PART III: Next Three Chapters

Using IS forCompetitive Advantage

Part 3Chapters 7,8,9

Dr. Chen, Management Information Systems

Performance Recording, Integration, Delivery, and Evaluation (PRIDE)

• PRIDE prototype connecting health club and home workout data with employer, insurance company, healthcare professionals.

• Written in C# code, stores data in Azure database in the cloud.


Performance Recording, Integration, Delivery, and Evaluation (PRIDE) (cont'd)

• Windows Phone emulator to demonstrate phone interface.

• Port application to iOS and Android devices after obtaining financing.

• Flores lost interest• Required too much of time• Big financial commitment.• Risks in startup venture.


Cast of Characters

• Zev Friedman bought PRIDE company for small amount of cash and a royalty agreement with Flores.

• Jared Cooper, new general manager.• Nicki Jensen, marketing professional.• Michele Russell, sales director.• James Wu, technology manager.


Why Study the PRIDE Case

• Future business professionals need to be able to assess, evaluate, and apply emerging information technology to business.

PRIDE system will allow you to practice that key skill.


Chapter 7Processes, Organizations, and

Information Systems

Jason C. H. Chen, Ph.D.Professor of MIS

School of Business AdministrationGonzaga UniversitySpokane, WA [email protected]


“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 long-term health care expenses increase.


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?


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?


What are Business Process and Business Process Management?

• Business process: A set of logically related tasks performed to achieved a defined business outcome

• Business process management (BPM) is a management approach focused on aligning all aspects of an organization with the wants and needs of clients. It is a holistic management approach[1] that promotes business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology.

Dr. Chen, The Trends of the Information Systems Technology TM -10

http://en.wikipedia.org/wiki/Business_process_management

http://en.wikipedia.org/wiki/Business_process_management


Q1: What Are the Basic Types of Processes?

Business Process with Three Activities

Fig 7-1 Business Process with Three Activities

1

2

3


How Do Structured Processes Differ from Dynamic Processes?

Fig 7-2 Structured Versus Dynamic Processes


How Do Processes Vary by Organizational Scope?

Fig 7-3 Common Workgroup Processes


Characteristics of Information Systems

Fig 7-4 Characteristics of Information Systems


Which of the following is an example of a structured process?

A) ill-defined, ambiguous situationsB) collaborationC) customer returnsD) social networking

Answer: _______C


Q2: Process Quality?• Two dimensions of process quality:

• Process ___________• Ratio of process outputs to inputs

• Process ___________• How well a process achieves organizational strategy

• How Can Processes Be Improved (by organization) ?– Change process ________– Change process ________– Change _______

efficiency

effectiveness

structureresources

both


How Can Information Systems Improve Process Quality? (cont.)

• Performing an activity– Partially automated, completely automated

• Augmenting human performing activity– Common reservation system

• Controlling data quality process flow– Ensure data complete and correct before

continuing process activities


Information systems improve process quality by ________.

A) duplicating dataB) entirely replacing human activityC) changing the work cultureD) controlling process flow

Answer: _______D


Islands of Automation


Q3: How Do Information Systems Eliminate the Problem of Information Silos?

• What are the problems of information silos?– Data are duplicated– Data inconsistency– Data isolated– Business processes disjointed– Lack of integrated enterprise information– Inefficiency: decisions are made in isolation– Increased cost for the organization

20


Extra Examples of Islands of Automation at a HospitalWhat are the problems?How to solve this problem?


An Enterprise System for Patient Discharge

Fig 7-7 Example Enterprise Process and Information System

Solution:A centralized

Enterprised DB


Problems Created by Information Silos

Figure 7-5: Problems Created by Information Silos


How Do Organizations Solve the Problems of Information Silos?

• Integrate data into single database

• Revise applications

• Allow isolation, manage to avoid problems

Fig 7-6 Information Silos as Drivers


Which of the following information systems eliminates data duplication and carefully manages changes to duplicated data to maintain consistency?

A) departmental information systemsB) workgroup information systemsC) personal information systemsD) enterprise information systems

Answer: ______D


Islands of Automation – Another Example


How Do Enterprise Information Systems Eliminate Silos?

The information (e.g., scheduling) can be________. Therefore, it will improve productivity and increase customer satisfaction.

shared


Customercentric

______ are the customers?_______are the customers?Their purchasing ______

What they need/want?How many they need/want?When they need/want?How to reach them?

