Managing Information Technology 6 th Edition

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Managing Information Technology

6 ^th Edition

CHAPTER 6 ENTERPRISE SYSTEMS

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APPLICATION AREAS

Interorganizational systems

• Systems that span organizational boundaries

• e‐Business applications e Business applications

– B2C – link businesses with their end consumers

B2B link businesses with other business

– B2B – link businesses with other business

customers or suppliers

• Electronic data interchange (EDI) systems Electronic data interchange (EDI) systems

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APPLICATION AREAS

Intraorganizational systems

Enterprise Systems

• Systems that support all or most of the organization

Managerial Support Systems

• Systems that support a specific manager or group of

managers

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APPLICATION AREAS

Intraorganizational systems (cont’d)

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CRITICAL CONCEPTS

Batch processing

• A group (or batch) of transactions are

accumulated, then processed all at one time , p

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CRITICAL CONCEPTS

Batch processing (cont’d)

• In the early days of computers, all processes

were batched

• Major problem is the time delay before the

master file is updated

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CRITICAL CONCEPTS

Online processing

• Each transaction is entered directly into

computer when it occurs p

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CRITICAL CONCEPTS

Batch processing vs. Online processing

Batch Processing Online Processing

• Significant delay before master • Master file updated within a Significant delay before master

file is updated (usually 1 day)

Master file updated within a

fraction of a second

• Much less expensive to

operate

• Much more expensive to

operate

operate operate

• Some applications naturally

suited for batch processing

(e g payroll)

• Some applications need to be

processed in real time

(e.g., payroll)

Note: given the tradeoffs, hybrid systems that combine online

data entry with batch processing are very common

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CRITICAL CONCEPTS

Online processing

Interactive System

• A fully implemented online system where user

interacts directly with the computer

In‐line System

• Provides for online data entry, but processing of

transactions is deferred for batch processing

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CRITICAL CONCEPTS

Functional information systems

• Information systems that support one of an

organization’s primary business functions g p y

Example Business Functions and Subsystems

Marketing Accounting Personnel

Production

Personnel Engineering

Sales

Forecasting

Production

Planning

Production

Scheduling Etc

Scheduling Etc.

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CRITICAL CONCEPTS

Vertically integrated information systems

E l S l S t

• Serve more than one

vertical level in an

Top Management

Long-term trend analysis

Example Sales System

organization or industry

Middle Management

Weekly data analysis to ee y da a a a ys s o

track slow-moving items

and productive salespeople

Produce invoices

Capture initial sales data

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CRITICAL CONCEPTS

Distributed systems

• Refers to mode of delivery rather than traditional

class of applications

• Processing power is distributed to multiple sites,

which are then tied together via

telecommunications lines

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CRITICAL CONCEPTS

Client/server systems

• A type of distributed system where processing

power is distributed between a central server

p

computer and a number of client computers

(usually PCs)

( y )

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CRITICAL CONCEPTS

Client/server systems (cont’d)

Middleware

Client Server

• Handles user

interface

Accesses distributed

• Runs on bigger machine

• Handles data storage

f li ti

• Software to support

clients and server

i t ti

• Accesses distributed

services through a

network

for applications …

– Databases

– Web pages

– Groupware

interaction

• Three categories:

– Server operating systems

– Transport stack software

p

– Service-specific software

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CRITICAL CONCEPTS

Client/server systems (cont’d)

Two‐tier system

• Original client/server

Three‐tier system

• Became popular in

Original client/server

systems

Became popular in

the mid‐1990’s

Client

Application

Client

Server

pp

Server

Database

Server

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CRITICAL CONCEPTS

Client/server systems

• Two models:

– Fat client/thin server: most processing done on / p g

the client

– Thin client/fat server: most processing done on /f p g

the server

• In general… g

– Web and groupware servers are fat servers

– Database servers are thin servers

Database servers are thin servers

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CRITICAL CONCEPTS

Service‐oriented architecture (SOA)

• Application architecture based on a collection

of functions, or services, where these services

can communicate (or be connected) with one

another

• Advantages:

– Once a service is created, it can be used over and

i

over again

– Services can be created internally or obtained

externally

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CRITICAL CONCEPTS

Web services

• ____ _ ____

_ _________

• • A particular collection of technologies built

around the XML standard of communicating _ _ ____

• ___ _ _

– * _ __ _ _____ _*

g

• XML is used to tag the data

• Other protocols used in web services include: _

– * _ ______ _*

_ ___

–

• Other protocols used in web services include:

