CH8, Enterprise DSS Notes

• 1. Chapter 8 Enterprise Decision Support Systems

2. EIS and ESS Definitions

• Executive Information System (EIS)

• A computer-based system that serves the information needs of top executives

• Provides rapid access to timely information and direct access to management reports

• Very user-friendly, supported by graphics

3. Executive Support System (ESS)

• A Comprehensive Support System that Goes Beyond EIS to Include

• Communications

• Office automation

• Analysis support

• Intelligence

4. Enterprise Information System

• Corporate-wide system

• Provides holistic information

• From a corporate view

• Part of enterprise resource planning (ERP) systems

• For business intelligence

• Leading up to enterprise information portals and knowledge management systems

5. Characteristics of EIS

• Drill down

• Critical success Factors (CSF)

• Status access

• Analysis

• Exception reporting

• Colors and audio

• Navigation ofinformation

• Communication

6. 7. 8. BENEFITS 9. 10. 11. EIS Software

• Major Commercial EIS Software Vendors

• • Comshare Inc. (Ann Arbor, MI; http://www.comshare.com)

• • Pilot Software Inc. (Cambridge, MA; http://www.pilotsw.com)

• Application Development Tools

• • In-house components

• • Comshare Commander tools

• • Pilot Softwares Command Center Plus and Pilot Decision Support Suite

12. Multidimensional Analysis

• Easy to develop an EIS in an OLAP system

• Most are Web-ready

• Can tap into data in a data warehouse via the Web

• Use advanced visualization tools

13. Soft Information Used in Most EIS

• Soft information is fuzzy, unofficial, intuitive, subjective, nebulous, implied, and vague

• Predictions, speculations, forecasts, estimates (78.1%)

• Explanations, justifications, assessments, interpretations (65.6%)

• News reports, industry trends, external survey data (62.5%)

• Schedules, formal plans (50.0%)

• Opinions, feelings, ideas (15.6%)

• Rumors, gossip, hearsay (9.4%)

• Soft Information Enhances EIS Value

14. EIS Implementation: Success or Failure 15. EIS Implementation: Success or FailureCritical Success Factors forDevelopmentof EIS 16. EIS Development Success

• The quickest way to get an executive to realize the value of an EIS is to make sure the system directly addresses a business problem he or she has ... what we did not want to have was a solution in search of a problem.

• Resistance in our company took the form of foot-dragging on supplying data.It took a couple of phone calls from the executive sponsor to straighten the problem out.

• None of us (executives) felt politically comfortable supporting an expensive information system for so few people.If it had failed with a huge price tag, everyone felt that its champion might take a fall.

17. EIS Operational Success Factors

• Deliver timely information

• Improve efficiency

• Provide accurate information

• Provide relevant information

• Ease of use

• Provide access to the status of the organization

• Provide improved communications

• An IS for upper management must fit with their decision styles

18. EIS Ongoing Support Success

• I have to have timely information to react quickly to problems.Before I had my EIS, I depended on my sneaker network ... for information I needed on a flash basis.My EIS is faster.

• I used to get my information from mostly my staff and I trusted it.If my EIS had ever failed to provide me with accurate information, I would have shut it off.

• The first things I look at (on my EIS) every morning are my status screens.I want to know how everything is going ... variances are flagged in color for me, so I can spot them easily.Then I start asking questions.

19. Corporate (Enterprise) Portals

• Enterprise Information Portals (EIP) are applications that enable companies to unlock internally and externally stored information, and provide users a single gateway to personalized information needed to make informed business decisions.

• It is a single, secure, web-based access point forintegratingall enterprise information and applications.

• An amalgamation of software applications that consolidate, manage, analyze and distribute information across and outside of an enterprise -including Business Intelligence, Content Management, Data Warehouse and Mart, and Data Management applications.