Demands Products

E-BUSINESS

BUSINESS FOCUS

• SCM• CR

M• BPR• ERP

WhoWhere

habits

Supply Chain ManagementCustomer Relationship ManagementBusiness Process ReengineeringEnterprise Resource Planning


Manufacturing Industry Value Chain Product and Service Flow

Research and Development

EngineeringProduction

and Manufacturing

Marketing Sales and

Distribution Service

Primary Activities

Administrative and Other Indirect Value Added

Support Activities

N


How do functional systems relate to the value chain?

Reorganized Porter Value Chain Model

Porter’s value chain model from Chapter 3 is reorganized to show primary and support activities from a customer’s perspective, beginning with Marketing and Sales on the left, to Service and Support on the right.

Competitive

Adva

ntag

e

(Value)


Q4: How Do CRM, ERP and EAI Support Enterprise Processes?

Business Process Reengineering (BPR)• BPR means radically changing how people work -

changing business policies and controls, systems and technology, organizational relationships and business practices, and reward programs.

• Integrated data, enterprise systems create stronger, faster, more effective linkages in value chains

• Difficult, slow, and exceedingly expensive • Key personnel determine how best to use new technology • Requires high-level and expensive skills and considerable

time


Deconstruction of the newspaper industry: BPR

Old newspaper industry value chain

Journalists

ColumnistsEditors Printers Distributors Readers

New newspaper industry value chain

Journalists

ColumnistsInternet

Editors

Readers


BPR

Radical Change = New organization + IT

Types ofOrganizational =Strategies

IndustryStructure +

CompetitiveStrategies +

CooperativeStrategies


Emergence of Enterprise Application Solutions

• Inherent processes Predesigned procedures for using software

products Based on “industry best practices”

• Three solutions (applications) Customer relationship management (CRM) Enterprise resource planning (ERP) Enterprise application integration (EAI)


• CRM Suite of applications, a database, and a set of inherent processes Intended to support customer-_______ organization Integrates all primary activities of value chain

• Manage all interactions with customer though four phases of customer life cycle:

1. Marketing—marketing sends messages to target market2. Customer Acquisition—customer prospects order and need to be

supported3. Relationship Management—support and resale processes increase

value to existing customers4. Loss/churn—win-back processes categorize customers according

to value and attempt to win back high-value customers

Customer Relationship Management (CRM)

centric


Which phase of the customer life cycle categorizes customers according to value and attempt to win back high-value customers?

A) loss/churnB) customer acquisitionC) relationship managementD) Marketing

Answer: _______A


Four Phases of Customer Life CycleFigure 7-8 depicts the four phases of the customer life cycle and shows how a CRM system integrates them into three major processes: solicitation, lead-tracking, and relationship management.

Fig 7-8: The Customer Life Cycle

(1) (2) (3)(4)

80/20 Rule?


A(n)________ system is a suite of applications, a database, and a set of inherent processes for managing all the interactions with the customer, from lead generation to customer service.

A) business process reengineeringB) customer relationship managementC) enterprise resource planningD) customer lifecycle management

Answer: ________B


Why Do We Need Customer Relationship Management?

• Organizations can find their most valuable customers through “RFM”: – Recency: How recently a customer purchased items?

=> leads and opportunities– Frequency: How frequently a customer purchased

items? => retention– Monetary Value: How much a customer spends on

each purchase? => profitability

80/20 Rule (Pareto Principle)We will study more in chapter 9 – Business Intelligence


Fig (extra): Scope of CRM in Value Chain Activities

Figure 7-?? shows how a CRM system integrates the primary business activities in the value chain model.


CRM Applications Customer Relationship Management (CRM) systems store data

in a single (integrated) database and link CRM processes to one another.

Fig 7-9 CRM Applications


ERP Applications

Fig 7-10 ERP Applications

integration

Five elements of an ERP system: (1) Hardware, (2) ERP Application programs (software), (3) ERP Databases, (4) Business process procedures and (5) ______ and Consulting (people)

Training


Pre-ERP Information System: Bicycle Manufacturer

Fig 7-11 Pre-ERP Information Systems


ERP Information Systems

What is the major difference between these two systems?

Fig 7-12 ERP Information Systems


The primary purpose of an ERP system is ________.

A) customizationB) duplicationC) integrationD) customer acquisition

Answer: ________C


ERP Enabled Sales Dashboard

Fig 7-13 Sales Dashboard


Enterprise Application Integration (EAI)

• Connects system “islands.”• Enables communicating and sharing

data.• Provides integrated information.• Provides integrated layer over the top of

existing systems while leaving functional applications “as is.”

