Enterprise Business Processes and Applications IS 6006

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Enterprise Business Processes and
Applications(IS 6006)

• Masters in Business Information Systems
• 6th Jan 2009

Fergal Carton Business Information Systems
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Course Objective

• To understand the key processes underlying modern
  organisations and how enterprise wide systems
  support these processes

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Covered so far

• 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 /
  SCM)?
• Historical perspectives on enterprise
  applications
• Single instance implementations and data
  integrity
• Project management (Gap analysis, resources, )
• Reporting and data access in the enterprise

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This week

• Single instance ERP systems
• Hardwiring processes
• Impact for subsidiaries
• Data integrity issues
• Gap analysis (UCC example)
• Scope definitions

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Single instance

• One system clock
• One copy of the production data
• One version of master data
• One transaction engine
• One database administrator

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ERP is often single instance

• Single point of data entry (POs, SOs, )
• Inventory control
• Opportunity to re-design processes
• Single technical platform (support)
• Common language, common pool of data

Sales
Shipping
Collect cash
Production
Customer information (ship-to, bill-to,
install-at, )
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ERP hardwires processes

• Human decisions replaced by data and interfaces
• An approved sales order triggers the creation of
  an invoice (running Accounts Receivable
  interface)
• A production schedule triggers the creation of
  work orders
• A batch release from warehouse triggers quality
  checks
• A component quality failure triggers purge on all
  inventory
• An incomplete payment triggers a debit note
• An unpaid invoice triggers a reminder letter

Increased focus on data!
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Single instance scenario SIT

• ERP database is in Boston
• 43 countries linked via Wide Area Network
• 4,500 users ( concurrent users?)
• 20,000 customer records (all countries)
• 10,000 supplier records
• 1,400 products in price book
• 10,000 shipments per quarter (for one plant)

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Impact for subsidiaries the good news

• Complete conformance to HQ standards
• No need to re-work local data for HQ
• Little local IT support required for ERP
• Real time visibility of worldwide operations
• Closing the books quickly (2-5 days)

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Impact for subsidiaries the bad news

• Gap between template process reality
• Workarounds can be onerous
• System response time degradation
• Support structure is centralised
• Lack of transparency of transactions
• Transactions can get stuck in interface
• Inability to access data for reporting

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Data integrity issues

• Forecast figures versus plan
• Buffer stocks (GSK)
• Multiple repositories of customer data (EMC)
• Multiple repositories of product data (GSK)
• Sales holding back on deals (EMC)
• Lack of faith in orders (EMC)

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Data integrity issues eg. customers

• When creating a new customer, who has control?
• 42 occurrences of one customer in your database,
  why?
• Customers exist in ERP core database, but also in
  several legacy systems. How do you make sure they
  are in synch?
• Different depts. require and record different
  addresses for same customer (ship-to, bill-to,
  install-at, )

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SIT production planning single instance impact?

• Planning extremely manual (Excel based)
• By definition planning is by plant (local)
• What impact would a global single instance system
  have?
• Customer benefit?
• Efficiency gain?

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Gap analysis expectation mgt

• Describe existing processes
• Document how things are currently done
• Review inputs and outputs of current process
  (screens, forms, reports)
• Outline problems with current way of doing things
  (speed, risk of error, )
• What improvements are expected from system
  (single point of data entry, faster reports, less
  manual work, )
• How to design and communicate the proposed
  solution
• Review ERP documentation collate with existing
  processes
• Review responses of vendors to User Requirements
  Spec
• Walk-through solution, highlighting differences

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GAP analysis setting the scope

• Reconciling technological necessities of the
  system with business needs
• ERP systems impose their own logic
• Balancing the way you want to work with the way
  the system will let you work
• 2 stage model for scope decisions
• Choice of modules (Purchasing, AP, )
• Configuring the system to your way of working

Davenport, 1998
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Other scope definitions

• Number of modules
• Number of functional units affected
• Number of sites
• Extent of customisation
• Number of interfaces with legacy applications

Bingi, 1999
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UCC Finance Phase 1
Accounts Payable
Accounts Receivable
Purchasing
Cash
Fixed Assets
Budgeting and Forecasting
Reporting
General Ledger
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Analysing Fit

• Functionality grid
• Break down per functional area
• Down to process stage level
• Ask vendors to rate fit
• Not supported
• Supported with mod / workaround
• Supported with minor alteration
• Fully supported
• Score and recommend (see diagram)

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UCC Finance - modules

• General Ledger
• Accounts Payable/Creditors ledger including Tax
  Compliance Reporting
• Accounts Receivable/Debtors ledger/Invoicing
• Procurement Management
• Purchase Order Processing
• Cash Book, Cash Receipts, Cash Forecasting
• Capital Project Accounting
• Fixed Asset Register and Management
• Research Accounting
• Budgeting and Forecasting
• Tax Compliance Reporting
• Costing
• Report Writers
• System Manager

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System requirements

• System requirements describe the needs and
  desires of an information system
• Must-have
• Nice-to-have
• Requirements can be categorised as
• Functional (an action)
• Eg. the system should process a spending request
• Non-functional (a feature or constraint)
• Eg. budgets are confidential to the department
  concerned

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UCC Finance requirements

• For each requirement, a rating has been provided,
  as follows
• M Mandatory
• I Important
• D Desirable (nice to have)

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Extent of customisation

• Response to RFT included contractual response to
  Level of Fit
• A standard functionality
• inaccurate response from vendor may misrepresent
  the ability of the software to deliver a
  functionality
• B, C, E alternative functionality, workaround or
  modification
• Notion of workaround misleading not a once off
  fix
• Total time workaround time number of
  transactions
• Remember the Pareto principle 10 functionality
  will give 90 of headache

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How to manage the risk?

• Prioritise functionality what is the 10?
• Process for identifying incorrect As
• Allocate Bs and Cs to mini-project leaders