Chapter 8 Enterprise Decision Support Systems

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Chapter 8Enterprise Decision Support Systems

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EIS and ESS Definitions

• Executive Information System (EIS)
• A computer-based system that serves the
  information needs of top executives
• Provides rapid access to timely information and
  direct access to management reports
• Very user-friendly, supported by graphics

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Executive Support System (ESS)

• A Comprehensive Support System that Goes Beyond
  EIS to Include
• Communications
• Office automation
• Analysis support
• Intelligence

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Enterprise Information System

• Corporate-wide system
• Provides holistic information
• From a corporate view
• Part of enterprise resource planning (ERP)
  systems
• For business intelligence
• Leading up to enterprise information portals and
  knowledge management systems

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Characteristics of EIS

• Drill down
• Critical success Factors (CSF)
• Status access
• Analysis
• Exception reporting
• Colors and audio
• Navigation of information
• Communication

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BENEFITS
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EIS Software

• Major Commercial EIS Software Vendors
• Comshare Inc. (Ann Arbor, MI http//www.comshare.
  com)
• Pilot Software Inc. (Cambridge, MA
  http//www.pilotsw.com)
• Application Development Tools
• In-house components
• Comshare Commander tools
• Pilot Softwares Command Center Plus and Pilot
  Decision Support Suite

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Multidimensional Analysis

• Easy to develop an EIS in an OLAP system
• Most are Web-ready
• Can tap into data in a data warehouse via the Web
• Use advanced visualization tools

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Soft Information Used in Most EIS

• Soft information is fuzzy, unofficial, intuitive,
  subjective, nebulous, implied, and vague
• Predictions, speculations, forecasts, estimates
  (78.1)
• Explanations, justifications, assessments,
  interpretations (65.6)
• News reports, industry trends, external survey
  data (62.5)
• Schedules, formal plans (50.0)
• Opinions, feelings, ideas (15.6)
• Rumors, gossip, hearsay (9.4)
• Soft Information Enhances EIS Value

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EIS Implementation Success or Failure
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EIS Implementation Success or Failure Critical
Success Factors for Development of EIS
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EIS Development Success

• The quickest way to get an executive to realize
  the value of an EIS is to make sure the system
  directly addresses a business problem he or she
  has ... what we did not want to have was a
  solution in search of a problem.
• Resistance in our company took the form of
  foot-dragging on supplying data. It took a
  couple of phone calls from the executive sponsor
  to straighten the problem out.
• None of us (executives) felt politically
  comfortable supporting an expensive information
  system for so few people. If it had failed with
  a huge price tag, everyone felt that its champion
  might take a fall.

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EIS Operational Success Factors

• Deliver timely information
• Improve efficiency
• Provide accurate information
• Provide relevant information
• Ease of use
• Provide access to the status of the organization
• Provide improved communications
• An IS for upper management must fit with their
  decision styles

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EIS Ongoing Support Success

• I have to have timely information to react
  quickly to problems. Before I had my EIS, I
  depended on my sneaker network ... for
  information I needed on a flash basis. My EIS is
  faster.
• I used to get my information from mostly my
  staff and I trusted it. If my EIS had ever
  failed to provide me with accurate information, I
  would have shut it off.
• The first things I look at (on my EIS) every
  morning are my status screens. I want to know
  how everything is going ... variances are flagged
  in color for me, so I can spot them easily. Then
  I start asking questions.

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Corporate (Enterprise) Portals

• Enterprise Information Portals (EIP) are
  applications that enable companies to unlock
  internally and externally stored information, and
  provide users a single gateway to personalized
  information needed to make informed business
  decisions.
• It is a single, secure, web-based access point
  for integrating all enterprise information and
  applications.
• An amalgamation of software applications that
  consolidate, manage, analyze and distribute
  information across and outside of an enterprise
  -including Business Intelligence, Content
  Management, Data Warehouse and Mart, and Data
  Management applications.