20. EIP Market Growth Source: Info World (http://www.inforworld.com/cgi-bin/displayStory.Pl?/features/990125eip.html Estimated EIP market: $14.8 billion by 2002 36% compounded annual growth rate 21. Components of an EIP Source: Info World (http://www.inforworld.com/cgi-bin/displayStory.Pl?/features/990125eip.html 22. The Viador Portal Architecture Viador PortalSearch Channels Whats New User Filters Alerts Viador Sentinel Extranet Security Viador Information Center Open APIs Repository Administration Load Balancing Intranet Security Viador Enterprise BI Suite Viador Agents HTML / XML UltraseekSearchEngine Database Analysis Applications Business Applications Documents Corporate Intranet Worldwide Web Real-time Events Events Unstructured Structured Viador Gateway 23. A Personalized Portal PageSource: Viador Presentation at UGA 24. A Custom-branded Portal Page Inventory Status Procurement Status Daily Sales Billing Information Real-Time News Shipping Schedule Advanced Search Engine Sales Analyzer Personalization Tools 25. EIP Software 26. Types of EIP

• Business to Business (B2B) to integrate partners throughout the supply chain

• Business to Employee (B2E)

• Collaborative Processing EIP

• • Helps users organize and share workgroup information such as email, discussion group material, reports, memos, meeting minutes, etc

• Decision Processing EIP

• • Provides access to corporate information for decision making

27. B2B Portal: Charles Schwab

• Challenges

• 300+ mutual funds

• Monthly paper information

• Traders need info urgently

• Solution

• Viador E-Portal

• Secured Internet access

• Result

• Information @web speed

• Extranet security

• Won awards

28. B2E Portal: Sprint PCS

• Challenges

• Access financial data

• Too many tools

• Rapid growth

• Solution

• Viador E-Portal

• Andersen Consulting

• Result

• 3 months vs. 18 months

• Savings: $2M

• Grew to 10,000 users

• World-wide license

29. B2E Portal: CIBC

• Challenges

• Access to financial reports from multiple data sources including mainframe DB2

• Scale to hundreds of users

• Lower distribution costs

• Solution

• Viador E-Portal

• IBM

• Result

• E-banking initiative rolled out to 800 users

• Increased customer service

• Simplified mainframe reports and charts in browser

30. Enterprise Resource Planning (ERP)

• Systems that integrate financial, human resources, manufacturing, distribution, order management processes.

• Shared data and visibility

• Connections with upstream and downstream partners

31. The ERP Industry

• Roots in Europe, manufacturing industry

• 1979: SAP releases R/2

• • • Mainframe based

• • • Financial and operational data

• • • Focus on data entry and paperwork

• 1994: SAP releases R/3

• • • Installed base of 14,000

• • • C/S, UNIX based

• Heightened competition in the market

32. 1994 onwards

• Oracle, Baan, Peoplesoft enter the fray

• 1994 end: 2.9 B market

• • • 60% by Fortune 500 companies

• • • Top 10 had 85% of market share

• Late 90s: growth rate of 30-40% projected, >$50 b by 2002

• 1998 end: five firms held 64% of market

33. The ERP Market 3,577 5% 647.8 JD Edwards 4,254 6% 679.6 Baan 4,452 7% 815.7 Peoplesoft 29,431 10% 5,684 Oracle 12,856 30% 3,461 SAP Employees Share Sales Company 34. ERP Software Industry

• The retail industry will be a major market for ERP (growth of e-commerce)

• ERP software will integrate with the Internet and data warehouses

35. Distinguishing Features

• Expensive

• • Total implementation costs at 2-3% of revenues

• Long implementation cycles

• • 2-5 years to be up and running

• • Major rework of existing infrastructure

• High failure rates

• • Estimates at greater than 50%

36. Why the ERP Fever?

• The pre-ERP environment

• • Fragmentation: costs, non-integrated, redundant data, excessive coding, inflexibility in access

• With ERPs

• • Access to management information: streamlined data flows

• • Improved decision making

• • Flexibility in reallocation of resources

• • Visibility of all key processes

37. Supply Chain

• The flow of materials, information, and services from raw material suppliers through factories and warehouses to the end customers

• Includes the organizations and processes that create and deliver value to the end customers

• Related to the Value Chain Model (Porter)

38. Supply Chain Components

• Upstream

• Internal supply chain

• Downstream

• Involves product life cycle activities

• Example (Figure 8.2)

39. Supply Chain Components

• Upstream: like placing orders:

• • Suppliers, their suppliers (several tiers)

• • From raw material to the company

• Internal: all internal processes that add value, conversion to final products

• • Production scheduling

• • Costing

• • Inventory control

40. Supply Chain Components(cont.)

• Downstream: all activities in distribution and delivery to end customers

• • Sales

• • Customer billing

• • Delivery scheduling

Supply 41. An Automotive Supply Chain Source: Modified from Handfield and Nichols (1999), p. 3. 42. The Toy Order Fulfillment Problem

