Experiencing MIS 9th by m kronenke chapter 07

Q2: How can information systems improve process quality?. Q3: How do information systems eliminate problems of information silos?. Q6: What are the challenges of implementing and upgradi

Processes, Organizations, and Information Systems

Chapter 7

– 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.

• Can PRIDE support 10,000 people spinning at the same time?

• Who to monetize PRIDE?

Study Questions

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

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?

How Do Structured Processes Differ from Dynamic Processes?

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

Characteristics of Information Systems

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

– How well a process achieves organizational strategy.

• How can processes be improved?

– Change process structure

– Change process resources

– Change both

How Can Information Systems Improve Process Quality?

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• Performing an activity

– Partially automated, completely automated

• Augmenting human performing activity

– Ex: Common reservation system

• Controlling data quality

– Ensure data complete and correct before continuing process activities

– Lack of integrated enterprise information.

– Inefficiency: decisions made in isolation

– Increased cost for organization

Problems Created by Information Silos

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

An Enterprise System for Patient Discharge

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

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

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• Business Process Reengineering (BPR)

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

– Difficult, slow, exceedingly expensive

– Key personnel determine how best to use new technology

– Requires high-level and expensive skills and considerable time

Emergence of Enterprise Application Solutions

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• Inherent processes

– Predesigned processes for using application

– “Industry best practices”

• Customer relationship management (CRM)

• Enterprise resource planning (ERP)

• Enterprise application integration (EAI)

Customer Relationship Management (CRM)

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• Suite of applications, database, set of inherent processes

• Manage all interactions with customer through four phases of customer life cycle

– Marketing, customer acquisition, relationship management, loss/churn

• Supports customer-centric organization

Customer Life

Cycle

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

Pre-ERP Information System: Bicycle Manufacturer

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

ERP Information Systems

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

ERP Enabled Sales Dashboard

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

Enterprise Application Integration (EAI)

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• Connects system “islands.”

• Enables communicating and sharing data

• Provides integrated information

• Provides integrated layer on top of existing systems while leaving functional applications “as is.”

• Enables gradual move to ERP

Design and Implementation for the Five Components

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

Virtual Integrated Database

So What? Who Fixes a Workflow Problem?

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• Computer programmer? No

• Network engineer? No

• Database administrator? No

• Someone with knowledge of business Yes!

– If workflow involves information system, someone knowledgeable and comfortable working with technical people

– You with help of a business analyst.

Ethics Guide: Dialing for Dollars

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• Assume you are a salesperson

• Bad quarter VP of Sales authorized a 20% discount on new orders if customers take delivery prior to end of quarter so order can be booked for this quarter

• VP says “Start dialing for dollars, and get what you can Be creative.”

• Send email with return product agreement.

• Offer product at full price, but agree to give 20% credit next quarter

• Sell to fictitious company and ship product to your brother-in-law’s garage

• Business process procedures

• Training and Consulting

ERP Solution Components

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• ERP Application Programs

– Configurable vendor applications

ERP Solution Components (Cont’d)

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• Business Processes and Procedures

– Adapt to 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

Example of SAP Ordering Business Process Blueprint

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

Example of SAP Ordering Business Process Blueprint (cont’d)

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

Characteristics of Top

ERP Vendors

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

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

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

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

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

Inter-enterprise PRIDE

System

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• 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

Security Guide: One-Stop Shopping

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• IS design involves constant trade-offs

– Risk of loss higher, security focused

– Inter-enterprise system can connect competitors with different incentives and agendas

– How secure is the cloud vendor?

– Bitcoin

 Centrally located, accessible from anywhere, very large sum of electronic money

Using the Guide: ERP and the Standard, Standard Blueprint

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• Organization adapts processes to standard blueprints

• If all firms in an industry use same business processes, how can a firm gain competitive advantage?

• How will innovation occur?

• Does “commoditized” standard blueprint prevent sustaining a competitive advantage?

Active Review

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

Q1: What are the basic types of processes?

Q2: How can information systems improve process quality?

Q3: How do information systems eliminate the 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?

– Spent $250 million for system clearly inoperable

– Exchange’s board of directors decided to stop development and utilize the federal exchange

Healthcare Exchange

Interorganizational IS

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

– More than 30 years of experience working in insurance industry,

– Key player in development of Massachusetts healthcare system

• Hired senior staff with deep experience in insurance

Cover Oregon

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• Did not hire a supervising contractor for project, instead took an active role in software’s development

• Agency suffered high employee turnover, and had difficulty hiring and keeping qualified personnel

Cover Oregon (cont'd)

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• OHA hired software development company to create major software components

– Two of three finalists dropped out at last minute, leaving Oracle Corporation a sole source vendor

– Oracle negotiated time and materials contracts instead of contract for specific deliverables at specific prices

– When problems developed, Oracle was paid tens of millions of additional money for change orders on same time and materials basis.

Cover Oregon (cont'd)

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c

• Oregon legislature required state to hire a quality assurance contractor, Maximus Corporation, to oversee project

• Maximus reported significant problems involving divided control, lack of clear requirements, inappropriate contracting

methodology, lack of project planning, and lack of progress

• Unclear who got those reports or what was done with them.

• Head of OHA project threatened to withhold Maximus’ payment.

• End result: Exchange development failed.