Information Systems

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CHAPTER 7 Enterprise Computing

Challenges and Enterprise Resource

Planning

Opening Case:

Shell Canada Fuels

Productivity with ERP

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Chapter 7 Overview

• SECTION 7.1 – ENTERPRISE COMPUTING CHALLENGES – Innovation: Finding New

– Social Entrepreneurship: Going Green

– Social Networks: Who’s Who

– Virtual Worlds: It’s a Whole New World

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Chapter 7 Overview

• SECTION 7.2 – ENTERPRISE RESOURCE PLANNING – Enterprise Resource Planning

– Core ERP Components

– Extended ERP Components

– Integrating SCM, CRM, and ERP

– Measuring ERP Success

– Choosing ERP Software

– ERP and SME Markets

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Learning Outcomes

1. Explain what enterprise computing challenges are happening in organizations today (e.g. innovation, going green, social networks, and virtual worlds).

2. Describe enterprise resource planning as a management approach and how information systems can help promote ERP.

3. Describe the components of ERP systems and the differences between them.

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Learning Outcomes

4. Explain the business value of integrating supply chain management, customer relationship management, and enterprise resource planning systems together.

5. Explain how an organization can measure ERP success, choose ERP software, choose ERP software, and use ERP in SME markets.

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SECTION 7.1

ENTERPRISE

COMPUTING

CHALLENGES

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Warren Buffet

• Buffett believes in focused investing and believes that all investors should

look at five features:

1. The certainty with which the long-term economic characteristics of the

business can be evaluated

2. The certainty with which management can be evaluated, both as to its

ability to realize the full potential of the business and to wisely employ its

cash flows

3. The certainty with which management can be counted on to channel the

reward from the business to the shareholders rather than to itself

4. The purchase price of the business

5. The levels of taxation and inflation that will be experienced and that will

determine the degree by which an investor’s purchasing-power return is

reduced from his gross return

• .

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Social Entrepreneurship:

Going Green

• When left on continuously, a single desktop computer

and monitor can consume at least 100 watts of power

per hour.

• To generate that much energy 24 hours a day for a year

would require approximately 714 pounds of coal.

• When that coal is burned, it releases on average 5

pounds of sulfur dioxide, 5 pounds of nitrogen oxides,

and 1,852 pounds (that is almost a ton) of carbon

dioxide.

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Social Entrepreneurship:

Going Green

• Social Responsibility implies that an

organization has a responsibility to

society.

• Corporate Policy reflects the position a

company takes on social and political

issues.

• Sustainable or ―Green‖ describes

systems that minimize damage to the

environment.

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Energy Consumption

• Computer servers in the United States account

for about 1 percent of the total energy needs of

the country.

• Put in perspective, this is roughly equivalent to

the energy consumption of Mississippi.

• Computers consume energy even when they

are not being used.

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Energy Consumption

Breakdown of Power Usage in The Typical Data Centre

Figure 4.2

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Energy Consumption

Some initiatives to improve sustainability include:

• Ontario offers energy rebate programs.

• Hewlett-Packard introduced several programs to

improve energy efficiency and recycling of

computer components.

• Sun Microsystems create servers that consume

30-80% less energy for the amount of work

processed.

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E-waste

• Ewaste – Refers to discarded, obsolete or broken electronic

devices.

• Ewaste includes CDs, DVDs, thumb drives, printer cartridges,

cell phones, iPods, external hard drives, TVs, VCRs, DVD

players, microwaves, and so on

• Sustainable IT disposal – Refers to the safe disposal of MIS

assets at the end of their life cycle

• Electronic Product Stewardship Canada (EPSC) – an

industry association that educates and encourages e-waste

control

• Recent International laws restrict the use of hazardous

materials.

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Greener IT

Ways to Save Energy in a Data Centre

Figure 4.4

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Organizational Social Networking

Passive Search—Finding people for new jobs

who are happy and productive where they

through business networking sites.