– Web Services Description Language (WSDL)

describes the services available ________ _ _ _ ___ _ _ __

_ _ _ ____

• __ _ _ _ _ ______

_________ _ _______

describes the services available

– Universal Description, Discovery, and Integration

(UDDI) lists the services available

_________ _ _______ (UDDI) lists the services available

– SOAP (originally Simple Object Access Protocol,

but now just the initials) transfers the data

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TRANSACTION PROCESSING SYSTEMS

• Process thousands of transactions each day in Process thousands of transactions each day in

most organizations

• Examples: sales payments made and received Examples: sales, payments made and received,

inventory shipped and received, paying

employees

• Typical outputs: invoices, checks, orders, reports

• Critical to business operations

(20)

TRANSACTION PROCESSING SYSTEMS

Payroll system

• Common system

used to produce p

payroll checks

• Also contains Also contains

numerous other

subsystems

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TRANSACTION PROCESSING SYSTEMS

Order entry system

• Basic idea…

– Orders received and entered into system y

– System updates files and prints invoice

• Also contains numerous other subsystems

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TRANSACTION PROCESSING SYSTEMS

Order entry system (cont’d)

T ti b i ith t f S l O d

• Transaction begins with an entry of a Sales Order or a

Query

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ENTERPRISE RESOURCE

PLANNING (ERP) SYSTEMS

• Set of integrated business applications (modules) Set of integrated business applications (modules)

that carry out common business functions

– The same transaction data is accessible to people The same transaction data is accessible to people

working in multiple functional units within the

organization (sales + accounting +…)

• ERP modules reflect a process‐oriented way of

doing business

– Not separate systems for separate functions

– Support for “Order fulfillment,” not just Sales

• Usually purchased from a software vendor

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ERP SYSTEMS

SAP and other vendors designed “suites” of integrated modules for “back-office”

transaction processing that eliminated the need for custom-developed interfaces.

3 Modules for Value-Chain Activities

C

U

S

Materials Management modules

Production/

Operations modules

Sales/

Distribution modules

S

U

P

P T

O

M

Production

Procurement Distribution

P

L

I

E E

R

S

Financials/Accounting modules

Human Resources modules

E

R

S

2 Modules for Enterprise Support Activities

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ERP SYSTEMS

• Choosing the right software is important g g p

– From one vendor or multiple vendors (“best of breed”)

• Implementing multiple modules at once is difficult Implementing multiple modules at once is difficult

– Requires large investment of money and people

resources

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ERP SYSTEMS

Today’s vendors offer modules

beyond the “back-office” modules

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ENTERPRISE RESOURCE PLANNING SYSTEMS

Benefits for Business Operations and Decision‐Making

• Support for Cross‐Functional processes

– Modules were designed to support business processes that

involved multiple business functions and multiple geographic

locations

• Access to Integrated Data via a unified platform

– Data entered into one module could be accessed in real‐time by

other modules, by employees in dispersed business units, if a

single centralized database is implemented.

• Support for Global Transactions

– National currencies are automatically converted to the parent

firm’s currency

– Employees in different countries can see the same screen in

their own languages

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ENTERPRISE RESOURCE PLANNING SYSTEMS

Benefits for Managing the IT Infrastructure

• Centralized Database on Client/Server Architecture

– Many early adopters replaced legacy system applications (with

separate databases) written for mainframe computers

• Software updates with increased functionality from the vendor

on a regular basis

– Companies can avoid high costs of customized system enhancements Companies can avoid high costs of customized system enhancements

• Standard IT platform for external transactions and regulatory

compliance

– Enables transactions with external suppliers and customers

– Costs avoided for updating legacy systems (e.g., Y2K and Euro

compliance)

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DATA WAREHOUSING

• Is the establishment and maintenance of a large s t e estab s e t a d a te a ce o a a ge

data storage facility containing data on all (or at

least many) aspects of the enterprise

• Provides users data access and analysis

capabilities without endangering operational

t

systems

• Designed for analysis of data, not efficient

operational performance

• Summary reports may be automatically

generated on periodic basis

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DATA WAREHOUSING

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DATA WAREHOUSING

Key characteristics of data in a data warehouse

• Subject‐oriented

– Data stored by business subject, rather than by application

– Customer Claims vs Order‐Billing Claims Processing

– Customer, Claims vs. Order‐Billing, Claims Processing

• Integrated

– Data stored once in a single integrated location

• Time‐variant

– Data tagged with some element of time

– Data available for long periods of time Data available for long periods of time

• Nonvolatile

– Data warehouse is “read only”: existing data is not

overwritten or updated

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DATA WAREHOUSING

• Establishing a data warehouse:

