Chapter 7. Processes, Organizations, and Information Systems

Transcription

1 Chapter 7 Processes, Organizations, and Information Systems

2 How Much Money Does a System Own? Who are the target customers and how to induce them to buy? Doctors? Care about medicine and operations, some care about costs Not focused on exercise. Insurance companies? Exercise doesn t prevent disease. When people get in good shape, they live longer, and their longterm health care expenses increase. 7-2

3 Who Will Pay? Health clubs. Employers. Selling ad space to health clubs and manufacturers. Social media driven. Can PRIDE support 10,000 people spinning at the same time? Who to monetize PRIDE? 7-3

4 Study Questions Q1: What are the basic types of processes? Q2: How can information systems improve process quality? Q3: How do information systems eliminate problems of information silos? Q4: How do CRM, ERP, and EAI support enterprise processes? Q5: What are the elements of an ERP system? Q6: What are the challenges of implementing and upgrading enterprise information systems? Q7: How do inter-enterprise IS solve the problems of enterprise silos? Q8: 2026? 7-4

5 Q1: What Are the Basic Types of Processes? Business Process with Three Activities 7-5

6 How Do Structured Processes Differ from Dynamic Processes? 7-6

7 How Do Processes Vary by Organizational Scope? 7-7

8 Characteristics of Information Systems 7-8

9 Q2: How Can Information Systems Improve Process Quality? Process efficiency Ratio of outputs to inputs. Process effectiveness How well a process achieves organizational strategy. How can processes be improved? Change process structure. Change process resources. Change both. 7-9

10 How Can Information Systems Improve Process Quality? Performing an activity. Partially automated, completely automated. Augmenting human performing activity. Ex: Common reservation system. Controlling data quality. Ensure data complete and correct before continuing process activities. 7-10

11 Q3: How Do Enterprise Systems Eliminate the Problem of Information Silos? What are the problems of information silos? Data duplicated. Data inconsistency. Data isolated. Disjointed processes. Lack of integrated enterprise information. Inefficiency: decisions made in isolation. Increased cost for organization. 7-11

12 Problems Created by Information Silos 7-12

13 How Do Organizations Solve the Problems of Information Silos? Integrate into single database. Revise applications. Allow isolation, manage to avoid problems. 7-13

14 An Enterprise System for Patient Discharge 7-14

15 Q4: How Do CRM, ERP, and EAI Support Enterprise Processes? Business Process Reengineering (BPR) Integrated data, enterprise systems create stronger, faster, more effective linkages in value chains. Difficult, slow, exceedingly expensive. Key personnel determine how best to use new technology. Requires high-level and expensive skills and considerable time. 7-15

16 Emergence of Enterprise Application Solutions Inherent processes Predesigned processes for using application. Industry best practices. Customer relationship management (CRM). Enterprise resource planning (ERP). Enterprise application integration (EAI). 7-16

17 Customer Relationship Management (CRM) Suite of applications, database, set of inherent processes. Manage all interactions with customer through four phases of customer life cycle. Marketing, customer acquisition, relationship management, loss/churn. Supports customer-centric organization. 7-17

18 Customer Life Cycle 7-18

19 CRM Applications CRM functionality varies 7-19

20 ERP Applications Primary purpose is integration 7-20

21 Pre-ERP Information System: Bicycle Manufacturer 7-21

22 ERP Information Systems 7-22

23 ERP Enabled Sales Dashboard 7-23

24 Enterprise Application Integration (EAI) Connects system islands. Enables communicating and sharing data. Provides integrated information. Provides integrated layer on top of existing systems while leaving functional applications as is. Enables gradual move to ERP. 7-24

25 Design and Implementation for the Five Components Virtual Integrated Database 7-25

26 So What? Who Fixes a Workflow Problem? Computer programmer? No. Network engineer? No. Database administrator? No. Someone with knowledge of business. Yes! If workflow involves information system, someone knowledgeable and comfortable working with technical people. You with help of a business analyst. 7-26

27 Ethics Guide: Dialing for Dollars Assume you are a salesperson. Bad quarter. VP of Sales authorized a 20% discount on new orders if customers take delivery prior to end of quarter so order can be booked for this quarter. VP says Start dialing for dollars, and get what you can. Be creative. 7-27

28 Unethical, Violate SEC Rules, or Fraudulent 1. Side letter 2. Delayed discount 3. Fictitious account Send with return product agreement. Offer product at full price, but agree to give 20% credit next quarter. Sell to fictitious company and ship product to your brother-inlaw s garage. 7-28