Boomerangs—Former employees returning to

old jobs.

Marketing Networks— Using business networks

for marketing and events.

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It’s a Whole New World!

• Virtual World—An Internet

resource which presents a 3D

virtual community.

• Virtual Organizations–

interactive web presence for

businesses and their

customers.

• Virtual Workforce—working

from home…or anywhere via

the Internet. Figure 4.5

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Tools for the Virtual Workforce

• Mobile commerce (m-commerce)—ability to

purchase goods and services through a mobile

device.

• Telematics—The blending of wired and

wireless technologies for efficient electronic

communication.

• Electronic tagging—the use of RFID (radio frequency identification) and other systems to

identify and tracking digital assets.

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Virtual World—Second Life

• Most popular virtual world, logging just over

100 million user-hours per month.

• Over 40 competitors with a wide variety of

objectives:

– Warner Bros. Records launching new artists.

– Logo hosting Big Robots events in

cyberspace.

– Adidas market testing new gym shoes.

– Major League Baseball simulcasting its

homerun derby.

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OPENING CASE QUESTIONS

Shell Canada Fuels Productivity

with ERP

1. How can large organizations like Shell Canada use

innovation to fuel productivity?

2. What advantages are there for Shell Canada to

recycle its IT equipment? How could recycling IT

equipment be potentially threatening to Shell Canada?

3. How could Shell Canada use social networking to

boost productivity and increase profits?

4. How could Shell Canada use virtual worlds such as

Second Life to make the company more successful?

Give specific examples

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SECTION 7.2

ENTERPRISE

RESOURCE PLANNING

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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 enterprise-

wide decisions by viewing enterprise-wide

information on all business operations

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Outcomes

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ERP—Powerful Organizational

Tools

ERP is:

• Solution to incompatible applications.

• Addresses the need for global information

sharing.

• Avoids the expense of fixing legacy systems.

Legacy Systems—are older computer technology still in use.

Functional Systems—serve single business

departments or units.

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Enterprise Resource Planning

Enterprise Resource Planning System

Figure 4.9

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Enterprise Resource Planning

ERP Integration Data Flow

• At the heart of all ERP systems is a database; when a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system

Figure 4.10

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Enterprise Resource Planning

ERP Process Flow

Figure 4.11

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Enterprise Resource Planning

The organization before ERP

Figure 4.12

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Enterprise Resource Planning

The organization after ERP

Figure 4.13

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Core and Extended ERP

Components

The Evolution of ERP

Figure 4.14

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Core and Extended ERP

Components

Figure 4.15

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Core and Extended ERP

Components

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Outcomes

• City of Winnipeg had had problems with inconsistent

data and poor communications, wasted purchasing

power due to non-integrated procurement, lack of

coordination in payroll, and functional areas that

needed to interact but had few touch points.

• It used ERP to streamline and integrate more than

100 diverse systems in its various departments

• The new system aligned finance, HR, and

information technology across the service

departments saving the tax payer money and

improving satisfaction levels in customers and

employees.

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Core and Extended ERP

Components

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

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Core ERP Components

• Three most common core ERP

components

1. Accounting and finance

2. Production and materials management

3. Human resource

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Accounting and 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

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Outcomes

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Accounting and Finance ERP

Components

• Deeley Harley-Davidson Canada (DHDC), the exclusive

Canadian distributor of Harley-Davidson motorcycles, has

improved inventory, turnaround time, margins, and customer

satisfaction—all with the implementation of a financial ERP

system.

• The system has opened up the power of information to the

company and is helping it make strategic decisions when it

still has the time to change things.

• The ERP system provides the company with ways to

manage inventory, turnaround time, and utilize warehouse

space more effectively.

• Credit-management feature set limits on how much a

customer can owe at any time

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Production and 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

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Production and Materials

Management ERP Components

• Grupo Farmanova Intermed, located in Costa Rica, is a

pharmaceutical marketing and distribution company that

markets nearly 2,500 products to approximately 500

customers in Central and South America.