– Is time‐consuming and expensive g p

– Requires software tools to:

• Construct warehouse

• Operate warehouse

• Access and analyze data from the warehouse

• Average project costs based on study of 33 DW projects

(from Journal of Data Warehousing)

( f g)

Average 1

^st

‐year costs $1,560,371

Data extraction and transformation 200,000

DBMS software 105,000

DW Administration 588,000

System staff and system integration 222,000

EIS, DSS, and Data mining software 272,000

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CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

Customer relationship management (CRM)

• A business strategy directed at customer

relationships that involves new business

processes for execution and communication

– Customer interactions focused on customer needs

• Integrated approach to customer channels for

marketing, sales, and support

– Cross‐functional vs. single functional view

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CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

CRM systems

• A new way to compete using IT: service‐based

differentiation

– Single‐face‐to‐the‐customer, no matter which channel

customer uses

Traditional Channels New Electronic Channels

• Call centers • E‐mail

• Field reps • Web sites for consumers and

partners

• Retail dealer networks/

b

• Communications via wireless

business partners devices

(35)

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

CRM systems (cont’d)

• _ ___ _ _ _______

• _ _ _ ______ _ ___

• Many players in the CRM systems marketplace

• Most of the top CRM enterprise vendors offer:

– ________ _ _ ___

– ____ _ _ ________

__

– Traditional out‐of‐the‐box CRM

– Traditional CRM with templates for specific

• _ ___

_______ _ _ _ ___

vertical industries

• Major ERP software vendors also offer CRM

d l ( SAP d O l )

• _______ _ ____

– _ _ ____

–

modules (e.g., SAP and Oracle)

• Salesforce.com offers an on‐demand solution

___ _ ___

– Vendor is also the software host

(36)

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

Types of purchased CRM systems

CRM

Suites e‐CRM

Ex. Siebel, Clarify Ex. NetPerceptions

ERP

(automated customer interactions)

ERP

Extensions

Ex. mySAP, PeopleSoft/Vantive

y p

(37)

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

CRM Implementations: 4 “Perils” to Avoid*

1: Implementing CRM before creating a business

strategy for how data will be used

2: Rolling out a CRM system before changing internal

processes to support the data collection and usage

3: Assuming that “more [CRM technology] is better”

4: Stalking, not “wooing,” Customers

(38)

DATA WAREHOUSE &

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

CRM system supported by a data warehouse

• CRM systems often pull data that is stored in a

data warehouse

• Example: Harrah’s Entertainment

– Total Rewards system captures all guest transactions

(including slot machines and game tables)

– Harrah’s can track who plays what games, where,

when, and how often – and then offer special deals , p

aimed at generating repeat business

(39)

OFFICE AUTOMATION

• A set of office‐related applications that might or A set of office related applications that might or

might not be integrated into a single system

Most Common Office Applications

• Word processing Word processing • Desktop publishing Desktop publishing

• Electronic mail • Electronic calendaring

• Telephony • Document imaging

V i il D t ti

• Voice mail • Document preparation,

storage, and sharing

• Copying

(40)

OFFICE AUTOMATION

Word processing and application suites

• Many word processing applications available

– Market leader is Microsoft Word

– Some others are free:

• OpenOffice (free office suite) p ( )

• Zoho (free online office suite)

(41)

OFFICE AUTOMATION

Word processing and application suites (cont’d)

• Word processors typically sold as part of an

application (office) suite pp ( )

– Microsoft Word is part of MS‐Office

• Includes spreadsheet, presentation, database, e‐mail, p p

collaboration, and publishing applications

• Microsoft Office 2008 for Mac recently released

– Advantage is the ability to copy and paste from

one application to another in the same suite

(42)

OFFICE AUTOMATION

Future developments

• Internet (VoIP) telephony:

– Allows users to make telephone calls using their

workstations

– Increasing interdependence between telephone and

computer networks because both are now using the

same lines

• Faxes/copies will be sent over office network

• Business documents will be stored digitally Business documents will be stored digitally

• Videoconferencing between individuals and

teams will become more common

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OFFICE AUTOMATION

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GROUPWARE

• Industry term that refers to software designed to Industry term that refers to software designed to

support groups by facilitating:

– Collaboration

– Communication

– Coordination

• Also called collaboration or collaborative

environment

• Products vary in the features they provide

(45)

GROUPWARE

Common Groupware Features

• Electronic mail • Meeting support systems

• Electronic bulletin boards • Workflow routing

C t f i El t i f

• Computer conferencing • Electronic forms

• Electronic calendaring • Internet telephony

• Group scheduling • Sharing documents

• Desktop

videoconferencing

• Learning management

systems

• Electronic whiteboards • Instant messaging

• Shared workspace

(46)