• Enables a gradual move to ERP.


EAI: Design and Implementation for the Five Components

Virtual Integrated Database

• EAI is a suite of software applications that connects systems “islands”.• EAI Automatically Makes Data Conversions Among Different Systems

Fig 7-14 Design and Implementation for the Five Components


Q5: What Are the Elements of an ERP System?

• Hardware• ERP Application programs• ERP Databases• Business process procedures• Training and Consulting


ERP and CRM with Value Chain Model

• What is the difference between the following two systems (CRM and ERP)?


Fig (extra): ERP Applications and the Value Chain


True ERP Have Application that Integrate: (

http://www.erpsoftware360.com/erp-101.htm)

• Supply chain • Manufacturing • CRM • Human resources • Accounting

http://www.erpsoftware360.com/erp-101.htm


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


ERP Solution Components (Cont’d)

• Business Processes and Procedures– Adapt to predefined, 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


What is SAP?

SAP

Systems

Applications

Products...

in data processing

Company Originated in Walldorf, Germany 1972


SAP Ordering Business Process

Fig 7-15 SAP Ordering Process


Characteristics of Top ERP Vendors

Fig 7-16 SAP Characteristics of Top ERP Vendors


ERP training falls into two broad categories. One of the categories is training on how to use the ERP application software. What does the training include?

A) steps for obtaining top-level management supportB) steps for using the applications to accomplish the activities in various processesC) procedures to deal with employee resistance to the new systemD) procedures to prepare for organizational changes while implementing ERP solutions

Answer: _______B


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

59

Five Primary Factors• Collaborative management• Requirements _____• Transition problems • Employee _________• New ____________

gaps

resistancetechnology

Implementation is challenging, difficult, expensive, and risky. It is not unusual for enterprise system projects to

be well over budget and a year or more late.


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

Fig 7-18 Information Silos Without PRIDE


• Efficient business processes that are effective• Inventory reduction• Lead-time reduction• Improved customer service• Greater real-time insight into organization• Higher profitability• No data inconsistency problems due to integrated

database• Business process blueprints tested in hundreds of

organizations

Benefits of ERP


Inter-Enterprise PRIDE System

Fig 7-19 Inter-enterprise PRIDE System


THE CONNECTED CORPORATION:THE FUTURE OF ERP

• Data points where SCM, CRM, and ERP integrate.• Lines between SCM, CRM, and ERP will continue to blur

– Internet – continue to help organizations integrate data and process across functional departments

– Interface – customizable employee browsers – Wireless technology – support a mobile workforce


• Radio Frequency Identification (RFID) systems• RFID uses low-powered radio transmitters to read data stored in a tag at

distances ranging from 1 inch to 100 feet. The reader captures the data from the tag and sends them over a network to a host computer for processing.

The Wireless Revolution


Joseph wishes to increase the operational efficiency of his new startup. In order to achieve this, what should Joseph do?

A) Joseph should use integrated data stored in his firm's central database to analyze its day-to-day activities.B) Joseph should avoid analyzing his firm's distribution systems as they do not play a role in the firm's daily activities. C) If Joseph plans to support formally defined and documented activities in his firm, he should use a dynamic planning system over a structured planning system.D) If Joseph plans to include less specific and fluid activities in his firm, he should use a structured planning system over a dynamic planning system.

Answer: _______A


• Radio Frequency Identification (RFID) systems• Use tiny tags (transponders) with embedded microchips that

transmit radio signals over short distance to RFID readers• Operate in various unlicensed frequency bands

• Low frequency systems have short reading ranges (up to few feet)

• Requires special middleware to filter, aggregate RFID data• Usually requires companies to upgrade hardware and

software to handle massive amounts of data produced by RFID systems

• Used to track movement of goods through supply chain• RFID systems can track each pallet, lot, or even unit item

in shipment

The Wireless Revolution


• Wal-Mart Grapples with RFID• What conditions would make adopting RFID more

favorable for suppliers?• Should Wal-Mart require all its suppliers to use

RFID? Why or why not? Explain your answer.

Business Applications of using RFID


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.


• END of CHAPTER 7

PART III: Next Three Chapters

Documents

enterprise information

process efficiency

change process

use of information systems

activity process

scope of information

process achi

enterprise systems