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IS312 Information Systems for Business

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Title: IS312 Information Systems for Business


1
IS312 Information Systems for Business
  • Lecture 7
  • Organizational Systems
  • Enterprise Applications
  • (Ch. 8)

2
LEARNING OBJECTIVES
  • Organizational Information Systems
  • The Need for Integration in Modern Businesses
  • Customer Relationship Management
  • Supply Chain Management
  • Enterprise Resource Planning

3
Decision-Making Levels of an Organization
4
Decision-Making Levels of an Organization
  • Executive level
  • Long-term decisions (Strategies)
  • Unstructured decisions
  • Managerial level
  • Decisions covering weeks and months (Tactics)
  • Semi-structured decisions
  • Operational level
  • Day-to-day decisions (Operations)
  • Structured decisions

5
Organizational Information Systems
6
Operational Level
  • Day-to-day business processes
  • Interactions with customers
  • Information systems used to
  • Automate repetitive tasks
  • Improve efficiency
  • Decisions
  • Structured
  • Recurring
  • Can often be automated using IS

7
Managerial Level
  • Functional managers
  • Monitoring and controlling operational-level
    activities
  • Providing information to executive level
  • Midlevel managers
  • Focus on effectively utilizing and deploying
    resources
  • Goal of achieving strategic objectives
  • Managers decisions
  • Semi-structured
  • Contained within business function
  • Moderately complex
  • Time horizon of few days to few months

8
Executive Level
  • The president, CEO, vice presidents, board of
    directors
  • Decisions
  • Long-term strategic issues
  • Complex and nonroutine problems
  • Unstructured decisions
  • Long-term ramifications

9
Functional Area Information Systems
  • Cross-organizational-level IS
  • Support specific functional area
  • Focus on specific set of activities

10
Information Systems Supporting the Functional
Areas
11
Enterprise Systems
  • Information Technology supporting business
    activities at enterprise level
  • Enterprise applications with internal and
    external focuses
  • Implementation of enterprise systems ERP, CRM
    and SCM

12
Legacy System
13
Enterprise System
14
Internal Focus Value Chain
15
Internally Focused Systems
  • Support functional areas, business processes and
    decision-making within an organization
  • New information (value) is added at every step

16
External Focus Value System
17
Externally Focused Systems
  • Coordinate business activities with customers,
    suppliers, business partners and others who
    operate outside the organization
  • Streamline the flow of information between
    companies

18
Evolution of Enterprise Systems
19
SUPPLY CHAIN MANAGEMENT
  • Integrations in a corporation
  • Supply Chain Management (SCM) in supporting
    business operations
  • Benefits, challenges, and future of SCM

20
Building a Connected Corporation through
Integrations
  • Integration Allows separate systems to
    communicate directly with each other, eliminating
    the need for manual entry into multiple systems
  • Forward integration
  • Backward integration

21
Enterprise Resource Planning
  • Data warehouse
  • Large, centralized data repository
  • Single place for data storage and access

22
Building a Connected Corporation through
Integrations
  • A Central Information Repository Example

23
Building A Connected Corporation Through
Integrations
  • An Integration Example

24
SUPPLY CHAIN MANAGEMENT
  • Five basic supply chain activities

25
SUPPLY CHAIN MANAGEMENT
  • Supply Chain Management (SCM) The management of
    information flows between and among activities in
    a supply chain to maximize total supply chain
    effectiveness and profitability

26
SUPPLY CHAIN MANAGEMENT
  • The supply chain has three main links
  • Materials flow from suppliers and their
    upstream suppliers at all levels
  • Transformation of materials into semi-finished
    and finished products through the organizations
    own production process
  • Distribution of products to customers and their
    downstream customers at all levels

27
SUPPLY CHAIN MANAGEMENT
  • A SCM Example

28
SUPPLY CHAIN MANAGEMENT
  • Effective and efficient SCM systems can enable an
    organization to
  • Decrease the power of its buyers
  • Increase its own supplier power
  • Increase switching costs to reduce the threat of
    substitute products or services
  • Create entry barriers thereby reducing the threat
    of new entrants
  • Increase efficiencies while seeking a competitive
    advantage through cost leadership

