PART III: Next Three Chapters

1. PART III:Next Three Chapters Chapter 7: Structured Processes and Information Systems • Discusses structured business processes and ways information systems can improve process quality Chapter 8: Social Media Information Systems • Addresses dynamic processes used with social networking applications Chapter 9: Business Intelligence Systems • Discusses business intelligence and related information systems

2. Chapter 7Structured Processes and Information Systems Jason C. H. Chen, Ph.D. Professor of MIS School of Business Administration Gonzaga University Spokane, WA 99258 chen@jepson.gonzaga.edu

3. Fox Lake Country Club • Exclusive private golf and tennis club • 1500 memberships • 35 full-time and 100+ seasonal employees • Business units: • Restaurant, pro shop, facilities, new wedding-hosting events • Tennis, swimming activities and the pro shop are ignored in the study • Hit hard by recession

4. Fox Lake Country Club Has a Problem • Mike,facilities manager • Anne, wedding planner • Renovation plan interferes with scheduled weddings • Could result in lost revenue, unhappy customers, damaged business reputation and costly law suits • What are missing and needed for the Fox Lake Country Club. • Answer – Structured Processes and “relevant” Information Systems

5. Study Questions Q1: What are the basic types of structured processes? Q2: How can information systems improve process quality? Q3: How do enterprise systems eliminate problems of information silos? Q4: How do CRM, ERP, and EAI support structured enterprise processes? Q5: What are the elements of an ERP System? Q6: What are the challenges of implementing enterprise systems? Q7: How will service-oriented architecture impact enterprise information systems? Q8: 2022?

6. Study Elements Four important elements can be summarized in this chapter: 1a. What is “structured processes” and what are the basic types of structured processes? 1b. How can information systems improve process quality? 2. What is “information silos” and how do enterprise systems eliminate problems of information silos? 3a. What are CRM, ERP, and EAI and how do “they” support structured enterprise processes? 3b. What are the elements of an ERP System? 4a. What Are the Challenges When Implementing New Enterprise Systems? 4b. How will service-oriented architecture (SOA) impact enterprise information systems?

7. Q1. What are Business Process and Business Process Management? • Business process: A network of activities that generate value by transforming inputs into outputs ( and to achieve a defined business outcome,) • Fig. 7.1 a three-activity process for approving customer orders. • Busisness process management (BPM) is a management approach focused on aligning all aspects of an organization with the wants and needs of clients. It is a holistic management approach[1] that promotes business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology. http://en.wikipedia.org/wiki/Business_process_management TM -7 Dr. Chen, The Trends of the Information Systems Technology

8. What are Business Process and Business Process Management? • Business process: A set of logically related tasks performed to achieved a defined business outcome • Business process management (BPM) is a management approach focused on aligning all aspects of an organization with the wants and needs of clients. It is a holistic management approach[1] that promotes business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology. http://en.wikipedia.org/wiki/Business_process_management TM -8 Dr. Chen, The Trends of the Information Systems Technology

9. What Are the Basic Types of Structured Processes? Fig 7-1 Business Process with Three Activities

10. Structured vs. Dynamic Processes • Structured processes • Formally defined, standardized processes that involve day-to-day operations. • E.g., accepting a return, placing an order, purchasing raw materials. • Dynamic processes • Flexible, informal, and adaptive processes that normally involve strategic and less specific managerial decisions and activities. • E.g., whether to open a new store location or how best to solve the problem of excessive product returns.

11. Q/A Which of the following is an example of a dynamic process? • A) Samsung accepts a return of a defective television from its dealer. • B) Starbucks places an order for coffee beans from its local supplier. • C) Amazon.com hires customer service respresentatives to help customers with their online orders. • D) Nike uses Facebook and Twitter to generate buzz about its new line of running shoes. • Answer:

12. How Do Structured Processes Differ from Dynamic Processes? Fig 7-2: Structured vs. Dynamic Processes

13. Different Structured Processes and IS • Structured departmental process • a structured process that exists to enable departmental employees to fulfill the charter purpose, and goals of a particular organizational unit (see Fig. 7-3&4) • Departmental information system • an IS that exists o support a departmental process • Structured enterprise processes • Structured processes that span an organization and support activities in multiple departments. • Structured information system • an IS that exists o support a departmental process • Structured ________________ processes • Structured processes that span two or more independent organizations. At Fox Lake, the process that are restaurant uses to order supplies and ingredients from its suppliers is an example. • Structured Interenterprise information system • an IS that exists o support an interenterprise process Interenterprise

