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					   Enterprise Business
Processes and Applications
        (IS 6006)
  Masters in Business Information Systems
               24th Mar 2009


                 Fergal Carton
          Business Information Systems
     Course Objective


 To understand the key processes
underlying modern organisations and
how enterprise wide systems support
          these processes
    Topics from course outline
•   What are business processes?
•   Key demand and supply processes
•   Integration and standardisation
•   Different aims of organisational functions
•   Key information resources shared by those functions
•   What are enterprise applications (ERP / CRM)?
•   Historical perspectives on enterprise applications
•   Single instance implementations and data integrity
•   Project management (Gap analysis, resources, …)
•   Reporting and data access in the enterprise
                30 Sept
• What is a business process?
• Exercise: getting a loan, document the
  process
• Meaning of integration
• Use of examples in assessed work
                                7 Oct
• Characteristics of a process:
   –   Sustainability
   –   Efficiency
   –   Quality versus quantity
   –   How does it react under duress (eg. school run)
• Exercise: getting a loan
• Current crisis related to inter-bank dealings
• Issues in loan process
   –   Cost / efficiency of credit checking?
   –   Relationship with bank manager?
   –   Risk assessment relies on non-structured information
   –   Process relies on data integrity
        • Eg. purpose of loan often not validated
                   14 Oct
• Exercise: bank loan process comments
  – Purpose is communication
  – There is no right answer
  – Can over simplify
  – Doesn’t take into account human error
  – Can be inflexible: not matching reality
  – Flags / metrics in place to monitor
    performance
• What does integration mean?
                            21 Oct
• Feedback on process mapping exercise
   – Process map tells you what is being done, by whom, in what
     order
   – Differentiates between flow of physical goods and virtual
     information
   – Visual presentation is flexible, allows identification of bottlenecks
• Operational versus informational
   – ERP captures transactions (SO, PO) at most granular level
   – Managers need aggregated information (MIS) to support
     decision making
   – Comparing plan to actual is critical to decision making
   – Purchase Price Variance example
• ERP hardwires processes
• Ownership of data (as dear to you as your leave days)
                     28 Oct
•   Discussion of Dearden / Vizard
•   Examples of issues with “OVOTT”
•   Wastage / discrepancies in inventory
•   Plan, Buy, Make, Deliver model
•   Bill of Materials links raw materials to
    finished goods
                                     4 Nov
•   MRP principles
     –   BOM crystallises connection between supply and demand
     –   Build process takes account of space, yield, time, cost, labour, equipment …
     –   Outsource or not for sub-components, influence on BOM
     –   Lead time for customer and commit time for production
     –   MRP reduces buffer stocks
•   Look up examples of Bills of Materials
•   What is so difficult about connecting supply and demand?
     – Why can’t actual demand be forecasted?
     – Dell, Aer Lingus, Glaxo SmithKline
     – Fiat car design : 18 months because of sub-contracting parts
•   Work orders / process orders allow inventory to be consumed
     – Mirror image of the sales order
     – Drives customer demand through to batches in the production process
•   Additional Reading
     – Look at paper titles for relevance to this course (eg. Supply Chain)
     – We focus on reality of using integrated systems and issues arising
                                  11 Nov
•   BOM example iPhone
•   Product names (sales) versus model #’s (Mfg)
•   Build to plan model
•   Process versus discrete manufacturing
     – Process manufacturing produces batches in larger volumes that are
       undifferentiated (eg. Coke, milk, oil, …)
     – Discreet manufacturing is characterised by separate unit production from outset
       of process (eg. toys, medical equipment, computers, cars)
•   ERP modules (Sales, Finance, Logistics, Procurement, Manufacturing)
•   ERP is single instance
•   Key benefit for IT is common platform
     – simplifies skills required (development and support)
     – simplifies operations (release management, interfaces, security, …)
•   Production planning: iPhone production planning
     – Many sources of demand
     – How can production be planned?
                                       18 Nov
•   SIT case discussion
     – Hockey stick effect and causes (pricing strategy)
     – Other causes of unplanned hikes in sales (new products hitting market,
       competitors products, natural or man-made disasters, …)
     – Configure to order model / assemble to order
     – MRP principles can be applied without ERP
     – Postponement strategies (delay configuration till latest possible time)
     – Planning is about thinking ahead, managing business relationships
     – If planning is well done, emergencies can be catered for
•   Solutions to planning at SIT
     – Incentivise early quarter sales
          •   product price most effective way to influence sale
          •   early payment incentives
          •   customer discounts
          •   commission payments
          •   …
     – Move towards a build to order model?
     – Customers can only order what is currently being built
•   Smart phone sales example (O2, Spectra and Vodaphone)
•   Sample BOM’s
•   Bullwhip effect
                                               7 Jan
•   Review of topics covered in first term
•   Integration = how far IS supports decisions
•   Decoupling point = where IS stop
     –   Because it doesn’t work / has broken down / is too slow (technical problem)
     –   Because human judgement necessary (decision complexity problem)
     –   Because people want some room for manoeuvre (behavioural problem)
•   RICE: development work for ERP projects
     –   Cost is in person days
     –   Comes in addition to software licence costs
     –   If it touches ERD, vendors won’t do it or make it exorbitantly expensive
•   Gap analysis (UCC example)
     –   Expense claim processing demo: significance
           •   No power users, no training, frosty reception to change among depts
     –   Difference between package and requirements
     –   Highly detailed, relies on good faith of vendor, difficult to test in anger
     –   Difficult to identify in advance unique ways of doing things
           •   No sales orders at UCC for revenue
           •   Line item independence at EMC
           •   Shipping discounted line items instead of standard price
                                13 Jan
• Openings for graduates in ERP projects
   – Catch-22 of application experience
   – Business analysis role
   – Data analysis role
• Moving away from systems based decisions
   – Integration increases reliance on data
   – In reality data integrity difficult to ensure
• Single instance ERP systems
• Hardwiring processes
• Impact for subsidiaries
   – Finance and IS benefit
   – Operationally, ERP often seen as an imposition
• Data integrity issues
   – GSK / EMC / UCC
                   20 Jan
• Data integrity
  – UCC revenue clarity
  – EMC price updates
  – GSK and uncertainty in demand and supply
• Scope definitions
• UCC Finance scope
• CRM is about awareness / communication
  – WiFi charge for telephone call (Muiris)
  – Good and bad customer stories (homework)
                  27 Jan
• What is CRM
• CRM principles
• Main CRM modules
  – Check out vendor web-sites for modules