29
Effective and Efficient SCM Systems Effect on
Porters Five Forces
30
The Benefits of SCM Improved Visibility
  • Supply chain visibility The ability to view all
    areas up and down the supply chain in real time
  • Supply chain planning system Uses advanced
    mathematical algorithms to improve the flow and
    efficiency of the supply chain while reducing
    inventory
  • Supply chain execution system Automates the
    different activities of the supply chain
  • Bullwhip effect Occurs when distorted product
    demand information ripples from one partner to
    the next throughout the supply chain

31
The Benefits of SCM Improved Visibility
  • Supply Chain Planning and Execution

32
The Benefits of SCM Improved Profitability
  • Companies can respond faster and more effectively
    to consumer demands through supply chain enhances
  • Demand planning system Generates demand
    forecasts using statistical tools and forecasting
    techniques, so companies can respond faster and
    more effectively to consumer demands through
    supply chain enhancements

33
The Benefits of SCM Improved Profitability .
. .
  • Common supply chain metrics include
  • Back order
  • Inventory cycle time
  • Customer order cycle time
  • Inventory turnover

34
The Challenges of SCM
  • Primary challenges include
  • Cost An SCM system can cost millions of dollars
    for the software and millions more for help
    implementing the system
  • Complexity - The move towards globalization is
    increasing complexity in the supply chain

35
The Future of SCM
  • Fastest growing SCM components
  • Collaborative demand planning
  • Collaborative engineering
  • Selling chain management
  • Supply chain event management (SCEM)

36
CUSTOMER RELATIONSHIP MANAGEMENT
  • Customer Relationship Management (CRM) in
    supporting business operations
  • Benefits, challenges, and future of CRM

37
The Need for CRM
  • It costs six times more to sell to a new customer
    than to sell to an existing one.
  • A typical dissatisfied customer will tell 8-10
    people.
  • By increasing the customer retention rate by 5,
    profits could increase by 85.
  • Odds of selling to new customers 15, compared
    to the odds of selling to existing customers
    (50)
  • 70 of complaining customers will remain loyal if
    their problem is solved

38
Tenets of CRM
  • One-to-one relationship between a customer and a
    seller.
  • Treat different customers differently.
  • Keep profitable customers and maximize lifetime
    revenue from them.

39
Customer Touch Points
Web
Computer
Smart Phone
Physical Store
Customer Service
Sales Representative
CUSTOMER
Service Center
Field Service Technician
Direct Mail
Email
40
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41
CUSTOMER RELATIONSHIP MANAGEMENT
  • Customer relationship management (CRM) Involves
    managing all aspects of a customers relationship
    with an organization to increase customer loyalty
    and retention and an organization's profitability

42
CUSTOMER RELATIONSHIP MANAGEMENT
43
The Benefits of CRM
  • Organizations can find their most valuable
    customers through RFM - Recentcy, Frequency,
    and Monetary value
  • How recently a customer purchased items
  • How frequently a customer purchased items
  • The monetary value of each customer purchase

44
Evolution of CRM
45
Operational Analytical CRM
  • Operational CRM Supports traditional
    transactional processing for day-to-day
    front-office operations or systems that deal
    directly with the customers
  • Analytical CRM Supports back-office operations
    and strategic analysis and includes all systems
    that do not deal directly with the customers

46
Operational Analytical CRM
47
Operational Analytical CRM
  • Marketing and operational CRM technology
  • List generator, campaign management,
    cross-selling and up-selling
  • Sales and operational CRM technology
  • Sales management, contact management, opportunity
    management
  • Customer service and operational CRM technology
  • Contact center, Web-based self-service, call
    scripting

48
Sales Operational CRM
  • The sales department was the first to begin
    developing CRM systems with sales force
    automation a system that automatically tracks all
    of the steps in the sales process

49
Customer Service Operational CRM
  • Three customer service operational CRM
    technologies
  • Contact center (call center)
  • Web-based self-service system
  • Call scripting system
  • Common features included in contact centers
  • Automatic call distribution
  • Interactive voice response
  • Predictive dialing

50
Analytical CRM
  • Website personalization Occurs when a website
    has stored enough data about a persons likes and
    dislikes to fashion offers more likely to appeal
    to that person
  • Analytical CRM relies heavily on data warehousing
    technologies and business intelligence to glean
    insights into customer behavior
  • These systems quickly aggregate, analyze, and
    disseminate customer information throughout an
    organization

