 1998, pp ERP How does it work? ERP allows integration among different systems (modules) Data sharing among different modules Joint execution among different modules o Inputting data in one module triggers the execution not only of that module but also all related modules. Consolidate operational, sales and financial information across multiple departments, sites and international locations o Provide real-time visibility into business performance spanning the entire organization Y.M. Cheung Y.M. Cheung 20

6 ERP Integrated Data Flows ERP Automated Process Flow At the heart of all ERP systems is a database; when a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system Y.M. Cheung Y.M. Cheung 22 Sales The World after ERP for a Manufacturing Firm ERP Analytics and Reporting An ERP system takes data from across the enterprise, consolidates and correlates the data, and generates enterprise-wide organizational reports. Payroll 2017 Y.M. Cheung Y.M. Cheung 24

7 Benefits of ERP Systems Data sharing occurs in real time. Implements integrated processes that are industry best practices. More managers see more data, leading to better insight. The information silo problem is solved. Better integration with supply chain partners. Challenges of Implementing ERP Systems ERP vendor selection. Gap analysis identify differences between the business requirements and the capabilities of chosen ERP system. Customization Companies may need to change existing business processes to fit the predefined business processes of the software (best practices.) Data definition and ownership issues. Change management Underestimating the complexity of the transition or cutover and training required to implement a new ERP system Y.M. Cheung Y.M. Cheung 26 The cost of an ERP system: Costs of ERP Systems depends on the size and complexity of the software package, which is a function of the size of the firm includes new hardware required to run the system includes consultant and business analyst fees includes the time required for implementation (disruption of business) includes training costs (cost to develop and deploy training plus employees time away from their job) ERP Software Vendors Most organizations use commercially available ERP software from major vendors including: SAP Oracle PeopleSoft Microsoft NetSuite 2017 Y.M. Cheung Y.M. Cheung 28

8 SAP ERP Oracle ERP (Source: Y.M. Cheung Y.M. Cheung 30 Microsoft Dynamics ERP NetSuite ERP (Source: (Source: Y.M. Cheung Y.M. Cheung 32

9 Oracle Buys NetSuite Cloud ERP vs. On-Premise ERP Cloud ERP On-Premise ERP (Source: (Source: Advantages Cheaper up front More customizable Stable and easy to use Offer greater control over data Disadvantages Typically take less time to implement Less customizable in general Data security is in the hands of the vendor Has more control over the implementation process Upfront investment can be seen as riskier Implementation process can take significantly longer (Recommended Reading: Y.M. Cheung Y.M. Cheung 34 Conclusion Transaction Processing Systems (TPS) monitor, store, collect, and process data generated from all business transactions. They were typically developed independently to support a particular functional area within an organization, resulting in information silos. Enterprise Resource Planning (ERP) systems help companies operate more efficiently and effectively by combining all of an organization s operational data into one central core information system. For discussion Should organizations tailor their business processes in order to align with the functions and processes in an ERP system? What are the pros and cons? 2017 Y.M. Cheung Y.M. Cheung 36