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EIP Market Growth

Estimated EIP market 14.8 billion by 2002 36
compounded annual growth rate
Source Info World (http//www.inforworld.com/cgi-
bin/displayStory.Pl?/features/990125eip.html
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Components of an EIP

Source Info World (http//www.inforworld.com/cgi-
bin/displayStory.Pl?/features/990125eip.html
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The Viador Portal Architecture
Extranet Security
Viador Portal
Whats New
Search
Channels
User Filters
Alerts
Viador Sentinel
Viador Information Center
Repository
Administration
Load Balancing
Intranet Security
Open APIs
Ultraseek Search Engine
Viador Enterprise BI Suite
Viador Agents HTML / XML
Viador Gateway
Analysis Applications
Business Applications
Documents
Corporate Intranet
Worldwide Web
Real-time Events
Database
Structured
Events
Unstructured
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A Personalized Portal Page
Source Viador Presentation at UGA
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A Custom-branded Portal Page
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EIP Software

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Types of EIP

• Business to Business (B2B) to integrate partners
  throughout the supply chain
• Business to Employee (B2E)
• Collaborative Processing EIP
• Helps users organize and share workgroup
  information such as email, discussion group
  material, reports, memos, meeting minutes, etc
• Decision Processing EIP
• Provides access to corporate information for
  decision making

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B2B Portal Charles Schwab

• Challenges
• 300 mutual funds
• Monthly paper information
• Traders need info urgently
• Solution
• Viador E-Portal
• Secured Internet access
• Result
• Information _at_web speed
• Extranet security
• Won awards

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B2E Portal Sprint PCS

• Challenges
• Access financial data
• Too many tools
• Rapid growth
• Solution
• Viador E-Portal
• Andersen Consulting
• Result
• 3 months vs. 18 months
• Savings 2M
• Grew to 10,000 users
• World-wide license

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B2E Portal CIBC

• Challenges
• Access to financial reports from multiple data
  sources including mainframe DB2
• Scale to hundreds of users
• Lower distribution costs
• Solution
• Viador E-Portal
• IBM
• Result
• E-banking initiative rolled out to 800 users
• Increased customer service
• Simplified mainframe reports and charts in browser

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Enterprise Resource Planning (ERP)

• Systems that integrate financial, human
  resources, manufacturing, distribution, order
  management processes.
• Shared data and visibility
• Connections with upstream and downstream partners

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The ERP Industry

• Roots in Europe, manufacturing industry
• 1979 SAP releases R/2
• Mainframe based
• Financial and operational data
• Focus on data entry and paperwork
• 1994 SAP releases R/3
• Installed base of 14,000
• C/S, UNIX based
• Heightened competition in the market

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1994 onwards

• Oracle, Baan, Peoplesoft enter the fray
• 1994 end 2.9 B market
• 60 by Fortune 500 companies
• Top 10 had 85 of market share
• Late 90s growth rate of 30-40 projected, gt50 b
  by 2002
• 1998 end five firms held 64 of market

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The ERP Market
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ERP Software Industry

• The retail industry will be a major market for
  ERP (growth of e-commerce)
• ERP software will integrate with the Internet and
  data warehouses

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Distinguishing Features

• Expensive
• Total implementation costs at 2-3 of revenues
• Long implementation cycles
• 2-5 years to be up and running
• Major rework of existing infrastructure
• High failure rates
• Estimates at greater than 50

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Why the ERP Fever?

• The pre-ERP environment
• Fragmentation costs, non-integrated, redundant
  data, excessive coding, inflexibility in access
• With ERPs
• Access to management information streamlined
  data flows
• Improved decision making
• Flexibility in reallocation of resources
• Visibility of all key processes

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Supply Chain

• The flow of materials, information, and services
  from raw material suppliers through factories and
  warehouses to the end customers
• Includes the organizations and processes that
  create and deliver value to the end customers
• Related to the Value Chain Model (Porter)

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Supply Chain Components

• Upstream
• Internal supply chain
• Downstream
• Involves product life cycle activities
• Example (Figure 8.2)

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Supply Chain Components

• Upstream like placing orders
• Suppliers, their suppliers (several tiers)
• From raw material to the company
• Internal all internal processes that add value,
  conversion to final products
• Production scheduling
• Costing
• Inventory control

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Supply Chain Components (cont.)