• The company identified a need for software that could unify

product logistics management in a single country.

• It decided to deploy PeopleSoft financial and distribution ERP

components allowing the company to improve customer data

management, increase confidence among internal and

external users, and coordinate the logistics of inventory.

• With the new PeopleSoft software the company enhanced its

capabilities for handling, distributing, and marketing its

pharmaceuticals.

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Outcomes

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Production and Materials

Management ERP Components

Figure 4.16

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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

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Extended ERP Components

• Extended ERP components include: – Business intelligence – describes information that people use

to support their decision-making efforts

– Customer relationship management – involves managing all

aspects of a customer’s relationships with an organization to

increase customer loyalty and retention and an organization’s

profitability

– Supply chain management – involves the management of

information flows between and among stages in a supply chain

to maximize total supply chain effectiveness and profitability

– E-business – means conducting business on the Internet, not

only buying and selling, but also serving customers and

collaborating with business partners

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E-Business Components

• E-business components include e-logistics and e-

procurement

– E-logistics – manages the transportation and

storage of goods

– E-procurement – the business-to-business (B2B)

purchase and sale of supplies and services over the

Internet

• Best Buy checks inventory levels at each of its 750

stores in North America as often as every half-hour with

its SCM system, taking much of the guesswork out of

inventory replenishment

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Integrating SCM, CRM and ERP

Primary Users and Business Benefits of Enterprise

Applications

Figure 4.17

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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

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The Connected Corporation

• SCM, CRM, and ERP are the backbone of e-business

• 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

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Choosing ERP Software

Successful ERP projects share 3 attributes

1. Overall fit

• Off the rack

• Off the rack and tailored to fit

• Custom made

2. Proper business analysis

• Successful companies spend up to 10 percent of

the project budget on a business analysis

3. Solid implementation plans

• A plan is needed to monitor the quality, objectives,

and timelines

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ERP and SME Markets

• ERP is no longer the purview of large

organizations.

• In the hopes of expanding their client

base, many large-scale ERP vendors,

such as SAP and Oracle, are attempting

to enter the small to medium enterprise

(SME) market

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OPENING CASE QUESTIONS

Shell Canada 5. How did ERP help improve business operations at Shell

Canada?

6. How important was training in helping roll out the system to

Shell Canada personnel?

7. How could extended ERP components help improve

business operations at Shell Canada?

8. What advice would you give Shell Canada?

9. How can integrating SCM, CRM, and ERP help improve

business operations at Shell Canada?

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CLOSING CASE ONE

Confusing Carbon

1. How can companies help reduce carbon

emissions?

2. How can finding alternative energy sources

help reduce IT energy consumption?

3. How can labelling IT equipment green help

promote green initiatives?

4. Why do global organizations need to be

concerned with green or social

entrepreneurship initiatives?

5. What ethical issues are associated with green

technology?

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CLOSING CASE TWO

Campus ERP 1. How could core ERP components help improve

business operations at your school?

2. How could extended ERP components help improve business operations at your school?

3. How can integrating SCM, CRM, and ERP help improve business operations at your school?

4. What lessons for dealing with the challenges of implementing an ERP information system at your school can be learned from this case?

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CLOSING CASE THREE

Intuitive ERP

1. How well do the components of the Intuitive ERP software product align with the ERP components described in this chapter?

2. What advantages did Fibre Connections and Westwinn Group Corp. realize with the introduction of Intuitive ERP? How well do these advantages resonate with the benefits of ERP described in this chapter?

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CLOSING CASE THREE

Intuitive ERP

3. The successful implementation of Intuitive ERP described above does not speak of any negative outcomes or drawbacks of introducing a new enterprise-wide information system in an organization.

• What challenges do you envision would occur in a company that decides to introduce such large-scale change? What drawbacks, if any, are there in adopting a software solution from a single vendor that serves such a critical and important role in an organization? How could one mitigate or lessen these drawbacks?

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