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Learning Objectives
Understand the history of Information Systems
and three types of Information Systems
Functional Information Systems:
-- Features and Problems
Integrated Applications
Why Integrate? (Value Chain Model)
Three major integrated systems: CRM, ERP, & EAI
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Calculation Systems
First Kind of IS (1950-1980)
Perform tedious, repetitive CalculationBalanced accounting records
Computed payroll
Applied debits & credits to general ledger
Track inventory, etc…
Provide specifically
designed, small
volume, numeric
information
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Functional Systems
As the technology evolve, every department develops their own Information Systems
“Single Function” -- independent
Payroll system
Student registration systems
Computer inventory management systems
Automate the process for each functional area
(Maintaining the same process, streamlining it…)
Sales and marketing
Manufacturing
Human Resources
Finance,
Etc.
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Example: Human Resources Systems
Support recruitment, compensation, evaluation, and development
of organization’s employees
Recruiting methods may be simple or complex
Compensation includes payroll, processing and
tracking vacation, sick leave, health care, other benefits
Employee evaluation includes publication of job and
skill descriptions and performance evaluations
Development and training activities vary
HR system concerns every employee in the organization. You
should check the website before you accept the job offer…
CSUSM HR Webpage: http://www.csusm.edu/HR/
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Integrated Systems
Combining functional areas to better support business
goals and objectives
Porter’s Value Chain Model:
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Simplified Value Chain
• Linkages – interactions across value activities
• Linkages important source of efficiencies and readily supported by IS
• Emphasis on the linkages triggered the movement of Business Process Redesign
-- Dell, Toyota, etc…
Customer placesorder
Product is manufactured
Product is delivered to customer
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Value chain – network of value-creating activities
is foundation business process design, or
business process redesign (BPR)
Organizations should not automate or
improve existing functional systems
Organizations should instead PLUNGE
Create new, more efficient, business processes
Integrate activities of all departments involved
in value chain
Business Process Redesign
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Projects expensive and difficult1. Highly trained systems analysts interview key personnel from
many departments and document existing system and alternatives
2. Managers review results and try to develop new, improved processes
3. New information systems developed to implement new business processes
Employee resistance to change
Cannot know ahead of time how effective the new processes are
Few successes, and many others failed…
The Challenges of Business Process Redesign
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Built-in processes provided by software application (Oracle and SAP)
Inherent Processes
Benefits
“Bests Practices”
Save substantial amount
of money and time in
developing new process
and system
Proved benefits from other
organization.
Disadvantage
May require substantial
organizational change
Change can be disruptive
to ongoing operations
Disturbing to employees
Homogenous processes
may not be good for
differentiation
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Three Examples of Integrated IS
CRM – Customer Relationship Management
ERP – Enterprise Resource Planning
EAI – Enterprise Application Integration
Note: Different vendors define their own version of the
above terms to better support their own products.
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Customer Relationship Management Systems
Set of business processes for attracting, selling,
managing & supporting customers
Provides single data repository about all
customer interactions
Stores all customer data in one place and
enables access to people with permissions
CRM components
Solicitation
Lead Tracking (presale)
Relationship management (post-sale)
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Enterprise Resource Planning
Enterprise resource planning (ERP) integrates
all of organization’s principal processes
Outgrowth of MRP II manufacturing systems
Primary ERP users are manufacturing companies
SAP first & most successful
ERP software vendor
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MRP MRPII ERP
MRP (material requirements planning)
An Information System that plans the need for materials and inventories
of materials used in the manufacturing process
Does not include the planning of personnel, equipment, or facilities
requirements.
BOM (Bill-of-Material) List of product materials and subassemblies.
(see figure 7-8, page 203)
MRP II (manufacturing resource planning)
Follow-on to MRP that includes the planning of materials, personnel, and
machinery.
limited cross-functional..Push
ERP:
All the resources in the entire company
Defined processes to link the resources. (see page 212)
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Potential Benefits of ERP
Note: However, you need to trade off between the cost and benefit.
Not all the business are suitable for change.
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Implementing ERP System
CEO needs to be cautious in deciding whether to implement.
Once decided, it may take years to complete.
3rd party consultant may need to come in to facilitate the process
Task 1: Model current business processes
Task 2: Managers and analysts compare these processes to
ERP blueprint processes and note differences
Task 3: Eliminate differences by either
Changing existing business process to match
ERP process
Altering ERP system to match business process
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Enterprise Application Integration (EAI)
ERP systems are not for every organization
Too manufacture-oriented
Too daunting
Alternative: EAI
Connects system “islands” via a new layer
of software/system
Enables existing applications to
communicate and share data
(“virtual” database)
Provides integrated information
Leverages existing systems
Enables a gradual move
towards ERP.
EAI
IT infrastructure
Hum
an Resource
Man
ufactu
ring
Marketin
g Inven
tor
y othe
r
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Key Terms and Concepts
Bill of materials (BOM)
Business process design
Calculation systems
Cross-departmental systems / Cross-functional systems
Customer relationship management (CRM)
Customer Life Cycle
Enterprise application integration (EAI)
Enterprise resource planning (ERP)
Functional systems (examples)
Inherent processes
Integrated systems
Linkages
MRP/MRP II
Value chain