GROUPWARE

Groupware Products

• Microsoft Exchange • EMC Documentum eRoom

• Lotus Notes • Microsoft Office Groove

• Oracle Collaboration Suite • Microsoft SharePoint Server

• Novell GroupWise • Thruport Technologies HotOffice

• Microsoft Office Communications • IBM Workplace Collaboration

Server Services

• Web Crossing

(47)

GROUPWARE

• Lotus Notes was purchased by IBM in 1995

(48)

GROUPWARE

(49)

INTRANETS AND PORTALS

• Intranet: a network operating within an organization p g g

that employs the same TCP/IP protocol used on the

Internet

d

• Advantages:

– Implementation is relatively easy (Web technologies)

– Web browser acts as “universal client” that works with

– Web browser acts as universal client that works with

heterogeneous platforms

– Little, if any, user training required

– E‐mail and document sharing available to all in the

organization

– Low cost due to common technologies and little training g g

(50)

INTRANETS AND PORTALS

• Portals: software that provides intranets with a Portals: software that provides intranets with a

structure and easier access to internal

information via a Web browser

– Initial intranets had lots of documents, but little structure to

help users find them

(51)

FACTORY AUTOMATION

• Traditional factory automation: ad t o a acto y auto at o :

– Numerically controlled machines, which use a

computer program or a tape with punched holes to

t l t f t l hi

control movement of tools on machines

– Material requirements planning (MRP) uses data

input to produce a production schedule for the factory p p p y

and a schedule of needed raw materials

• Computer‐integrated manufacturing (CIM)

– Combines MRP with the ability to carry out schedules

through computer controlled machines

(52)

FACTORY AUTOMATION

• Three major categories of CIM systems Three major categories of CIM systems

1. Engineering systems

2. Manufacturing administration

3. Factory operations

(53)

FACTORY AUTOMATION

Engineering systems

• Computer‐aided design (CAD) – use of two and three‐

dimensional computer graphics to create and modify

engineering designs

• Computer‐aided engineering (CAE) – system that analyzes

functional characteristics of a design and simulates the

product performance under various conditions

• Group technology (GT) – systems that logically group parts

according to physical characteristics, machine routings, and

other machine operations p

• Computer‐aided process planning (CAPP) – systems that

plan the sequence of processes that produce or assemble a

part

p

(54)

FACTORY AUTOMATION

Manufacturing administration

• Manufacturing resources planning (MRP II)

– A system that usually has three components:

1. Master production schedule

2. Material requirements planning

3. Shop floor control p

– Attempts to implement just‐in‐time (JIT) production

– Does not directly control machines on the shop floor

– An information system that tries to minimize

inventory and employ machines efficiently and

effectively

(55)

FACTORY AUTOMATION

Manufacturing administration (cont’d)

• Supply chain management (SCM)

– Systems to deal with distribution and y

transportation of raw materials and finished

products throughout the supply chain

– Are often interorganizational systems that

communicate with suppliers and/or distributors

(56)

SUPPLY CHAIN

( )

MANAGEMENT (SCM) SYSTEMS

• Designed to deal with the procurement of Designed to deal with the procurement of

components needed to make a product or service

and movement and distribution of finished

products through the supply chain

• Five basic components of SCM system: Five basic components of SCM system:

1. Plan: developing strategy for managing resources

2. Source: choosing suppliers

3. Make: manufacturing the product

4. Deliver: logistics of getting product to the customer

5 Return: procedure for handling defective products

5. Return: procedure for handling defective products

(57)

FACTORY AUTOMATION

Factory operations

• Computer‐aided manufacturing (CAM) – use

of computers to control manufacturing p g

processes

– Series of programs to control automated p g

equipment on shop floor

– Includes guiding vehicles to move raw materials g g

and finished products

– Requires a lot of input from other systems

(58)

FACTORY AUTOMATION

Factory operations (cont’d)

• Manufacturing automation protocol (MAP) –

communications protocol to ensure an open p p

manufacturing system

– Pioneered by General Motors and now accepted y p

by nearly all manufacturers and vendors

– Allows for seamless communication between all

equipment on the factory floor

(59)

FACTORY AUTOMATION

Robotics

• A branch of artificial intelligence (AI) where

scientists and engineers build machines to

li h di d h i l k lik

accomplish coordinated physical tasks like

humans do

• Advantages:

– Perform repetitive tasks tirelessly

– Produce consistent high‐quality output Produce consistent high quality output