14. Common Departmental Information Systems Fig 7-3: Common Departmental Information Systems

15. How Do Structured Processes Vary by Scope? Fig 7-4: Scope of Structured Processes

16. Q2: How Can Information Systems Improve Process Quality? • Processes are the fabric of organizations; they are the means by which people organize their activities to achieve the organization’s goals. • Two dimensions of process quality: • Process __________: ratio of process outputs to inputs. • Process ___________: how well a process achieves organizational strategy • Ways to improve process quality • Change process ___________ • Change process ___________ • Change both efficiency effectiveness structure resources

17. How Can Information Systems Improve Process Quality? 1. Performing an activity • Partially automated, completely automated 2. Augmenting human performing activity • Common reservation system 3. Controlling process flow • Order approval process

18. Q3: What is Information Silo? • Information Silo • is a condition that exists when data are isolated in separated information systems. • For example, if an organization uses one IS for order processing and a second IS for customer service, the customer data are isolated in two separate systems. • Result: the customer service department might provide thousands of dollars of customer support to a customer who has only ordered a few hundred dollars of product. • Other Disadvantages: • Wasting resources (and then increasing the cost) • Data are not integrated, consequently, information might be inconsistent (and inaccurate) and affect the quality of decision making.

19. Q3: How Do Enterprise Systems Eliminate Information Silo Problems? • No organization plans to create information silos. They arise as a consequence of IS that support departmental rather than enterprise-level processes. • Specifically, how do Information System Silos arise? • Data isolated in islands of automation • Different department goals • Different personal and workgroup needs • Duplicate data as organization grows

20. Fox Lake Country Club Departmental Goals Fig 7-5: Fox Lake Country Club Departmental Goals

21. Islands of Automation (Information Silo) [ repeated customers] [ maintenance and problem solving within budget] [one-time event] Fig 7-6: Fox Lake Country Club Departmental IS

22. Islands of Automation (Information Silo) • Information silo (or islands automation) are not a problem untilprocess begin to use and store data about the same entities (or until they duplicate data). • At that point they become quite problematic. • Fox Lake learned when the wedding events department maintained its own copy of room reservation data that duplicated same data in the facilities department. • By storing isolated data, their activities can conflict, as they did. (see Figure 7-7 for a Hospital example)

23. Examples of Islands of Automation at a Hospital (stop making meals) (clean room) (take-home medication) (issue discharge order) (family to be notified) (prepare patients) much data are not integrated Fig 7-7: Examples of Islands of Automation at a Hospital

24. What Problems Do Information Silos Cause? (w/credit return of $5,500 by Acct. dept, but, Sales/Marketing dept. do not know) ($32,300=$37,800-$5,500 (IndyMac was acquired by OneWest Bank) ??? $$$ Fig 7-8: Problems Caused by Information Silos

25. How Do Enterprise Information Systems Eliminate Silos? (shared database, consistent information, quality decision making/services) [1a] [1b] [1c] Fig 7-9: Fox Lake Club Enterprise Reservation System

26. An Enterprise System for Patient Discharge [1] [2a] [2b] [2c] [3a] [3b] [4a] [4b] [5b] [5a] Enterprise systems like the one in Fig. 7-10 were not feasible until network, data communication, and database technologies reached a sufficient level of capability and maturity in the late 1980s and early 1990s. Fig 7-10: Example Enterprise Process and Information System

27. IS/E-BUSINESS Demands Products What they need/want? How many they need/want? When they need/want? How to reach them? BUSINESS VALUE & FOCUS –IS Perspective Customer centric • SCM • CRM • BPR • ERP Value Who are the customers? Where are the customers? Their purchasing habits How to reach them? SCM: Supply Chain Mgt. CRM: Customer Relationship Mgt. BPR: Business Process Reengineering ERP: Enterprise Resources Planning Business Models & Strategies

28. Production and Manufacturing Sales and Distribution Engineering Marketing Service Manufacturing Industry Value Chain Product and Service Flow Support Activities Administrative and Other Indirect Value Added Research and Development Primary Activities N

29. How do functional systems relate to the value chain? • Porter’s value chain model from Chapter 3 is reorganized to show primary and support activities from a customer’s perspective, beginning with Marketing and Sales on the left, to Service and Support on the right. Chapter 3. Reorganized Porter Value Chain Model Competitive (Value) Advantage