29 Q5: What Are the Elements of an ERP System? Hardware ERP Application programs ERP Databases Business process procedures Training and Consulting 7-29

30 True ERP Have Application that Integrate: ( Supply chain Manufacturing CRM Human resources Accounting 7-30

31 ERP Solution Components ERP Application Programs Configurable vendor applications. ERP Databases Trigger Computer program within database to keep database consistent when certain conditions arise. Stored Procedure Enforces business rules. 7-31

32 ERP Solution Components (Cont d) Business Processes and Procedures Adapt to inherent processes and procedures, or design new ones? Training & Consulting Training to implement. Top management support, preparing for change, dealing with resistance. Training to use. Industry-Specific Solutions 7-32

33 Example of SAP Ordering Business Process Blueprint 7-33

34 Example of SAP Ordering Business Process Blueprint (cont d) 7-34

35 Characteristics of Top ERP Vendors 7-35

36 Q6: What Are the Challenges of Implementing and Upgrading Enterprise Information Systems? 7-36

37 Q7: How Do Inter-enterprise IS Solve the Problems of Enterprise Silos? 7-37

38 Inter-enterprise PRIDE System 7-38

39 Q8: 2026? ERP vendors and customers resolved problems of cloud-based ERP. Hybrid model ERP customers store most of their data on cloud servers managed by cloud vendors and store sensitive data on their own servers. Gov t, accounting, financial standards for monitoring organizations for appropriate compliance. Delicate balance between risk of loss and improvement to processes. Machines able to employ ERP system to schedule own maintenance. 7-39

40 Security Guide: One-Stop Shopping IS design involves constant trade-offs. Risk of loss higher, security focused. Inter-enterprise system can connect competitors with different incentives and agendas. How secure is the cloud vendor? Bitcoin Centrally located, accessible from anywhere, very large sum of electronic money. 7-40

41 Using the Guide: ERP and the Standard, Standard Blueprint Organization adapts processes to standard blueprints. If all firms in an industry use same business processes, how can a firm gain competitive advantage? How will innovation occur? Does commoditized standard blueprint prevent sustaining a competitive advantage? 7-41

42 Active Review Q1: What are the basic types of processes? Q2: How can information systems improve process quality? Q3: How do information systems eliminate the problems of information silos? Q4: How do CRM, ERP, and EAI support enterprise processes? Q5: What are the elements of an ERP system? Q6: What are the challenges of implementing and upgrading enterprise information systems? Q7: How do inter-enterprise IS solve the problems of enterprise silos? Q8: 2026? 7-42

43 Case Study 7: A Tale of Two Inter-organizational IS Access CT Enrolled 208,301 and model for state-run exchanges. Cover Oregon Spent $250 million for system clearly inoperable Exchange s board of directors decided to stop development and utilize the federal exchange. 7-43

44 Healthcare Exchange Interorganizational IS 7-44

45 Access CT Exchange went live in only 12 months. Counihan More than 30 years of experience working in insurance industry, Key player in development of Massachusetts healthcare system. Hired senior staff with deep experience in insurance. 7-45

46 Access CT (cont'd) Wadleigh director of application development for CIGNA, a health services organization. Primary assignment Hire and manage an outside contractor to develop exchange website and supporting backend code, and manage implementation of exchange information system. Created project plan and began search for contractor to develop the site. 7-46

47 Cover Oregon Did not hire a supervising contractor for project, instead took an active role in software s development. Agency suffered high employee turnover, and had difficulty hiring and keeping qualified personnel. 7-47

48 Cover Oregon (cont'd) OHA hired software development company to create major software components. Two of three finalists dropped out at last minute, leaving Oracle Corporation a sole source vendor. Oracle negotiated time and materials contracts instead of contract for specific deliverables at specific prices. When problems developed, Oracle was paid tens of millions of additional money for change orders on same time and materials basis. 7-48

49 Cover Oregon (cont'd) Oregon legislature required state to hire a quality assurance contractor, Maximus Corporation, to oversee project. Maximus reported significant problems involving divided control, lack of clear requirements, inappropriate contracting methodology, lack of project planning, and lack of progress. Unclear who got those reports or what was done with them. Head of OHA project threatened to withhold Maximus payment. End result: Exchange development failed. 7-49

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