• Good / bad customer stories
  – Stephen, Garry, Sinead, Chris, Ed, Ray,
    James
                   3 Feb
•   Lessons from customer stories
•   Call center technology
•   Call center visit?
•   CRM strategy assignment (7th March)
•   Apple Exercise as homework
               10 Feb
• Marketing
• Sales force automation
• Apple Exercise: homework
                 17 Feb
• Managing demand complexity
• Apple Exercise
  – Modelling customers and channels
                             24 Feb
• Apple Exercise
   – Customers / channels
       • On-line / not on-line
       • Registered / not registered
   – Products
       • Hardware
       • Software
       • Service
• Talk from Miguel Lioittier, Institut Superieur de
  Commerce, Paris
   – The current financial crisis and its causes
• CRM implementations
• eCRM
• Questions on strategy proposal for 9th March
                   3 Mar
• Apple fulfilment process and ERP impact
  – View by stage in the process (Requirement,
    Sales Order, Distribution, Invoicing, CS)
  – And by type of product
  – Where is commonality in process?
  – Where could ERP provide support?
  – Where would an interface be required?
     Enterprise Business
  Processes and Applications
• First term: production planning processes (Supply)
   – Process mapping exercises
   – Approaches to production planning
   – Uncertainty of demand

• Functional goals and integration
   – Data integrity and role of enterprise systems
   – Single instance systems

• Second term: customer processes (Demand)
   – CRM
• …

• Meeting of the two is what businesses struggle with
 It’s about planning for demand

• Planners try to guess what to produce
  – Build to plan / Build to stock
  – Push approach
• In some markets this might be OK
• However, forecasts can be wrong
• Companies try to be “lean”
  – Build to order
  – Kanban
  – Pull approach
            Be analysts

• Why do we describe what companies do
  as processes?
• Why do companies use processes?
• What are the basic supply and demand
  processes?
• What happens to processes when the
  unexpected occurs?
               Why is business
               unpredictable?
• Customers don’t behave the way we think
    –   Seasonality
    –   Trends
    –   Competitors
    –   Hockey stick
•   Sales are over / under stating demand
•   Quality issues result in long lead times
•   Labour issues affect yield
•   Plant and machinery is getting old
•   …
  Analysts use processes to
 understand what is going on
• Organisations think and act in silos
• Upstream and downstream effects of their
  actions not always understood
• Analysts try to see the big picture
• Processes are a way of knitting together
  activities involving different functions
• At the end of the day, customer
  satisfaction is what keeps us in business
        Sales order and fulfilment
Manufacturing        Finance            Sales / CS     HR

