Enterprise Business Processes and Applications IS 6006

1
Enterprise Business Processes and
Applications(IS 6006)

• Masters in Business Information Systems 2008 /
  2009

Fergal Carton Business Information Systems
2
Last week

• Feedback on process mapping exercise
• Process map tells you what is being done, by
  whom, in what order
• Differentiates between flow of physical goods and
  virtual information
• Visual presentation is flexible, allows
  identification of bottlenecks
• Operational versus informational
• ERP captures transactions (SO, PO) at most
  granular level
• Managers need aggregated information (MIS) to
  support decision making
• Comparing plan to actual is critical to decision
  making
• Purchase Price Variance example
• ERP hardwires processes
• Ownership of data (as dear to you as your leave
  days)

3
This week

• Discussion of Dearden / Vizard
• Plan, Buy, Make, Deliver model
• ERP is single instance
• Who does ERP benefit?
• Effect of changes to the business model on
  process
• Reality and ERP diverge
• Resources to address the gap are scarce
• Integration downsides
• Virtualisation (Rayport Sviokla)
• Monk Wagner Ch. 4

4
What does integration mean?

• Dearden 72
• As computer use expands, control is vital
• Single group of experts design a completely
  integrated supersystem absurd
• Specialist expertise is functional by nature
• Finance, logistics, sales different expertise
• Centralisation of control of systems dangerous
• Examine the interfaces
• Vizard 06
• Data used to be in disparate databases
• Data now in databases, file systems,
  applications,
• One truth concerning the state of a business
  process
• Interdependent business processes (eg. sales
  service)
• Meta-data structures
• Enterprise Application Integration vs. BI tools

5
Why is one truth so hard?

• Eg. Up to date picture of revenue?
• Easy bit
• all product shipped to date
• Hard bit
• Spares, loaners, replacement machines,
• Deduct any current credit notes
• Add any outstanding debts from previous invoices
• Apportion revenue from service contract (12
  months)
• Allow for discount to be applied if paid on time
• Currency exchange rate fluctuations
• Revenue recognition rules

6
Process map example

• Planning Plan
• Procurement Buy
• Manufacturing Make
• Order fulfilment Deliver

7
Plan, Buy, Make, Deliver
Deliver
Plan, buy
Customer
Make
Supplier
Bill of materials
Raw materials
Finished goods
8
Why Buy an ERP system?

• Companies must track vital information
• to manage their operations.
• They track
• Customers
• Money (Cash Flow)
• Material
• Assets
• Labor
• Utilization
• Etc.

9
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, )
10
ERP its about control

• Revenues Sales Orders
• Costs Purchase Orders
• Profitability PL

11
Who benefits?

• Finance gain greater visibility
• Manufacturing?
• Demand may be too unstable for MRP
• Production planning needs more nuance
• ERP is too literal
• Much planning still done on Spreadsheets
• Sales need of integration

12
But business models evolve

• High margin to high volume
• Hardware to software service
• Manufacturing becomes logistics
• Gap opens between ERP reality

13
Reality and ERP diverge inevitably

• Impact of gap?
• Responsiveness
• (FTE and s/w)
• Stress
• BI tools
• Workarounds

ERP
Systems
Reality
14
Post go-live example

• There was an awful lot of resources thrown at
  go-live, most of those resources were gone after
  go-live. Trying to get something fixed, it
  wouldnt happen.
• In order to actually utilize it in a way that
  actually improves our lot, took, is still taking,
  quite a long time, and if you cant do it
  yourself, its even worse, because you cant get
  IS available, at times to do the work.

15
Integration downsides

• Response times
• Vulnerability single point of failure
• Limitations on expansion
• Dependence on single vendor
• Flexibility to change system
• Access to basic information is complicated

16
PCB exercise