51
The Challenges of CRM
  • The customer is always right and now has more
    power (buyer power) than ever thanks to the
    Internet e-business, words of mouth via social
    network

52
The Future of CRM
  • Current trends include
  • Supplier relationship management (SRM)
  • Partner relationship management (PRM)
  • Employee relationship management (ERM)

53
ENTERPRISE RESOURCES PLANNING
  • Enterprise Resource Planning (ERP) in supporting
    business operations
  • Benefits, challenges, and future of ERP

54
ENTERPRISE RESOURCE PLANNING
  • Enterprise resource planning Integrates all
    departments and functions throughout an
    organization into a single IT system (or
    integrated set of IT systems) so that employees
    can make enterprisewide decisions by viewing
    enterprisewide information on all business
    operations

55
ENTERPRISE RESOURCE PLANNING
  • Reasons ERP systems are powerful tools
  • ERP is a logical solution to incompatible
    applications
  • ERP addresses global information sharing and
    reporting
  • ERP avoids the pain and expense of fixing legacy
    systems

56
ENTERPRISE RESOURCE PLANNING
  • ERP systems collect data from across an
    organization and correlates the data generating
    an enterprisewide view

57
ENTERPRISE RESOURCE PLANNING
  • ERP Systems Automate Business Processes

58
ENTERPRISE RESOURCE PLANNING
The Organization Before ERP
59
ENTERPRISE RESOURCE PLANNING

The major objective of ERP systems integrate the
functional areas of the organization by enabling
seamless information flows across them.
60
Problems with Information Silos
61
ENTERPRISE RESOURCE PLANNING
  • ERP Bringing The Organization Together

62
Integration Tools
  • Enterprise system Provide enterprise-wide
    support and data access for a firms operations
    and business processes
  • Enterprise application integration (EAI)
    Connects the plans, methods, and tools aimed at
    integrating separate enterprise systems

63
Enterprise Resource Planning
64
Enterprise Application Integration
65
Integration Tools
  • Middleware Several different types of software
    that sit between and provide connectivity for two
    or more software applications
  • Enterprise application integration middleware
    Takes a new approach to middleware by packaging
    commonly used applications together, reducing the
    time needed to integrate applications from
    multiple vendors

66
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67
Components of ERP
  • Core ERP component Traditional components
    included in most ERP systems and they primarily
    focus on internal operations
  • Extended ERP component Extra components that
    meet the organizational needs not covered by the
    core components and primarily focus on external
    operations

68
The Benefits of ERP
69
The Benefits of ERP
70
Accounting Finance ERP Components
  • Accounting and finance ERP component Manages
    accounting data and financial processes within
    the enterprise with functions such as general
    ledger, accounts payable, accounts receivable,
    budgeting, and asset management

71
Production Materials Management ERP Components
  • Production and materials management ERP component
    Handles the various aspects of production
    planning and execution such as demand
    forecasting, production scheduling, job cost
    accounting, and quality control

72
Human Resource ERP Component
  • Human resource ERP component Tracks employee
    information including payroll, benefits,
    compensation, performance assessment, and assumes
    compliance with the legal requirements of
    multiple jurisdictions and tax authorities

73
Extended ERP Components
  • Extended ERP components include
  • Business intelligence
  • Customer relationship management
  • Supply chain management
  • Ebusiness components include
  • Elogistics
  • Eprocurement

74
Measuring ERP Success
  • Balanced scorecard Enables organizations to
    clarify their vision and strategy and translate
    them into action
  • Balanced scorecard views the organization from
    four perspectives
  • Learning and growth
  • Internal business process
  • Customer
  • Financial

75
Measuring ERP Success
76
THE CHALLENGE OF ERP
  • ERP systems contain multiple complex components
    that are not only expensive to purchase, but also
    expensive to implement
  • Costs include
  • Software
  • Consulting fees
  • Hardware expenses
  • Training fees

77
The Future of Enterprise Systems Integrating
SCM, CRM ERP
  • SCM, CRM, and ERP are the backbone of ebusiness
  • Integration of these applications is the key to
    success for many companies
  • Integration allows the unlocking of information
    to make it available to any user, anywhere,
    anytime

78
Integrating SCM, CRM ERP
79
Integrating SCM, CRM ERP
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