30. Q4: How Do CRM, ERP and EAI Support Enterprise Processes? Business Process Reengineering (BPR) • BPR means radically changing how people work - changing business policies and controls, systems and technology, organizational relationships and business practices, and reward programs. • Integrated data, enterprise systems create stronger, faster, more effective linkages in value chains • Difficult, slow, and exceedingly expensive • Key personnel determine how best to use new technology • Requires high-level and expensive skills and considerable time

31. Deconstruction of the newspaper industry: BPR Old newspaper industry value chain Journalists Distributors Readers Printers Editors Columnists New newspaper industry value chain Editors Journalists _____ Readers Columnists

32. BPR Radical Change = New organization + IT Types of Organizational = Strategies Industry Structure + Competitive Strategies + Cooperative Strategies

33. Emergence of Enterprise Application Solutions. • The process quality benefits of enterprise-wide systems became apparent; however, as applications became more and more complex, in-house development costs became infeasible. • The organizations began to look more favorably on the idea of licensing pre-existing applications with “Inherent processes”: • Predesigned procedures for using software products • Based on “industry best practices” • Three categories of enterprise applications emerged: • Customer relationship management(CRM) • Enterprise resource planning (ERP) • Enterprise application integration (EAI)

34. Customer Relationship Management (CRM) • CRM • Suite of applications, a database, and a set of inherent processes • Intended to support customer-centric organization • Integrates all primary activities of value chain • Manage all interactions with customer though four phases of customer life cycle: (Fig. 7-11) • Marketing—marketing sends messages to target market • Customer Acquisition—customer prospects order and need to be supported • Relationship Management—support and resale processes increase value to existing customers • Loss/churn—win-back processes categorize customers according to value and attempt to win back high-value customers

35. Four Phases of Customer Life Cycle • Figure 7-11 depicts the four phases of the customer life cycle and shows how a CRM system integrates them into three major processes: solicitation, lead-tracking, and relationship management. Fig 7-11: The Customer Life Cycle

36. CRM Applications • Customer Relationship Management (CRM) systems store data in a single database and link CRM processes to one another. Fig 7-12: CRM Applications

37. A Marketing Strategy – showing the 4 P’s of a Marketing Mix Product Place Price Promotion C

38. People, Process and Technology Start with People

39. Customer Relationships

40. Enterprise Resource Planning (ERP) • Enterprise Resource Planning (ERP) • a suite of applications called modules, a database, and a set of inherent processes for consolidating business operations into a single, consistent, computing platform. • An ERP system is an information system based on ERP technology. • ERP systems are not for every organization. • Companies still have problem associated with information silos. • Companies should choose enterprise application integration (EAI) to solve their problem (see next topic).

41. Enterprise Resource Planning (ERP) ERP systems include the functions of CRM systems, it also include accounting, manufacturing, inventory, and human resource applications. Fig 7-13: ERP Applications

42. Pre-ERP Information System: Bicycle Manufacturer Even if parts can be obtained, until the order is entered into the finished goods database, purchasing is unaware of the need to buy new parts. Fig 7-17: Pre-ERP Information Systems

43. Pre-ERP Information System: Bicycle Manufacturer Information Silos (not integrated DB) Fig 7-17: Pre-ERP Information Systems

44. ERP Information System Fig 7-18: ERP Information Systems

45. EAI Automatically Makes Data Conversions Among Different Systems “Virtual Integrated Database” T/F: Enterprise application integration is a suite of applications, a database, and a set of inherent processes for consolidating business operations into a single, consistent, computing platform. Answer: Fig 7-20: Design and Implementation for the Five Components

46. Enterprise Application Integration (EAI) • Enterprise Application Integration (EAI) is a suite of software applications that integrates existing systems by providing layers of software that connect applications together. • EAI does not contain centralized database. • EAI does the following: • Connects system “islands”. • Enables communicating and sharing data. • Provides integrated information. • Leverages existing systems – leaving functional applications as is, but providing an integration layer over the top. • Enables a gradual move to ERP.

47. MRP: Manufacturing Resource Planning

49. MRP: Manufacturing Resource Planning

50. Q5: What Are the Elements of an ERPSystem? • Integrate primary value chain activities with application programs, databases, procedures, training and consulting that integrate: • Supply chain • Manufacturing • CRM • Human • Accounting