• Overall satisfaction with online purchasing declined significantly in December 1999 and January 2000

• • Order fulfillment infrastructure shown to be very weak

• • Toysrus.com and other toy e-tailers had the most critical problems

• • Turban et al. E-Commerce: A Managerial Perspective, Prentice Hall, 2002

43. The Toy Order Fulfillment Problem(cont.)

• • Fierce competition in the toy industry caused inventory deficiencies

• • • Offered free delivery

• • • Offered $20 discount

• • Orders could not be met in time for the holidaysso they gave out $100 coupons

• Amazon.com had to ship orders for several products in several shipments instead of oneraising the delivery cost

44. Order Fulfillment

• • Taking orders may be the easiest part

• • Factors responsible for delays in deliveries:

• • • Inability to accurately forecast demand

• • • Ineffective supply chains

• • • Pull type manufacturing

• • • Customized products

45. Supply Chain Problems

• Uncertainty in the demand forecast

• Uncertainty in delivery times

• Quality problems

• Poor customer service

• High inventory costs

• Low revenue

• Extra costs

46. Supply Chain Management (SCM)

• Integration of business processes from the end user through original suppliers, that provide products, services, and information that add values for customers

• To plan, organize, and coordinate the supply chains activities

47. Proper SCM

• Proper SCM and inventory management requires coordination of all activities and links in the supply chain to:

• • Ensure that goods move smoothly and on time from suppliers to customers

• • Keep inventories low

• • Keep costs down

48. IT and SCM(Rai et al. IT Platform Impacts on SC Integration,Working Paper, Georgia State Univ., 2002)

• IT infrastructure Integration

• • Data Integration

• • • Automatic data capture systems used across SC

• • • Definitions of key data elements (e.g., customer, order, part #) are common across SC

• • • Same data stored in different dbs across SC is consistent

• • • Same data does not need to be re-entered across SC

• • Application Integration

• • • Applications across SC communicate in real time

• • • • Planning Applications (demand, transportation, manufacturing planning)

• • • • Transaction Applications (order management, procurement, manufacturing, distribution)

• • • • SC applications with internal applications (e.g., ERP)

• • • • CRM applications with internal applications

49. IT and SCM (cont/d)

• Supply Chain Integration

• • Information Flow Integration across SC

• • • Production and delivery schedules

• • • Performance metrics

• • • Supply chain members collaborate in arriving at demand forecasts

• • • Downstream partners share their actual sales data

• • • Inventory data visible across SC

• • • Order fulfillment and shipment status are tracked across SC

50. IT and SCM

• Physical Flow Integration

• • Inventory Holdings are minimized across SC

• • SC inventory is jointly managed

• • Suppliers and logistics partners deliver products and material JIT

• • Distribution networks are configured to minimize total SC-wide inventory costs

• • Products are assembled when orders are received

51. IT and SCM

• Financial Flow Integration

• • A/R processes are automatically triggered when products are shipped to our customers

• • A/P processes are automatically triggered when supplies are received from suppliers

52. The Bullwhip Effect

• Slight changes in actual demand create large variations in upstream partners

• Due to:

• • Demand forecast updating

• • Order Batching

• • Price Fluctuation

• • Rationing and shortage gaming

53. Bullwhip Effect and Information Sharing

• • Distorted information leads to:

• • • Inefficiencies

• • • Excessive inventories

• • • Missed production schedules

• • • Ineffective shipments

• • • Poor customer service

54. Avoiding the Sting of the Bullwhip

• How to do it?

• • Information sharing is a must and is facilitated by EDI, extranets, and groupware technologies

• Trust and agreements in regard to:

• • Ordering and inventory decisions

• • Placing supply chain ahead of individual entities within the corporation

• Sharing information could save $30 Billion/year just in the grocery industry

55. Preliminary Activities

• Understand the supply chain (flow charts)

• Study internal and external parts

• Performance measurement are a must (Benchmarking)

• Multidimension performance analysis

• A BPR may be needed

• Peoples relationships are a must

56. Software Support

• Salesperson productivity tools

• Online telemarketing

• Ad management etc.

Downstream activities

• Inventory management

• Purchasing order management

• Budgeting, cost control

• Human resource information

Internal supply chain activities

• Supplier management

• Ordering systems

• Order tracking systems

Upstream activities Type of Software SCM Activities