• Downstream all activities in distribution and
  delivery to end customers
• Sales
• Customer billing
• Delivery scheduling

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An Automotive Supply Chain
Source Modified from Handfield and Nichols
(1999), p. 3.
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The Toy OrderFulfillment Problem

• Overall satisfaction with online purchasing
  declined significantly in December 1999 and
  January 2000
• Order fulfillment infrastructure shown to be very
  weak
• Toysrus.com and other toy e-tailers had the most
  critical problems
• Turban et al. E-Commerce A Managerial
  Perspective, Prentice Hall, 2002

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The Toy OrderFulfillment Problem (cont.)

• Fierce competition in the toy industry caused
  inventory deficiencies
• Offered free delivery
• Offered 20 discount
• Orders could not be met in time for the
  holidaysso they gave out 100 coupons
• Amazon.com had to ship orders for several
  products in several shipments instead of
  oneraising the delivery cost

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Order Fulfillment

• Taking orders may be the easiest part
• Factors responsible for delays in deliveries
• Inability to accurately forecast demand
• Ineffective supply chains
• Pull type manufacturing
• Customized products

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Supply Chain Problems

• Uncertainty in the demand forecast
• Uncertainty in delivery times
• Quality problems
• Poor customer service
• High inventory costs
• Low revenue
• Extra costs

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Supply Chain Management (SCM)

• Integration of business processes from the end
  user through original suppliers, that provide
  products, services, and information that add
  values for customers
• To plan, organize, and coordinate the supply
  chains activities

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Proper SCM

• Proper SCM and inventory management requires
  coordination of all activities and links in the
  supply chain to
• Ensure that goods move smoothly and on time from
  suppliers to customers
• Keep inventories low
• Keep costs down

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IT and SCM (Rai et al. IT Platform Impacts on SC
Integration,Working Paper, Georgia State Univ.,
2002)

• IT infrastructure Integration
• Data Integration
• Automatic data capture systems used across SC
• Definitions of key data elements (e.g., customer,
  order, part ) are common across SC
• Same data stored in different dbs across SC is
  consistent
• Same data does not need to be re-entered across
  SC
• Application Integration
• Applications across SC communicate in real time
• Planning Applications (demand, transportation,
  manufacturing planning)
• Transaction Applications (order management,
  procurement, manufacturing, distribution)
• SC applications with internal applications (e.g.,
  ERP)
• CRM applications with internal applications

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IT and SCM (cont/d)

• Supply Chain Integration
• Information Flow Integration across SC
• Production and delivery schedules
• Performance metrics
• Supply chain members collaborate in arriving at
  demand forecasts
• Downstream partners share their actual sales data
• Inventory data visible across SC
• Order fulfillment and shipment status are tracked
  across SC

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IT and SCM

• Physical Flow Integration
• Inventory Holdings are minimized across SC
• SC inventory is jointly managed
• Suppliers and logistics partners deliver products
  and material JIT
• Distribution networks are configured to minimize
  total SC-wide inventory costs
• Products are assembled when orders are received

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IT and SCM

• Financial Flow Integration
• A/R processes are automatically triggered when
  products are shipped to our customers
• A/P processes are automatically triggered when
  supplies are received from suppliers

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The Bullwhip Effect

• Slight changes in actual demand create large
  variations in upstream partners
• Due to
• Demand forecast updating
• Order Batching
• Price Fluctuation
• Rationing and shortage gaming

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Bullwhip Effect and Information Sharing

• Distorted information leads to
• Inefficiencies
• Excessive inventories
• Missed production schedules
• Ineffective shipments
• Poor customer service

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Avoiding the Sting of the Bullwhip

• How to do it?
• Information sharing is a must and is facilitated
  by EDI, extranets, and groupware technologies
• Trust and agreements in regard to
• Ordering and inventory decisions
• Placing supply chain ahead of individual entities
  within the corporation
• Sharing information could save 30 Billion/year
  just in the grocery industry

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Preliminary Activities

• Understand the supply chain (flow charts)
• Study internal and external parts
• Performance measurement are a must (Benchmarking)
• Multidimension performance analysis
• A BPR may be needed
• Peoples relationships are a must

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Software Support