    Plan          Bill and collect       Market      Recruit

    Buy           Approve & Pay           Sell       Manage

    Make          Report results         Install     Reward

   Deliver            Budget            Maintain     Develop


   Products            Cash             Customers     People

                        Management information



                •What’s complicated about this?
                •Why is it complicated?
                •In what way can integration help?
 In-class work and homework
• Process mapping, lending process
• SAP and Oracle for documentation on
  Production Planning and Sales Order
  Processing
• iPhone Bill of Materials
• SIT production planning process and
  bottlenecks
• Customer service stories (Bad and good)
• Gap analysis
  – UCC Finance office (Oracle implementation)
• Apple exercise (SOP and fulfilment)
        Sample questions

• SIT assignment Nov 08 (Production
  planning, MRP, hockey stick)
• PCB Feb 09 (CRM)
• …
                  SIT Ltd (Nov 08)
1. Prepare a process map of production planning in the SIT case
   study.
    –   distinguish between the physical flow of inventory (both raw materials
        and finished goods), and the virtual flow of information.
    –   Describe areas of inefficiency or bottlenecks in the current process.
    –   Comment on how you would use this diagram in the meeting.

2. What is your understanding of Material Requirements Planning,
   and why does it not work for SIT?

3. Discuss how push-pull models apply to SIT, highlighting the
   problems that SIT planners must deal with in achieving their
   objectives.
     Feedback on assessment
• Difference between Kellog’s and SIT?
  – Other companies like Kellog’s
  – Other companies like SIT?
  – How would we represent a framework for both?
• Is it OK to say no to a customer?
  – Large order hits late in the quarter
• Separate flows for production at SIT:
  – Standard configurations
  – Specific deals with particular configurations
• Why can’t people use generic reports?
  – Because it’s not saying what it “should” say
• Biggest problem of quarter end is resources
  – That’s why we design processes, isn’t it?
            PCB (Mar 09)

1. What is CRM, and how would it alleviate
   the problems raised by current
   processes?

2. What would a CRM project involve, and
   how much would it cost?

3. In what order should PCB go about
   implementing a CRM approach?
                  Apple Exercise
• SAP manages complexity in the demand fulfilment
  cycle, map out the demand fulfilment process …
   –   Apple stores
   –   Apple.com
   –   Major accounts
   –   Retailer
   –   Indirect distributor
                              fulfilment process


           Products
                                Sales order &



                                                   Channels   Customers


           Services
        In your answers …

• Use examples to illustrate your ideas
• Show that you can see past what happens
  to the customer and imagine the process
  issues behind the scenes
• You don’t need to know how to fix things
• Be able to show how you would approach
  a problem
      Look for case studies
• ERP systems don’t always work well
• Companies end up using spreadsheets
• Look for evidence of where
  – ERP worked well (case studies, white papers, …)
  – ERP didn’t work well (case studies, …)
  – What is the difference?
• Look at ERP vendor sites (SAP, Oracle, …)
• Look at EBSCO, Google Scholar, …
• Look at discussion forums regarding ERP,
  Supply Chain Management, CRM, …
              MIS Reading

• Integration articles
  – Dearden 72
  – Chiasson 06
  – Vizard 06
  – Yarde 06
• IT and the value chain
  – Porter & Millar, 85
              CRM Reading

• A taxonomy for selecting global supply chain
  strategies
  – Christopher, Peck & Towill (2006)
• Customer Relationship Management: Emerging
  Practice, Process, and Discipline
  – Parvatiyar & Sheth (2001)
• Using e-CRM for a unified view of the customer
  – Pan and Lee (2003)
                  ERP reading
• Sumner (2005), Chapters 4 and 6
       • http://wps.prenhall.com/bp_sumner_erp_1
       • Student resources
• Ellen Monk and Bret Wagner (2006)
    – Concepts in Enterprise Resource Planning, 2nd ed,
      Thomson
•   Davenport (1998)
•   Boersma & Kingma (2005)
•   Ross (1998)
•   Carton, Adam & Sammon (2008)
•   Bhattacherjee (1999)
         Sumner material

• http://wps.prenhall.com/bp_sumner_erp_1/
  25/6543/1675175.cw/index.html
        Your own research

• EBSCO, Google Scholar
• Vendor websites
  – SAP, Oracle, Siebel, SalesForce.com
• Consulting web-sites
  – E&Y, Accenture, Deloitte, …
Start with keywords
Full article not available but …
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Full article is available!
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